The business being conducted in a cramped office suite in a middle-class neighborhood far from New York City's financial center was a mystery. Neighbors sometimes heard "loud, very agitated" telephone conversations in Russian. But there were few visitors and it sometimes remained closed for days at a time.
As recently as last week, a mailman left stacks of dozens of letters--some from the Bank of New York--with a neighboring office because the letters could not be pushed under the door.
But inside office number 612, at least four companies at the center of a sprawling worldwide money-laundering inquiry are located. Benex International Co., one of the companies, moved at least $2 billion through a Bank of New York account over the past year, sources said.
Indeed, it was the incongruity of the modest, 400-square-foot office--which today appeared sparsely furnished and had cardboard boxes stacked against one wall--and the enormous sums of money allegedly being moved from Russia to dozens of banks around the world that apparently prompted the Bank of New York probe.
In August 1998, Republic National Bank notified federal authorities of suspicious activity after in-house investigators, alerted to unusually large amounts of money moving through Benex-related accounts at the Bank of New York, visited the building, located in the Kew Gardens section of Queens. According to sources, bank officials told federal investigators there was "no resemblance to what should have been there," given the level of financial activity.
Although officials at Republic did not know the details about the companies involved in the transfers, they noticed the unusual flows of money because the bank served as an intermediary on wire transfers for some banks in Russia to the Bank of New York. In examining those transfers, Republic then found that it also had an account for Torfinex Corp.--the current leaseholder on the office--and notified federal officials, sources said.
A woman who answered the door at Torfinex today declined to answer questions. A man in the office did not come to the door.
Benex received mail at the office. A company called General Forex Corp., listed on the lease as the original tenant, also has accounts at the bank. So does Torfinex, as well as another company registered to do business as Tofex Corp., sources said.
In April, sources said, federal investigators issued subpoenas for records about Torfinex and General Forex, also referred to in some documents as General Foerex. Last month, officials subpoenaed "a significant amount of documentation" from the Bank of New York and seized about $20 million from two Benex or Benex-related accounts, law enforcement officials said.
As investigators have closely examined bank records, the money flowing through the accounts appears lower than originally reported, a source said today. Investigators have found about $5 billion moved through the accounts over the past 3 1/2 years, not $10 billion, though that number could still change before the accounting is completed.
Investigators also have established ties between the Kew Gardens companies and at least four others, sources said. The other companies include Lowland Inc., Becs International LLC, and Valcom Solutions Inc., all registered to do business in New Jersey, according to state documents. Another related company is Intermedia Enterprises, sources said.
Becs, after Benex, appears to be the second-most-active account, with more than $1 billion moving through it, a source said.
Many of the surnames of the companies' officials are Russian. Investigators believe one of the central figures behind the companies is Peter Berlin, a Russian native who now has American citizenship, according to sources close to the case.
Berlin is married to Lucy Edwards, a London-based vice president for the Bank of New York who was fired last month. An internal inquiry by the bank alleged that Edwards, who helped manage the bank's Eastern European division, falsified bank records, violated internal policies and failed to cooperate with an in-house investigation, sources said.
Berlin is listed on incorporation documents as an official or agent for Benex (which is registered in New Jersey), Becs and Lowland. Records show he's also registered as president of a New Jersey company called Dimalex N.Y. Corp.
No one has been charged in the case, and investigative specialists note the legal ownership of multiple companies by a single individual or group is relatively common. An attorney for Edwards and Berlin has flatly denied any wrongdoing.
Hans Hottenrott, who owns a nearby business, said he was surprised when he asked one of the men in the Torfinex office what the company did.
"I asked him what was he shipping, and he said boats, yachts," said Hottenrott, who runs a freight forwarding business. "When I asked him if I could give him a quote, he said he would get back to me. That was a year ago."
Staff researcher Margot Williams contributed to this report.