Three years before General Forex became a focus of a global money-laundering probe, Citibank closed the company's checking account after bank officials became uneasy about the company's activities, sources said.
General Forex is one of nine related companies--all of them associated with the same person--that authorities believe used accounts at the Bank of New York and other financial institutions to move billions of dollars from Russia and other countries to banks around the world. Federal officials recently subpoenaed bank and other records about the company.
Authorities estimate that one of those companies, Benex International Co., alone moved at least $2 billion through a Bank of New York account over the past year. Benex and the other companies are associated with a Russian native--now U.S. citizen--Peter Berlin, according to federal officials. No charges have been filed and Berlin has denied any wrongdoing.
General Forex, which described itself in a business report as a "personal credit institution," used a business checking account at Citibank to transfer a million dollars a day or more; it reported annual sales of $300,000. General Forex transfered some of the money to an account in Switzerland, according to legal documents.
Citibank officials moved to close the account in November 1995 after questioning the company's business practices, a source familiar with the account said. The officials, who declined to discuss the matter today, shut down the account in January 1996, the source said. No one has alleged that General Forex engaged in any illegal activity. It isn't clear whether Citibank communicated its concerns to regulators; a Citibank official said it is illegal to disclose whether it filed a suspicious-activity report.
Warren Stone, a lawyer who represented General Forex in a civil suit two years ago, said he doesn't know why the account was closed. "It doesn't really make sense actually," said Stone, who described General Forex as a "transmitter-of-money" company.
General Forex was the original occupant of a small office in the Kew Gardens neighborhood in Queens, where at least four of the companies, including Benex, conducted business or received mail, sources and documents show.
Stone said he believes that company Vice President Aleksey Volkov, a man listed on the lease for the Queens office, is now in Russia.
Details about the company's account at Citibank emerged as officials in the Justice Department and FBI were preparing to meet with Russian investigators Tuesday to discuss the Bank of New York case, the possible ties to Russian organized crime and related money laundering investigations in Germany, Switzerland and elsewhere.
At the same time, the Manhattan district attorney's office has apparently begun a parallel grand jury investigation of the Benex-related accounts, sources said. The prosecutor's office has issued subpoenas for a variety of records relating to Benex and other companies, sources said. An official declined to comment.
Details about General Forex help to underscore the sprawling nature of the money-laundering probes. Investigators face the task of sorting out electronic transactions that go back several years and involve at least $5 billion, according to law enforcement sources.
Money launderers now electronically transfer money in and out of accounts around the world to obscure the origins of the money.
In addition to examining reams of financial documents, investigators are trying to untangle a multitude of relationships among dozens of Russian business people in the United States, at least nine related companies and at least three major New York banks where those companies maintained accounts.
General Forex also used as a business address a commercial post office box at the Mail Annex in Amityville on Long Island, according to state incorporation records. That mail drop was in turn used by a variety of companies, as well as individuals with Russian surnames, said a Mail Annex official who asked not to be identified.
"They must have had 25 different companies," the official said, adding that law enforcement officials have inquired about the users of the mail box.
While it remains unclear exactly who General Forex served, bank records filed as part of a court case brought by General Forex against Citibank in 1997 offer a glimpse into an active money-transfer business.
General Forex alleged in the civil lawsuit that it had instructed Citibank to transfer $50,000 from its business checking account to an account at Paribas Privatbank AG in Basel Switzerland. The lawsuit claims the money was taken from the account but never wired to the Swiss account of a company called Yellow BV.
Stone, the lawyer who filed the lawsuit on General Forex's behalf, said the case was dropped after Citibank shared documents demonstrating that it had acted appropriately. Stone said he did not know the nature of Yellow's business.
Bank documents filed with the lawsuit show that in a three-day period in late November 1995, shortly before the Citibank account was shut down, General Forex received more than $2 million in deposits and transferred more than that amount to other accounts. One of those transfers was to the Yellow account in Switzerland.
"General Forex apparently was a transmitter of money . . . on behalf of third parties," Stone said, adding that he did not know in detail the kinds of services the company provided. Stone said he also helped Volkov, the vice president of General Forex, begin a company called Torfinex.
Torfinex also intended to operate as a transmitter of money, and in 1997 it applied for permission from the New York State Banking Department. General Forex, Torfinex, Benex and another company registered as Tofex all listed the same Queens office as a business address. Federal officials are also examining whether Torfinex was operating legally in the United States.
Research editor Margot Williams contributed to this report.