korflaber by the Forward

They gave $25 million to Jewish nonprofits. Was some of that money laundered from Ukraine?

The Lubavitch Educational Center, a set of schools in South Florida teaching toddlers and Talmud scholars alike, nearly went out of business in 2013.

Past due on an $8 million loan, the center was facing foreclosure on three properties, including its main campus, an 84,020-square-foot behemoth on seven acres. A company made up of the center’s supporters won the foreclosure auction and gave it a long-term lease. Among the benefactors who helped the schools make up outstanding debts were Mordechai Korf and Uriel Tzvi Laber, partners in business and philanthropy whose $1.4 million donation was part of a philanthropic portfolio that pumped about $25 million into Jewish nonprofits between 2006 and 2018.

Now these two men, who represent the pinnacle of generosity to many religious Jews in Florida, are among the targets of a lawsuit stemming from a Ukrainian money-laundering scheme that calls into question the legitimacy of years of their philanthropic contributions.

Korf and Laber owned more than $6 million worth of shares — at least 7% — in an overseas unit of PrivatBank, which, according to a 2018 report by the National Bank of Ukraine, “was subjected to a large, coordinated money-laundering scheme and bank fraud” to benefit the shareholders’ and their affiliates’ “business and personal interests.” Korf’s and Laber’s shares were in PrivatBank Latvia, which was fined more than $1 million by that country’s financial watchdog in September for inadequately preventing money-laundering.

Ukraine nationalized PrivatBank in 2016, financing a bailout of more than $5.5 billion to save it from collapse as a result of the fraud — which the NBU, a Ukrainian governmental entity that regulates banks, said involved the parent bank in Ukraine as well the bank’s overseas units. While the report itself does not name any of the foreign branches involved in the scheme, the Organized Crime and Corruption Reporting Project wrote last year that PrivatBank Latvia received at least $130 million in laundered money.

PrivatBank Ukraine was re-privatized in 2018, and the new owners filed a civil lawsuit in Delaware last May naming Korf and Laber as two of three U.S. “agents” who helped the bank’s majority shareholders, two Ukranian billionaires, launder up to $470 billion — more than the GDP of Austria. PrivatBank Latvia, according to the suit, “was a key money laundering and fraud center.”

Korf, 47, and Laber, 48, declined through a representative to be interviewed or answer any questions related to their businesses or charitable giving.

Their lawyer, Marc Kasowitz, said via email that the allegations against them are “100% false and defamatory,” and the lawsuit “nothing more than a fictional orchestrated political attack” on the Ukrainians, who vocally opposed the president at the time.

The accusations “will be shown to be complete fabrications when the evidence in this case comes out,” said Kasowitz, who has also represented President Donald Trump in matters related to Russian interference in the 2016 presidential election. “Our clients have earned a well-deserved reputation for honesty and high integrity over the past 20+ years.”

Indeed, Korf and Laber, who each live in white-columned mansions in Miami Beach, are key supporters of the Chabad network in Florida, one of the movement’s largest, strongest and wealthiest communities in the world.

The Greater Miami Jewish Federation estimates that 42% of Jewish homes with children in the area have engaged with Chabad’s various branches and programs. The two men have donated and raised a total of more than $11 million for Chabad-related causes across Florida, according to their own foundations’ tax filings. Korf is one of the nine children of Rabbi Abraham Korf, the beloved founder of Miami’s Chabad center, and many local Chabad groups that received Laber and Mordechai Korf’s donations are run by Korf’s relatives.

Florida, with $11 million in donations over a dozen years, and New York, with $10 million, are the focal points of their Jewish giving. But the pair has also given money to Jewish organizations in Connecticut and Canada, Massachusetts and Montana, Denmark and Jerusalem. They give to synagogues, to schools, to summer camps and to Zionist organizations, with individual grants ranging from $180 to more than $1 million.

Weeks of investigation into Korf and Laber turned up new questions with each answer. It is unclear how they made their money; most of the active businesses for which they’re listed as officers in the world’s largest open database of company records are implicated in the alleged bank scheme. Phone calls to their organizations became circular games of cat and mouse.

It is difficult to specifically track how money from PrivatBank’s loans may have filtered through Korf and Laber’s foundations to the Jewish nonprofits, and there is no evidence that any of the recipients were aware of the two men’s connection to the laundering. But if the lawsuit succeeds, the nonprofits could face demands to return the funds, a phenomenon called a “clawback.”

Peter Henning, a law professor at Wayne State University who prosecuted bank fraud at the Department of Justice, said launderers frequently slide money into charities to evade taxes and scrutiny, or to get “pats on the back.”

“If you’re going to funnel money to a charity, no one’s going to ask a lot of questions,” he said. “If you’re willing to give money, they’re going to take it.”

Jewish pioneers of South Florida

Korf, who is married and has at least five children, is part of one of the Chabad movement’s most prominent families. His parents, Abraham and Rivka, arrived in Miami from Brooklyn in the early 1960s as emissaries of the Lubavitcher Rebbe, Menachem Mendel Schneerson. After decades in which Florida’s Jews had been concentrated in Jacksonville, a northern port city, snowbirds from other states and Jewish immigrants from Latin America and the Caribbean were quickly making Miami the center of the Sun Belt’s Jewish universe.

At the time, kosher food was hard to come by in South Florida. So, the story goes, Rabbi Korf slaughtered chickens himself and Rebbetizin Rivka salted and soaked them.

One of the couple’s daughters, Leah Jacobson, recalled in an interview published on Chabad.org that the family lived on “a shoestring budget,” and had very little time with their rabbi father, who raised them not to make life decisions based on money. The Korfs ran Shabbat retreats in their home, inviting college students and quizzing the children on their studies, and the kids took a lot of “inner pride” in their father’s mission, Jacobson said.

Mordechai, the seventh of the nine children, studied for the rabbinate in Brooklyn, and at 19, left for Ukraine on a humanitarian mission run by his father’s organization, according to a 2017 article in the Miami Herald. For three years, he learned Russian and navigated the culture of Ukraine, eventually meeting his future business partners.

Laber has been active in Ukraine since at least the early 2000s, and is quoted in a 2001 book by the journalist Larry Tye saying that he was introduced to business partners in Russia by Shmuel Kaminezki, an Israeli who was serving as chief rabbi of an industrial part of Ukraine. (This was a different person from the prominent American Haredi rabbi Shmuel Kamenetsky.)

The largest money-laundering scheme in history?

The 2019 lawsuit by PrivatBank’s new owners accuses Korf and Laber of racketeering, conspiracy and fraud in what the suit and the National Bank of Ukraine report the year before described as a scheme involving hundreds of fraudulent loans, a complicated network of dozens of shell companies in Delaware and elsewhere, metallurgical assets and commercial real-estate transactions in Cleveland.

At the center of the scheme, according to the lawsuit and the report, were two Ukrainian billionaires, Igor Veleryevich Kolomoisky and Gennadiy Borisovich Bogolyubov, who founded PrivatBank in the early 1990s. The lawsuit contends the two made fake loans to their partners, including Korf and Laber, obscured the paths of the loans using their businesses and spent the money to “enrich themselves” from 2006 through 2016.

The NBU — whose responsibilities include ensuring the stability of Ukraine’s currency, licensing banks, inspecting them for compliance and applying corrective measures when they break the law — said that 95% of PrivatBank loans over a decade were issued to parties related to the shareholders. The overseas branches — like the Latvian bank in which Korf and Laber owned shares — issued fraudulent loans and served as a “mechanism to service the related party companies,” according to the NBU. The loans were either used to pay back other loans, a phenomenon called “loan recycling,” or were woven through a series of transactions to obscure the final use of the loan, the report contends.

The report describes “a concerted attempt to disguise the true nature of the economic purpose” of the loans from regulators and other stakeholders “for the benefit of the former shareholders.”

In the lawsuit, the new bank owners contend that in one case, four companies controlled by the two bank co-founders drew down a combined $187 million from PrivatBank. They then allegedly ping-ponged the money through a series of 24 transactions over five hours involving seven shell companies controlled by Korf, Laber and Korf’s brother-in-law Chaim Schochet, ending in a purchase of a metals facility in Kentucky.

Korf and Laber owned and managed shell entities in the United States and bought other businesses using laundered money, the lawsuit says. It claims that the deals not only netted Korf, Laber and Schochet millions of dollars, but also turned Kolomoisky and Bugolyubov, the Ukrainian bank founders, into the largest commercial real-estate holders in Cleveland.

Unlike his brother-in-law Korf, Schochet has only donated modestly to Jewish causes, according to tax documents such charities are required to file — a single gift of $7,200 in 2014 to the Miami Beach-based Turkish Friends of Chabad.

The new owners of PrivatBank have also filed lawsuits related to the laundering scheme in the United Kingdom and Israel, as well as the United States. The Daily Beast reported in April that the FBI is investigating Kolomoisky. An appeals court in London this fall ordered Kolomoisky and Bogolyubov to pay legal costs totaling more than $14 million to PrivatBank after the bank won an appeal that will allow it to move forward with a fraud claim.

Liliia Zubaryeva, a spokeswoman for PrivatBank, said in a statement that the bank “remains fully committed” to “recovering the losses it has suffered.” She said the laundered money was “used to acquire and support various United States business and commercial real estate.”

Building lives of luxury

It is unclear how, when or where Korf and Laber met, and how they grew wealthy enough to purchase real estate and metallurgical facilities across the United States, or donate so much to so many different groups. Korf’s father described Mordechai’s job in a 2010 blog post as a “philanthropist” and “supporter of Chabad institutions worldwide.”

Public records show that Korf and Laber live less than a 10-minute walk from each other in homes overlooking Sunset Lake, with pools and exterior walls bleached white in the Florida sun. Laber’s seven bedroom, nine-and-a-half bathroom home was assessed at $14 million in 2018; Korf’s, which has nine bedrooms and eight baths, at $7.7 million.

A review of business records and news reports shows that their main venture is called Optima International of Miami, a company they co-founded in 1995 that owns real estate and raw materials processing businesses. Another venture, the Delaware-based Optima Acquisitions— which is co-owned by Korf, Kolomoisky and Bugolyubov— was, according to the lawsuit, the primary vehicle used to buy metallurgical assets with the fake loans.

Nearly all of the active corporations for which Korf is listed as an officer are cited in the Delaware lawsuit as having been involved in the laundering. Most of the active corporations for which Laber is listed as an officer are either listed in the suit, or have neither digital footprints nor unique street addresses.

‘Let’s build something nice.’

Korf and Laber are each the president and chief executive of Florida-based philanthropic organizations — the Korf Family Foundation and the Laber Foundation, respectively — whose first tax filings available online are from 2006, the same year the NBU report says the money-laundering scheme started. Korf’s foundation received tax-exempt status in 2008, and Laber’s in 2009.

In Tye’s book, Laber described his attitude toward philanthropy: “It’s the whole concept of wealthy Jews helping the community,” he said. “Let’s build something nice.”

It is not clear what year the foundations were incorporated, because neither organization appears in Florida’s charity database. Leonard Kreigel of Sosin and Kreigel, the accounting firm that helped both foundations file tax documents, declined to provide registration numbers or say when the foundations were incorporated. Mike Sitrick, a spokesman for Korf and Laber, also declined to provide the registration numbers and said only that “the foundations are registered with the appropriate entities.” Weeks after the initial publication of this article, Sitrick told the Forward the foundations were exempt from registering because they do not solicit contributions.

There is no way to trace whether any of Korf and Laber’s donations to Jewish charities included money that the Ukrainian authorities claim was laundered. But at least three shell entities named in the lawsuit have given hundreds of thousands of dollars since 2013 to the Korf Family Foundation, which in turn donated to Jewish charities.

Between 2006 and 2018, according to tax filings, the two foundations gave more than 160 Jewish nonprofits about $25 million. Three non-Jewish charities also received grants — two that assist former residents of the Soviet Union and one involving cancer research.

The foundations’ most generous year was 2010, with $3,116,463 in donations. Close behind that was 2013, the year the Lubavitch schools in the Miami area faced foreclosure and received more than $1.2 million from Korf, the largest of their donations during the 12 years.

In all, the men made donations in 15 states and Washington, D.C., plus Canada, Israel and Denmark.

Many of the grants went to organizations led by Korf family members.

Friends of Lubavitch of Florida Inc, which lists Rabbi Abraham Korf as an officer, has received more than $6 million directly from Korf and Laber’s foundations since 2006, according to tax documents. Accountants for Friends of Lubavitch of Florida did not respond to a request for comment.

Rabbi Bentzion Korf, one of Mordechai’s brothers, is the president of the Lubavitch Educational Center, which has received nearly $700,000 in direct donations from the foundations since 2006. The National Center for Life & Liberty, a nonprofit that provides legal assistance to the Lubavitch Educational Center, said the group’s leaders — including Bentzion Korf — were “totally unaware” of the lawsuit against Korf and Laber, and will rely on their lawyers if there is any attempt to recoup the funds.

Other recipients of large donations, including groups named Keren Peulos, Jewish Educational Media and Beis Medrash Levi Yitschak, also did not return phone calls and emails. They do not appear to have any direct ties to Korf’s family, but Laber has served as a director for Jewish Educational Media.

Mordechai’s eight siblings are all entrenched in the Chabad community across the U.S., especially in Florida. Yosef Yitzchok Korf is the spiritual leader at Hollywood Community Synagogue in Florida. Bentzion Korf is the director of the Lubavitch Educational Center and Chabad Mid-Miami Beach. Zalman Korf is a co-director at Chabad of Walnut Creek. All of those organizations received donations from Korf, Laber or both. They did not respond to requests for comment.

The tax filings also show $2.8 million in donations over 12 years to the Federation of Jewish Communities of the CIS, which provides aid to Jewish communities in the former Soviet Union. When first contacted by a reporter on Feb. 10, the organization’s U.S. office director, Mindy Zalmanov, said the group “never received” that money; she followed up three days later with an email saying the group does not comment on donations or expenditures.

Asked about Zalmanov’s claim that they never received the donations, Kasowitz, the lawyer for Korf and Laber, said “the storyline you are trying to manufacture” is “false and defamatory.”

“Each and every organization that the foundations have generously contributed to, has in fact been received by the intended recipient,” he wrote in an email, apparently meaning each donation has been received. “We are proud of the tremendous positive impact that these donations” have had “on the respective Jewish communities.”

Some of that impact was on display last week, as conservatively dressed men and women streamed into a 2,200-seat arena a few blocks from the beach for a $200-a-head tribute dinner and concert to celebrate 60 years of Chabad in Florida.

At the concert, the movement dedicated a school building it had purchased for $5 million in 2017. It had come a long way from salting chickens and avoiding foreclosure.

The late leader of Chabad, Rabbi Schneerson, once said Miami should be “the Jerusalem of Jewish exiles,” observed one concertgoer, 29-year-old Rabbi Matisyahu Devlin, “and it has been done.”

Jacob Fenton contributed reporting from Portland, Ore., Max Ziffer from Miami and Virginia Jeffries from New York. This story used the ProPublica Nonprofit Explorer, a database of tax filings from nonprofits, and the Investigative Reporting Workshop’s Accountability Project, which indexes public data so journalists can search across otherwise siloed records.

Corrections: A previous version of this article stated that Mordechai Korf and Uriel Laber owned 7% of shares in PrivatBank. In fact, they owned 7% of shares in PrivatBank Latvia, an overseas unit of PrivatBank, which is based in Ukraine.

The original also mistakenly suggested that Korf’s and Laber’s foundations may have violated Florida law by failing to register with the state. Representatives for Korf and Laber have since informed the Forward that the foundations are exempt from registration because they do not solicit donations from the public.

The initial version misinterpreted Laber’s comment, in a 2007 article, that Ukrainian Jewish donors expect a “pay-in, pay-out” policy, as meaning they expect to be able to withdraw their funds; following publication, a representative for Mr. Laber explained that he meant that local Ukrainian people would prefer to see charitable donations disbursed to the poor quickly as opposed to be held in endowment for future distribution. The quote and interpreting sentence have been removed.

The original also stated incorrectly that Laber had served as president, vice president and secretary of Optima Acquisitions since 1995. In fact, he served in those roles for Optima International of Miami. We have also updated the number of entities named in the lawsuit for which Korf and/or Laber are named as officers.

The Forward regrets these errors.

Molly Boigon is an investigative reporter at the Forward. Contact her at boigon@forward.com or follow her on Twitter @MollyBoigon

Two Florida Chabad donors implicated in Optima schemes

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