JUST AS ONE OF MEXICO'S BIGGEST EXPORTS BESIDES DRUGS IS CRIMINALS, SO IT IS WITH RUSSIAN.
FLORIDA AND SAN FERNANDO VALLEY PART of LOS ANGELES ARE NOW CENTERS FOR RUSSIAN ORGANIZED CRIME.
OLEG
KHERSONSKY….
HOME
ADDRESS:
(PUBLIC
RECORD)
3631
DIXIE CANYON AVE.
LOS
ANGELES, 91423
WHERE
EVER THUS RUSSIAN THUG ACTUALLY GETS HIS MILLIONS, HE “INVESTS” IT CA
MORTGAGES, AND THEN VERY QUICKLY ENDS UP OWNING THE PROPERTIES.
KHERSONSKY
ACQUIRES DOZENS OF PROPERTIES THROUGH THIS MEANS AND THEN QUICKLY TRANSFERS
THEM TO OK, LLC WHICH IS LAWYER DENIES THIS ENTITY IS WHERE KHERSONSKY HIDES
HIS ASSETS.
Itkin's
alleged partner in the Sunset Strip club was Oleg Khersonsky, the licensed agent for several of
Zinberg's pawn shops, who was arrested for assault with a deadly weapon and
also for "oral copulation with a person under 14 through force or
fear."
But
Itkin's denial Friday doesn't seem to square with his signature on an apparent
agreement in which he and Khersonsky
sold their equity interests in April 2000 for $422,000 to a recent émigré named
Alex Brusilovski. Itkin's agreement was attached to a fraud suit that
Brusilovski filed a year later in a Los Angeles state court, where he alleged
that Itkin and Khersonsky
failed to tell him that the strip club was losing its liquor license at the
time of the sale because the owners failed to restrict the performances to
"bikini dancing" and allowed nudity and simulated sexual intercourse.
The 1998 small claims court case would be completely
insignificant, but for the passing way that it seems to connect Zinberg with Oleg Khersonsky and Tommy
Gambino
OVER
20 YEARS, David Zinberg has risen from a pawnbroker and bail bondsman to become
chief executive of one of the largest online retailers of jewelry, BIDZ.com
(BIDZ:
1.21, +0.02, +1.68%). This year, he expects his Website to auction nearly $250
million worth of watches, rings and other closeout merchandise to buyers from
as far away as Colombia and the Middle East. But the Los Angeles-based
entrepreneur is said to be frustrated that the stock of his fast-growing
enterprise has fallen from 22.50 to 8.72 in the past nine months. The slump,
say BIDZ executives, is the fault of short-selling scalawags whose
"naked" sales account for the stock's regular appearance on the list
of shares whose sellers fail to properly deliver them.
The
discount on BIDZ shares may also have something to do with the impressive array
of fences and violent felons with whom Zinberg has been in business in the past
two decades. The 50-year-old chief executive has no criminal record, but a
number of his partners and key employees have startling rap sheets...and added
arrests and convictions to those records while working with Zinberg.
The
jewelry dot-com may be small carat, with a market capitalization of just $207
million, but it catches the eye. The company did not make Zinberg available to
Barron's, but it says Zinberg didn't know of his associates' priors. BIDZ just
settled a suit in which Cartier accused BIDZ and Zinberg of hawking
counterfeits of its trademark "tank" wristwatch. A vice president
with a criminal record who helped BIDZ auction the ZIL limousine once used by
Soviet party boss Yuri Andropov is no longer with the company. "There's
nobody in the company today that has a criminal record," says Vice
President Leon Kuperman. "It's not something that we have to worry about
at this point."
Discussions
about Zinberg's associates appeared on blogs as long as six months ago (see blogs.barrons.com).
But Kuperman says the company only recently dug into the allegations after
receiving an anonymous letter to its board. Just last Wednesday, he says, BIDZ
first saw documentation alleging that co-founder and director Garry Itkin had
run an illegal strip club on Sunset Boulevard, while also serving as BIDZ's
chief financial officer in 1999. Itkin's alleged
partner in the Sunset Strip club was Oleg Khersonsky, the licensed agent for several of
Zinberg's pawn shops, who was arrested for assault with a deadly weapon and
also for "oral copulation with a person under 14 through force or
fear."
Kuperman
also says BIDZ just discovered last week a 1998 Los Angeles small-claims case
in which Zinberg was named as a defendant alongside a shoe-business partner
named Sergey Proshak, whose felonies include failure to register as a sex
offender, and Tommy Gambino, a reputed underboss of the Los Angeles mafia who
precipitated a Clinton-era scandal by paying presidential stepbrother Roger
Clinton to lobby, unsuccessfully, for a commutation of a 45-year sentence
Gambino's father was serving for heroin trafficking.
Friday,
the company's public-relations consultant Rich Layne said that BIDZ director
Itkin denies he was an owner of the strip club. Itkin was merely a financial
adviser to Khersonsky,
whom the articles of incorporation showed as sole shareholder. Any claims that
the BIDZ co-founder was a strip-club owner are just short sellers'
misinformation, said Layne. But Itkin's denial Friday
doesn't seem to square with his signature on an apparent agreement in which he
and Khersonsky sold
their equity interests in April 2000 for $422,000 to a recent émigré named Alex
Brusilovski. Itkin's agreement was attached to a fraud suit that Brusilovski
filed a year later in a Los Angeles state court, where he alleged that Itkin
and Khersonsky
failed to tell him that the strip club was losing its liquor license at the
time of the sale because the owners failed to restrict the performances to
"bikini dancing" and allowed nudity and simulated sexual intercourse.
Zinberg
left the eastern European country of Moldova as a teenager and found his way to
Los Angeles. Starting in 1988, he began acquiring pawn shops. A decade later he
had 17 of them across L.A., a bail-bond outfit, a dental lab and a deli. He
also started looking for outside money, with makeshift private-placement
memoranda that described pawn-brokering as "high-yield short-term
non-recourse consumer loans secured by tangible personal property, such as
jewelry, consumer electronics equipment and firearms."
Not
every investor was satisfied. Starting in 1994, a woman named Yelena Simonyan
alleged that she invested over $1.1 million in several pawnshops on the
invitation of Zinberg, Itkin and an employee and part-owner of the pawnshops by
the name of Michael Merzlak. In a fraud and embezzlement suit she filed against
them six years later in an L.A. state court, Simonyan said they gave her a job
and a share of the pawnshop profits until 1996 and then the money stopped. She
also alleged that Zinberg took large sums of money and took pawned items from
the shops. She won a jury verdict and a $700,000 judgment against them. They
gave her 37,500 shares in BIDZ.
By
April 1999, Zinberg had discovered the Internet. After using eBay (EBAY:
29.10, -0.35, -1.18%) to auction off some jewelry, he started his own dot-com
called BIDZ and then merged it with his bail-bond and "collateral
lending" operations (which he renamed from Union Pawn to Asset Lenders of
America). BIDZ's unregistered prospectuses showed ownership of BIDZ as
initially split 50/50 between Zinberg and a young fellow named Michael
Henderson, who had managed the pawnshops since 1991. Without registering with
the Securities and Exchange Commission, they sold shares to some 800 investors.
A
June 2002 lawsuit filed against BIDZ and Zinberg by Henderson's mother after
his death from a drug overdose described his longtime addiction to cocaine,
heroin and ecstasy. He became so addled that he developed paranoid delusions
that the SEC was going to bust them for their unregistered stock sales.
Henderson was afraid of radio waves. He thought characters on TV were
discussing him. His psychiatrist said he hallucinated visions of Satan. His
mother demanded Henderson's half share of the dot-com. Despite the plain
language of the prospectuses, Zinberg replied that Henderson had been holding
shares only on behalf of Zinberg's sister Marina. Ultimately, the suit was
settled.
In
a declaration filed for that lawsuit, Zinberg said that he was aware that
Henderson was a convicted felon...as was Henderson's mother.
The
deceased pawnshop manager wasn't the only dubious colleague of Zinberg. Michael
Merzlak, the pawnbroker that Simonyan named in her lawsuit, had arrests or
convictions going back as far as 1983, for such crimes as attempting to buy
stolen property. Zinberg's partner in a footwear business called Famous Shoe's
Liquidator, Sergey Proshak, was a sex offender with prior arrests for assault
and battery, and kidnapping. Vladislav Shulga, who worked for a Zinberg
pawnshop, pleaded guilty to defrauding Medicare and paying kickbacks to doctors
for business sent to a medical lab that Shulga owned. Another pawnshop employee
named Steven Proshak owned a chain of 10 adult- day-care centers called Circle
of Friends. Just last year, California suspended the centers amid a fraud
investigation.
"When
you work in the pawnshop and bail-bonds business, you meet people with less
than sparkling backgrounds," said Zinberg's spokesman, Rich Layne.
"Could they not be U.S. senators? Yes."
But
while Zinberg acknowledged knowing about the criminal past of his late partner
Michael Henderson, he denies knowing about the backgrounds of others he worked
with. When BIDZ began its online auctions of jewelry, its largest supplier,
creditor and outside shareholder was Saied Aframian. In November of last year,
some investors found out that Aframian had been convicted in 1985 of receiving
stolen property as part of a nationwide sting by the Federal Bureau of
Investigation.
BIDZ
shares abruptly tanked from their level above $22 — after the first appearance
of a substantial short interest, Vice President Kuperman notes. In a conference
call, Zinberg told investors that he'd known nothing of Aframian's conviction
as a fence.
Lawrence
Kong, BIDZ's financial chief for the past seven years, says the company began
divesting its pawnshops and bail-bond operations in 2001. Revenues from the
Website began lifting off the next year. By 2004, BIDZ reported a small profit
on sales of $65 million.
The
striving auction site courted its customers with loss-leading offers in which
BIDZ set its reserve price at just $1. When a lucky buyer got a Rolex watch for
just a buck, BIDZ told the world. In a March 2002 publicity stunt, BIDZ
auctioned off the ZIL-115 limousine that it said had belonged to Communist
Party boss Andropov. The car was worth $350,000, boasted the company's vice
president for development Igor Krakovsky. It went for $28,404.
Krakovsky,
by the way, had a prior conviction for receiving stolen property. Not long
before Zinberg hired him, Krakovsky had been the subject of a Los Angeles Times
story about Passover observance in prison where he was doing time on a
concealed weapons conviction. Kuperman, BIDZ's current development V.P., says
BIDZ hadn't known the background of the executive, who left the company in
2003. "Back then we weren't doing background checks," Kuperman says.
Kuperman
doesn't want the colorful characters in Zinberg's history to distract investors
from the chief executive's success with BIDZ. Business Week ranked the company
among America's preeminent small companies in this year's Hot Growth list. Its
sales grew more than 40%, to $55 million, in the June 2008 quarter. Earnings
grew 25% to $3.6 million, or 14 cents a share.
Yet
profit margins may vary because the company has almost six months of inventory
on hand and valuation of such closeout merchandise is a challenge. BIDZ shares
finished last week at 8.72, less than 12 times Wall Street's average estimate
for next year's earnings. Calling the stock undervalued, Zinberg this month
said BIDZ had bought back $10 million worth of its shares and planned to buy
another $10 million worth.
The
dot-com jeweler didn't address the skeletons in Zinberg's friends' closets
until recently, when Kuperman says the board got an anonymous letter detailing
that history. BIDZ shrugged off most of the criminal stuff as no longer
relevant. "Tell us how we could run our business differently, knowing this
information," says Kuperman. Two matters warranted follow up, however: the
Gambino incident and Itkin's alleged strip joint.
The
1998 small claims court case would be completely insignificant, but for the
passing way that it seems to connect Zinberg with Oleg Khersonsky and Tommy Gambino.
Kuperman said Zinberg didn't even remember the case. He remembered only the
name of Tommy Gambino and his company, Progressive Telecom. Gambino figured in
a lengthy 2002 investigation by the House Government Reform Committee into
President Bill Clinton's last-minute pardons of big-time malefactors such as
the commodities trader Marc Rich.
The
president's step-brother Roger unsuccessfully petitioned on behalf Gambino's
father, Rosario, a pizza-shop owner whom prosecutors called "the main link
between Mafia heroin traffickers in Sicily and the American Mafia." The
report also mentioned Progressive Telecom, a business that put pay phones in
bars. Tommy Gambino's partner in the business, according to the investigator's
source in the L.A. Police Department, was a famous Colombo crime-family capo
named Dominick "Donnie Shacks" Montemarano. Both Tommy and Rosario
Gambino denied any connection with the mob and said they weren't related to
Carlo Gambino.
The
Gambino small-claims suit means nothing to Zinberg or BIDZ, says spokesman Rich
Layne. The plaintiff never even showed up at court.
Itkin's
alleged ownership of the Sunset Strip club is more of a red flag, admitted Kuperman
on Thursday. Zinberg knew nothing about that, Kuperman said. "He was very
surprised when he reviewed the documents." Itkin denied on Friday the
strip joint had been his. Barron's asked to speak to Itkin, but BIDZ said he
was in Eastern Europe and unavailable.
"We
have always held Garry's background in high esteem," Kuperman said
Thursday. "He's an accomplished businessman." Indeed, the 47-year-old
Itkin is a bigger fish than Zinberg. He got himself a $3.5 million mansion on
Beverly Hills' Mulholland Drive after a decade as an executive of the LIVIZ
vodka empire of Alexander Sabadash — a billionaire who once tried to take
control of a Russian paper mill with a private-assault team. Amid a Russian
government probe of tax evasion and political corruption, Sabadash was forced
from his position as a Russian legislator in 2006 and recently sued the U.S.
government demanding they grant him citizenship. His Beverly Hills estate is
grander than Itkin's.
While
BIDZ had ready dismissals for almost every question about BIDZ's and Zinberg's
fascinating crowd, the company was stymied when Barron's asked them why the
company's Website manager appeared in Internet registries as the listed contact
for the domain name www.rasputincasino.com, which until February 2005 hosted
the Baja Casino — which bragged of having "the highest payout on the
Internet or anywhere else" for Blackjack, Magic Hat Slots and 16 other
gambling activities. The online casino's other listed contact was in Moldova,
where BIDZ customer service is based. Neither BIDZ nor its Website technician
knew of any connection between the company and the online casino.
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