It’s raining Ukrainians: Why we should care about money laundering in downtown Cleveland

How did such a company of crooks like Optima Ventures come to be the single largest commercial real estate owner in downtown Cleveland? The easy answer is lack of oversight and transparency in Ohio real estate transactions.


55 Public Square building in downtown Cleveland.

55 Public Square building in downtown Cleveland.

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Cleveland.com has been reporting on the illegal real estate dealings by Ukrainian oligarchs in Cleveland since 2019. Seems a bit surreal. Why should Ukrainian oligarchs be interested in Cleveland real estate and shouldn’t we be happy that someone/anyone is interested in Cleveland real estate?

First, Ukrainian oligarchs are buying property for the purpose of money laundering, as alleged by the FBI, and second, oligarchs are lousy landlords. Optima, the company owned by the charged oligarchs, including Ihor Kolomiosky, does not have a good track record of keeping businesses afloat. The first takeover that got journalists’ attention was the failed Warren Steel Holding purchase north of Youngstown. After Optima bought the company, it neglected its investment and allowed the company to go bankrupt in 2016, losing 150 local jobs, citing “unforeseen business conditions.” In 2020, the FBI charged Optima with a $623 million money laundering offense. Kolomoisky and his associates stole money from a Ukranian Bank in order to buy Warren Steel Holdings with no intention, apparently, of keeping the company alive. In addition to the lost jobs in Warren, long-suffering Ukranians in Ukraine saw their scant reserves pilfered to finance the scheme. Warren was also left with a toxic waste site and a debt of a quarter million dollars in back taxes.

Who is Ihor Kolomoisky? Even Vladimir Putin calls him a crook and there are lawsuits against him in multiple countries. He dabbles in Ukranian politics and was active in attempting to throw the Russians out of Ukraine. But none of these causes appears to have distracted him from massive accumulation of wealth. Even after his disastrous business dealings in the United States, as of 2018, Kolomoisky was paying D.C. lobbyists to obtain an E-2 “investors” visa for him so he could do business more directly in the United States without intermediaries.

How did such a crook come to be the single largest commercial real estate owner in downtown Cleveland? The easy answer is lack of oversight and transparency in Ohio real estate transactions. Clearly, business dictates selling to the highest bidder, but at what cost? And what if the long-term consequences are more costly than the profit derived from the sale? 

Cleveland’s real estate agents and developers need to do more due diligence on companies looking to buy commercial property in Cleveland. Optima has been in business for years and it would have taken little more than a Google search to uncover its murky dealings. 

I first learned of the massive Ukrainian oligarchical purchases in Cleveland from European diplomatic colleagues. I was a US diplomat for 30 years battling corruption around the world, before retiring to Cleveland. Curious about Cleveland, my foreign friends asked, “Is this your new home?” At first I did not believe the stories, thinking it impossible that Cleveland had been “had” on such a massive scale by a company of crooks. 

Cleveland, of course, is not alone in serving as a destination for money laundered by Russian and Ukrainian oligarchs. New York City and Florida, among others, also have been destinations for dirty money. But the lack of due diligence and experience with oligarchs, and fire sale real estate prices compared to other US cities, make Cleveland more vulnerable. Any Russian or Ukrainian company coming to town with big money should raise red flags. There are likely legitimate Russian and Ukrainian investors, but they are rare. Whoever becomes Cleveland’s new mayor should review Cleveland’s real estate transactions with care. 

Well before the Warren Steel Holding debacle, in 2012, Cleveland.com wrote a fawning piece over Optima’s point man in Cleveland, Chaim Schochet, the brother-in-law of Mordechai Korf, a co-founder of Optima. Portrayed as an energetic young businessman who cared about Cleveland’s future, Cleveland.com claimed he would be a hands-on landlord to the huge landholdings he was amassing. That didn’t happen.

Although many Ukrainian oligarch-owned properties have already been divested, Optima still owns One Cleveland Center, 55 Public Square and a stake in the Westin Cleveland Downtown. 


The Westin Hotel in downtown Cleveland may be in danger of closing.

The Westin Hotel in downtown Cleveland may be in danger of closing.

One Cleveland Center has already been raided by the FBI in August, 2020. So far the building has not been forfeited. But 55 Public Square is in forfeiture as of December, 2020. The 22 story prime real estate building is now in default of a $14 million loan. 

According to Cleveland.com, “government attorneys said the money used to buy the building came from ‘embezzlement, misappropriation and fraud.’ The records detail a minute-by-minute breakdown of how investigators believe money was funneled from Ukraine to several businesses until it reached Cleveland.” As of March of this year, the Westin Cleveland is facing foreclosure, based on Optima’s/Kolomoisky’s financial distress. Optima’s local intermediaries are asking the court for the hotel to go into receivership claiming, “What was once one of the crown jewels in the City of Cleveland’s renaissance may soon be shuttered once again. The hotel property that breathed new life into a block-long section in the downtown core may soon fall into darkness.” 

Kolomoisky and his Ukrainian oligarchs, likely, are suffering no financial distress whatsoever, while their investments shutter prime Cleveland real estate and result in significant job loss. 

Cleveland suffers from these shady investments for numerous reasons, but here are the top three:

Reputation – Our Cleveland should not become a destination for unregulated and non-transparent money laundering. Nauru, Cyprus and the Cayman Islands are already notorious for these activities. Established by the G7, the Financial Action Task Force (FATF) as well as the Organization for Economic Cooperation and Development (OECD), closely monitor money laundering operations and publish warnings about doing business in places where governments do not have adequate controls in place. City, county and state legislators need to more closely monitor Cleveland real estate transactions, and probably enact more stringent financial oversight. I am sure I will hear yelps about liberty and big government, but local business people could not possibly have the information required to make an informed decision, without consulting government officials. 

Harm to Ukraine – It is hard to imagine a country with a more tortured history than Ukraine. But let’s start with the 1930s famine that killed millions under Stalin. To pay for its independence in 1991 Ukraine forfeited its nuclear arsenal and then was powerless to prevent the completely unlawful Russian annexation of Crimea. I have lost count of how many international treaties were violated by Vladimir Putin’s occupation of Ukrainian land, not just in Crimea, but in Eastern Ukraine. Russian forces are massing on the Ukraine border as I write.

Unfair to our Ukrainian diaspora – Cleveland is the proud home to the Ukrainian Museum, as well as the Cultural Gardens and a host of churches and organizations dedicated to preserving and promoting Ukrainian culture. Ukrainians have been a successful diaspora not just in Cleveland’s economic development but in enriching our cultural cornucopia. This is what our Ukrainians should be known for, not callous money laundering and neglect of Cleveland real estate.

I encourage city and county officials to play more conscientiously with our precious real estate and not make Cleveland a haven for  money laundering. 

The original version of this article stated that Cleveland.com’s profile of Chaim Schochet was published in 2019. It was published in 2012. We apologize for the error.

Jennifer Brush is a 30 year US diplomat with postings in Eastern Europe and the former Soviet Union. She was the Organization for Security and Cooperation (OSCE) Ambassador to Moldova from 2012-2014.  Ambassador Brush was born in Solon, Ohio and has retired there.

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