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Sanctioned by U.S. allies, a former Russian banking titan lies low in South Florida

McClatchy Washington Bureau logo McClatchy Washington Bureau 5/16/2022 Lily Dobrovolskaya, Nicholas Nehamas, McClatchy Washington Bureau

Inside his $3.4 million condo perched high above Miami’s “Little Moscow,” Russian ex-banker Lev Khasis is lying low.

Since Russia’s invasion of Ukraine, Khasis has seen devastating U.S. sanctions imposed against close associates of Vladimir Putin, against Russia’s media tycoons and exporters, against politicians, and even several former co-workers at the state-owned banking giant where Khasis spent years as a top executive — including his former immediate supervisor, the CEO.

But not him.

Khasis is neither surprised nor fearful, according to his lawyer. The former financial heavyweight, who quit his job at Russia’s Sberbank two days before Russian troops breached Ukraine’s border, believes he has done nothing wrong and certainly nothing to merit American sanctions.

But that didn’t stop the governments of Canada and the United Kingdom from placing Khasis on their own sanctions lists — meaning he cannot engage in any financial transactions in those countries or with their citizens and financial institutions around the world. The United States and its allies have generally coordinated their sanctions campaigns against Russian leaders and the oligarchs and financial institutions who aid them.

If U.S. officials do impose sanctions, it would be a crushing blow for Khasis, a 55-year-old Russian who holds a U.S. green card. His Russian-born wife and several of his children are American citizens. He and his family moved to the United States in 2011, when he became an executive at Walmart after a successful career in Russia’s retail sector. The next year, he bought three condos in Sunny Isles Beach — the wealthy waterfront city north of Miami Beach — for more than $5 million. In 2013, he joined Sberbank and began splitting time between Sunny Isles and Moscow.

Sunny Isles Beach is often called Little Moscow for its moneyed caste of Russian expatriates, drawn by year-round sun and financial opportunity. Many are rich, having benefited from Russia’s economy, but not necessarily oligarchs with mega-yachts and mansions. Khasis, in particular, is a prototypical entrepreneur and capitalist, using his perch in South Florida to invest in distressed local real estate and co-found an aerospace company. But now he finds himself caught in the swirl of global politics, trying to create distance between himself and a regime back home that is pursuing a brutal war on Ukraine, making itself an international outcast.

READ MORE: How U.S. sanctions against Russia work

Khasis’ predicament is an unusual case that illustrates some of the challenges U.S. officials face as they seek to punish those close to Putin by wielding the blunderbuss of economic sanctions: What, if anything, should happen to people who by virtue of their important jobs helped prop up Putin’s government — and then seemingly changed their minds?

In Russian media, recent headlines blared that Khasis had “fled” Moscow for South Florida, conjuring up images of a Cold War defector.

Khasis declined to comment for this story. In a statement, his lawyer said that Canada had “erroneously” imposed sanctions on Khasis, believing he still worked at Sberbank, and that the United Kingdom had followed suit.

“We are pushing the Canadian government to correct its mistake and advise its international counterparts, such as the United Kingdom of the same, as this error is significantly and adversely affecting Mr. Khasis and his immediate family,” the lawyer, Ashley Taborda, wrote in an email.

As for potential U.S. sanctions, Taborda said: “There has been no indication from U.S. authorities that Mr. Khasis will be placed on any sanctions list and there is no basis to do so.”

The United States has levied sanctions against hundreds of Russian oligarchs, politicians and businesses in retaliation for the Ukraine invasion, saying it will freeze and seize their assets — from condos to private jets to mega-yachts — although to seize any assets federal authorities must show the money used to purchase them was linked to a crime.

The Department of Treasury imposed limited sanctions on Sberbank on Feb. 24, the same day as the Russian invasion, before placing full blocking sanctions on the bank more than a month later — the most severe financial punishment used by the United States.

The blocking sanctions prohibit U.S. persons and financial institutions from engaging in any transactions with the bank and require them to freeze any of its assets under their control. They are a direct blow to the functioning of Russia’s financial system. Sberbank holds “the largest market share of savings deposits in the country [and] is the main creditor of the Russian economy,” Treasury said.

The United States also added Herman Gref, Sberbank’s CEO and formerly Khasis’ immediate boss, to its sanctions list. The announcement described Gref as a “close Putin associate,” going back to their time together working for the mayor of St. Petersburg in the 1990s. Gref served as Russia’s trade minister before joining Sberbank.

While Khasis himself is not a member of Putin’s inner circle, “he is an extremely prominent figure in Russian state banking, the right hand of Gref,” said Ilya Shumanov, director of Transparency International-Russia, an anti-corruption group.

Khasis’ role at Sberbank led him to high-profile settings. In 2013, he and other bank officials met with Donald Trump in Moscow during Trump’s Miss Universe pageant, which the Russian bank sponsored.

In a Facebook post written in Russian, Khasis said that Trump talked “very interestingly and wittily about real estate, his political views, the Miss Universe contest, [and] his sympathies for Putin.”

‘Ministry of Cash’

In addition to his work in Russia, Khasis has strong financial ties to the United States.

During the recession, Khasis developed a business, along with other Russian emigres, of buying up cheap condos in South Florida, usually out of foreclosure, and renting them out to locals — a reflection of the unseen global forces that shape Miami’s real estate market. In addition, Khasis owns a nearly $9 million condo in Manhattan.

He also co-founded a California-based space technology firm called Momentus. Last year, Khasis and his business partner sold their stakes in Momentus after the company disclosed that the U.S. Department of Defense called its Russian ownership “a risk to national security.” Among Momentus’ clients: NASA and Lockheed Martin, the giant U.S. defense contractor.

Khasis has said he was planning his exit from Sberbank long before he left. But signs that Russia would soon invade Ukraine seemed to accelerate his plans.

In a Feb. 15 news release, Khasis said he would step down from his post as first deputy chairman in June because of his “personal and professional priorities” and that he had made the decision several months ago. The release stated that Khasis would continue to work with Sberbank as a consultant and run its fledgling e-commerce business.

“Lev Khasis is one of the leaders who built the Sber we know today, a modern company with a diversified business model,” CEO Gref said in a statement. “Lev pioneered the transformation of Sberbank into a technology company and did a lot to improve the efficiency of our organization, create new services and products, increase our customer centricity, and develop Sber’s corporate culture.”

Things suddenly changed when it became inescapably clear that Russia would invade Ukraine.

On Feb. 22, a second Sberbank news release stated that Khasis would leave the bank immediately, giving up the consultancy and e-commerce startup. Russian troops stormed across the border two days later. There is no public record of Khasis condemning the invasion, something that would likely put his friends and family in Russia at risk.

Khasis’ lawyer confirmed that her client’s “plans to resign from Sberbank and permanently move to the United States had long been in effect, as his family has been living in the United States since 2011, but were expedited due to worsening geopolitical conditions.”

“Based on what we’ve seen in the media,” she added, “Mr. Khasis’ departure has undoubtedly sent a clear, loud and resounding message regarding his opinion and his feelings about the course of action which Russia has chosen.”

The Treasury Department declined to comment for this story. So did officials at Homeland Security Investigations, which is investigating any South Florida assets of sanctioned Russians. Sberbank’s press office did not respond to an email.

State-owned Sberbank sits at the foundation of how Russia’s government controls its economy, said Juliet Johnson, a professor of political science at Montreal’s McGill University who has written about the nation’s banking system.

“Its nickname is the Ministry of Cash,” Johnson said. “It is the place where most Russians still have their accounts. There’s a reason it gets sanctioned: Its policies and activities are very much directed by the government. It is essentially an agent of the Russian government.”

As first deputy chairman, Khasis served as “the equivalent of a high-ranking government official,” she said — one of the top three leaders at the bank, alongside the CEO and another first deputy chairman.

When the United States placed sanctions on Sberbank’s other first deputy chairman, Alexander Vedhaykin, who unlike Khasis stayed in his post, it described him as “a leader, official, senior executive officer, or member of the board of directors” of the Russian government. On May 8, Treasury added eight other senior Sberbank executives to its sanctions list.

The close ties between Putin and Sberbank didn’t stop major American financial firms from buying the bank’s stock in previous years. Its top international investors include BlackRock, JPMorgan Chase, Vanguard and TIAA.

Abbas Gallyamov, a Russian political commentator, said he was surprised that Russia allowed Khasis to walk away from Sberbank — and questioned if there was more to the story. For instance, the chief of Russia’s central bank, Elvira Nabiullina, reportedly tried to resign after the invasion only for Putin to tell her she had to stay.

“The entire Russian political system is built on absolutely non-institutional, shady personal relationships,” said Gallyamov, a former speechwriter for Putin who now criticizes the regime.

But on the face of things, he said, Khasis’ departure would undoubtedly be seen by Russian leaders as “an act of betrayal.”

‘Deliberately Devastating’

The United States has the power to impose sanctions on people with U.S. citizenship and green cards. But it rarely does so.

Of the thousands of individuals on the sanctions list, roughly a dozen have U.S. addresses. Only one is listed as an American citizen.

For someone living in the United States, being added to the list would be “deliberately devastating from a commercial perspective, and personally highly disruptive,” said Chip Poncy, global head of financial integrity at K2 Integrity, a risk, compliance, investigations and monitoring firm and a former Treasury official. “All assets of that individual in the U.S. would be required to be frozen unless permitted under a program exemption.”

That means Khasis wouldn’t be able to access his U.S. bank accounts. Things like paying a mortgage and buying groceries could become difficult, if not impossible.

Canada sanctioned Khasis on Feb. 24. The United Kingdom followed suit a month later. The public rationale for the decision was sparse.

The Canadian government included Khasis on a list of “key members of President Putin’s inner circle, close contacts and family members of some individuals already sanctioned by Canada.” The United Kingdom, in turn, cited Canada’s decision in adding Khasis to its own list, saying it would freeze his assets and ban him from travel.

Khasis’ lawyer said she had submitted a “de-listing application to the Minister of Foreign Affairs in Canada requesting for Mr. Khasis’ name to be removed on an urgent basis, setting out the myriad reasons for which Mr. Khasis does not meet the requisite statutory criteria for designation,” and was working on a similar request to the United Kingdom.

Canada’s foreign ministry said privacy laws prevented it from saying more about Khasis. The United Kingdom did not respond to a request for comment.

“People who make a lot of money supporting corrupt state actors in Russia should not be allowed to simply walk away,” said Adam Kaufmann, a criminal defense lawyer who specializes in foreign corruption cases and a former New York City prosecutor. “There should be consequences. That is probably the message [Canada and the United Kingdom] seek to deliver.”

Another senior Russian bank official, Igor Volobuev, publicly quit his job as vice president at Gazprombank and attempted to join the defense forces of Ukraine, where he was born, according to Reuters.

Whether the United States will actually sanction Khasis depends on what federal officials hope to accomplish, said Johnson, the McGill professor.

Having resigned, Khasis has little ability to pressure Russia’s government to change its policies — one of the primary reasons for the U.S. sanctioning state officials and influential oligarchs.

But sanctions can accomplish other goals too, especially as a warning to business executives with ties to both Russia and the West.

“This could send a broader message to international citizens that cooperating with the Russian government will be punished, that you should really think twice about that,” Johnson said. “If the goal is to turn the Russian government into an international economic pariah, then it will be more effective in that regard.”

Still, sanctioning Khasis could be “counterproductive” given that the banker walked away from his life and position in Russia, Johnson said — something the United States presumably hopes other high-profile executives will emulate.

“You do want to encourage people to quit their jobs and leave,” Johnson said. “But you might also want to have them publicly say, ‘Hey, we’re leaving not just to save ourselves financially, but also because we oppose the war.’ ”

©2022 McClatchy Washington Bureau. Visit mcclatchydc.com. Distributed by Tribune Content Agency, LLC.

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