Page:2020-07-29 PSI Staff Report - The Art Industry and U.S. Policies that Undermine Sanctions.pdf/7

 Group Limited ("Highland Business"). The email copied London-based attorney Mark Omelnitski, who used his firm the Markom Group to establish and maintain shell companies for the Rotenberg family.

The true ownership of the listed shell companies was not, however, as straightforward as the Panama Papers email chain suggested. For example, based on financial information reviewed by the Subcommittee during its investigation, Arkady Rotenberg appeared to be the UBO of Highland Ventures, not his brother Boris. That information included non-public wire transfers showing multi-million dollar transfers from a company owned by Arkady Rotenberg to Highland Ventures. In 2012 and 2013, that company—Milasi Engineering—transferred over $124 million marked as annual dividends to Highland Ventures. The December 31, 2014 Financial Report for Milasi Engineering listed Arkady Rotenberg as its UBO, making it clear that Highland Ventures received its funding from a company owned by an individual the U.S. would later sanction. Milasi Engineering also held shares in Stroygazmontazh, a gas pipeline company sanctioned in April 2014 by the United States due to its ownership by Arkady Rotenberg.

Arkady Rotenberg transferred his business interests to his son, Igor. In July 2014, four months after the United States sanctioned Arkady, Mr. Omelnitski's firm, the Markom Group, executed paperwork that appeared to transfer Arkady's interest in Milasi Engineering to his son, Igor, who was not sanctioned at the time. Milasi Engineering was owned by two other holding companies. The Markom Group transferred the ownership of those two companies to Highland Ventures, which it asserted had always been owned by Igor. Therefore, from July 2014 to April 2018, when Igor was finally sanctioned by the United States, Milasi Engineering was owned on paper by an unsanctioned individual. A report by a bank investigator produced to the Subcommittee determined the transfer of Milasi Engineering from Arkady to Igor was done solely to evade sanctions, and the Markom Group "intentionally structured [the ownership of these shell companies] to be opaque in order to hide the identities of true beneficiaries." In response, the bank closed all accounts associated with the Markom Group. This included closing accounts held by art advisor Gregory Baltser.

Art advisor Gregory Baltser facilitated purchases for the Rotenbergs. Intermediaries played a central role in the Rotenbergs' art purchases in the United States. As previously explained, Mr. Omelnitski and his company, the Markom Group, established and maintained shell companies for the Rotenbergs to mask their identities. The Rotenbergs also employed art advisor Gregory Baltser, who facilitated the purchase and sale of high-value art both before and after sanctions without disclosing the names of his clients.

Mr. Baltser is a U.S. citizen, who must comply with U.S. sanctions laws, but his business is based in Moscow. Prior to sanctions, funds Mr. Baltser used to