Justice Department's indictment of Semion Mogilevich

Ukraine and Russia, in order to make it more difficult for law enforcement
authorities, securities regulators, as well as YBM’s auditors and forensic
examiners, to uncover the true nature of their criminal operations.
B. THE GENESIS OF THE NETWORK OF YBM COMPANIES
31. Commencing in or about January 1993, the defendants, MOGILEVICH,
FISHERMAN and BOGATIN, and others known and unknown to the grand jury, formulated
plans to establish and control a new, publicly-owned company in North America (which became
known first as PRATECS, and later as YBM). It was part of the scheme to defraud that this
publicly-owned company would be given the appearance of an international magnet manufacturer
and distributor, and would be structured in such a way that it could sell its stock on the securities
exchanges, first in Canada and, eventually, in the United States. It was the defendants’ intention
to build the scheme around a Canadian publicly-owned company because the defendants believed
securities regulations in Canada were more lenient than in the United States, and provided the
easiest access to the North American capital markets.
32. To carry out this scheme to defraud, in a series of corporate mergers and
acquisitions involving companies owned and controlled by defendant MOGILEVICH, namely,
YBM MAGNEX, ARIGON, MAGNEX RT and ARBAT, as set forth in paragraphs 32a-32e
below, the defendants took the following steps, among others, to create the publicly-owned
company, PRATECS/YBM, and to ensure that MOGILEVICH would have effective control of
the resulting publicly-owned company.
(a) Defendant MOGILEVICH authorized and financed the plans to fund this
venture by providing seed money totaling approximately $2.4 million through his offshore
16