Foreign Economic Industrial Bank Ltd., also known as Vneshprombank, has filed for U.S. bankruptcy proceedings, seeking protection against claims on its New York real estate, The Real Deal reported Dec. 22.
The head of Vneshprombank, Larisa Markus, has been accused of stealing about $13 million from the financial institution and using it to buy New York City real estate, under a series of corporate entities.
Those companies then allegedly pledged half of their real estate as collateral for loans taken in 2015 and 2016.
The Chapter 15 filing will prevent claims on the real estate by other parties while an ongoing investigation by Russian authorities into Markus' alleged scheme wraps up.
The authorities are probing allegations that Markus and her accomplices allowed the bank to enter into lending agreements with affiliated companies that had no intention of ever repaying their loans.
According to the filing, Markus is involved in the alleged fraud that is estimated at $13.5 million. Authorities expect the number to rise significantly as the investigation unwinds.
Markus' brother Georgy Bedzhamov, who had allegedly played a part in the scheme, is seeking asylum in Monaco, the filing said.
In April, the Monaco law enforcement authorities detained Bedzhamov at the request of Russia.
The Russian central bank had revoked the bank's license, accusing its managers of the illegal withdrawal of assets and estimating the gap between its assets and liabilities at 187.4 billion Russian rubles.
Earlier in 2016, Panama-registered company Panabroker sued Vneshprombank, demanding that the bank repay about $1.6 million in loans it provided in 2001 with the money to come from the sale of Markus' real estate assets.
As of Dec. 23, US$1 was equivalent to 61.16 Russian rubles.