Politics & Government

Giuliani associate made millions in Ukraine before his U.S. fortunes turned

This screengrab of a photo from the Ukrainian publication Jetsetter.ua shows Liza Naumova and her then-husband Igor Fruman. In 2012, he was ranked the 195th richest person in Ukraine.
This screengrab of a photo from the Ukrainian publication Jetsetter.ua shows Liza Naumova and her then-husband Igor Fruman. In 2012, he was ranked the 195th richest person in Ukraine.

Long before Igor Fruman was arrested in a widening political scandal that threatens the American presidency, the Soviet-born émigré and sometime Florida man came to riches through political connections in Ukraine.

Fruman’s fortunes were made in Ukraine in the late 1990s thanks in part to ties to at least one politician there, according to anti-corruption groups. A review of his last two decades in business suggests he might have been trying to rekindle sagging fortunes at the time of his Oct. 9 arrest for what the indictment said was “a scheme to funnel foreign money to candidates for federal and state office” in order to “buy potential influence with candidates, campaigns” and foreign governments.

Aside from his scowling mug shot — taken after the FBI arrested him at Dulles International Airport with a one-way ticket out of the country — not much is known about Fruman, though in 2012 he was ranked the 195th wealthiest person in Ukraine worth almost $29 million by Focus, a weekly Ukrainian news magazine published in Russian.

Despite that, he’s had a lower profile than his alleged co-conspirator and fellow émigré, Lev Parnas, who appears almost daily in newly unearthed photos showing him alongside prominent GOP politicians.

How did Fruman get so rich? And does he still have that fortune?

Interviews with some Fruman business associates and civic groups in Ukraine who have watched his business and political connections paint a picture of an Odessa businessman whose fortunes peaked about the time of his Focus ranking in 2012, though he has faced setbacks and challenges ever since.

Described in Ukrainian media as someone not shy about bending rules, Fruman’s businesses included a U.S.-based company that shipped food products from the United States and elsewhere to Ukraine, real estate development in Ukraine and a now-bankrupt Soviet-era canning plant that produced dairy products and baby food.

Luxury for sale

If the man now accused by the U.S. government is little known, a colorful, decade-old, 24-page promotional brochure for his once-thriving, multi-pronged company Otrada Luxury Goods fills in many of the blanks.

The magazine-style brochure for Otrada Luxury Group, the overarching holding company with many retail and real estate subsidiaries, features a smiling photo of Fruman as its CEO.

“Welcome to Ukraine, Welcome to Luxury,” begins the sales pitch from a younger, thinner Fruman, who is pictured on the second page. The sales pitch continues: “Otrada Luxury Group represents the finest products, produced by the finest companies that the world has to offer.”

The enterprise catered to Ukraine’s mega wealthy, who by the mid 2000s represented a small but growing number about 15 years after the collapse of the Soviet Union. The company brochure boasted of sales of $27 million in 2007 and an average annual growth rate of 23 percent since its founding in 1999.

Though Otrada’s main U.S. operation was F.D. Import & Export, which moved food products to Ukraine, the brochure spotlighted a wide range of businesses, including Royal Motors Auto Center, since 2006 an importer of luxury vehicles in Ukraine and described in the glossy magazine as an authorized Jaguar and Land Rover distributor.

This screenshot of a 2011 Ukrainian television interview shows Igor Fruman and his wife Liza Naumova at Royal Motors, a Ukrainian luxury car dealership they owned at the time.

Reached by telephone this week at the number for the car dealership provided in the brochure, employees of Royal said they’d never heard of Fruman. He appeared in Ukrainian television interviews at the dealership as late as 2011, but it is unclear if he still owns it.

Fruman did not respond over a period of more than a week to questions about his businesses left on his answering machine at Otrada’s main U.S. office in Tarrytown, New York, and before and after his arrest employees there refused to discuss him or what business is done there.

Emailed questions about Fruman’s business ties were not answered by Fruman or by John M. Dowd, his lawyer in the ongoing congressional impeachment inquiry into President Donald Trump’s conduct during a July phone call to Ukrainian President Volodymyr Zelensky. Fruman and Parnas were hit with a subpoena on Oct. 16 after refusing to appear before lawmakers.

Otrada also boasted in the brochure of numerous retail spots for fashion goods, jewelry and high-end watches. It also owned the Otrada Beach Club in Odessa, waterfront condos there and the city’s five-star Hotel Boutique Otrada. At the hotel, a desk clerk who answered the phone wouldn’t answer any questions about Fruman, and employees declined to discuss who owns it.

Fruman’s success, however, began with something far more pedestrian than luxury goods. His import-export business focused on life’s daily essentials.

“F.D. Import and Export Corporation was Ukraine’s exclusive distributor of Nestle products and distributed dairy products, coffee, baby food and other specialty foods,” reads the “history” section of Otrada’s brochure. That New York-based company was also cited as U.S. headquarters for Otrada.

But that’s not where Fruman’s investments ended. He tried his hand at restaurants and real estate development, too.

An important Fruman partner in Otrada and other businesses, Sergey Dyablo, also makes a brief appearance in the brochure. He is a former Odessa councilman whose personal website calls him a philanthropist and real estate developer. Fruman’s early fortune is tied up with Dyablo.

“My global idea is to return Odessa the status of a monument of urban development,” Dyablo says on his website. “The current goal is to turn the Otrada district … into one of the best districts of Odessa.”

Dyablo, who still lives in Odessa, could not be reached for comment, but his LinkedIn profile lists him as general manager of Otrada Group since 2005. In the Otrada brochure, he appears in a section about a newly opened franchise in Kiev, Ukraine’s capital, called the Buddha Bar. The restaurant, part of a Paris-based chain, opened in Kiev in 2008 with Fruman and Dyablo partnering with Ukrainian-American entrepreneur Mikhail Don and others. A decade later, Don’s business interests would include the U.S. medical marijuana industry, where Fruman had also been trying to make inroads at the time of his arrest.

Don did not answer questions sent via email. His wife answered the phone at his home and relayed questions to him but said he did not want to discuss his business dealings.

Together, Dyablo and Fruman have sought to develop Odessa’s Black Sea coastline, and even registered a company in Nevada in 1998 called Black Sea Prospects Inc. What it did is unclear, and its status was revoked in 2008 by Nevada’s secretary of state.

The two men appear to have also registered companies in the names of their family, according to documents found in Ukraine’s corporate registry. Because documents aren’t backed by financial records, it’s hard to know with certainty whether family members are actually part of a business or are being used to keep a prominent name out of public records, said Glib Zhavoronkov, a Ukrainian investigative journalist in Odessa.

Many Fruman companies are registered in Ukraine in the name of his now-estranged wife, fashion model Yelyzaveta Naumova. She owns a fashion shop in the Miami Design District called Odds, and her Instagram page lists her as co-owner of Otrada Luxury Group.

Although Fruman’s name no longer appears in the registry for owners of Buddha Bar, his wife, who in Miami goes by Liza, is on the registry documents. She did not return calls to her shop and a reporter who visited it was turned away.

Similarly, Fruman is still listed on registry documents for F.D. Import & Export in Ukraine but these documents describe its business as freight and trucking, not imported goods.

Bending rules

Fruman and his business associate, Dyablo, were accused in Ukrainian news reports in 2014 of illegal building. Stories ran that year in Odessa media about an allegedly unlawful construction site adjacent to their Otrada Beach Club, an seaside restaurant in Odessa.

The two were building a two-story building that had not been authorized by the Odessa City Council, nor by the local urban planning and property department, according to the news reports. By April 2015, the site was already much larger than approved but allegedly no one from the city could get in touch with Fruman or Dyablo to halt the construction, the stories said.

By June 2015, according to a story published by the Ukrainian news site Dozor Odessa, it became clear that the new construction was intended as an expansion of the Otrada Beach Club, with its own restaurant, hotel rooms and rooftop lounge. None of that had been approved by the local government, reports said.

The two men have been the target of transparency activists in Odessa, a city on the Black Sea that has an infamous, century-old history of mob activities and government corruption. It has long been something of a smuggler’s cove with ties to the New York enclave of Brighton Beach, a frequent FBI hotspot.

Transparency groups who have followed prominent Odessa businessmen believe that Fruman and Dyablo have gone their separate ways in recent years.

“Fruman has ended communication with Dyablo,” said Vitaliy Ustymenko, whose transparency group Automaidan follows the activities of former political figures such as Dyablo. Neither Fruman nor Dyablo could be reached for confirmation.

A year before Fruman and Dyablo’s land deals hit troubles, Fruman saw one of his marquee businesses go belly up: the Balta Dairy and Canning Plant. The news site Dumskaya.net widely covered the bankruptcy and described the plant as the largest dairy company in the region, built during the Soviet era as a flagship dairy operation. The failure of the company marked the start of what appears to be a slide in Fruman’s good fortune.

Dumskaya reported on Jan. 18, 2013, that 600 workers were left jobless with the closure of the debt-ridden plant, which also made baby food.

Some companies that list Fruman’s businesses as associated with them seem to be distancing themselves from him. Petromark Holding, which listed two Fruman entities, Otrada and F.D. Import & Export, as partners on its website, removed those names from the site one day after a reporter spoke to CEO Marko Petrov on the phone in Odessa. He told the reporter the company, which says on its website that it focuses on energy, tourism and IT services, no longer has any association with Fruman’s companies.

Petrov, who said he was semi-retired, also said that he hadn’t spoken with Fruman since the early 2000s after a joint business venture collapsed and that he’d had no connection to Naftogaz or Burisma Holdings, two Ukrainian energy companies that are part of the congressional impeachment inquiry into Trump’s call to the Ukrainian president.

Burisma is the company that Fruman and associate Lev Parnas were working with Trump attorney Rudy Giuliani on, in an attempt to get dirt on Hunter Biden, the son of former Vice President Joe Biden, who sat on Burisma’s board of directors. Fruman and Parnas hoped to export natural gas to Naftogaz.

“What kind of business would I have there?” Petrov asked, when a reporter questioned him about Burisma and Naftogaz.

Up in smoke

A shrinking business empire wasn’t the only problem for Fruman, now in his early 50s. In December 2017, Fruman and Naumova entered into bitter divorce proceedings in Miami. Her lawyers subpoenaed his bank records. His lawyers tried to impose mandatory drug testing on her, alleging she had a drug problem.

At the same time, Fruman found a new business interest: medical marijuana. That interest — and other allegations — led to his indictment alongside Parnas, his business partner David P. Correia and a San Francisco-area expat from Ukraine named Andrey Kukushkin, who already faced legal issues in California.

The federal legal problems for the four men centers on efforts to belatedly get a crack at a medical marijuana license in Nevada, but reporting by the Miami Herald shows Fruman and Parnas also asked about a license in Florida, apparently trying to get a foothold in the medical marijuana business in the Sunshine State.

It’s unclear where their funding would come from, given Fruman’s slumping fortunes and a long trail of debt and regulatory actions against Parnas in New York and Florida.

One of Fruman’s past associates from the Buddha Bar, Mikhail Don, has invested heavily in the marijuana business along with an émigré from the former Soviet Georgia, Beni Golani. They have invested in marijuana ventures in Maryland and Massachusetts..

Golani has residences in Maryland and Ukraine but could not be reached for comment at either.

Erin Roche, a spokesperson for one of the companies, Holistic Industries LLC, which operates in five states and the District of Columbia, said Don and Golani “are only minority passive investors (as individuals) in Holistic’s Massachusetts affiliate.” She added that Fruman, Parnas and the other two arrested along with them for alleged illegal foreign campaign donations “have no connection to Holistic Industries, whether directly or indirectly.”

In its licensing application, another Maryland company called Rosebud Organics, formed with a separate member of the Genderson family, lists Don and Golani as together owning 51 percent of the venture.

Tess Riski and Nicholas Nehamas contributed from Miami and Boca Raton.

Kevin G. Hall: @KevinGHall, 202-383-6038; Alexandra Marquez: 202-383-6026, @amarquez60

Investigative reporter Kevin G. Hall shared the 2017 Pulitzer Prize for the Panama Papers. He was a 2010 Pulitzer finalist for reporting on the U.S. financial crisis and won of the 2004 Sigma Delta Chi for best foreign correspondence for his series on modern-day slavery in Brazil. He is past president of the Society of American Business Editors and Writers.
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Alexandra Marquez is based in Washington, D.C. and is a student at the University of Maryland, College Park. She is an intern working for the McClatchy D.C. Bureau and the Fort Worth Star-Telegram.