Cash, Mules and Paid Protests: How a Fraudster Seized an Ethnic Enclave

Bundles of cash arriving on flights from Russia via Armenia provided an early sign of mischief in a tiny Eastern European enclave. Then came a wave of noisy street demonstrations featuring destitute pensioners paid to chant for the removal of their country’s pro-Western president.

But events in that enclave, Gagauzia, in the Republic of Moldova, took their most bizarre turn this summer when — at an outdoor meeting of officials and journalists next to a statue of Lenin — a fugitive convicted criminal announced the members of a new regional government.

They were, the fugitive fraudster declared while speaking by video link from Israel, a “dream team.”

However, for the central government of Moldova, one of Europe’s poorest and most fragile nations, the drama unfolding in Gagauzia was more of a nightmare.

Less than a decade after Moldova’s financial system almost collapsed following the theft of nearly $1 billion from major banks, the architect of that catastrophe, the Israeli-born Moldovan businessman Ilan Shor, had somehow seized an entire region.

Worse still, lamented Moldova’s president, Maia Sandu, Mr. Shor, who was convicted in 2017 for his role in ransacking Moldova’s banking system, was working in the interests of Russia, meaning that Gagauzia had “fallen into the hands of pro-Russian criminal groups.”

But the enclave, with around 140,000 people, mostly members of a small Turkic community of Orthodox Christians, remained out of step with the rest of the country.

Comrat, Gagauzia’s capital, kept Soviet statues and street names honoring Soviet-era politicians and soldiers. Most residents watch Russian state television, prohibited in other parts of Moldova, which is predominantly ethnic Romanian and determined to join the European Union.

Now, the war next door in Ukraine, which many in Gagauzia want Russia to win, is intensifying longstanding frictions between the region and the central government in Chisinau. Nobody expects these to turn violent, but they are already turning a sparsely populated landlocked region of vineyards and ramshackle villages into a cockpit of international intrigue.

When Gagauzia organized a referendum in 2014 — illegally, according to the central government — more than 98 percent voted in support of joining a Moscow-led trade bloc over the European Union.

This summer, relations reached a new low when Yevgenia Gutsul, a previously unknown protégée of Mr. Shor’s, won a regional election to become the “bashkan,” or governor, of Gagauzia. Her surprise victory as a candidate for the Shor Party, a banned pro-Russian outfit financed by the fugitive millionaire, followed promises by Mr. Shor to invest $500 million in the region and turn it into a “land of dreams.”

The United States last year placed sanctions on Mr. Shor and his Russian pop-star wife. It accused him of working with “Moscow-based entities” to undermine Moldova’s efforts to join the European Union and engaging in “persistent malign influence campaigns” on behalf of Russia.

Foreign diplomats stayed away from Ms. Gutsul’s inauguration, in July, but Russia and Turkey have since embraced her. She declined to be interviewed.

Soon after taking office, Ms. Gutsul declared that her first priority was to “renew our friendly relations with the Russian Federation.”

“This is very important for Gagauzia,” she said. “We are, so to speak, a pro-Russian party.”

She added that she had held talks with Leonid Slutsky, a far-right member of the Russian Parliament under sanction by the United States, about opening a representative office in Moscow, a push into foreign policy that would go far beyond the limits of Gagauzia’s local autonomy.

The Shor Party has only five seats in Moldova’s 101-member Parliament, compared with more than 60 held by Ms. Sandu’s party. (It had six before Mr. Shor decamped to Israel in 2019 to avoid a prison sentence for fraud and money laundering relating to the bank heist.)

But, because of its deep pockets and flare for mischief-making, the party has emerged as Russia’s most potent battering ram against Moldova’s shift toward the West.

Frustrated in its efforts last year to unseat Ms. Sandu through street protests, the party has turned its energy and money toward Gagauzia.

Expressing support for Russia has always been a good way to win votes in Gagauzia, according to Alexandr Tarnavsky, an ethnic Ukrainian member of the regional Parliament. He said his wife and his mother were both cheering for Russia in its war against Ukraine.

But he added that he and nearly everyone else in Gagauzia were still stunned by Ms. Gutsul’s election victory, which he described as “not just strange, but very sad” — a sign that “voters want to believe in fairy tales” told by Mr. Shor and are ready to “entrust their future to a convicted criminal.”

Ms. Gutsul’s officially declared spending on her election campaign as the Shor Party’s candidate shows that she spent seven times the amount of her main rival, a socialist.

Mihai Popsoi, the deputy chairman of Moldova’s pro-Western governing party, said he believed that the real amount was 10 times that. “Shor’s party is a fringe group,” he said, “but it has lots of money.”

It is unclear how much of the many millions of dollars that Mr. Shor stole he has managed to hold onto. He also has wealth generated by the business empire built by his father, a legitimate businessman.

But security officials believe that much of the money Mr. Shor has used to finance his political activities in Moldova — including Ms. Gutsul’s election campaign — originated in Russia, claiming that they have identified around 20 million euros, or $21 million, in transfers from Russia to entities he controls between June 2022 and this past July.

Part of this, they say, was ferried in by “mules” on flights between Moscow and Moldova, often via Armenia. (Mr. Shor for a time controlled Air Moldova, the country’s now-insolvent national carrier.)

The flow of funds came to light, intelligence officials who requested anonymity said, when customs officers at the Chisinau airport noticed a sudden increase in the number of passengers arriving from Russia via third countries carrying bundles of cash with just under 10,000 euros, the limit beyond which money has to be declared and explained. They also uncovered hundreds of prepaid debit cards issued by a bank in Dubai, in the United Arab Emirates, and large transfers from Russia to Moldova through an informal network.

Mr. Tarnavsky said that he did not know the origin of the money used to support Ms. Gutsul’s election campaign, but added that Mr. Shor “is not a philanthropist,” so it was unlikely that he used his own cash to fund road or other projects that she had promised.

These include “Gagauzland,” a theme park celebrating Gagauz culture that is supposed to open next year near Comrat.

But Ms. Gutsul struggled for weeks to get the regional Parliament to approve her new government team, as required by law. The original lineup, announced by Mr. Shor in July, had to be revised multiple times to remove people from outside the region whose only qualification was loyalty to the fugitive millionaire before legislators voted to endorse it on Wednesday.

In signs of a rift in the pro-Russia camp, the socialist party, which also supports calls for closer ties to Russia but resents Mr. Shor for stealing its voters, voted against the new team. “The election was stolen by a crook we don’t want or need,” said Piotr Fazli, a painter and socialist member of the regional Parliament.

Marina Tauber, a member of the national Parliament for Mr. Shor’s banned party and its main leader inside Moldova since Mr. Shor fled to Israel, denied that Russia had provided money, noting that Mr. Shor had been barred from entering Russia since 2015.

“We have never represented Russia. Or the European Union or America. We are a pro-Moldovan team,” Ms. Tauber said, adding that the money used to finance projects in Gagauzia was “investments by Ilan Shor, his friends and partners.” She declined to name them.

Vladislav Kulminski, a former government official who has closely followed events in Gagauzia for years, said Mr. Shor “doesn’t give a damn about Russia’s geopolitical position” or the future of the autonomous region, “but cares a lot about not going to jail.”

Gagauzia, he added, is “just an instrument.”