An accountant from the northern Russian city of Murmansk, Irina Glazunova paid few thousand dollars to a New Jersey “car dealer” named Sergey Kapustin for a second-hand Lexus car. The car was supposed to be shipped from the United States to Russia. In 2013, when Irina called Sergey Kapustin’s office in the US, his employee received the phone call. Irina wanted to know about the car she has purchased. But to her utter surprise and anger – Kapustin’s employee laughed and told her: “We are crooks!” Then he threatened her with legal action saying, “Come get me across the ocean … and we will sue you.”
According to US District Judge Susan D. Wigenton, Kapustic was “cruel”, “Cold” and “calculative in taking advantage of” the people, who were looking for cheaper second-hand vehicles from the US.
International Consortium of Investigative Journalists (ICIJ) in its reports says: Kapustin made use of a ready arsenal of legal threats as he pocketed millions from victims who were promised cheap used cars from the US. Some never arrived. Others, snapped up at salvage auctions, had been submerged during Superstorm Sandy in 2012. The victims in Ukraine, Russia and Kazakhstan lost from $6,000 to $65,000 each, according to the judgment in a lawsuit filed by nearly two dozen victims in US federal court in New Jersey.
Kapustin and his accomplices operated “slick Internet websites” advertising bargains on gently used vehicles but often had no cars to sell, the lawsuit claimed. They used images of cars pilfered from other online car-sales sites to lure customers in a “bait and switch” scheme, the suit alleged.
In 2015, Judge Hillman ruled in the victims’ favor and ordered that 17 of them be repaid. For many customers, however, it was already too late. Kapustin’s companies “diverted” money to foreign bank accounts after customers asked a federal court to freeze his assets, victims alleged. Judge Hillman ruled that Kapustin’s companies filed “fraudulent bankruptcies” to avoid payouts.
According to ICIJ, despite the trail of allegations, JPMorgan and Standard Chartered moved Kapustin’s money — even after US authorities fined the banks and placed them on probation for helping other criminals move illicit funds.
In all, according to court and bank records, at least two other banks with US operations allowed Kapustin to shift cash through their accounts: Wells Fargo Bank and Rhode Island-headquartered Citizens Bank.
Story of Kapustin
In 1998, Kapustin moved to New York City from Moscow, where he operated a car dealership. Within a year, the goateed father of four bought Global Auto, which sold used cars from a small lot in Delran, in central New Jersey. He became a US citizen and sold used cars domestically and overseas, including to a niche market in the former Soviet Union, where customers perceived American car dealers as more trustworthy than local ones.
Kapustin grew wealthy and invested in a Finnish motel, Motel Road 66, near the Russian border. The motel holds a Summer Bike Fest where young women shake golden pom-poms while men arm wrestle and rev motorcycle engines loudly. The festival stage is decked out in Finnish, American and Confederate flags.
Two New Jersey residents alleged in 2008 civil complaints filed in state court that he and others had doctored car sales contracts. One victim said her signature was forged on a document to require an additional payment of more than $11,000 after she had paid nearly $30,000 for a used BMW.
Kapustin and his companies denied wrongdoing. The cases were settled confidentially.
Months after the first New Jersey complaint against Kapustin, a Spanish customer paid for a white Mercedes, according to state court records. Kapustin took the money, and then told the customer that the car was no longer available because of “customs issues,” but he did not refund the payment, according to the complaint. Kapustin denied wrongdoing and settled out of court.
“Mr. Kapustin’s version of events was ridiculous,” the victim’s attorney, Carolyn Gilinsky, told ICIJ. He “depended on his victim’s unwillingness to undertake the expense and effort necessary to pursue an international fraud claim.”
Gilinsky said she is not surprised that banks worked with Kapustin after the 2008 accusations. “I always work under the assumption that most laws are written by banks and insurance companies and they are written in a way so that they always win,” Gilinsky said.
The same year, New Jersey’s attorney general filed a false-advertising complaint against one of Kapustin’s companies that sought to force an end to “unfair or deceptive acts.” The company misled customers about prices, failed to disclose damage to vehicles and persuaded one person to sign a blank sales document, according to the complaint.
The company, Global Auto Inc., settled with the state and paid $123,000 in penalties and legal costs. It denied wrongdoing and did not make restitution to victims.
Mikhail Matveev, a manager at British American Tobacco in St. Petersburg, Russia, lost $14,920 on a Honda SUV that wasn’t delivered. “I have a disabled child and I needed the car for my child’s transportation to the hospital, day-care center and rehabilitation facilities,” Matveev said in an affidavit. Matveev borrowed money from family and friends to buy the car. He never received a refund.
Other victims included a Russian truck driver earning $500 a month, a retired military officer, a jazz musician and a Kazakh engineer who is the father of a child with a severe brain disorder. The engineer borrowed money from his mother to buy a $21,000 Honda that never arrived, he told the court.
In March 2018, Kapustin pleaded guilty in federal court to one count of money laundering. He agreed to repay more than $1 million to at least 61 victims with individual payments as high as $89,960 and as low as $2,920. One year later, during sentencing, he apologized for his behavior.
The judge told him that he had gotten off lightly.
Glazunova, the Murmansk accountant, said she hadn’t received a penny despite two U.S. judges’ orders that entitled her to more than $150,000 in monetary and other damages.
Glazunova came to the United States and testified against Kasputin before a grand jury. Other victims called Glazunova to share their stories, she said, including a young woman who said that her mother had suffered a stroke and her father had died of a heart attack after learning that they had been cheated.
Glazunova bristles at the memory of hearing during the trial that he used victims’ money to send one of his children to a modeling school that cost $200,000. The Kapustin family says it never paid such money or sent children to such a school.
“He spat in our face,” she said. “The bottom line is, I think we lost after all”.