It was a huge scoop by a Western media outlet.
An American news site had published excerpts from a report by corporate investigations firm Kroll implicating Ukrainian oligarch Ihor Kolomoisky and two of his business associates, Ihor and Hryhoriy Surkis, in withdrawing money from PrivatBank during its 2016 nationalization — claims that were the subject of important litigation in Ukraine.
Naturally, Ukrainian media outlets jumped on it, publishing their own accounts of the story. Many emphasized that an American site had reported the news.
And, indeed, the excerpts from the report were real, according to a Kyiv Post source with knowledge of the matter, who requested anonymity as they were not allowed to speak with the media.
The documents showed how Kolomoisky and the Surkises illegally extracted money from PrivatBank — something they have long denied.
But there was one problem: The American site in question, the Chicago Morning Star, is not a real news outlet. It has fake authors and plants slanted stories amid its steady stream of poorly written news about Illinois.
And the story of how the Chicago Morning Star leaked the Kroll excerpts offers a window into how fake news and politically biased information find their way into the mainstream Ukrainian press, allowing interested parties to influence the political discussion in the country.
Questionable site
The Chicago Morning Star may sound like a competitor to the Chicago Tribune or Sun-Times, but it isn’t.
Rather, it’s a site that has been churning out short, often Chicago-focused, stories since early in 2018. The stories appear to contain little independent reporting, and most are written in grammatically correct, but stilted English.
“Over its long history, the Chicago Morning Star has changed sets, forms and formats,” the site says on its Facebook page, which has only 1,343 likes and 3,452 followers. “The only consistent quality throughout all the years of our activity remains the qualitative, objective and prompt informing our readers about the most important news of Chicago and Illinois.”
The Morning Star claims that it hardly covered any stories outside Illinois until 2017, when its server broke down and it lost all of its content. That’s when it decided to diversify its coverage.
That story offers a convenient myth to explain why the Chicago Morning Star has only operated since 2018. But the Kyiv Post was not able to find any proof of the Morning Star’s online presence before that time.
A closer look at the site makes it clear something isn’t right.
Virtually all of its reporters and editors appear to be fictional people. Using reverse image searches, the Kyiv Post discovered that the photograph of Shawn Genzone, the Morning Star’s senior writer, was actually a stock photo used widely online. The image of the site’s senior editor, Ivan Cease, also appeared to be a popular stock photo. The Kyiv Post located multiple stock photos of the woman who supposedly is staff writer Adyson Sipes.
The author of the PrivatBank story, Brody Englebrecht, also seems to be fake. He appears never to have been published by any other media outlet and to lack any presence whatsoever on Twitter or Facebook. However, the Kyiv Post could not establish where his photograph came from.
The Kyiv Post sent an email to the address listed on his author page and to the site’s general email address, but has not heard back.
The Kyiv Post also called the phone number listed on the Chicago Morning Star’s website. It led to the voicemail for a business called “Chicago Porch Compliance.”
There was only one clearly real person listed on the author page: a 22-year-old Lithuanian freelance journalist. She had published just one story: an interview with former Lithuanian President Valdas Adamkus.
The Kyiv Post contacted her over Facebook. She said that she had published the interview with Adamkus on several sites in Lithuanian and English. Because the former president had immigrated to the United States and lived in Chicago after World War II, the freelancer thought it would be a good idea to try to pitch the interview to Chicago media.
She says the Chicago Morning Star was among a number of outlets on a list of “Top 15 Chicago News Websites to Follow” online. She emailed the editors of a number of the sites, but the Morning Star was the one that wanted to publish it.
“And then it turns out the whole page was fake,” she told the Kyiv Post in a message.
Info laundry
The Kroll leak wasn’t the first story published about Ukraine on the Chicago Morning Star’s website. There were also several others, mostly focused on issues too complicated or minute for the average American audience.
Many appeared to benefit someone in Ukrainian politics. The Kyiv Post couldn’t establish who was behind the publications, but their subjects suggested a political motive.
One story from 2019 reported that Yuriy Vitrenko, then the managing director of Ukrainian state energy company Naftogaz, claimed that CEO Andriy Kobolev was “lobbying for U.S. interests” on the Ukrainian energy market.
The story seemed targeted to damage Kobolev’s reputation.
In May, Kobolev fired Vitrenko, the coda to a longstanding conflict between them. In an interview with the Kyiv Post that same day, the former managing director called Kobolev “subservient” to the government and said this endangered reforms.
In mid-2019, as Ukrainian media reported that President Volodymyr Zelensky might send Hennadiy Nadolenko, Ukraine’s ambassador to Israel, to the United States, the Chicago Morning Star also reported on the news.
“According to our sources, Gennadiy Nadolenko is a close friend of (Ihor) Kolomoisky, who now lives in Israel and personally introduced the diplomat to the President of Ukraine,” the Morning Star reported.
That seemed targeted to damage Nadolenko’s reputation. Nadolenko wasn’t appointed the Washington ambassador and remains in Israel.
In November, the Morning Star reported that Ukrainian diplomat Sergiy Korsunsky, then the head of the country’s diplomatic academy, could be appointed Ukrainian ambassador to China. That story appeared to be promoting Korsunsky’s candidacy.
After that, Strana.ua, a Ukrainian news site with a controversial reputation, picked up the story, bringing it into Ukrainian information space.
In April, Korsunsky was appointed Ukraine’s ambassador to Japan.
And, in early 2020, a Morning Star story alleging corruption in Ukraine’s State Space Agency and a top machine-building plant sparked a small scandal in local Canadian media after a news site in Nova Scotia quoted it and tried to tie it in with a controversial aerospace company in the region.
It may seem strange to try to push a story in Ukraine by way of a fake American news site, but the Chicago Morning Star’s methods are not new.
In November 2017, an English-language fake news site called the Luxembourg Herald claimed that Maryna Poroshenko, the wife of then-Ukrainian President Petro Poroshenko, had laundered money through a charitable fund.
That story was then picked up by multiple Russian pro-Kremlin media. Later, the Insider, an independent Russian news site, reported that all the stories on the Luxembourg Herald’s site were copied from well-known Western media outlets and the Maryna Poroshenko story — possibly the lone original article on the site — featured obvious errors.
Alexey Kovalev, investigations editor at the Latvia-based Russian independent news site Meduza, has researched in depth how fake news outlets plant disinformation into the Russian media space.
Fake sites like the Morning Star are often used to plant disinformation or compromising material against a person online, he says. When that material is published on a site perceived as “Western,” it can give the publication a veneer of greater legitimacy.
“It’s aimed at people who can’t distinguish between a legitimate media outlet and a website which simply looks like one,” Kovalev told the Kyiv Post in a message. “These websites are quite easy to set up and can even be automated, sometimes with the aim of simply profiting from stolen content.”
Kroll report
Two pages of what looks like scanned extracts of the Kroll investigation — that’s what the Chicago Morning Star published on its website.
A Kyiv Post source with the knowledge of the report confirmed the published pages were authentic.
Kroll, state-owned PrivatBank and the National Bank of Ukraine, which commissioned the report in the first place, did not respond to the Kyiv Post’s request for comment by publication time.
The leaked extract of the Kroll report concludes that Kolomoisky’s associates, the Surkis brothers, embezzled funds from PrivatBank.
When the bank was taken from Kolomoisky and his business partner Gennady Bogolyubov in 2016, some $5.5 billion were allegedly embezzled from it through insider lending. The Former owners deny accusations of stealing from the bank.
But the Kroll excerpts suggest otherwise. They detail how some of the embezzlement allegedly happened.
The excerpts leaked through the Chicago Morning Star, a simulacrum of a news site, show that the Surkis brothers were part of a large insider-lending scheme, which contradicts what their lawyers say.
The Surkises held 80% of all deposits in its Cyprus branch bailed in during PrivatBank’s nationalization. The companies linked to them owned $245 million out of $310 million that the state confiscated.
This money was initially loans that were converted to deposits. To repay these loans, the Surkises got new ones in a loan recycling scheme, the Kroll report says.
According to the Kroll investigation, the deposits of the six Surkis companies were funded through a series of loans made in 2008-2010 by PrivatBank’s branch in Cyprus to companies connected to PrivatBank.
The interest the Surkis companies paid on the loans was lower than the interest they earned on the deposits — virtually making them money out of thin air. That money came from millions of Privatbank’s regular clients in Ukraine.
“The loans, which totaled $361 million, were grouped in batches, within which loans were issued within minutes of each other before being immediately channeled through a web of transactions between related party company accounts which appeared to have no obvious commercial purpose before being placed in deposit accounts of (the six Surkis companies),” the Kroll investigation states.
The six companies in question were all registered on the same day — Feb. 20, 2012 — and at the same address in North London, according to the U.K. Company House. These six companies were all created by a number of other companies registered at the address of what appears to be a private registrar of companies in the British Virgin Islands.
Half of the companies — Sofinam Investments LLP, Lumil Investments LLP and Berlini Commercial LLP — were registered to Polina Kovalik, the wife of Hryhoriy Surkis. The other half — Tamplemon Investments LLP, Sunnex Investments LLP, and Camerin Investments LLP — were owned by Olga Romanova, wife of Ihor Surkis.
These companies are exempt from audit under British law because of their small size.
Both the borrowers and the depositors were related parties to the bank, the Kroll report concludes. “The interest which was earned on the deposits was significantly higher than the interest which was due on the loans,” the report states.
Kroll investigators also directly point to the Surkises as Kolomoisky business partners who were the actual owners of the six companies in question, even though they are registered to their wives.
The flow of funds looks very much like money laundering, Kroll report concludes.
On Aug. 3, Surkis brothers’ lawyer called the published excerpts “an absolute lie,” saying that his clients’ companies never participated in embezzling money from Privatbank.
Surkis vs. Privatbank
The Surkis brothers have been denying their ties to Kolomoisky ever since their deposits, along with the deposits of other Kolomoisky associates, were confiscated during PrivatBank’s nationalization.
The Surkises’ lawyers insist they were wrongfully deemed insiders, and the state must return their money. The brothers sued state-owned PrivatBank in Cyprus for $245 million and in Ukraine for $259 million in a bid to get their money back.
In Cyprus the case is pending. In Ukraine, they won.
In April, a local court ruled that PrivatBank must comply with its obligations before Surkises and pay back $259 million to the deposit holders, the six British companies of the Surkis brothers. But PrivatBank said that it had converted their money into the bank’s share capital under the bail-in procedure, so the obligations had been fulfilled.
PrivatBank says it will not return this money to the Surkis brothers knowing it will be fined for not obeying the court.
In an even more important lawsuit, the Surkises tried to challenge the bail-in procedure and get a court ruling that they were not Kolomoisky insiders. If they won this case, it would have endangered the entire nationalization and enabled other Kolomoisky insiders to get their deposits back.
But after a few victories in lower courts, the Surkis brothers lost the case in the Supreme Court in June.
