The family of former Kremlin media chief Mikhail Lesin is apparently living quite large in Los Angeles.
Their lavish Hollywood lifestyle, which has provided an entré into the movie business and has brought them into the orbit of the industry's biggest A-list stars, has some wondering where the family's money came from.
According to U.S. Sen. Roger Wicker (R-Mississippi), after leaving the Russian government in 2009, Lesin "moved his immediate family to Los Angeles, California, where he acquired multiple residences at a cost of over $28 million." In a letter sent to Attorney General Eric Holder last month, Wicker requested a Department of Justice investigation into whether Lesin's real estate purchases were part of violations of the Foreign Corrupt Practices Act or Anti-Money Laundering statutes.
"That a Russian public servant could have amassed the considerable funds required to acquire and maintain these assets … raises serious questions," Wicker wrote.
Real estate purchases are just one aspect of Lesin's family's business interests in Los Angeles. Since last year, Lesin's son, Anton Lessine, has produced four major Hollywood movies with stars including Arnold Schwarzenegger, Brad Pitt, Shia LaBeouf, and Woody Allen.
On Aug. 1, Radio Free Europe's Luke Johnson and Carl Schreck published a report on Wicker's request for a probe into Lesin's finances. Citing documents provided by the senator's office, the report noted evidence that Lesin and his son had linked business interests. According to Radio Free Europe, Lesin bought three properties in the Los Angeles area. One of these was a 13,000-square-foot Beverly Hills home purchased by Dastel Corporation for $13.8 million in August 2011. Records show Lessine was a corporate officer of the company. Radio Free Europe also identified a corporation in which Lesin's daughter, Ekaterina Lesina, was an officer, which purchased a $5.6 million Beverly Hills home in 2012. (Despite the different surnames, Business Insider has confirmed these family relationships.)
According to Wicker's letter, the elder Lesin was "Russia's Minister for Communications and Mass Media from 1999-2004." Radio Free Europe reported that Lesin "played an instrumental role in solidifying state control" over an independent television network and subsequently was "seen as the mastermind" behind Putin's launch of the international news network RT, which U.S. officials have described as a "propaganda bullhorn" for Moscow.
Critics say the Lesin family fortune is troubling because Putin and his cronies have a reputation for corruption — illegally enriching themselves and spiriting their wealth out of Russia.
"Putin and his inner circle have enriched themselves through the seizure of private assets, using dubious legal maneuvers, coercion, and intimidation," said a senior Capitol Hill aide who spoke to Business Insider about Lesin. "Ironically, even Putin's cronies know that they too may fall out of favor. As such, tens of billions of dollars are cloistered and concealed in banks and investments throughout the world."
"The modus operandi of Putin's corrupt inner circle has been to siphon the money out of Russia and into their foreign accounts and foreign assets," noted Vladimir Kara-Murza, a member of the federal council of the People's Freedom Party, an opposition party in Russia. That way, he added, the funds were "completely closed from any scrutiny" inside Russia. He says these tactics are the reason the U.S. government has attempted to sanction top members of Putin's regime and their business associates.
Despite the concerns about Russian officials' getting their money into the U.S., Lesin's son, Anton Lessine, has managed to invest in some very high-profile projects.
Lessine's career as a Hollywood producer appears to have begun in earnest around 2012, when he was attached as a producer to the horror movie "Haunt," which was produced and financed by a company called QED International. On its website, QED is billed as "a leading independent motion picture production, financing and sales distribution company." Business Insider reached out to QED CEO Bill Block, who also was credited as a producer for "Haunt," and he referred us to a spokesperson who did not respond to our request for comment. After "Haunt," Lessine was credited as an executive producer on three QED films; 2013's "Fading Gigolo,""Sabotage," which debuted in March, and "Fury," which is set to be released in October.
These projects boasted some serious star power. "Fading Gigolo" starred John Turturro and Woody Allen. "Sabotage" featured Arnold Schwarzenegger as an elite DEA agent. Brad Pitt starred in "Fury" and also executive produced the movie along with Lessine.
Lessine could not be reached for comment on this story. Ilya Tsipis, who has a Linkedin page describing him as the president of Dastel Corporation and is listed in records as the company's registered agent, did not respond to a request for comment. Business Insider also attempted to call Lessine's sister, without success. Lessine's father, Putin's former media czar, could not be reached for comment.
Lessine is hardly the first person with controversial foreign connections to be drawn to the movie business in Hollywood. Saadi Qaddafi, the son of the late former Libyan dictator Muammar Qaddafi, enjoyed a short-lived stint as a movie producer before his father was deposed in a bloody revolution. Earlier this year, LA Weekly published a lengthy report documenting the backgrounds of producers Remington Chase and Stefan Martirosian, which included "convictions for cocaine trafficking; ties to the Russian oil business, the Armenian government and the African diamond trade ... stints as federal informants," and alleged links to a contract killing in Moscow.
Peter Newman, who heads the joint MBA/MFA graduate program at the Tisch School of the Arts at NYU and has produced more than 30 films including 2005's "The Squid And The Whale," told Business Insider that "dumb money," or financing from inexperienced investors who are new to the industry, has a long and colorful history in Hollywood. Given the difficult economic climate, Newman said, the Industry's appetite for such financing had only increased in recent years.
"The major studios at present really would rather not develop, produce, or finance motion pictures," he explained. "They'd rather do it off balance sheets, because the economics of making movies, especially big movies, just are very, very dicey."
Additionally, Newman said it is movies made outside the studio system that are more likely to involve questionable financing. Specifically, he pointed to larger independent films produced by companies like QED and then are distributed by other studios.
"The studio is basically saying, 'Deliver the movie with such and such, and such and such, and we'll pay this much to promote it in the United States.' But they're not really getting their hands dirty," said Newman.
Three of the four major films produced by Lessine — "Fading Gigolo,""Haunt," and "Fury"— followed this model. They were produced by QED and distributed by a studio. "Sabotage" was produced and distributed by QED. Sony Pictures Entertainment, which is the worldwide distributor for "Fury," did not respond to a request for comment on this story. Millenium Entertainment, which distributed "Fading Gigolo" in the U.S., and IFC Midnight, the American distributor for "Haunt," also did not respond to requests for comment.
For larger movies made outside the studio system, Newman said, it is especially important to have cash up front to secure an A-lister.
"The agencies basically say, 'If you want a Brad Pitt, or a Bruce Willis, or whatever ... there has to be $20 million in the bank," Newman explained.
This star power is critical because these movies need to guarantee foreign box office in order to secure further financing. A proven marquee name is the best way to do this.
"These projects you're talking about are really large independent films that the studios handle the U.S. distribution of, and the equation is usually, there is a foreign sales agent selling territories," Newman continued.
Given this system, it's not hard to see why people with cash to burn — whatever their backgrounds — are so popular with movie production companies. And the financiers benefit as well: In addition to the chance to clean up their money, an association with a global celebrity can help otherwise controversial figures add some shine to their reputations.
"The economics of filmmaking itself are so dicey and then you add in the vanity factor of people wanting to be around famous people and attractive people," Newman said. "It's sort of a deadly chemical mix that has been around for a long time and will continue to happen as long as there's a film business."
Furthermore, in his decades of making movies, Newman claims he's seen few checks and balances that are likely to keep Hollywood's hands off dirty money.
"Observationally, I really have seen very little vetting going on," Newman said. "You know, the only vetting that goes on in Hollywood is, does the check clear?"
There's no evidence that Lesin's money came from corruption. But the suggestion that Putin's inner circle has a reputation for making money through less-than-legal means and getting that cash out of the country is well established. Furthermore, as Wicker said in his letter requesting the investigation, the "considerable" sums used by Lesin for his real estate transactions seem questionable for a "public servant."
Lesin's son's filmmaking activities would seem to raise similar issues. That the two have linked business dealings is already clear in the case of one real estate property. Additionally, Lessine does not seem to have any history of involvement in film financing or other major business deals in the U.S. prior to his father's departure from the Kremlin and subsequent spending spree in LA's real estate market.
Lesin's critics in Washington say that without forceful government intervention, corrupt money spirited out of Putin's Russia will continue to be laundered in the U.S.
"Money laundering is like electricity, which follows the path of least resistance," the Hill aide said. "Without robust sanctions from the U.S. and the international community, Putin's cronies will continue to stash their plundered loot beyond the scope of U.S. jurisdiction. Time will tell whether the crisis in Ukraine will stir the international community into substantive action."
Meanwhile, Lessine's forthcoming production, "Fury," opens October 17.
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