How One Man Swindled Europe's Poorest Country

On the 26th of November, 2014, a group of political elites made criminal prosecutions for a billion-dollar fraud almost impossible. One man is connected to almost every fraudulent transaction, yet he still hasn’t faced justice. He and his co-conspirators are responsible for a crime that devastated the Moldovan economy. When state institutions failed, journalists stepped in — and uncovered another, much bigger financial crime.

How has this man escaped justice for so long? The answer to that question stretches across the world, from Russia to the UK and all across Europe. This is the story of how Ilan Shor embezzled $1 billion from Moldova.

Who is Ilan Shor?

If you asked a group of Moldovans who Ilan Shor is, they would give you a wide range of answers: politician, businessman, fraudster, fugitive. Not much is known about his childhood, but we know he was born in Tel Aviv on 6th March, 1987. The nose for opportunity ran in his family.

His father was Miron Shor, founder of ShorHolding and Dufremol, Moldova’s largest duty-free goods importer. In the public eye, Miron is remembered as an entrepreneur and president of ORT Moldova, a Jewish philanthropic organisation. The family soon moved back to Moldova, but decades later, Ilan would return to Israel under very different circumstances.

Journalist and friend of the family Margarita Tsvik quoted his father as saying (translated from Russian), “We must understand our children; then they will understand us. I never forbid Ilan anything, but he will never do what is called deception, dishonour, or indifference to people.” Fortunately, Miron passed away before he could see Ilan’s fall from grace.

He passed away in 2005, leaving enormous shoes for his 18-year-old son to fill.

If you asked Ilan Shor who he was, the answer would be wildly different. His career went from success to success. He rapidly expanded ShorHoldings, even purchasing the Milsami Orhei Football Club. Nothing demonstrates his sense of self better than the model of himself that he kept at his property in the capital city of Chisinau.

An interview with the BBC captured the absurd sight: “With one hand, he’s juggling mobile phones. His other brandishes a kebab stick with dollar bills skewered between the lumps of meat and onion. He’s also got a football — he funds the team that has just won the Moldovan championship. And his arm is resting on a racket — he sponsors the country’s Tennis Federation.”

Whatever his other crimes, Shor is clearly guilty of self-obsession.

The Grand Theft

Most bank robberies are loud and quick: the robbers go in, take the cash, and leave. The world-changing fraud that became known as the “Grand Theft” was silent. It took years. There were countless signs of fraud and criminal activity, yet no one investigated until it was far too late.

By November of 2014, three of Moldova’s biggest banks were in critical condition: Unibank, or UB; Banca de Economii, or BE; and Banca Socială, or BS. All three were owed a total of 18 billion Moldovan leu in loans, roughly $1 billion. Economists sounded the alarm for months, but their concerns fell on deaf ears. Starting on November 27th, the government placed the banks under administration and prepared to liquidate them.

How could three major financial institutions fail so spectacularly? The public was demanding answers, so the Moldovan government hired a private firm to investigate alongside the national bank — and what they found shook the country to its core.

In 2012 and 2013, three of Moldova’s largest banks were quietly infiltrated. Since 2007, Unibank had been owned by Vienna Capital Partners. However, in August of 2012, all of the shares were sold to new stakeholders, each holding just under 5% of the company.

Under Moldovan law, shareholders who own over 5% must be approved by the National Bank of Moldova. Similar patterns unfolded at BE and BS. On paper, all of these shareholders were independent entities and individuals.

Yet, as soon as investigators looked just beneath the surface, they discovered a web of interconnected shell corporations, suspicious bank accounts, and hidden beneficiaries, all leading back to one man: Ilan Shor. The National Bank of Moldova has identified 77 companies and individuals involved in suspicious transactions, all of whom are connected, directly or indirectly, to Ilan Shor. Creatively labelled the Shor Group, this cabal was at the centre of a massive loan fraud and money laundering scheme that spanned across the world.

But where did the funding for these purchases come from? Most of them were financed by offshore corporations with Latvian bank accounts — a recurring theme throughout this story. Most of the declared beneficiaries of these shares were actually nominees hiding the true recipients. When UK financial firm Kroll looked into these organisations, they found that many of them shared addresses with Shor Group companies.

Once they had control, they started issuing massive high-risk loans to other Shor Group entities. In any bank, there is a loan approval process, and large loans are subject to extra scrutiny. In these three banks, members of the Shor Group were appointed to senior positions and directed loan approvals from inside.

In December of 2012, Viorel Melnic, a self-described director of Dufremol, was appointed head of the council of Unibank. That same month, another associate of Ilan Shor, Sergiu Albot, was made vice president; a year later, he was appointed president. Albot was also a former employee of the National Bank of Moldova.

In that year alone, Unibank increased loans to Shor Group members by half a billion Moldovan leu, almost $30,000,000. In 2013, the president of Banca Socială resigned. He immediately took over the vice presidency, and eventually the presidency, of Banca de Economii.

The Kroll investigators flagged this as possible evidence of a conspiracy.

On 18th March, 2013, the conspirators made the first of many mistakes. BEM sold claims to some loans to a UK-registered organisation called the Roseau Alliance LLP for 1 billion MDL. Why would a British company be interested in high-risk loans from a Moldovan bank? They were “non-performing loans,” meaning that they were unlikely to be repaid.

The actual purpose of this agreement revealed itself to investigators years later: the influx of funds increased BEM’s loaning ability. A few months later, Roseau facilitated another agreement between BEM and its shareholders, in which the shareholders purchased at least 300 million MDL in loans. Just over a year later, BEM would rescind these agreements as they teetered on the precipice of discovery.

Perhaps the most damning part of this is the massive money laundering operation that linked these loans to Russia, Latvia, and dozens of other countries. Most of the loan funds were moved through several Moldovan and foreign companies and then used to repay existing loans at other banks. At the same time, the three banks massively increased the number of interbank deposits, which further increased their lending capacity.

It was a massive circle, and it’s hard to see how anyone made money until you look at the foreign banks. Between 2012 and 2014, over 43 billion leu, or $2.6 billion, flowed into foreign banks from Shor Group accounts. Most of the Latvian bank accounts belonged to recently incorporated offshore entities with no identifiable owners.

By transferring the money through several accounts, splitting it, and adding it to legitimate funds, they hid the source. In some cases, the money was initially sent to Russian banks to further obscure the source before being sent onwards. The accounts belonged to shell corporations registered all over the world, including in the UK, Panama, and Belize.

The Kroll investigators believed that the fraudsters were using an advanced algorithm to facilitate these transactions, as some of them were made in seconds. In total, 89% of loans to Shor Group companies were sent to Latvia. The fraud stretched all the way into Asia, as Kroll discovered suspicious transactions involving accounts in Hong Kong.

The complexity of the crime makes it difficult to know exactly how much money was stolen. Although most of the money was transferred back into Moldova to pay off other debts, between $600 million and $1 billion was syphoned off.

All of this sounds bad for Ilan Shor, but none of it condemns him. Could it be a coincidence that all of these transactions are connected back to him? Well, no, because Ilan Shor showed up in person to set up several of the fraudulent Latvian bank accounts. On top of that, in 2014 he was elected to the BEM Board of Directors. Yet, to this day, he maintains his innocence.

What was Ilan Shor up to while all of this was going down? He was used to a lavish lifestyle. He made headlines in 2011 when he married Russian pop star Jasmin. Most weddings are filled with aunts, uncles, and cousins you only vaguely know, but Shor’s wedding was attended by the president and the Minister of Justice.

An anonymous acquaintance told NewsMaker that Shor was known for flashing his wealth and driving expensive cars. It’s ironic that while he was running one of the biggest loan frauds in history, he himself ran up debts.

Pride Comes Before The Fall

You’re probably wondering, how did Shor get away with such blatant fraud? Corruption is rampant in Moldovan politics, but the noose began to tighten.

By November 2014, all three banks were in a dire situation. Shor Group entities collectively owed them 8 billion leu. Despite this, the banks continued to approve loans.

At this point, the eyes of the public were on the banks, and the government was finally forced to take action. They appointed representatives to BEM’s Board of Directors, but the conspirators didn’t inform these members of upcoming meetings. They knew their scheme was coming to an end, so, like cornered animals, they bit.

From 1st to 24th November, BEM loaned 12 billion leu, or $711,000,000, to Shor Group entities, increasing the amount they were owed to 13.1 billion leu. At the same time, across all three banks, 6.5 billion leu in loans was paid back using funds previously loaned to other Shor Group associates. On November 12th, BEM loaned 1.68 billion leu (in leu, euros, and dollars) to an offshore company.

Later that day, the same amount of money was transferred to Shor Group accounts and used to pay off loans to BS.

In the final days of the banks, BEM cancelled the Roseau agreements to move some funds out of the country. The desperate attempt to cover their trail reached a crescendo on the 26th of November. Despite being owed billions, Banca Socială approved several new loans totalling 13.7 billion leu, which was then transferred to Latvian accounts owned by British partnerships.

Meanwhile, loans at BEM were reversed with no explanation, and balances between BEM and the Russian bank accounts were cleared. Documents and electronic records about loans from all three banks mysteriously disappeared. The biggest “coincidence” involved a borrowed car, an opportunistic thief, and an unfortunate fire.

That day, BEM management ordered staff to move documents to an off-site archive. The head of the department of management watched as the files were loaded into a car and driven off. The next day, the company that loaned them the car informed the bank that the car had been stolen and set on fire.

That day marked a tipping point. Between the 25th and the 27th of November, there were several major transactions. On the 26th of November, BS held a shareholders’ meeting without informing the National Bank, where they attempted to sell loans to Fortuna LLP, another shell corporation. However, because they didn’t tell the national bank, the sale was voided.

That was their last chance. Between the 27th of November and December 31st, 2014, all three banks were placed under administration, and the investigation began. The scale of corruption and fraud that it revealed caused Moldova to erupt.

The Discovery

The investigation into Ilan Shor and the “Grand Theft” revealed a much bigger fraud. A journalistic organisation called RISE Moldova caught wind of a transnational money laundering operation involving several of Shor’s company accounts at another bank. While the Shor Group was defrauding three banks out of $1 billion, Moldindconbank was involved in the laundering of over $20.8 billion in rubles between 2010 and 2014. This was part of the Russian Laundromat, the biggest money laundering scheme in European history. Like the Grand Theft, it was loan fraud. As The Guardian explained it, “Typically, company A ‘loaned’ a large sum of money to company B. Other businesses in Russia – fronted by Moldovans – would then guarantee these ‘loans.’ Company B would fail to return the ‘money.’ Moldovan judges would authenticate the ‘debt,’ allowing Russian companies to transfer real money to a bank in Moldova.” From Moldova, the money was transferred all over the world. Between 2011 and 2013, Shor Group entities received $22 million in total from Russian companies.

The Fallout

When the scandals were revealed, the public was outraged. Over the next two years, protests broke out across the country, led by a grassroots movement called Dignity and Truth. The poverty rate in Moldova skyrocketed. The theft of $1 billion knocked the country’s fragile economy off its feet and annihilated any trust in the government. We’d love to tell you that the public outcry led to swift arrests, long prison sentences, and a reform in the Moldovan banking system, but we’d be lying.

As Charles Caleb Colton allegedly said, “Corruption is like a ball of snow: once it’s set a-rolling, it must increase.” When the fraud was uncovered, there were three names on the lips of every Moldovan: Ilan Shor, Vladimir Plahotniuc and Serghei Iaralov. Plahotniuc was the archetypal oligarch: wealthy and secretive with a finger in every pie. As one of the most influential politicians in the country, he was elected to the Moldovan parliament in 2010.

He became the first prime deputy speaker, a title that was created for him. He also had a tight grip on the media through his ownership of the General Media Group, the largest of its kind in Moldova. Plahotniuc had enormous control over the judiciary and the police force. Gheorghe Cavcaliuc, a high-level police official, was involved in tapping the phones of opposition politicians during Plahotniuc’s rule.

Even less is known about Serghei Iaralov. Although he was a common sight in meetings with Plahotniuc, his name was virtually unknown until 2015. Ex-Prime Minister Vlad Filat implicated him as a mastermind in the theft. Like Plahotniuc and Shor, Iaralov is an affluent businessman.

His former business partner, Visarion Cheshuev, warned that “you will not find Iaralov’s name or signature anywhere. It is not his style. He prefers to act from the shadows, through intermediaries, trusted people.” Minutes after pointing the finger at Iaralov, Vlad Filat was arrested on suspicion of corruption in relation to the Grand Theft.

In 2015, Ilan Shor was placed under house arrest, but he didn’t stay there for long. Under Moldovan law, political candidates can’t be arrested or face charges, so Shor went into politics. In 2015, he was elected mayor of the city of Orhei in a landslide.

The rampancy of corruption in Moldovan politics may tell us how. One Moldovan citizen commented, “Everyone in the government steals from us, so what?” A resident of a remote settlement asked an interviewer, “Did you see a playground for children in the centre?

It was built by Shor. The only chance we have to buy groceries is Shor’s food truck, which arrives here twice a week. It looks like he is the only one who cares for us.”

Somehow, Shor consistently remained the third or fourth most popular politician in Moldova. Still, the wheels of justice were quietly turning in the background. In 2017, he was tried and convicted for the role he played in the fraud.

However, he was placed under house arrest pending an appeal. Later that year, he fled to Israel. Not long after, Vladimir Plahotniuc also fled the country.

While in Israel, Ilan Shor finally took his mask off. Since the 2020 presidential election, pro-European sentiment has been on the rise. While on the run, Ilan Shor began remotely arranging anti-government protests.

He took over the “Socio-Political Movement Equality” party, a pro-Russian organisation, and changed its name to the Shor Party. In 2023, violent anti-government protests erupted, culminating in the Constitutional Court banning the Shor Party. He is currently reported to be in Russia, where he has been granted citizenship.

Time and distance have not lessened his determination: in 2024, he was accused of buying votes by smuggling money into Moldova from Russia. The amount of money flowing through Chisinau Airport raised a red flag for the customs officers: the chief stated, “There were certain flights: Moscow-Istanbul-Chisinau, Moscow-Yerevan-Chisinau. Normally people don’t come in with that much money.

Not from Moscow.”

Has Justice Been Served?

The impact of the Grand Theft cannot be measured. The disappearance of $1 billion was equivalent to 12% of Moldova’s GDP. The war in Ukraine has only worsened Moldova’s economic situation, with the poverty rate hitting 33.6% in 2024.

The corruption scandal led to the dismissal of the government. The demonstrations that followed reached a fever pitch when protestors broke into the parliament after it approved a new government. Despite the outrage, none of the major players have faced significant prison sentences.

Vladimir Plahotniuc and Ilan Shor are still fugitives. Serghei Iaralov has never been formally charged, although he is at the centre of several investigations. Former Prime Minister Vlad Filat was sentenced to 9 years in prison but was released after 4.5 years.

Ilan Shor was originally sentenced to 7.5 years in prison, but that sentence was increased to 15 years. As political tensions grow across Europe, we are left wondering: will Ilan Shor, the mastermind of one of the greatest frauds in history, ever face justice?

Key Takeaways

• Ilan Shor orchestrated a $1 billion fraud in Moldova, devastating the country’s economy.
• Shor’s scheme involved infiltrating three major banks and using shell corporations to launder money.
• Despite overwhelming evidence, Shor has evaded significant justice, currently residing in Russia.
• The fraud was uncovered by journalists after state institutions failed to act on warnings.
• Public outrage led to protests, but key figures like Shor and Plahotniuc remain at large.

Frequently Asked Questions

Who is Ilan Shor?

Ilan Shor is a Moldovan politician and businessman known for his involvement in a billion-dollar fraud that devastated Moldova’s economy. He was born in Tel Aviv and moved to Moldova with his family. His father, Miron Shor, was a prominent entrepreneur in Moldova.

What is the ‘Grand Theft’?

The ‘Grand Theft’ refers to a massive loan fraud and money laundering scheme that involved three of Moldova’s largest banks: Unibank, Banca de Economii, and Banca Socială. The scheme, orchestrated by Ilan Shor and his associates, resulted in the embezzlement of approximately $1 billion.

How did Ilan Shor and his associates carry out the fraud?

Ilan Shor and his associates infiltrated the three banks by acquiring shares through a web of interconnected shell corporations and suspicious bank accounts. They issued high-risk loans to other Shor Group entities and laundered the money through various foreign banks, primarily in Latvia and Russia.

What role did the Moldovan government play in the fraud?

The Moldovan government was slow to respond to the fraud despite warnings from economists. In November 2014, the government placed the banks under administration and prepared to liquidate them, but by then, the damage had been done. The government also hired a private firm to investigate alongside the national bank.

What was the impact of the fraud on Moldova’s economy?

The fraud had a devastating impact on Moldova’s economy, with the disappearance of $1 billion being equivalent to 12% of the country’s GDP. The scandal led to a significant increase in the poverty rate and widespread public outrage, resulting in protests and the dismissal of the government.

What happened to Ilan Shor after the fraud was uncovered?

Ilan Shor was placed under house arrest in 2015 but was elected mayor of Orhei later that year. He was tried and convicted for his role in the fraud in 2017 but fled to Israel while on appeal. He has since been involved in anti-government protests and is currently reported to be in Russia.

Who are the other key figures involved in the fraud?

The other key figures involved in the fraud are Vladimir Plahotniuc, a wealthy and influential politician, and Serghei Iaralov, a businessman known for acting from the shadows. Both have evaded significant legal consequences and are currently fugitives.

What is the current status of the investigation and legal proceedings?

As of 2024, Ilan Shor has been sentenced to 15 years in prison, but he remains a fugitive. Vladimir Plahotniuc and Serghei Iaralov have also evaded significant prison sentences. The fraud has had long-lasting effects on Moldova’s economy and political landscape.

How did journalists uncover the larger financial crime?

Journalists from RISE Moldova uncovered a transnational money laundering operation involving several of Shor’s company accounts at Moldindconbank. This operation was part of the Russian Laundromat, one of the biggest money laundering schemes in European history.

What was the public’s reaction to the fraud?

The public was outraged by the fraud, leading to widespread protests across the country. The protests were led by a grassroots movement called Dignity and Truth, and the scandal resulted in a significant increase in the poverty rate and a loss of trust in the government.

Sources

• Original Into the Shadows video: How One Man Swindled Europe’s Poorest Country
• Hero image source by Photographer: Mosbatho / openverse, by.

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