16 Treasure Valley residents indicted for drug trafficking, money laundering after FBI raids
The Boise man believed to be responsible for “washing” the money in a multimillion-dollar scheme to smuggle and sell counterfeit cellphones will remain in custody while he awaits trial. But, two of his brothers have been released.
Brothers Gennady Babichenko, Timofey Babichenko, and Pitor Babichenko all appeared Tuesday before U.S. Chief Magistrate Judge Ronald Bush for hearings on prosecutors’ motions to detain them. Gennady Babichenko was the only one who was ordered to stay in jail.
A fourth planned hearing for another brother, Pavel Babichenko, was postponed until Friday when his attorney is available. He remains in temporary custody.
The U.S. Attorney’s Office initially asked that all four brothers remain in jail without bond while they await trial, claiming the four were a flight risk.
The four men and six other people were part of a yearslong investigation that culminated in an indictment last week. Prosecutors say the suspects bought the fake goods in bulk from manufacturers in Hong Kong and China, repackaged them in two Boise warehouses, then individually resold them on Amazon and eBay, telling consumers the phones were new and genuine.
The 10 face 34 combined charges, including conspiracy to commit wire fraud, mail fraud, conspiracy to traffic in counterfeit trademarked goods, and money laundering conspiracy.
Gennady Babichenko, 42, is a denturist who owns European Denture Center businesses in Caldwell and Boise, as well as locations in Oregon and Washington, and labs in Meridian and in Utah that fabricate dental implants. He is also the pastor at Morning Star Christian Church in Boise. He also has residency status in Brazil, where he owns two construction companies.
He is accused of illegally funneling profits from the scheme through his businesses and through his church, according to Deputy U.S. Attorney Katherine Horwitz. The money is believed to have been passed among multiple accounts, eventually reaching the two Brazilian construction companies.
Since 2012, Gennady has wired as much as $1.43 million to those construction companies, prosecutors said. The most recent wire transfer was for $100,000 on Aug. 2.
The Babichenkos own five buildings in Brazil that are multi-apartment buildings that they constructed, Horwitz said in court.
On Aug. 22, Gennady Babichenko told police that he transferred at least $1 million to the Brazilian companies, Horwitz said.
Gennady called those funds a “business investment.” When asked about the large sums of money being exchanged between accounts and businesses run by his family members and others, he called them “loans,” the prosecutor said. He apparently told authorities he did not charge interest on the loans, nor did he necessarily expect that they’d be paid back.
Timofey Babichenko, 31, and Piotr Babichenko, 39, will be released from custody Wednesday. Judge Bush declared prosecutors didn’t have enough evidence to justify holding Timofey; Horwitz then withdrew her motion to detain Piotr.
Bush didn’t elaborate on where the evidence fell short. Prosecutors say both men traveled to China to procure the phones. Neither man appears to have the same overseas residency status as Gennady, however, according to testimony Tuesday.
The pair do face restrictions. Their passports have been seized and they are forbidden from applying for a new passport or visa in any country. They must stay in Ada County and appear at every court hearing.
There are potentially more than 25,000 victims who purchased the counterfeit products, according to U.S. Attorney Bart Davis. Last week, the FBI raided eight residences, two warehouses, one business location and one church believed to be owned or operated by the Babichenkos.
FBI and Homeland Security agents bought the counterfeit Apple and Samsung devices more than 14 times through Amazon and eBay between November 2015 and December 2017, according to court documents.
The other six co-defendants in the case have already been released from jail. They include Kristina Babichenko, David Bibikov, Natayla Babichenko, Artur Pupko, Mikhail Iyerusalimets and Anna Iyerusalimets.
The counterfeit scam and money laundering arrests came after police, while investigating a drug case, received a tip about the Babichenkos. They used a confidential informant throughout the investigation.