Left to Rot, an Environmental Mess

WARREN, Ohio – A Ukrainian oligarch’s buying spree that federal authorities say was financed through hundreds of millions of dollars laundered through an international fraud scheme has left ruin in its wake – leaving a small community in Trumbull County to wrestle with the consequences.

“They raped us,” Champion Township Trustee Doug Emerine says of the owners of Warren Steel Holdings, which operated a steel mill at 4000 Mahoning Ave. “They left these townships with a huge problem here to clean up that will be a burden to us for years.”

The state of Ohio filed litigation in 2016 against Warren Steel, which closed earlier that year, and in 2019 the parties signed a consent order to clean the site of contaminants.  The parties agreed during an in camera hearing Oct. 8 to move the trial – initially scheduled for Oct. 26 – to an undetermined date in the spring. 

The abandonment of Warren Steel left in its wake scores of environmental issues, records show.  In addition, the steel mill experienced a host of safety violations during its operation that in one case led to an explosion that injured several workers. Meantime, owners were using the mill as collateral for more than $100 million in mortgage loans before closing it.

The shutdown of Warren Steel led to the loss of more than 150 jobs and left behind an environmental wasteland, Emerine says.

“We realize there are environmental problems at the site. But it’s a good property,” he says. “The biggest problem for townships like ours is that we don’t have an abundance of property to begin with.” He says that at least one party has inquired about acquiring a portion of the site.

The abandoned mill reflects what has occurred across the region for years.

“That’s the legacy of this whole Valley,” says Sarah Lown of the Western Reserve Port Authority. 

Often, these old industrial sites lie fallow until the remnants are scrapped and the land left compromised by years of contamination. Foreclosure actions are useless over these properties since no entity wants to assume the responsibility of cleanup, she says. “It holds the community over a barrel.”

Warren Steel Holdings was established by a partnership that included one of eastern Europe’s most powerful oligarchs, Igor Kolomoisky, whom U.S. authorities have accused of masterminding an intricate plot to steal $5.5 billion from a Ukrainian bank he co-owned and launder the cash through a maze of shell companies from Cyprus to the Caribbean.  

More than $600 million of that money eventually came to rest in the United States and was used to scoop up real estate and industrial assets across the American Midwest, the government says.  At one point, Kolomoisky was the largest single landlord in downtown Cleveland. 

As one of the wealthiest men in Ukraine, Kolomoisky is widely believed to be the driving force behind President Volodymyr Zelensky’s rise to power. A sworn enemy of Russian President Vladimir Putin, he bankrolled an army of Ukrainian nationals to fight Russian-backed forces while expanding a business empire that encompasses real estate, energy and media interests in that country.

Last year, Kolomoisky attracted national attention when it was reported that two Ukrainian-born businessmen who live in Florida – Lev Parnas and Igor Fruman – met with the billionaire in an inept attempt to dig up political dirt on Joe Biden, now the Democratic nominee for president of the United States. According to reports, Kolomoisky kicked the two out of his office when he rejected the pair’s suggestion that he help to arrange a meeting between Zelensky and Rudy Guliani, an acolyte of President Donald Trump.

Meanwhile, Kolomoisky’s empire in the United States was crashing.

Among the casualties was Warren Steel, which today stands as a rusted hulk of buildings on hundreds of acres just off the state Route 45 and Route 82 interchange in Champion Township. Authorities say that the steel mill was one of many interests that Kolomoisky and business partner Gennadiy Bogolyubov acquired with money obtained illegally from PrivatBank, an institution both oligarchs once controlled. When PrivatBank uncovered a shortfall of more than $5 billion in 2016, the Ukrainian government assumed control of the bank and sued Kolomoisky and Bogolyubov in the Chancery Court of Delaware.  Kolomoisky is challenging the takeover.

Federal authorities also allege that two accomplices based in Miami, Mordecai Korf and Uriel Laber, helped to manage Kolomoisky’s scheme in the United States.

Marc Kasowitz, a New York attorney who represents Korf in the fraud case, said in previous reports that his client had no knowledge of wrongdoing by Kolomoisky.

Korf is also the president and CEO of Warren Steel, according to documents filed with several courts. On Aug. 4, agents raided the offices in Miami and Cleveland of Optima Management Group, a collection of companies owned in part by Kolomoisky.

Warren Steel Holdings, formerly known as Copperweld Steel Corp. and then CSC Ltd., manufactured special bar quality steel at the sprawling site. CSC filed for bankruptcy in 2001 and sold the plant to Warren Steel Holdings that year.  The mill was restarted in 2009 but was beset almost immediately with problems. 

On Aug. 11, 2011, for example, an explosion at Warren Steel’s arc furnace led to the injuries of four workers.  Some of these injuries included burns, back and neck injuries, hearing loss, and post-traumatic stress disorder, according to papers filed in Trumbull County Common Pleas Court. 

An inspection by the Occupational Safety and Health Administration the day of the explosion found two serious safety violations at Warren Steel and fined the company $5,940, according to U.S. Department of Labor records.  Between 2011 and 2014, OSHA discovered at least 17 health and safety violations at the plant and levied fines of $43,482, records show. Numerous Ohio Environmental Protection Agency violations were also lodged during this period, according to OEPA documents.

A civil suit filed in May 2019 by PrivatBank in the Court of Chancery in Delaware claims that Kolomoisky and his associates funneled $622.8 million in fraudulently obtained loans into their U.S. interests. Court documents say about $9 million went to Warren Steel between 2010 and 2013.  

A complaint filed in Trumbull County in 2015 by a former business partner, Vadim Shulman, alleged that Kolomoisky and Bogolyubov swindled him of $30 million that he initially invested in the venture.  Court papers say that he later became aware of $18 million lent to Warren Steel from other entities Kolomoisky controlled.

But it was also apparent that owners used the mill to leverage additional loans internally. According to documents filed with the Trumbull County Recorder’s office, three mortgage documents signed on Aug. 20 and 21, 2014, show that Warren Steel used the plant as collateral to obtain $110.7 million in mortgage loans – $15 million of which was lent by Optima Acquisitions LLC, a company controlled in part by Kolomoisky. Warren Steel at the time had just recently renegotiated a package with the Public Utilities Commission of Ohio that reduced energy rates so it could reopen after shutting down temporarily that year.

The mill reopened in August 2014 but shut down again in November 2015. In January 2016, the company announced it would close the mill for good, citing “unforeseen business conditions.”

Emerine, the Champion Township trustee, says his major concern is when the environmental cleanup at the site will be finished. In addition to the poor conditions of the buildings, he’s wary of potential ground contamination. In 2019, the OEPA found abandoned toxic chemicals, oil pits and other hazardous materials in portions of the shuttered mill, nearly four years after it closed.

Warren Steel also faces massive fines. The Ohio attorney general won a judgment of $1.1 million against the company and last year the parties agreed to a consent order that mandates the company to clean the site.  While cleanup in some portions of the site has begun and the hazardous materials removed from the complex, the fine remains unpaid.

“Mr. Korf has been engaging folks to investigate the issues and get it cleaned up,” says Patrick Wilson of Harrington, Hoppe & Mitchell, who represents Korf and Warren Steel in the local matter. He does not represent Korf in the international fraud issue. “This will continue until we have a resolution.”

Warren Township Trustee Edward Anthony says so far, no accidents or complaints have been lodged at the site since the mill closed.  Over the last year, he observed workers removing debris and engaging in remediation efforts along the southern portion of the property, which rests in Warren Township. The work appeared to stop in the spring after the pandemic forced businesses across the country to shut down.

“We’re hoping they continue to work on this property,” he says.

Ultimately, it’s the community that pays the price, Emerine says. “It’s an eyesore for the community and it’s a danger for the community,” he says. Moreover, he says the shutdown of the mill removes an important source of tax revenue for the township.

“That was one of our largest tax producing properties,” Emerine says. Currently, the Warren Steel property is $258,354 delinquent in property taxes, according to the Trumbull County auditor. “We haven’t collected a penny in years,” Emerine says.

What angers Emerine is the bold negligence of these mill owners and the cavalier manner in which they simply shut down and left. “When you take some of our biggest tax producing properties such as that mill, walk away from it and leave it in the condition that it’s in – it’s a dead stick to us,” he laments.  “The chance of doing anything with that property again dwindles to next to nothing.”

Pictured: From the air, the former Warren Steel Holdings looks like a prime site for redevelopment. It is not.