In US Prison, a Russian Tech Entrepreneur Involved in $93 Million Fraud Was Exchanged After Putin’s Call

Klyushin smoothly added, “We have developed an application that we plan to introduce to the global market in collaboration with Swiss investors, which will have no ties to the Russian Federation.” This way, M13 would be “accessible to investors from Europe and America.”

There is little evidence to support the notion that M13 was creating a customized program for traders. However, the concept of enticing Western investors to engage in trading based on illicit information was indeed accurate. Klyushin and Ermakov were once seen at an event with Anselm Schmucki, a Swiss national who managed the Russian office of DuLac Capital, a Zurich-based investment firm. One of Klyushin’s attorneys, Max Nemtsev, mentioned, “The intention was to extend this offering to international clients, whoever Anselm was collaborating with.”

Schmucki declined to provide a comment for this article. His former business associate, Domino Burki, affirmed that their firm, DuLac, was not involved in any wrongdoing. Regarding Schmucki, Burki expressed uncertainty about his activities in Moscow, stating, “I believe that Anselm is not involved in criminal activities.” On a separate note, in 2023, Schmucki was sanctioned by the UK foreign secretary and the US Treasury Department. The Treasury Department alleged that he collaborated with “a company suspected of having ties to Russian organized crime and money laundering.” It further mentioned, “Schmucki oversees a global network of shell corporations,” including one based in Edinburgh, Scotland, and had close financial associations with an individual accused of financial crimes.

Among the plethora of documents that US prosecutors reviewed as they obtained warrants for the iCloud accounts of Ermakov, Klyushin, and other members of the M13 group, a photo of Klyushin receiving a Russian Medal of Honor on June 14, 2020, signed by “V. Putin,” stood out prominently. The evidences gathered, including screenshots of Ermakov trading through Klyushin’s account, the pre-publication download of earnings reports, the collection of Porsche convertibles, encrypted discussions backed up on Klyushin’s iCloud, indicated a clear-cut case. From Ermakov’s indication of the risk of ending up in a courtroom—demonstrating criminal intent—to the precise details of the trades executed using stolen information, the evidence pointed to an undeniable truth. One additional photograph that caught attention was a Russian Medal of Honor bestowed upon Klyushin, which substantiated the case against him.

The day following the awarding of the medal to Klyushin, a former US Marine, Paul Whelan, found himself inside a glass cage at Moscow City Court, donning a blue-gray sweater. Holding up a sign that read, “Sham trial! Meatball surgery!”—alluding to the fabricated charges of espionage leveled against him and the urgent hernia surgery he underwent weeks prior. Seeking intervention from President Trump, he stood flanked by two masked men with holstered pistols as the judge pronounced a sentence of 16 years in a transformed gulag.

Several weeks later, Trevor Reed received a nine-year sentence and was dispatched to a dreadful facility. Refusing to cooperate, he was confined to solitary isolation and stripped of his reading materials. Commencing a hunger strike, Reed later recounted to CNN, “I began feeling unwell. I consistently coughed up blood for approximately three and a half months, multiple times each day.”

Towards the end of summer, the M13 team ceased relying on the data from Donnelley and Toppan Merrill for trading, and authorities had no means to reach them while they remained in Russia. The anticipation was that one of them would opt to travel to a country with a favorable stance towards the US government. The first person departing—be it Sladkov, Irzak, Ermakov, Klyushin, or others—would be apprehended; all others would be implicated as accomplices in an extensive insider trading case. “There was no alternative plan,” Frank shared.

With two US federal indictments already looming over him, Ermakov wisely chose to stay in Russia. On the contrary, Klyushin was eager to relive the excitement of heli-skiing. This time, amidst the Alps, he planned to bring his spouse along to celebrate their anniversary.

In the United States, prosecutors initiated the preparation of a criminal charge against Klyushin. The FBI contacted Swiss authorities for assistance. On Sunday, March 21, 2021, Klyushin and his wife departed from Moscow in a private jet. “You’re literally holding your breath,” Frank remarked to CNBC. After about four hours, the Klyushins touched down at Sion airport, Switzerland, donned in ski attire, ready to board a helicopter. Frank narrated, “He was already equipped in ski gear, alighting from the aircraft geared up to fly by a chopper. That’s when the Swiss agents swooped in.”

This juncture in the narrative takes a bewildering turn. Reports from local media revealed that Klyushin arrived in Sion in handcuffs and shackles, where he was detained in solitary incarceration without bail. However, according to Oliver Ciric, the Swiss attorney quickly enlisted in Klyushin’s defense, his client remained composed and unperturbed throughout the ordeal. Ciric, an expert in multilingual responses to Western sanctions by Russia and, surprisingly, an honorary consul from the Republic of Vanuatu, stated that Klyushin’s arrest followed his rejection of advances from British and American intelligence personnel in a bar in southern France and subsequently in Edinburgh, Scotland. This insinuated that the alleged spies were attempting to extract information about his connections in the Kremlin or possibly recruit him as an asset. Despite Klyushin’s proximity to the Putin administration, Ciric lacked evidence to substantiate these claims.

On April 7, the Kremlin urged the Swiss authorities to extradite Klyushin back to Moscow, citing him as a fugitive accused of large-scale financial deception. This demand appeared peculiar in light of the substantial support Klyushin’s company received from the Kremlin. More confounding was Klyushin’s voluntary compliance with the extradition plea, potentially exposing him to the notorious Russian judicial system. The US government also proposed extradition of Klyushin to the United States, triggering a 12-day period

Subsequently. The appeal was approved towards the end of June. All parties involved reached an agreement on the swift nature of the process—a high-profile extradition case that could typically linger for years. “It deviated completely from the usual protocols,” Ciric remarks. “This anomaly is attributed to the political pressures imposed.”

During that same year in June, at a lakeside residence near Geneva, Putin and US president Joe Biden deliberated on the possibility of a prisoner exchange. This subject had been under deliberation for some time through various avenues—formal dialogues between diplomats, informal conversations engaged in by a fluctuating network of external legal representatives and advocates. No accords were reached on that day. However, the two nations established a new line of communication, this time between the CIA and their Russian counterparts.

Following a sequence of appeals, Klyushin was transferred to the US in December and incarcerated at Plymouth County detention facility. A trial date was scheduled approximately a year later. For a case of such intricacy, even this timeline seemed remarkably swift. This was partly due to an accord struck between the Justice Department, Klyushin’s defense attorneys, and the presiding judge, Patti Saris.

Both parties, for their individual reasons, sought to minimize Klyushin’s ties within the Russian government and society. Saris, for her part, expressed concerns that extensive discussions on these connections could bias the jury. The prosecutors, as per Frank, aimed to “emphasize the actual facts of the insider trading.” Meanwhile, Klyushin’s American legal representatives completely reversed their earlier defense strategy, avoiding any mention of the alleged interactions with Western intelligence or the reasons those intelligence agencies might have had an interest in their client.

Thus, the trial did not disclose the identities of Klyushin’s investors—individuals such as Aleksandr Borodaev and Boris Varshavskiy, the individual who received the Russian gold medal for mining. Nor did it delineate the extent of Russians that gained from the scheme. It omitted any reference to the fact that when Klyushin showed Ermakov photographs in August 2019 of a safe filled with $3 million in $100 bills, that safe was situated within the Russian Ministry of Defense.

The trial concluded in 16 days. Klyushin was convicted on all counts. Nonetheless, he appeared indifferent to the verdict.

By 2022, the American and Russian administrations exchanged two sets of detainees. They swapped Konstantin Yaro-shenko, a Russian narcotics smuggler, for Trevor Reed, and they exchanged Viktor Bout, the arms dealer infamous as the “Merchant of Death,” for the American basketball athlete Brittney Griner.

Bout was a figure akin to a real-life antagonist, fueling conflicts from Afghanistan to Angola. Yaroshenko agreed to transport 8,800 pounds of cocaine. Conversely, Griner had been detained for nearly a year for possessing less than a gram of hash oil. Reed was falsely accused of assaulting a Russian officer once. Undoubtedly, the release of wrongly apprehended American civilians was a cause for celebration. However, what message did this convey to Putin, that he could exchange Bout’s liberty for Griner’s? Yaroshenko’s for Reed’s? Doug London, a CIA veteran of 34 years, expressed concerns that while the trade was well-received politically, it might not be in the long-term interest of the US. “Russia felt emboldened by this,” he informs. “They will likely take more hostages and make more arrests.”

Klyushin was convicted on Valentine’s Day, 2023. Approximately six weeks later, on March 29, Russian authorities seemingly abducted Evan Gershkovich, the Wall Street Journal journalist, and charged him with espionage. This sparked an international uproar. Subsequently, negotiations were initiated to facilitate a potential swap to secure his return.

Reports vary on whether Klyushin was a focal point of discussion as negotiators convened through various avenues—or if he remained unmentioned. The Russian tycoon Roman Abramovich purportedly played a significant role—while others dispute his involvement. The State Department was purportedly coordinating an international coalition to secure the release of the next batch of Western detainees or was perceived to be ineffectually navigating the periphery. The CIA was either spearheading talks on behalf of the US or, as one out of 10 sources noted, simply “delivering the mail” for the Biden administration, which was dictating all decisions. Adding to the complexity, numerous of the 24 individuals eventually liberated in the extensive prisoner exchange of August had their own advocates, all attempting to liaise with governments and among themselves. One American detainee even had two sets of representatives, each of whom denigrated the other in my interactions.