Mob Wars: Bulgaria’s Trauma Bond to Euro-Atlanticism and the Credit Millionaire Club
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SOFIA, BULGARIA – 1989 is marked in the collective Bulgarian memory, along with every other former Eastern bloc country, as the year that everything changed. Behind the scenes, the leader of the Hard Currency Commission of the communist party, Andrei Lukanov, had been making preparations for the transition.
A candidate-member of the Politburo, Lukanov was one of Bulgaria’s most powerful men. As Minister of Foreign Trade, he had keen insight into the economic realities of the East-West divide and as an insider in the Soviet Union’s top political body, Lukanov had access to privileged information and close relationships with the Russian state’s agents in Bulgaria, including the KGB’s liaison at the country’s State Security services, the Darzhhavna Sigurnost or simply DS.
Together with other “reformers” in the Politburo, Lukanov plotted and carried out the November 10, 1989 coup of long-time Bulgarian head of state, Todor Zhivkov and presided over the redistribution of government properties and enterprises among select members of the State Security services as part of a wholesale transfer of wealth from the collective to a relatively small band of spooks, spies and bodyguards.
Ownership of banks, farms, prime real estate and factories all across Bulgaria was signed over to the most trusted elements of the state as part of the first wave of pseudo-privatizations that swept through post-communist Bulgaria. Lukanov’s ‘liberal’ reforms were a ploy to maintain control of the economy as the façade of communism fell away and, in the process, created a new class of Bulgarian oligarchs linked to the State, often referred to as “credit millionaires”.
Three particular branches of the Bulgaria’s secret police – foreign economic espionage, smuggling, and domestic economic counterintelligence –, which had been tasked with aiding the country’s economy since the 1960s through the theft of foreign trade secrets and contraband operations, such as trafficking of weapons, narcotics and cigarettes throughout the region, would become primary channels of economic activity in post-communist Bulgaria.
Several years prior to the removal of Zhivkov, Lukanov had begun to lay the groundwork for the change-over. The numerous import-export firms set up by the DS to facilitate the black market activities of the Bulgarian state provided the scaffold for Lukanov’s capital flight “roundtripping” scheme, which consisted of funneling the proceeds of illicit operations to multiple foreign banks that had also been set up by the DS around the world, and re-introducing the money into Bulgaria as ‘investments’ in the emerging ‘entrepreneurial’ endeavors of former DS agents.
This process of massive capital flight resulted in the collapse of the standard of living for the vast majority of the Bulgarian population, as the value of their currency plummeted and the state continued to run enormous deficits, while a lucky few members of the state security apparatus accrued all the benefits and emerged as the clear winners in post-communist Bulgaria.
For the past thirty years, the Bulgarian economy has been controlled by these “SOE” (state-owned enterprise) mafias and their legacy, embodied in a new generation of impresarios adopting the much more apropos rhetoric of capitalism to carry on the age-old traditions of exploitation and control of resources for a select group.
None more emblematic of this tragicomic reality than the cryptocurrency lending company, Nexo, which has inexorable ties to these same SOE mob networks, and link to even larger complexes of offshore pools of cheap cash from black market, underworld revenue streams, that provide critical sources of liquidity to the credit-based, above-board Western financial order. One of its co-founders, Antoni Trenchev, is rumored to be the godson of Lukanov himself.
The Bulgarian Alan Delon
Antoni Antoniev Trenchev spent much of his life outside of Bulgaria. Born in 1986 in Munich to a latter-day Bulgarian fashion mogul and an insurance company lawyer, who had been working as a counterintelligence agent since the early 1980s, Trenchev spent his adolescence in Sofia before pursuing a bachelor’s in English and German law at King’s College London, followed by a masters’ in German and European law from Humboldt University in Berlin.
Trenchev returned to Bulgaria sometime after 2010 to join a political project comprised of several right-wing, conservative parties, along with a handful of nationalist and leftist groups, called the Reformist Bloc. Formed in 2014 to push Bulgarian national policy even further towards the Euro-Atlanticist sphere, Trenchev’s brief political foray was marginally distinguished by his advocacy for cryptocurrencies, arriving to work in a top-of-the-line Mercedes Benz and hunger for the media spotlight.
As the youngest member of the 43rd Parliament, Trenchev leveraged his good looks and academic titles to make wavesin the press about corruption in the Bulgarian government – a highly dubious position to take given his own family’s background. Dubbed the “Bulgarian Alan Delon” after the popular French leading man, Antoni Trenchev’s nickname had a more direct, if unsuspected, link to his father’s past.
When Antoni was only three years old, his father Antoni Panayotov Trenchev, had already been with the Second Directorate (counterintelligence) of the Bulgarian DS for seven years. Recruited in 1982 while working at the Munich branch of the Bulstrad insurance company and given the alias “Petrov”, the senior Trenchev and his wife were reportedlyemployed at the Bulgarian embassy in Bonn, Germany – then one of the most important espionage nodes for the KGB in all Western Europe. Bulstrad, a state-owned enterprise privatized in 1993, will become a pivotal link as our investigation proceeds.
Since the early 1960’s, Germany’s status as Bulgaria’s number one trading partner had made it one of the KGB’s top intelligence targets and had been working closely with the Bulgarian secret service for decades to gather all diplomatic cables of West German officials among other covert operations. These activities weren’t limited to Germany and it wasn’t always the KGB which took the initiative.
In nearby Austria, a spy codenamed “Delon” originally recruited and trained by the DS’ Department of Economic and Industrial espionage with access to U.S. Department of Defense materials, was eventually handed over to the KGB so they could run him and, in turn, feed the information back to the Bulgarians.
So named when the Parisian move icon’s sex symbol status was at its peak, that “Delon” was a perfect example of the “full integration” between the KGB and the Bulgarian DS that was prevalent when the other Delon’s father was using his insider knowledge of the commercial insurance business to aid the DS/KGB ops in the city by the Rhine River.
But in 1989, everything was about to change for the Trenchevs. Soon after Lukanov’s coup d’état by committee against Zhivkov, the family moved back to Bulgaria to partake in the SOE bonanza. Five years later, Antoni’s mother was granted special import licenses to start her own fashion business, enjoying exclusive representation for brands like MaxMara, Benetton, Trendbox and many others in Bulgaria. She later became known as the fashion guru for Bulgaria’s first ladies.
Trenchev senior also got in the game, as a business partner in several business ventures with a former wrestler and party security henchman named Boyko Borisov, who would later rise to become the most powerful man in Bulgaria as future Chief Secretary of the Ministry of Internal Affairs and two terms as Prime Minister in 2009 and 2013.
Trenchev’s father had managed to ride the post-communist wave clean over the political turmoil unleashed by Lukanov, who would be assassinated by the very forces he let loose in the country in 1996. By then, the SOE mafias had grown so strong and controlled so much of the nation’s destiny, that the Bulgarian state itself was on the verge of complete collapse.
Welcome to the Credit Millionaire Club
According to Martin K. Dimitrov from Tulane University’s Political Sciences department, the transition produced “three models of postcommunist [sic] entrepreneurs“, all of whom had ties to the DS, but differed in education, experience and in their place within the post-communist socio-economic order.
One silo consisted of ex-convicts and former athletes (especially wrestlers), like Boyko Borisov, who after the collapse of communism established extortion rackets disguised as security and insurance firms, or took over the weapons and drug smuggling routes originally used by the communist government to generate liquid capital for the state. Many of these trafficking operations were turbo-charged during the decade-long wars in Yugoslavia that followed, and cemented the seedy underbelly of Bulgaria’s present-day organized crime networks.
Arms shipments and other cargo proscribed by the UN embargo on Yugoslavia moved through Bulgaria’s border with Serbia throughout the entire conflict. The contraband was sourced by another, originally more powerful group of post-communist entrepreneurs represented by people like the notorious Iliya Pavlov and his Multigrup organization. These men had the most direct links to the communist party by virtue of their roles managing some of the state-owned enterprises before the transition. Trenchev’s father fits within this group.
Both of these groups would form business alliances during the 1990s and become the main beneficiaries of the first wave of “privatizations” that swept through the country, resulting in their control of roughly 90% of all private firms in Bulgaria, and setting the stage for the third kind of post-communist entrepreneur Dimitrov describes: “highly educated, young, and dynamic businessmen with ‘clean’ backgrounds”.
Nexo’s founders would certainly fall among this latter group, although part of an even younger generation than the type specifically mentioned by Dimitrov, who emerged in the aftermath of a mob war between the first two factions, and was caused by a rift between those loyal to communist-era, Russia-centric networks and the beckoning Euro-Atlanticist circles.
Antoni Trenchev’s rumored godfather, Lukanov, brought the IMF to Bulgaria only months after Zhivkov’s ouster, with the Western institutional lender setting up shop right in downtown Sofia in 1990 to provide training seminars and sending over 20 technical assistance missions to the country within the first two years of its membership.
The World Bank followed in tow with loans tied to structural adjustment programs calling for mass layoffs, wage suppression and raising gas prices as a condition for financial support. Bulgarian society and the working classes, in particular, would bear the brunt of these measures amid warring mafia cliques that reached a climactic moment with Lukanov’s murder as hyperinflation gripped the Central East European nation and stripped away all social safety nets.
Pavlov himself would be killed a day after testifying at Lukanov’s murder trial a few years later. But, by then Western-linked interests had gained the upper hand through the installation of the government of Simeon Saxe-Coburg-Gotha, the exiled heir to Bulgaria’s Tsarist throne, who came to power under the National Movement for Stability and Progress (NDSV) party, a.k.a. Simeon II National Movement, in 2001.
Much of Bulgaria’s Euro-Atlanticist power bloc was put in place during the NDSV’s rule, including Reformist Bloc leader, Meglena Kuneva, and Lydia Shuleva, mother of Nexo co-founder Georgi Shulev. Shuleva served as Simeon’s Economic Minister and Minister of Labor and Social Policy simultaneously, playing a key role in some of the most critical developments around Bulgaria’s banking and pension reforms, that will turn out to be highly relevant to the links between Nexo, Credissimo and Ruja Ignatova’s OneCoin Ponzi scheme.
In the meantime, our investigation will turn its attention to Trenchev senior’s business partner, Boyko Borisov, who was placed on the political fast track by the NDSV. Appointed Chief Secretary of the Ministry of the Interior by Simeon II, Borisov would be tasked with managing the organized crime groups of Bulgaria, which he was a part of, in the interests of the Euro-Atlanticists.
Borisov’s War and the Sex
Borisov had been offering his security services professionally since 1994, when he incorporated the first of his multiple business ventures, called IPON-1, together with long-time girlfriend Tsvetelina Borislavova Karagyozova, the daughter of a DS foreign intelligence officer named Borislav Karagyozov. Curiously, Karagyozov had been responsible for state security’s technical staff in a number of Bulgarian embassies, including the diplomatic missions in the U.S., Indonesia and Romania.
IPON was known to be the informal link between state security and one of Bulgaria’s three main organized crime groups, known as the SIK, with which Borisov had extensive ties. Both Borisov and Tsvetelina had previously partnered with SIK boss Rumen “Pashata” Nikolov in a fake cigarette smuggling scheme, and much of IPON’s work revolved around executing contract killings on behalf of the group against its two main rivals, the VIS and TIM.
In March, 1997, Tsvetelina was almost killed in a car bomb planted behind the left front tire of her Jeep by SIK’s enemies. Miraculously escaping with only a few scrapes and scratches, the woman who would be nicknamed “Tsetsa the Sex” for her multiple trysts with rich and powerful men, as well as a rumored lesbian relationship with Borisov’s ex-wife, was on the verge of becoming Bulgaria’s most powerful woman, herself.
Her attempted assassination came just after a major banking crisis had roiled the Bulgarian economy, opening the door for Borislavova’s entry into the all-important Bulgarian banking and finance sector on behalf of the organized crime network. After nine Bulgarian banks went bust a year earlier, a new Prime Minister with close family and business ties to one of IPON’s top SIK-linked clients Slavcho Hristov, was elected amid the scandal.
Hristov, (pronounced ‘Christof’), owned several resorts and restaurants, which were guarded by Borisov’s security service, and owned 40% of BRI Bank through offshore holdings. In 2000, BRI was merged with one of the bankrupt banks and renamed CIBank. Soon thereafter, CIBank began processing tax, fees and insurance payments for the government, making it one of the country’s most stable financial institutions.
Tsvetelina was appointed Chairwoman of CIBank’s Supervisory Board at Hristov’s direction, who ‘retired’ suddenly, leaving Borisov’s girlfriend to attend to his businesses, including the resorts and other assets. Meanwhile, Borisov was about to embark on a killing spree to eliminate SIK’s competitors under the cover of Simeon II’s Ministry of the Interior.
According to a 200-page confidential investigation by a private intelligence agency on Borisov’s entire life history and mob connections commissioned by a financial institution in Switzerland, the period between 2001 and 2005 marked a particularly intense spate of murders by IPON security operatives. SIK’s further links to the Simeon II administration and Israeli Parliament members were later revealed in a joint investigation by Bivol and OCCRP. Israel’s involvement as an agent of Euro-Atlanticist hegemony will come into play again when we look deeper into Nexo’s co-founder, Kalin Metodiev.
Throughout the NDSV’s four-year reign, Tsvetelina captured the media spotlight as the social companion of “Tsaritsa” Margarita, Simeon II’s Spanish wife during many public events. At the same time, she was busy restructuring CIBank and integrating SIK’s interests into the regularized economy, while also accumulating a larger stake for herself.
In 2005, she founded the Clever Synergies Investment Fund (CSIF), a non-profit vehicle where she transferred many of the non-bank-specific SIK-linked assets, like the resorts, real estate and energy concerns. The CSIF is what she is most well-known for today and the entity through which she conducts most of her business.
One notable exception occurred in 2008, when she registered a business called “Multinational Asset Portfolio (MAP) Support” dealing with “intellectual property deals” and business acquisition consulting services. The company’s directors included Tsvetelina, a Borisov associate she has been tied to romantically named Alipi Alipiev and one Ruja Ignatova.
