Sam and Anna Zhadanov, et al. - Page 11




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          from a Government informer who used them to pay Belkin for an               
          order of plastic vials.  Belkin, in turn, used them to pay                  
          Vortex.  After tracing the deposit, the U.S. Postal Service                 
          turned over the negotiated money orders to an agent of the                  
          Criminal Investigation Division, Internal Revenue Service.                  
               In September 1992, the Zhadanovs made another trip to                  
          Switzerland, in part to explore the potential for expanding                 
          Vortex’s manufacturing business to Europe.  Prior to departing on           
          this trip, Mr. Zhadanov had exchanged correspondence with Jack              
          Reiss, a commercial broker, regarding suitable commercial space             
          for a new manufacturing facility.  During the trip, Mr. Reiss               
          showed Mr. Zhadanov potential warehouse space for product                   
          assembly, and following the meeting, Mr. Reiss sent Mr. Zhadanov            
          a letter detailing the procedures for marketing, distribution,              
          and sales in Europe.  The Zhadanovs also traveled from                      
          Switzerland to Milan and Bergamo in Italy during September 1992             
          to meet with potential Vortex clients.                                      
               E.   Criminal Investigation of Vortex and Sam Zhadanov                 
               In May 1993, after an investigation by various Federal and             
          State law enforcement agencies, Mr. Zhadanov was arrested on                
          charges stemming from his relationship with Belkin and Edelson              
          and his manufacture and sale of alleged crack vial paraphernalia,           


               7(...continued)                                                        
          testified that whenever he used money from the safe for business            
          expenses, he returned unspent portions to the safe.                         





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