The work on behalf of Russia’s richest oligarch is part of a discreet niche business for Bank of Utah that allows wealthy foreigners to legally obtain U.S. registrations for their aircraft while shielding their identities from public view.
SALT LAKE CITY — Bank of Utah has that all-American feel. Founded in the 1950s by a veteran of both world wars, it offers affordable mortgages and savings accounts, sponsors children’s festivals and collects coats for the poor.
But in addition to its mom-and-pop customers, the bank has a lesser-known clientele that includes Russia’s richest oligarch, Leonid Mikhelson, an ally of the country’s president, Vladimir Putin. The bank served as a stand-in so Mikhelson could secretly register a private jet in the United States, which requires U.S. citizenship or residency.
The work on behalf of Mikhelson, whose gas company is under U.S. sanctions, is part of a discreet niche business for Bank of Utah that allows wealthy foreigners to legally obtain U.S. registrations for their aircraft while shielding their identities from public view. The bank does this through trust accounts, in its own name, that take the place of owners on plane registration records.
Bank of Utah manages more than 1,390 aircraft trust accounts, most of them for foreigners, generating millions of dollars in fees and making it the second-largest holder of such accounts in the country. A trove of records leaked from an offshore law firm, Appleby, shows that the services offered by Bank of Utah, Wells Fargo and other U.S. companies were sought after by rich jet owners in Russia, Africa and the Middle East.
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The files were obtained by a German newspaper, Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists and other news organizations, including The New York Times. Among other things, the records reveal how Appleby often packaged trust arrangements with a tax-avoidance scheme on the Isle of Man, a British crown dependency that serves as a haven for aircraft owners to sidestep taxes in the European Union. Together, businesses like Bank of Utah and Appleby provide a suite of money-saving tricks for the wealthy elite around the world.
An inspector-general report in 2013 found that more than half of noncitizen trusts registered with the FAA “lacked important information such as the identity of the trusts’ owners and aircraft operators.” As a result, the report said, the agency “has been unable to provide information on these aircraft to foreign authorities upon request when U.S. registered aircraft are involved in accidents or incidents.”
Another inspector-general report, in 2014, cited specific cases that it said demonstrated the potential for national-security or legal problems. Among them was an incident in which an unnamed U.S. bank had to cancel an aircraft trust after learning that its beneficiary, a Lebanese politician, had ties to a terrorist group. Another involved a jet registered to Wells Fargo that made an unscheduled landing in Libya in 2011 just as a no-fly zone was imposed by the United Nations.
And three years ago, a plane registered to Bank of Utah was spotted at an airport in Iran, raising questions about whether its presence violated U.S. sanctions at the time. The bank told reporters it had “no idea” why the plane was there, and would not reveal who owned it; the Bombardier jet turned out to be owned by a Ghanaian company and had no Americans aboard.
That episode led to some soul-searching for Bank of Utah officials. In a recent interview at the bank’s corporate trust offices in Salt Lake City, Branden Hansen, chief financial officer, said that the reputational risk of the trusts prompted the bank to consider whether “to shut this whole thing down.”
Ultimately the bank decided to continue the service, but with stronger due diligence and new staff to oversee it. Jon Croasmun, a trust officer who joined the bank last year, said that “knowing who the owners are is important,” adding that the bank searches public records, seeks passports and takes other steps to ensure it knows the background of aircraft owners.
Still, the Bank of Utah executives were surprised to learn that they had aided Mikhelson, the Russian oligarch. When told the name of the offshore shell company that Mikhelson used to manage his Gulfstream jet, Croasmun interrupted the interview to check the bank’s files. He confirmed that the shell company had been a client since 2013 — but information identifying Mikhelson as the man behind it “was nowhere that I saw in the files.”
“His name is not in there,” Croasmun said.