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From Russia With Sleaze

Wednesday, May 31 2000
Here's a story that has more baroque Russian names and funny twists than a Dostoevski novel, so read carefully:

Sam Budovsky and Luba Troyanovsky are an unmarried couple who live in a terra-cotta-roofed mansion in the Sea Cliff with a view of the Golden Gate Bridge. They run several self-owned businesses from home -- real estate and import-export seem to be favored lines -- but in 1994, a Russian firm called Bryansk Engineering Works signed over to Budovsky the right to collect a stubborn debt from a shipyard in Bulgaria. BEW is a venerable rail-car company in western Russia that also builds ship propulsion equipment, and it seems the firm made some engines or boilers for Bulgarian shipbuilders in the Black Sea town of Varna. The Varna shipyard, as it's called in court papers, refused to pay up. BEW offered this debt to Budovsky while he was at a trade fair in either Russia or Ukraine. The reasons it did so are in dispute, but Budovsky's lawyer says it was to cover a debt owed by BEW to Budovsky's girlfriend, Ms. Troyanovsky.

"BEW said, 'Look, you go find this money in Bulgaria, and if you collect, you get paid,'" explains Nils Rosenquest, a San Francisco lawyer who represents both Budovsky and Troyanovsky. "And much to their shock, it actually happened."

Budovsky's company, U.S. Dnipro, collected. In a matter of weeks, Budovsky and his partners (a Ukrainian company called DVM) persuaded the Varna shipyard to wire the full payment for the debt to an account in San Francisco. The agreement with BEW allowed Budovsky to keep a commission of $240,000, but he neglected to wire anything at all back to Russia. When BEW sued, in 1996, Budovsky declared bankruptcy. What happened to the money? In a new lawsuit in Northern California District Court, BEW complains that $1.2 million was transferred to Luba Troyanovsky's import-export firm, Amimpex, sometime in 1995.

Troyanovsky's side of the story, as Rosenquest implies, is that BEW owed her money for jackets, mittens, and other goods she'd previously exported to Russia, and the $1.2 million is hers. BEW disagrees. Budovsky, Troyanovsky, and BEW are still in court. The dispute is a big, big mess. And it really has nothing to do with the rest of this column, which is about a local Lubavitcher rabbi, his charity, and several thousand used cars.

How could there be any connection? This Russian story is just a curtain-raiser, a little seasoning to give international flavor to what would otherwise be the burnt end of a dingy local tale. It's a divertissement. A vaudeville comedy act. A little joke.

Forget it.

Rabbi Bentzion Pil grew famous in '97 for raising millions of dollars in a donate-your-car-to-charity scheme that drew attention from several government investigative agencies and a variety of news organs, SF Weekly included. By the lenient terms of his settlement with the state, Pil can't sit on the board of a charity until at least 2002. He was investigated in a criminal vein by federal authorities, and was supposed to be sentenced next month in the resulting case, but it looks like that hearing will be rescheduled, again. It also looks like Pil will face relatively mild punishment as a result of a plea bargain he's entered with the feds.

Not only have the investigations ended with a whimper; they're also wrapping up without answering some of the most important questions raised by the rabbi's multimillion-dollar car-collection operation.

Bentzion Pil made himself prominent in the Richmond's Russian Hasidic community during the mid-'80s simply by being the only Russian-speaking rabbi in San Francisco. He and his wife, Mattie, founded a charity called the Jewish Educational Center, or JEC, to run a school for Jewish kids called Beth Aharon. The JEC and Beth Aharon were essentially broke until 1993. That was when the Pils discovered the lucrative world of donated cars.

The radio, billboard, and classified newspaper ads the JEC started to run promised huge deductions to taxpayers who were stuck with otherwise useless hulks of metal. "That extra car in your garage or your old car, in any condition, can be repaired and given to a needy family," ran one of the radio spots. Response was incredible, not just from the Bay Area, but also from New York, Los Angeles, New Jersey -- from every market where the Pils ran ads. The JEC had to lease Pier 48, in China Basin, to store, repair, and auction the sheer tonnage of donated cars.

Dozens of charities have raised money by accepting donations of used cars. There is nothing inherently dishonest about a charity accepting a gift of a car, and the donor taking a tax deduction for the value of the car. In 1996, though, a Wall Street Journal reporter found the JEC raising millions of dollars, with improbably high overhead costs of around 80 percent of money raised, vs. 40 percent in an average healthy charity. The rabbi for a while drove around in a nice donated Cadillac, and $100,000 in JEC funds was allegedly diverted into a down payment on the Pils' three-story house in the Richmond.

The yard where the donated cars were to be auctioned off, meanwhile, was grim. "The selection of a half-dozen cars that you offered were the worst junk and rotting hulks I've ever seen," a disgruntled man who'd applied for a car wrote in a 1996 letter, "and when I asked the person there if he knew what condition they were in, he responded that if they were driven there he assumed they could be driven away, but could not guarantee it and added that they had not been checked by a mechanic."

Pier 48 burned late in 1996, along with a warehouse containing 200 or 300 cars. It wasn't arson, according to the DA's Office. A mechanic working on a car had apparently left a work lamp on, sparking the blaze. Under the terms of the city lease, mechanics shouldn't have been working on cars at the pier, but no fine was assessed. (The pier matter was handled by the San Francisco District Attorney's Office as part of an unfair business practices civil case against the JEC; it ended in a settlement after the charity went bankrupt.) And only 30 to 40 cars, in any case, were fully destroyed.


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