A Billionaire’s Story

Igor Olenicoff

Wealth Origin: Real Estate

Birthplace: Moscow, Russia or Northern Iran

Education: Bachelor of Arts/Science, University of Southern California; Master of Science, University of Southern California; Master of Business Administration, University of Southern California

Introduction

On March 12, 2008, billionaire Igor Olenicoff opened the doors of his Orange County real estate firm, Olen Properties, to a team of government investigators led by Kevin Downing, lead U.S. Department of Justice tax division lawyer. Upon entry, with no love lost, Downing gets in Olenicoff’s face, telling him “Don’t bullshit us!” assuringly adding, “I’ll come down hard on you if you try!”

Olenicoff found himself implicated in the biggest tax fraud case in American history. This wasn’t the first time a team of investigator’s rambunctiously burst through his doors. About 6 a.m. on a Monday morning in May of 2005, 30 IRS criminal investigators swarmed the Olen Properties offices, his personal home, and his son’s home.

After the 2005 raid, Olenicoff refused to work with prosecutors and basically put his fate in the hands of his lawyers; not a bad move, considering the outcome. According to Public Radio International (PRI), “In December 2007, he plead guilty to one count of failing to declare his foreign bank accounts, and agreed to pay $52 million in back taxes, one of the largest individual tax cases in Southern California history. He faced up to three years in prison, but he wouldn’t serve a day.”

So why, in 2008, are federal prosecutors again at his doorstep? Considering he is entirely self-made, you’d think he’d be satisfied with his hundreds of millions and ultimately billions of dollars in net worth. When he and his family came to America, they had nothing but $800 and four suitcases between them; with such a starting point and having come so far, why risk the trouble?

Early Life

Igor Olenicoff was born in the year 1942. Controversy exists as to his birthplace as he may not even be sure. What is known is that his parents fled Russia for a secluded mining camp in Northern Iran when the communist party won the Russian Revolution and ultimately formed the Union of Soviet Socialist Republics (USSR). His family had ties to Czar Nicholas II, which at that time meant death, or even worse, being loaded onto a one-way train to Siberia.

As for the royal family’s fate, after being captured by the communists, Czar Nicholas II and his entire family were murdered. History tells us, “late at night on July 17, 1918, the Romanov family was awoken and told to get ready for another move. Still hoping to escape, the women packed up their things and put on clothing into which they had sewn precious jewelry, religious icons and a large amount of money. Then, unexpectedly, their captors turned on them, attacking them first with bullets, then with the butts of guns, bayonets and even their own heels and fists.”

At some point during this blood-soaked episode of Soviet history, fleeing for their lives, Olenicoff’s family relocated to Northern Iran. Here is the genesis of the debate as to where Igor was actually born; had his family left before or after his birth?

Leaving Iran

While growing up in Iran, Igor attended an English-language school run by missionaries. By the time he turned 15 years old, his family decided they’d move to the United States. A point of historical significance, they must have moved in the wake of the 1953 Iranian coup d’état.

During the 1953 Iranian coup d’état, rumors ran rampant that the democratically elected Prime Minister Mohammad Mosaddegh was making moves to align himself with the Soviet Union. In hindsight, the United States and the United Kingdom teamed up to overthrow the Iranian government by means of stoking fears amongst the population of an impending communist dictatorship.

The reality was, the U.S. and U.K. only used the Cold War as a smokescreen as both countries were much more concerned that a significant chunk of the world’s oil supply could find itself in the hands of a power-hungry Mohammad Mosaddegh. He wasn’t really a communist, however, using other influential Iranians to tell people he was sure did stir up civil unrest.

Ultimately, at the behest of western nations, Mosaddegh was removed and replaced. It is likely that when taking into account the instability of the region, a lack of economic opportunity, and the never-fleeting fear of being repatriated by the Soviet Union, Olenicoff’s family made their decision to leave Iran for the distant shores of America.

The Promise of America

Leaving one continent for another is no easy decision to make. Imagine the Olenicoff family huddled together in their humble living room weighing their options. They had already carved out some kind of life in Iran since fleeing Russia. Were they really going to throw away all they had worked for up to this point, only to uproot once again for the uncertainty of starting over?

Their answer: yes.

Like millions of others throughout the globe, in the midst of undaunting disparity, they opted for all the opportunity that individual freedoms have to offer. Understanding that, although they’d be leaving behind everything and everyone they had ever come to know, as long as they had each other and an unwavering drive to become better versions of themselves, they could carve out some kind of life in the New World.

They rejected falling dependant to the deceiving hands of a communist government and opted to put their destiny in their own control. This is the miraculous secret to America’s unrelenting success; a nation which beckons to those so motivated, so confident, so willing to risk everything in the pursuit of their dreams.

Arriving in America

The flip side of America’s limitless opportunity is its lack of patience for the faint of heart; this is a land that owes to its people nothing but safe-guarding with all its righteous might the freedoms which provide the opportunity for one’s pursuit of happiness.

Like every other newcomer, the Olenicoff’s too were met with this harsh reality upon their initial landing in New York. Igor, his brother, father, and mother had between them just $800, four suit-cases, and whatever random belongings they were able to stitch to the insides of their coats.

Shortly after arriving, they were robbed – catalyzing their decision to move to the west coast; ultimately settling in Southern California. Igor’s father, Michael, formerly an engineer, took on work as a janitor. His mother, Zina, worked as a housekeeper.

So this American Dream began.

College

It’s not publicly known if Olenicoff graduated from high school. Considering his circumstances, it’s more likely he earned a GED and then enrolled in courses at his local community college. Regardless, PRI tells us, he pulled shifts at a hardware store to pay for those classes.

According to Forbes, he then qualified “for a government grant to pay for his studies at USC – ON the condition he either work in government or teach after graduation.”

The same article then goes on to explain that “he satisfied the requirements by teaching evening courses at Valley College (now called Los Angeles Valley College) in business math for 4 years while working at Shell Oil and taking M.B.A. classes.”

What drove him to work so hard at such an early age? Could it have been that due to a lack of friends and loved ones, he was left with nothing to do but work on his own self-improvement? Was it simply him fulfilling the destiny which he desired?

People get so caught up in the vast amounts of wealth, the mansions, fast cars, and private jets and they forget to realize that what made all of those things possible, tangible, and real was whatever motivated this young man busting extra shifts in the hardware store. If only there was a way to put such desire into words because, in such desire, true wealth resides.

Career

From being a store clerk, upon completing his college courses, he moved on to fill some kind of teaching role at a community college. Sometime about this point, he found work at Shell Oil; how he got the job and at what position he began is not known. What we can be sure of is that a person with Igor’s kind of work ethic won’t take long to make their way to the top. Not to mention, the M.B.A. he completed in the meantime.

Touche Ross

Olenicoff made the leap from Shell Oil to Touche Ross, an accounting firm that eventually got acquired by Deloitte.

Motown Records

While at Motown Records, he was vice president and business consultant to Berry Gordy, helping to expand the company out of Detroit and into Hollywood.

His time here may not have ended on the best terms as Olenicoff enlisted the help of legendary Los Angeles lawyer Rob Kardashian to assist him in obtaining pay he felt the company owed him.

A Billboard article from the time reads:

Motown Executive Files Over Pact

Los Angeles – Suit has been filed in superior court here by Igor Olenicoff against Motown Record Corp of Calif., seeking $48,038, which he claims is due to him on a two-year employment pact he signed with the firm Dec. 8, 1970.

The suit describes Olenicoff’s duties, outlined in his contract as “executive, managerial, and supervisory.” Olenicoff claims he was discharged May 4, 1971, after being paid $27,500. His pact called for $30,000 the first year and $34,500 the second.

Robert Kardashian of Eamer & Bedrosian represents the plaintiff.

Real Estate

The Orange County Business Journal informs us that Olenicoff began his career in real estate when co-founding a real estate syndicator, Gemini Pacific. Afterward, he took on the role of VP of operations at Dunn Properties.

Olen Properties

Having fostered the courage and knowledge to go into business on his own, Igor launched Olen Properties in 1973; his first investment consisted of a 16 unit duplex.

Building Olen Properties

The company’s website describes the business strategies which have led to their success:

Since the founding of the company 46 years ago, we committed ourselves to a basic business principle: maintain stability through careful controlled growth and consistent hands-on management. Olen’s success continues to be driven by this principle. Today, Olen has attained institutional stature in property ownership and development. We are particularly proud that our growth was achieved entirely through company operations and without outside equity sources.

Our track record for high-quality properties that consistently deliver exceptional returns speaks for itself. What sets Olen apart from other companies in our industry is that we build and acquire projects for the express purpose of profitably retaining them indefinitely. Consequently, our focus has to be day-to-day, customer-focused and detail-oriented, while our vision has always been long term. These principles will continue to guide us and assure our future success.

We learned in our early years that in order to thrive in this industry a company has to be both financially and organizationally prepared to deal quickly with market changes. For Olen, being dynamic in our objectives by continuously adjusting for factors that affect our industry has meant the difference between continuously enhancing our assets rather than merely preserving them or having to dispose of them to survive.

We not only weathered the last four real estate recessions, but managed to thrive and use them to our advantage. Olen’s strong capital base and financial strength ensures our ability to acquire or build projects when we believe the timing is correct; as opposed to having to wait until the general wisdom in the market reaches that conclusion.

Olen Properties Today

Forbes estimates that Olen Properties owns 8 million square feet of office space and 15,000 residential units in California and four other U.S. states.

Family Life

Olenicoff married Jeane M. Patterson and together they had two children, a son, Andrei, and daughter, Natalia. Mother was always near but father, son, and daughter all maintained their own special bond. Together, they’d indulge in their obsession with motorcycles and cars.

Natalia says, “When I was in elementary school and Andrei was in high school, we’d spend evenings working on our cars in the garage or playing basketball. They taught me about car engines and tools.”

From their earliest years, Igor had been priming both his children to take over the helm of Olen Properties.

Andrei

Andrei enthusiastically followed in his father’s footsteps, eager to take on the challenge of leading Olen Properties into the future. Nothing was going to be handed to him though. Igor started him as a window washer, then put him at the construction sites, and eventually, he earned his role as head of finance and leasing.

Natalia

Natalia, however, proved to be a bit more rebellious. She never really wanted to join the family business, in fact, the Orange County Register (OCR) says that as a teenager, “Natalia earned her own cash, babysitting, clerking at a bead shop, hostessing at Tommy Bahama’s.”

Igor confesses, “Natalia was never keen on working with Dad.”

She was destined for the arts, she loved photography and taking posh portraits of family and friends. Natalia even earned a partial scholarship to USC for her work. While in college, she minored in graphic arts and majored in communications.

Speaking about her choice of coursework, Igor playfully says, “Initially, I thought that was akin to majoring in basket weaving.”

Natalia notes that it was about a month before graduation when she really began to feel the pressure to join the family business.

Graduating College

She describes going out to dinner with her brother Andrei, expecting another pitch of course, but to her amazement, Andrei understood her plight, she says, “I remember it so clearly. It was raining, and we were both sick with a cold,” she confessed to him how she wanted to leave Orange County. Andrei encouraged her, saying if he had it to do over, he would have traveled before joining the company.

Natalia graduated and found creative work in San Francisco. She wasn’t making much but had sparked her career writing about nightlife for Riviera and freelancing for Entrepreneur magazine.

It’s expensive to live in San Francisco. Actually, it’s entirely unaffordable. Her father was sending her money to help with the bills but soon convinced her to come back home after hinting at cutting her off financially and promising a new car were she to join him at Olen Properties.

Natalia caved, she says “I saw how much (they) loved real estate and working with Olen, and I hoped I’d someday feel that way, too.”

Tragedy Strikes

She had been at the company a year already, when on Oct. 14, 2005, Natalia noticed her brother hadn’t shown up for work.

The OCR documents what happened next, “by noon, she began to wonder where Andrei was. She checked with her dad’s assistant, and they called Andrei’s wife, who was surprised he wasn’t at the office. Natalia left to get sandwiches and came back to find the assistant crying and saying into the phone: ‘Are you sure? Are you absolutely sure?’”

The article confirms that “Andrei was killed in a car accident while driving the Jeep he’d built to San Jose to have it worked on. He’d planned to fly back that morning.”

After hearing the news, Natalia says, “I went into my dad’s office, gave him a long hug, and he said, ‘Let’s go home.'”

Only a year or so after the crash, Natalia told reporters, “Anyone suddenly thrown into a position of responsibility is going to have some doubts and some fear…I try really hard to use that hurt, and that ‘on-the-edge’ feeling to better myself…Of course I have bad days, and I get really sad sometimes. Sometimes I cry at my desk in the middle of a day because I miss him so much.”

Andrei Olenicoff Memorial Foundation

In loving memory of Andrei, the Olenicoff family launched the Andrei Olenicoff Memorial Foundation. It is “a non-profit organization dedicated to supporting programs that directly help in improving the lives of those affected by blindness/vision impairment and other disabilities, particularly children. In recent years, the Foundation has also expanded its efforts in the areas of animal welfare and environmental protection – both of which are causes that were near and dear to Andrei’s heart.”

In addition, they opened up a restaurant in Irvine in his name, where 100% of the restaurant’s net profits benefit The Andrei Foundation.

According to the website, “Andrei’s exuberance and creativity were a force to be reckoned with – especially in the kitchen and behind the bar. When he was diagnosed with a retinal eye disease in his 20s, he also became very aware of the impact that nutrition has on our health. Eating organic, local food became a way of life for him, long before the rest of the world had caught on to its benefits.”

They continue, “In celebration of Andrei’s beautiful life, the Olenicoff family opened a restaurant dedicated to those very same principles. Since 2009, Andrei’s has been sourcing and serving only the best local and organic ingredients for their kitchen and bar. We believe that healthy and happy go hand-in-hand.”

Controversies

This leads us back to the beginning of our story, it’s March 8th, 2008, and Igor Olenicoff is standing in his Olen Properties offices face-to-face with Kevin Downing, a prosecutor from the United States Department of Justice, who is implicating him as being part of the biggest tax fraud case in American history. Almost an honor, when considering how far he came to even be confronted with such a problem.

Tax Evasion

Long story short, Olenicoff had entrusted a Swiss bank to manage his funds. Whether he knew or “didn’t know” how they were going to manage his money is for legal debate, however, the fact is that his money was put into offshore accounts in order to avoid being taxed by the United States government.

What led the prosecutor’s to his door was that the banker he had been working with, Bradley Birkenfeld (originally of Boston), found himself in a tight spot with his superiors, he was about to get fired, and in order to potentially profit from his whistleblowing, reported to U.S. government officials the unlawful practices of his Swiss bank, UBS.

Naturally, due to Olenicoff being a client of Birkenfeld and UBS, he found himself in the crossfire of this showdown. Despite his contributions to the case, the Department of Justice wasn’t too keen on Birkenfeld’s intentions; therefore, they sought Olenicoff’s help to put him away. Olenicoff was happy to participate with the investigation, especially considering Birkenfeld’s guidance had put him in this situation, to begin with, then the guy double-crossed him when he went to the feds as a whistleblower.

In the end, all parties walked away with wounds from this classic Mexican standoff; except Uncle Sam, of course, Uncle Sam always wins (“Uncle Sam” being a slang term for the United States government).

The Punishments

According to PRI, the following episode played out in the courtroom:

Birkenfeld would eventually plead guilty. In addition to helping Olenicoff evade $7,261,387 in taxes, Birkenfeld admitted to advising clients on all sorts of tactics to conceal their undeclared accounts, accepting “bundles” of checks from U.S. clients for deposit into Swiss, Liechtenstein and Danish banks and, on one occasion, buying diamonds for an American client and transporting them to the U.S. in a toothpaste tube.

The judge sentenced him to 40 months, the longest prison sentence by far for anyone associated with this case. UBS agreed to pay $780 million to avoid prosecution, admitting it fostered tax evasion from 2000 to 2007 and consenting to turn over the names of some 4,500 U.S.-based clients, a transfer which was approved in June by the Swiss parliament. Olenicoff plead guilty to filing a false tax return and received two years of probation and paid $52 million in back taxes and penalties. (He is currently suing Birkenfeld and dozens of other UBS executives in a sweeping civil action.)

By all accounts, it is extremely rare for the Justice Department to indict a valuable informant, and immunity has been granted to witnesses implicated in far more serious crimes than Birkenfeld’s (hit men, mobsters and members of the Manson Family, to name a few). Given the massive scope of the UBS fraud, why the government would arrest a whistle blower who came forward voluntarily remains a puzzle, for many observers of the case, even after Downing explained his reasoning in court.

Igor Olenicoff Motivation

Igor Olenicoff isn’t a bad person. Sure, he gets into trouble but it isn’t because he has these horribly malicious intentions to bring harm to people. Rather, he bends the rules where he can and waits to see how much he can get away with. For example, an artist once sent him the blueprints for a sculpture, at which point, Olenicoff sought out a cheaper Chinese sculptor to create the same piece. Clearly, this is stealing and not okay.

It’s really almost laughable because he so clearly has the money to pay his taxes, to not have to steal artwork, etc. yet, for whatever reason he can’t help but try his luck at getting a better, slightly illegal, deal.

All in all, regardless of his occasional recklessness, the story of his rise from poverty to wealth is one we all ought to admire and try our best to learn from. A very long time ago, Igor was stocking shelves in a hardware store just to have enough to pay for his community college classes. He didn’t have much of anything to his name beyond a vision. Leaving us to suppose, in his mind’s eye, he has always been the man he is today.