OpsLens

The Anatomy of Fraudulent Wartime Profiteering: The IZOP-K Scandal

Donald Trump is preparing to put an end to one of the biggest international fiascoes of the Biden Administration. The war in Ukraine, and its attendant excesses, have become synonymous with Biden. The Biden Administration attitude toward Ukraine-related corruption has been “let’s deal with this after the war is over.” If Congress and the new DOJ show more curiosity, they are likely to discover scandals of all sizes.

In 2022, as Ukraine urgently sought protective equipment for its soldiers, Ukraine’s Ministry of Defense (MoD) placed a €6,169,000 prepayment with a Slovenian company, IZOP-K, for ballistic gear (‘bulletproof vests’). That started a series of bureaucratic failures and shady dealings, in which opportunists exploited the desperation of war.  The question is how this happened, in spite of IZOP-K’s record with American companies.

The equipment IZOP-K delivered failed basic safety tests, making it unusable. Ukraine pursued arbitration and won in March 2024, but they have not yet recovered their money. IZOP-K’s CEO, Klemen Molek, deflects blame, citing quality issues with a Macedonian manufacturer.  But two American companies accuse Molek of fraud, and he is not the only questionable figure in the spotlight.

A History of Broken Promises

Klemen Molek, owner of IZOP-K, left one North Carolina businessman bankrupt after failing to provide 13,000 AK47s for which he’d been paid $4.5 million.  He also received $9 million from Target Sports USA, an online ammunition retailer based in Connecticut, but three years later has not supplied a single bullet.  The two American victims are warning other U.S. and European companies: “I don’t trust Klemen Molek or his company IZOP-K.  Everything may look legit and with the right documentation, but it’s not.”

Suliban Deaza, from Charlotte, North Carolina, lost his entire business, IKON Weapons, over failed contracts with IZOP-K for the purchase of AK47s and Russian gas masks.  Molek had sent him photos of the weapons in crates, but failed to provide them.  When Deaza flew to Serbia to try to take possession of them, Molek only played a cat and mouse game.

Deaza said: “I have been in the industry for many years and take all precautions with paperwork, contracts, end user certificates, ATF permits and export papers. You think you’ve seen it all. When you deal with Klemen he provides all the necessary documentation, including contracts, commissions… everything has the right signatures and government seals. One time he bragged of how he had the Slovenian government in his pocket and if he needed any permit he could get it immediately. This and his prior reputation led me to believe him.”

“During the bankruptcy procedures he even appeared in front of the North Carolina Court via video link arguing the delays in supplying the weapons were all because of someone else and never his fault at all. At the end I was literally one step from going to jail here in the United States. It cost me my business, it cost me my home and it almost cost me my marriage. In all I lost about $7.5M, and the most important thing, my reputation.”  Deaza said that he learned later that Molek and his associates in Serbia and Montenegro had sold the AK47s to different people with different contracts.

Among the customers IZOP-K lists on its website is Target Sports USA, whose owner Miodrag Delmic has not seen any return on the $9 million he paid Molek in 2021. The two had struck up a relationship over the phone in 2020 after being introduced by another broker.  It was during COVID and supplies of ammunition were running low in the U.S.

“He’s Slovenian and my grandmother was Slovenian so we had that background in common. We did a few deals together and everything worked out fine,” Delmic said.  The deals were always for ammunition, the common calibers: 7.62, 5.56, .223, and 9mm. Klemen visited Delmic in the U.S., and Delmic traveled to Slovenia where he met Klemen’s family.  “And then the bigger numbers came and here we are, three years later, playing lies after lies and so on,” Delmic said.

Those “bigger numbers” were a $9 million prepayment for two ammunition deals in 2021, involving two Russian factories, Vympel and Bernaul.  Delmic said, “Molek used another broker to purchase the ammunition from Vympel, taking his commission when he placed the order. I have confirmation that Vympel received $3 million of our money.  But then the Russia-Ukraine war started. They said ‘Force majeure, we’re not giving you ammunition and we’re not giving you your money back.’ I understand that, but when I asked Molek ‘Where’s the other $5 million? How about the other factory,’ he told me they don’t have the money. I believe that money was misused. I have been told by some of his other partners that he never gave the $5 million to that second factory, that he kept it for himself. I am continuing to look into that, and hope to find out the truth of the matter soon.”

Delmic went to Slovenia, hired an attorney, and tried to get his money back.  He succeeded in forcing Molek to sign a debt service agreement for the full $9 million, repaying $220,000 a month, but Molek defaulted after just eight months.

“This was last February. He made payments up until October when he failed to make the payment. He said the money was in Dubai and he couldn’t get the funds out. Another lie. It’s always somebody else’s fault. Everybody’s stupid. He’s the smart one. It’s not his fault. It’s the government. It’s blah, blah, blah, blah, blah.”

Delmic and Deaza are now pushing for the FBI, Interpol, and the Slovenian government to get involved and investigate so Molek and his associates are stopped, and criminal charges can be brought against them in the U.S. as well as Slovenia. “We want people to be aware of Klemen Molek and IZOP-K’s fraudulent tactics. This has to end.”

In addition to the two American cases, a British victim is also taking IZOP-K to the London Court of International Arbitration and a Canadian firm is thought to have been swindled out of millions during the COVID pandemic over a supply of masks from China.

The Lesson for U.S. Investigators

Going back to Ukraine, once again the question is how Ministry of Defense officials overlooked Klemen Molek’s history in the American courts.  When they granted him an agreement with a prepayment, was that an oversight, or was someone protecting him from inside Ukraine’s national security apparatus?

The agreement with IZOP-K had been reached by two government ministers, Bohdan Khmelnytsky and Vyacheslav Shapovalov, currently awaiting trial in Ukraine charged with embezzling $30 million through bulletproof vest purchases.  Currently Klemen Molek and IZOP-K are still doing business as usual in military ammunition markets around the world.  Klemen Molek works closely with his father, Marjan Molek, who himself is subject to a judgment by Ukrainian authorities for over 4.5 million Euros, and has been investigated by Slovenian authorities for fraud.  Who keeps granting Marjan and Klemen Molek continued access?

Who Is “Fant?”

Reached by email, Klemen Molek denied owing money to Ukraine: “The case is still open,” he said.  Questioned about the ballistic vests, he said that the quality of the vests was the responsibility of the Macedonian factory where they were made.  Most of his answers were terse and uninformative.  His responses became quite expansive, however, when he was asked about an individual who was named in letters from Ukraine’s MOD, an individual named “Di Fant Valerjevic” or just “Fant.”  Fant seems to be a middle man in the transaction, and there is some indication that he is using an assumed name.

When asked about Fant, Molek became alternately defensive and threatening.  He went on at some length, calling Fant “… a well-known figure in our community and a long-standing business partner of military companies. He has been assisting almost all Slovenian enterprises in operating securely in risky foreign markets (not even mentioning Ukraine). His impeccable reputation leaves no place for doubt, and many companies value his opinion.”

I reached out to Mr. Fant as well, but his responses were even more defensive.  He denied any knowledge of the matters at hand, stating “I have never had, do not have, and do not wish to have ANY direct or indirect involvement in the matters you are asking about for 100%.”  Then he too became menacing, threatening to refer my emailed questions to Slovenian intelligence authorities, invoking GDPR, and suggesting he would reach out to American defense and energy officials for some reason.

But Klemen Molek spoke of “Mr. Fant’s assistance in expediting the ground fast delivery of military goods through Bulgaria and Romania and from USA by air during the challenging logistical conditions at the start of Russian invasion.” He went on: “His invaluable diplomatic support during those compressed timelines allowed us to deliver the goods in record time…”

Who is Di Fant, and what exactly was his role in supplying allegedly defective ballistic vests from IZOP-K to Ukraine’s military? And what is his real name, and his background? Look for another article with more detail about Molek’s Ukrainian partner that goes by the name of Fant.