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Judge rules U.S. erred in arresting russian emigre may be freed during deportation appeal

Washington Post

January 27, 2004

By Jerry Markon. Washington Post Staff Writer

A federal judge ruled yesterday that homeland security agents should not have arrested a jet-setting Russian businessman and indicated that he would release the immigrant as he and his wife appeal an order sending them back to Russia to face trial on embezzlement charges.

Judge T.S. Ellis III said he probably would release Alexandre Konanykhine at another hearing tomorrow. He said he is "inclined" to subject Konanykhine to electronic monitoring so federal officials could track his movements.

Ellis took the action as he blasted the government's long-standing effort to deport Konanykhine, who has had close dealings with opponents of Russian President Vladimir Putin and who contends that he and his wife, Elena Gratcheva, would be killed if sent home. Konanykhine contends that the U.S. government is helping Putin's efforts to suppress dissent by pursuing the deportation. U.S. officials deny the case has any political overtones.

"It stinks," Ellis said during a hearing this month in U.S. District Court in Alexandria, "if someone thinks he's going to be persecuted. . .. We pride ourselves in this country in preventing people from being persecuted, don't we?"

He added yesterday: "Not a lot of this makes me proud of my government."

A Justice Department appeals panel on Nov. 20 ordered Konanykhine deported to Russia and gave Gratcheva 30 days to voluntarily leave the United States. The ruling reversed a 1999 decision that had granted them political asylum in the United States.

On Dec. 18, Konanykhine and his wife were pulled from their vehicle at a tollbooth near the border with Canada. They were hoping to seek asylum there. Minutes before they were to be put aboard a flight to Moscow, Ellis ordered a stay of the deportation. He has reviewed the issue at a series of hearings since then.

Yesterday's developments were the latest in the couple's unusual odyssey through the U.S. business community and judicial system. Since arriving in the United States with his wife in 1993, Konanykhine has gone from being a jet-setting Internet banker with an apartment at the Watergate and matching his-and-her BMWs, to a prisoner, to a political refugee and now back to being a prisoner. Along the way, he has made and lost millions of dollars and been the target of CIA and FBI investigators, a Russian military prosecutor and a Russian mafia hit man. The case has been likened to a Tom Clancy novel.

Ellis yesterday called it "long and tortured." At a hearing this month, Ellis said he had received a mysterious phone call in his chambers from someone asking about the case and claiming to work for the CIA. "I have no idea if he really was from the CIA," Ellis said. "It was certainly an inappropriate telephone call."

Michael Maggio, an attorney for Konanykhine, called Ellis's ruling yesterday "extraordinary. . . . It's not often that a foreign national wins an immigration case these days."

Federal officials were prepared to deport Konanykhine to Russia immediately if Ellis reversed his stay. "This is a legal process afforded to everyone in the United States," said Garrison Courtney, a spokesman for U.S. Immigration and Customs Enforcement. "We obviously respect the right of appeal."

But Ellis ruled that the government had not respected that right when it arrested the couple and had instead breached a 1997 agreement that allowed them to stay in the United States pending resolution of their asylum claims

A decade ago, Konanykhine was one of the young entrepreneurs who made a fortune in the sale of state assets as the Soviet superpower disintegrated. By his own account, he became a multimillionaire in his mid-twenties, living a life of luxury in Russia and joining the inner circle of President Boris Yeltsin.

Konanykhine's high living in Russia ended in the early 1990s, when he had a falling-out with his business partners. In 1993, Russian law enforcement officials accused him of embezzling millions of dollars. He responded that he was being persecuted for exposing corruption in Russia and that he had prevented millions from being stolen.

In late 1993, Konanykhine and his wife moved to Washington. But he caught the attention of U.S. and British officials when he set up the European Union Bank, an Internet bank in the Caribbean that U.S. and British investigators say helped siphon millions of dollars out of Russia.

He was arrested in his Watergate co-op in June 1996 and charged with immigration fraud. The Russian government demanded his extradition on the old embezzlement charges, saying he had stolen $8.1 million and labeling him Russia's most-wanted criminal. But in February 1999, Konanykhine was granted political asylum, in part because an FBI agent testified that the Russian mob in New York had a contract out to kill him.

The decision in November overturned that ruling.

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More News...

Washington Post:
Konanykhin, one of the first Russian millionaires after the fall of the commies, left in 1992 and was granted asylum here in 1999. He's built a very successful Web advertising business in New York City. He had been chosen "New York Businessman of the Year." "As such, you will be honored and presented with your award," NRCC chairman Thomas M. Reynolds (R-N.Y.) said, at a "special ceremony" April 1. " President Bush and Governor Arnold Schwarzenegger are our special invited guests.
CNN:
Alex Konanykhin controlled Russia's largest commercial bank in the 1990s
Wall Street Journal:
Mr. Konanykhin was a whiz-kid physics student who became a pioneering Russian capitalist in early 1990s, building a banking and investment empire valued at an estimated $300 million all by his mid-20s. He was a member of President Boris Yeltsin's inner circle.
The Sun:
Alex Konanykhin fled Russia in 1992 and won asylum in the US after the collapse of the Soviet Union. The entrepreneur had set up 100 different companies in Russia and had an estimated net worth of $300million by the time he was 25. He is regarded as one of the first Russian millionaires after the fall of the Iron Curtain. One of the newly open country's leading lights, he even met with US President George HW Bush in 1991 on a joint visit with Russian leader Boris Yeltsin. However, he was then kidnapped in 1992 while visiting Budapest and all of his business assets were seized in Russia. … Being hunted by the Russian state, Konanykhin won asylum in the US in 1997 and set up a new life - but the shadow of the Kremlin continued to loom over him.He went on to rebuild a business empire and set up multimillion dollar firms such as TransparentBusiness in the US.
The Deal:
... a New York-based software startup called TransparentBusiness Inc. has drawn backing from Fortune 500 executives through a relatively new type of securities offering called 506(c) as part of an effort to raise $10 million this year ... Alex Konanykhin, CEO of TransparentBusiness, said he decided to reach out directly to accredited investors by purchasing ads in financial publications. One particularly bold ad includes the figure, 90,000%, with a question mark next to it. Konanykhin said the ad speaks to the large market opportunity for his company's software, which helps governments eliminate fraud by verifying billable hours charged by outside contractors. ... One of the investors, Ken Arredondo, told The Deal he invested in TransparentBusiness and agreed to serve on its board of directors because of the company's strong management team and the huge market opportunity to increase transparency of outsourced contracts worldwide. He believes in the company's product and said it's unique. "It's a Saas-based, easy-to-use tool," he said. "There are a lot of technology players out there that are a lot bigger, but none of them have what they have. There will be competition, but they have the product now. They have first-mover advantage."
The Baltimore Sun:
Business whiz kid.
WJLA TV / ABC:
Russian Bill Gates.
The Times:
By the time he was 25 he was one of the most important figures in post-Communist Russia. But in 1992, while on a business trip to Hungary, Alex Konanykhine was kidnapped.
The New York Times:
The Federal Bureau of Investigation notified Konanykhin that Russian organized crime figures had paid to have him killed.
Los Angeles Daily Journal:
Representing himself through much of the process, Konanykhin managed to convince an immigration judge of an alleged INS and KGB conspiracy and cover-up. Following the court's admonishment, the INS agreed to drop all charges and also pay $100,000..The judge also ordered an investigation of the Justice Department. In separate actions, Konanykhine subsequently won multimillion dollar libel judgments against two Russian newspapers. A $100 million lawsuit against the Justice Department is pending, alleging perjury, fraud, torture and witness tampering by U.S government officers on behalf of the Russian Mafia.
Profit Magazine:
Imagine you are a teenage physics genius who quickly amasses a $300 million empire of real estate and banking ventures, has dozens of cars, six hundred employees, several mansions and two hundred bodyguards—but you are nonetheless kidnapped by those you trusted, threatened with torture and death, and have your entire empire stolen from you one dark night in Budapest. You escape with your life by racing through Eastern-block countries and flying to New York on stashed-away passports—only to have the KGB and Russian Mafia hell-bent on your hide and the U.S. government jailing you and conspiring to serve you up into their clutches. All this before your 29th birthday. Sound like a Tom Clancy thriller? No. . . just a slice in the life of Alexander Konanykhine.