"Jury awards Russian $33M damage ruling"

During a trial that included the testimony of a former American spy, an Arlington County Circuit Court jury has awarded a Russian entrepreneur and former Arlington County resident $33.5 million in damages, finding that two well-known Russian newspapers published defamatory articles about him.

The compensation recommended by the six-member jury is the highest Clerk of the Court David A. Bell said he has encountered in his tenure.

The jury's recommendation will be reviewed by Judge William T. Newman Jr.

In a lawsuit filed in February 1997, Alexander Konanykhine, 33, alleged Izvestia - a Russian daily newspaper - reported the businessman was involved in criminal acts such as defrauding the Federal Reserve, bribery, bigamy, theft and money laundering. Theinformation was erroneous and published with "reckless disregard for its truth or actual malice," the suit claimed.

"I was being made a villain of the people," Konanykhine said yesterday after his trial against a second Russian newspaper was continued. "What is ironic is that it was happening because I refused to join their way."

Konanykhine said Izvestia for years had assisted the KGB and Communist Party in persecuting dissidents by printing lies and character assassinations.

Court documents highlight two newspaper articles printed about Konanykhine in 1996 and 1997. He said the articles are available on the Internet and for purchase at specific newsstands in the Arlington County area, and some were reprinted in the American media.

Konanykhine said he believes former Communist leaders tried to use him as a scapegoat for the failing Russian economy.

Izvestia neither acknowledged the case by correspondence nor provided legal representation in court, said Konanykhine's lawyer, J.P. Szymkowicz said.

"When you don't have assets here, you have nothing to lose," Szymkowicz said.

A former American spy posing as an official working for the Communist Central Committee at the time of the events testified in Konanykhine's defense.

Konanykhine said he doubts he will ever get the full amount of the reward, but he said the money is not his concern. He said his priority is clearing his name.

The allegations have made it difficult to recruit financial backing and have stalled his hopes of clearance by the Securities and Exchange Commission, said Kohanykhine, owner of KMGI.com, an Internet business in New York.

"People take it seriously," Konanykhine said. "The new theory is that Russia is a democracy just like [the United States], and if the government says something, it considers it truth."

In 1983, Konanykhine was a student at the Moscow Institute of Physical and Technology and began work on a student construction team. He eventually parlayed the student experience into a successful construction company of his own.

But, according to court documents, he was expelled from the school for what he believes were the government's proddings against capitalistic endeavors.

As perestroika swept the former Soviet Union, Konanykhine established the Russian Exchange Bank, one of the largest commercial banks in Russia, and took control of four additional financial institutions. By the time he was 25 years old, Konanykhine estimated his net worth was more than $300 million, court documents say.

The young entrepeneur claims to have financed Russian President Boris Yeltsin in the 1990 elections.

After the fall of the communist system in 1991, former KGB and Communist Party officials began "taking back power," he said. "It took them a few months to get over the shock of being rejected of power."

In 1991, organized crime began to tighten its grip over the Russian economy and began to threaten many companies doing business in Russia, court documents say. Konanykhine said he was kidnapped in 1992 during a business trip to Budapest by a criminal group with close ties to the KGB.

He said the group seized all of his businesses.

Konanykhine escaped and asked Russian and Hungarian authorities for an investigation into the abduction but was instead persecuted for his actions, court documents said.

He and his wife, Elena, fled to the United States shortly after the kidnapping.

But, Russian authorities asked that Konanykhine be extradited, and the couple was arrested for alleged violations of immigration laws.

A U.S. District Court judge in Alexandria ruled Konanykhine's arrest unlawful and ordered he be released. A suit seeking monetary compensation for the year-long detention is still pending.

Konanykhine was cleared in February 1999 of similar charges by the U.S. Immigration and Naturalization Service, but said the INS relied on falsified Russian documents and witnesses.

Konanykhine's lawsuit against the Kommersant Daily, a Russian business newspaper, was delayed yesterday until Jan. 19 after Szymkowicz argued that the possible jury pool included people who had participated in Monday's trial or jury pool members who had heard about the case after the jury was released.

Kommersant Publishing House filed a motion to dismiss the lawsuit in March 1998, claiming Arlington County Circuit Court did not have jurisdiction over the case since the defendants' businesses were based in Moscow. That motion was denied.

"All the defendants are foreign corporations," the defendant's memorandum said. "Plaintiffs do not allege that any defendant does business in Virginia, or that any transaction or occurrence relating to this litigation took place in Virginia."

The McLean-based law firm which represented Kommersant in the motion for dismissal has since discontinued its representation and could not be reached for comment.