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"Konanykhine update: fall guy of international criminal?"

Interpreter Releases

August 4, 1997

In 73 Interpreter Releases 1214 (Sept. 16, 1996), we reported on an unusual and complicated case, Konanykhine v. Carroll, Civil Action No. 96-1085-A (E.D. Va. Aug. 16, 1996). The petitioner, Alexandre P. Konanykhine, was a successful entrepreneur in Russia, but flee when he allegedly began to receive threats from corrupt elements both within and outside his business.

Mr. Konanykhine eventually wound up in the U.S., where he sent numerous letters to the press and to officials in Moscow, protesting his situation. Those protests did not have the desired effect. A Russian military prosecutor, Alexandre Volevodz, charged that Mr. Konanykhine had embezzled $8.1 million from the All-Russian Exchange Bank. Mr. Konanykhine countered that Mr. Volevodz was acting under the influence of Russian organized crime, and claimed that the charges and evidence against him had been fabricated.

U.S. prosecutors and FBI officials in Moscow agreed to assist Russian authorities in their quest for the return of Mr. Konanykhine to Russia. The FBI was allegedly interested in giving the Russians what they wanted, because it had just opened a new Moscow office and wanted to establish cooperative relations with Russian officials there. As there was no extradition treaty between the U.S. and Russia, the Moscow FBI office asked the Washington, D.C. FBI office whether there were any immigration violations outstanding that would allow immigration authorities to deport Mr. Konanykhine specifically to Russia.

Subsequently, the INS alleged that Mr. Konanykhine and his wife had used a fake Russian subsidiary to obtain US. visas, which Mr. Konanykhine denied. He also filed an asylum application, which was also denied. Mr. Konanykhine had obtained advance parole pending an application for adjustment of status. The INS detained Mr. Konanykhine, and placed him in exclusion proceedings, claiming that his advance parole was thereby automatically terminated.

Mr. Konanykhine sought release from detention pending resolution of this immigration status. He filed a habeas corpus petition, charging that the detention was unlawful. U.S. District Judge T.S. Ellis III granted habeas corpus relief because the INS had not properly terminated his parole status before detaining him and placing him in exclusion proceedings.

In the most recent activity in this case, Mr. Konanykhine was released from detention and placed under house arrest following a hearing on a third habeas petition. [Legal Times, July 28, 1997, at 8.] Konanykhine v. Carroll, No. 97-449-A (E.D. Va. July 22, 1997). During the hearing on July 22, 1997, several witnesses accused INS officials of misleading the court about their real reasons for detaining Mr. Konanykhine and seeking his deportation specifically to Russia. The witnesses also accused the INS officials, including the local District Counsel, of ignoring suggestions that some of the evidence against Mr. Konanykhine was flawed.

One of the witnesses Yuri V. Shvets, a former KGB intelligence officer, testified that he had been granted asylum in the U.S., but was fearful for his safety because the KGB "desperately wants to win this case, and everybody who won't step to their side would face problems."

Mr. Shvets testified that it became clear to him that the INS wanted to deport Mr. Konanykhine specifically to Russia. Mr. Shvets testified that he told INS officials that in the files he was asked to review, there were "strong indications that the Russian side is just lying." Relying on his past experience with similar cases, Mr. Shvets said it was extremely likely that Mr. Konanykhine had been set up by the KGB as a scapegoat for covert KGB smuggling of millions of dollars out of Russia which had belonged to the Communist Party. [Mr. Shvets testified that the KGB has been split into two parts, SVRR (Russian Foreign Intelligence Service) and FSB (Federal Security Service, the domestic branch), which together have the same tasks and people as the former KGB. For purposes of brevity, we will use "KGB."]

Since the situation had reached the attention of Boris Yeltsin, Mr. Shvets noted, it had become important to KGB members to cover up their involvement in the embezzlement, and they therefore wanted to pin the blame on Mr. Konanykhine instead and bring him back to Russia to silence him. Mr. Shvets testified that if Mr. Konanykhine were to be brought back to Russia, "every single minute for the rest of his life he will dream to be executed, because the life will be intolerable."

Mr. Shvets said that when he brought up theses concerns, the INS District Counsel replied that the INS need not worry about what happened in Russia and what was in this particular file of documents. The District Counsel also mentioned that the INS already had enough reason to deport him without getting into the details in the file.

Mr. Shvets said that he strongly believed that the file of documents presented by the Russian side was "a fraud." He said that he was testifying because he was afraid that soon the fraud and corruption would be publicly exposed, and the U.S. government would be embarrassed if they had cooperated in the scapegoating of Mr. Konanykhine.

Another witness, Antoinette J. Rizzi, formerly an assistant district counsel for the INS, said that she had worked on the Konanykhine case and had become alarmed at what she perceived could be flimsy evidence against him. After bringing up her concerns to various INS officials, she was informed that her work on the case was confidential and could not be discussed with anyone outside the Justice Department. She appeared in court on this case in response to a subpoena. She said that this case was the reason why she is no longer employed by the INS: that after raising her concerns about the case, her supervisor, the District Counsel, relieved her of her duties and she subsequently resigned.

Ms. Rizzi testified that she was aware that the INS' true desire was to deport Mr. Konanykhine to Russia, even though the INS had testified in court that they were only interested in his alleged visa fraud. She said that during a meeting with Russian representatives, she began to explain that it wasn't absolutely certain that Mr. Konanykhine, if he were excluded from the U.S., would necessarily be deported to Russia. She explained that he might instead be deported to the most recent country from which he came. At that point, Ms. Rizzi testified that the INS District Counsel interrupted, telling the Russians that despite the law, the INS would seek the Attorney General's authorization to make sure Mr. Konanykhine was sent back to Russia, and that the INS would make sure he was kept in custody until that time. "I sat in my chair and I was amazed," said Ms. Rizzi, who was reluctant to rebut her supervisor.

Ms. Rizzi also testified that the District Counsel told her that Mr. Shvets' information was not of any use to the INS, and that he would instead make a good witness for Mr. Konanykhine. Ms. Rizzi further testified that she believed that the Konanykhine case was important to the INS because the FBI and INS were establishing fledgling offices in Moscow, and therefore cooperation with the Russians was essential in greasing the wheels. Ms. Rizzi said that her opinion was that the INS had misrepresented to this court the motivation for arresting Mr. Konanykhine, and also misrepresented to the court the fact that the INS intended to send Mr. Konanykhine back to Russia.

Judge Ellis said that Mr. Konanykhine had "demonstrated a significant likelihood of success on the merits of the habeas petition." He further said there was a "significantly strong basis" on which the petitioner could argue that the district director acted for reasons other than risk of flight or public interest, and that what the INS really wanted to do was to deliver Mr. Konanykhine to the Russians even though there is no extradition treaty. Judge Ellis said that the record reflected a probability that the INS had not offered a bona fide reason for refusing to parole the petitioner, and that even if there were a determination made based on public interest, the determination may well have been "significantly infected by fraud from the Russian military prosecutor, so as to undermine any factual basis relied on."

Judge Ellis therefore ordered that Mr. Konanykhine be released on condition that he remain at home while his immigration issues were resolved, and that conditions of bail and restraint be established that would ensure that he would not be a flight risk. Judge Ellis noted that he was concerned not only about possible misrepresentations, but that he was repeatedly assured that the INS had not specific intent to deliver Mr. Konanykhine to the Russians, when it appeared they may have had that intent. He said that the court would resolve these issues quickly, and that in the meantime, since Mr. Konanykhine had been incarcerated for more than a year, the court would "get to the bottom of it" with his living in an apartment instead of in detention. Judge Ellis said he found the testimony to be "credible and somewhat disturbing."

Attorneys for Mr. Konanykhine in this case, appearing pro bono, were John Nassikas III and D. Jacques Smith of Washington, D.C.

In a separate matter, the Board of Immigration Appeals (BIA) heard oral argument on Mr. and Mrs. Konanykhine's immigration case case week. [Legal Times, July 28, 1997, at 8.] Washington, D.C. attorney Michael Maggio is representing the couple in that case. Mr. Maggio has filed a motion to remand to the immigration judge on the ground that the evidence is flawed.

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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.