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"Russian freed, INS faces ethics probe"

Legal Times

September 1, 1997

By Karen Alexander

A settlement agreement between the district director of the Immigration and Naturalization Service and Alexandre Konanykhine made the long-jailed Russian banker a free man on Aug. 26, and the Justice Department has indicated that the INS lawyers who sought to keep him behind bars will themselves be investigated.

U.S. District Judge T.S. Ellis III endorsed the settlement - which also requires the INS to pay $100,000 in legal fees to Konanykhine's pro bono counsel at Arent Fox Kintner Plotkin & Kahn - and ordered Assistant U.S. Attorney Robert Spencer to confirm within 30 days that there will be an internal probe by the Department of Justice of the INS lawyers' conduct.

"What I'm interested in now is whether a misrepresentation has been made to this court" by INS lawyers about their motives for keeping Konanykhine in custody, Ellis said from the bench.

In jail for more than a year and then under house arrest for the past month, Konanykhine, 30, spent his first days of freedom taking hours-long walks with his wife Elena Gratcheva in their Northwest Washington neighborhood.

Konanykhine and Gratcheva entered the United States on business visas in 1992. Konanykhine, who made a fortune in post-Communist Russia as the head of the All-Russian Exchange Bank, claims he was fleeing from the Russian mob when he entered the U.S. from Antigua.

Russian prosecutors pursued Konanykhine in the United States, claiming that he had stolen $8 million from his own bank, and the couple were arrested in June 1996 for alleged visa violations. Gratcheva was released on bond, but Konanykhine was jailed in Virginia.

INS lawyers told Ellis in three habeas corpus hearings that Konanykhine had lied on his business visa, is a fugitive from justice in Russia, and should be kept in custody because he is a flight risk.

But at a July 22 hearing, a former INS attorney who originally prosecuted the cases against Konanykhine and a former agent of the KGB testified that INS officials, including District Counsel Eloise Rosas, the top lawyer in the office, had misled the court about their reasons for detaining Konanykhine and had ignored suggestions that some of the evidence against him is flawed.

Antoinette Rizzi, the former INS prosecutor, alleged that Konanykhine had been detained because the INS had promised Russian prosecutors that he would be held in custody until he could be returned to Russia. The United States does no have an extradition treaty with Russia. Under U.S. law, therefore, if he were deported, he could only be returned to the country from which he entered the United States - Antigua.

All of the original lawyers for the INS have been removed from the case since the last habeas hearing in July.

David Kline, a lawyer with the Justice Department's Office of Immigration Litigation, negotiated the settlement for the INS. It was reached in August and formally entered by Ellis on Aug. 26.

In response to the judge's inquiries from the bench last week, Kline told Ellis that a "wrongdoing investigation is going to be conducted by the Office of Professional Responsibility."

The OPR initially looked into the matter before Rizzi's testimony but dismissed it. Kline indicated last week that he understood it would be reopened in light of the recent developments. "There seems to be no reason why the Office of Professional Responsibility shouldn't look into it," Kline said.

Ellis agreed. "Let this matter proceed by way of the Office of Professional Responsibility, but this court wants to be advised of it ... before I use the resources of the court to do it myself."

The settlement is a major victory for Konanykhine and for his two lawyers who originally took the case pro bono - John Nassikas II, of counsel at Arent Fox, and D. Jacques Smith, a senior associate at the firm.

In a separate matter, Konanykhine and Gratcheva are still pressing their immigration case. Last year, the two filed for asylum,. claiming Russian mobsters were trying to steal Konanykhine's business and would have him jailed or killed if he were returned to Russia.

An immigration judge originally denied the petitions. The Board off Immigration Appeals agreed to hear oral arguments in July, but on the eve of that hearing, INS lawyers agreed to have the asylum issue remanded to an immigration judge.

Konanykhine's immigration lawyer, Michael Maggio of D.C.'s Maggio & Kattar, says he is hopeful that in light of the new developments, the INS will agree to grant Konanykhine permanent resident status, or at least political asylum. "The next stage in this case for us is, we hope, to be able to resolve Mr. Konanykhine's situation without the need for a new hearing," Maggio says

Russian Immigrant
Russian Banker
Justice Department

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.
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.
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.