Washington Post
January 27, 2004

Judge Rules U.S. Erred In Arresting Russian
Emigre May Be Freed During Deportation Appeal

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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