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When his country’s destiny returned to its own hands by the fall of the Soviet Union, Pavel Lazarenko rose from lowly engineer to prime minister. But his meteoric rise ended abruptly when he fled corruption charges leveled by Ukrainian officials. Even as Lazarenko was detained by U.S. authorities while trying to enter the country, his name was on presidential ballots back home. Today, with his freedom, wealth and privilege lost behind the walls of a federal detention center, Lazarenko will ask Judge Martin Jenkins of the U.S. District Court for the Northern District of California to rule that he cannot be prosecuted here for events that took place half a world away. Prosecutors say Lazarenko wielded his power like a club, using it to extort millions from Ukrainian businesses and laundering the money through Swiss, Antiguan and American banks on his way to a vast personal fortune. His attorney says Lazarenko is the victim of a politically motivated prosecution possibly based on misleading evidence fed to U.S. investigators by a corrupt Ukrainian regime intent on silencing opposition. Whatever the motivation, the case has captured the attention of Ukrainians in the United States and abroad. “It is a big deal,” said Igor Gawdiak, president of the Ukrainian-American Coordinating Council. “People do see him as corrupt,” but “a lot of them are very cynical and say he’s no different from any of the others.” The key question today will be whether Lazarenko, in a case that echoes the American prosecutions of former Panamanian leader Manuel Noriega and Philippine President Ferdinand Marcos, can be prosecuted on a 53-count money laundering and wire fraud indictment based on acts that took place abroad. “The indictment attempts to stretch the application of domestic criminal statutes to foreign conduct that Congress expressly determined should not be criminalized under the laws of the United States,” wrote Theodore Cassman, Lazarenko’s lawyer, in court papers. But the government responds that the conduct the defense refers to is not the issue in the case. The issue, they argue, is Lazarenko’s use of U.S. banks to support and conceal his criminal deeds. “Each financial transaction, each transportation of stolen money, each wire in furtherance of a scheme to defraud — occurred wholly in the United States,” wrote Assistant U.S. Attorney Martha Boersch. “The overseas conduct … is either the predicate to the charges, part of an element of the offense, or part of the factual background of the case, and is not the act charged as a violation of each statute.” The case is also going forward against the backdrop of an emerging political drama in Ukraine which has the potential to cast doubt on the validity of the evidence against Lazarenko. Recently released tape recordings made by Ukrainian President Leonid Kuchma’s top security official paint Kuchma in an unflattering light. Their contents have sent Ukraine into convulsions of unrest. On one, there are indications Kuchma may have had something to do with the beheading of an opposition journalist. Kuchma first denied it was his voice, then reportedly said the tapes were doctored. But another tape may be more relevant to the case at bar. On one tape, according to a report in the Kiev Post, Kuchma is heard bragging that his administration fed misleading information to U.S. investigators. FIVE SWIMMING POOLS According to the indictment, Lazarenko, “as a government official in Ukraine, would engage in various acts of extortion and fraud, and would receive funds that had been stolen, converted and taken by fraud, and would transfer the proceeds of the activity into bank accounts” in different countries. He allegedly extorted money from legitimate businesses in Ukraine, laundering more than $200 million through bank accounts. Cassman, of Emeryville, Calif.’s Cooper, Arguedas & Cassman, characterizes the case as “utterly and completely without precedent,” because, he says, the prosecution relies on activity beyond the reach of U.S. jurisprudence. Boersch asserts that Cassman is falsely portraying the prosecution as a bribery case under the Foreign Corrupt Practices Act. “The defendant’s entire argument … is constructed upon a flawed foundation. Each floor built upon that foundation is therefore unsound, and in the end, his claims collapse,” Boersch wrote. If Lazarenko ever returns to Ukraine, he faces prosecution there as well. Ukraine’s prosecutor general announced last month he was proceeding with criminal charges that Lazarenko was responsible for the assassinations of two men, including a bank executive. The U.S. does not have an extradition treaty with Ukraine. And as for the accusation that the United States is merely prosecuting Lazarenko by proxy for Kuchma, a political opponent, Boersch dismisses that point as well. Ukraine is a leading recipient of U.S. foreign aid. “If the defendant is suggesting that the government serves as Ukraine’s proxy because it has received evidence from Ukraine, then presumably the government is also proxy for the United Kingdom, the Netherlands, Switzerland, the Bahamas, Antigua, Israel, Russia and Cyprus, since the government has received evidence from those countries as well,” Boersch said. The government is also seeking the forfeiture of more than $20 million in assets, including Lazarenko’s Novato estate. The opulence of Lazarenko’s home, with its $6.75 million price tag (paid in cash) and its five swimming pools, is surpassed by the Sausalito, Calif., home of his one-time deputy, Peter Kiritchenko. Dozens of FBI agents raided Kiritchenko’s $11 million estate in 1999, arresting him as his wealthy neighbors looked on. A criminal complaint was filed and subsequently dropped. But Kiritchenko is painted in the indictment as a victim of Lazarenko’s schemes. The former prime minister, “by threat of economic harm and under color of official right induced Kiritchenko” to participate in the criminal endeavors, the indictment reads. He could end up testifying should Jenkins let the case proceed. But international intrigue in the form of the so-called Melnychenko Tapes could add an element of unpredictability. Mykola Melnychenko, President Kuchma’s top security official, announced recently that for years he hid what he said was a voice-activated tape recorder in a couch in Kuchma’s office. The report that Kuchma bragged about misleading Justice Department investigators could not be verified. Neither could a 10-week-old Russian report quoting a Ukrainian parliamentary deputy as saying the Justice Department is investigating Kuchma himself for money laundering. A recent study performed by security consultants Kroll Associates questioned the tapes’ authenticity, though some officials in Ukraine heard on the tapes have reportedly vouched for them. Melnychenko fled Ukraine before the tapes were released, stopping first in Europe before seeking political asylum here. The U.S. State Department confirmed in April that asylum had been granted. His whereabouts are being kept secret. Scott Horton, president of the International Institute for Human Rights, which helped Melnychenko win asylum, would say only that the former guard is “somewhere in North America.” Horton, a partner with New York’s Patterson, Belknap, Webb & Tyler, said he had not heard the tapes, but was not surprised at the report. “I find it hard to believe that President Kuchma would mislead anybody,” Horton said, wryly.

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