Russian Oligarch Exiled in Beverly Hills Fights to Keep his $200-Million Fortune

Photo Credit: Mel Melcon / Los Angeles Times

The term ‘witch hunt’ has been a buzzword used in recent news to describe presidential accusations, rogue whistleblowers, and now a Russian oligarch turned defector. Two decades ago, Ashot Yegiazaryan, wealthy businessman and Russian politician, partnered with Moscow officials to rebuild the aging Hotel Moskva. A Soviet landmark located in Belgrade.

In 1993, Yegiazaryan became the Chairman of the Moscow National Bank (MNB). By 1995, MNB had become one of the largest banks in Russia, housing accounts of the Administration of Moscow region, The Ministry of Defense of the Russian Federation, Russian State Arms Export Company, The Russian Space Agency, and the General Prosecutor’s Office. Yegiazaryan was Deputy Chairman of the Board of Directors of “Unikombank” JSCB from 1996 to 1998. His political career excelled in 1999 when Yegiazaryan became a member of the State Duma and deputy chairman of the Committee on Budget and Taxes. In 1999, Yegiazaryan provided testimony in the criminal case regarding the embezzlement of $130 million from accounts held at MNB. The embezzled funds belonged to state-owned Rosvooruzheniye Weaponry Company. The investigation found that MNB used forged documents to withdraw the state funds. The stolen money was then moved through the MNB-controlled Unikom bank.

MNB’s banking license was revoked in 1998, but no criminal charges were brought against Yegiazaryan.

The expatriate fled the country in 2010, alleging he had been squeezed out of the project by prominent oligarchs closely allied with Vladimir Putin,according to a 2014 filing in federal court in Los Angeles.

The exiled politician sought refuge in a hilltop home in Beverly Hills, from where he managed to extract a nearly $200 Mn settlement from a U.S.-sanctioned Russian billionaire over the busted deal.

But in a seemingly unrelated dispute, he lost an $84-million arbitration award to a former business partner, Vitaly Ivanovich Smagin, who claimed Yegiazaryan had swindled him, and was convicted in absentia of criminal fraud in Russia.

Los Angeles U.S. district judge, Gary Klausner, was appointed to the case. In Russia, Yegiazaryan and his brother were found guilty in absentia of defrauding Smagin and in 2018 sentenced to serve their terms in penal colonies. Klausner threw out the case, ruling the law didn’t apply because Smagin was a Russian citizen and the dispute was essentially foreign in nature. However, he was overruled on appeal, leading to the Supreme Court review.

Yegiazaryan’s Petition for Certiorari pertaining to this case states that he “used a series of fraudulent transactions to steal Plaintiff’s shares in a joint real estate investment in Moscow, Russia” and that he “began taking steps to hide assets”, including the $198 million settlement in 2015 (the “Kerimov Award”). Alleging Yegiazaryan apparently “hid the money in an offshore bank account in Monaco held under the name of one of his shell companies—he then further encumbered the assets by placing them in a Liechtenstein trust (the “Alpha Trust”).”

Today, he stands increasingly hemmed in, legally and financially. Long the subject of an Interpol Red Notice, he has faced arrest if he traveled abroad and recently faced a similar threat in his adoptive home. After years of maneuvers to avoid paying the judgment, he was held in contempt in May by a federal judge in Los Angeles who warned he might incarcerate Yegiazaryan.

Last month, the U.S. Supreme Court ruled that a separate lawsuit filed by his former partner, Vitaly Smagin, under the Racketeer Influenced and Corrupt Organizations Act could proceed. The law, better known as the RICO Act, allows for treble damages that could total more than $300 million in Yegiazaryan’s case.

Smagin declined to be interviewed, according to his lead attorney, Nicholas Kennedy, who said in a statement that the claim his client “is affiliated with the Russian government in any way is absolutely false and has been rejected repeatedly by courts around the world.”

Diego Zambrano, an associate professor at Stanford Law School, cited Yegiazaryan’s legal battle in a recent scholarly article as part of a trend in which authoritarian governments make use of Western courts to harass political dissidents, critics and even the U.S. media. Yegiazaryan quoted the article in an appeal last month of the recent contempt order.

“This lawsuit has reflected a clear attempt by ‘Russia’s authoritarian government’ to use a ‘proxy plaintiff’ — Smagin — ‘to file claims in U.S. court against [a] dissident and exiled politician,’” an appeal stated, quoting Zambrano.

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