The Looting of Russia
An FBI agent and an honest Moscow cop stop the plundering of the national treasury
Some weeks after the shipments arrived, Golden ADA approached Nelson Colton, head of Unique Premium Metals, the top gold distributor in Los Angeles. Colton's clientele includes many Russians, but what seemed odd was the amount this new company wanted melted down and sold: 5.5 tons of gold. Colton gladly obliged, eventually selling off over $50 million of gold for the Russians.
All told, Bychkov's agency had shipped to Golden ADA a $90 million chunk of the Russian treasury. While this had been passed off in Moscow as the collateral for a bank loan, Kozlenok apparently saw it as something else: He and his partners embarked on a world-class buying spree. "Mind boggling," says Charles Sims, a bankruptcy trustee who later saw the books. "I'd never seen anything like this."
Typical of Kozlenok's purchases was the Golden ADA building. The owner wanted $6 million; Kozlenok offered nearly $11 million--if the sale closed within a week. The overjoyed owner agreed. One afternoon in Beverly Hills, Kozlenok strolled into the showroom of a luxury car dealer and paid more than $1 million for a Rolls-Royce and two Aston Martins. During three days in Los Angeles, he and the Shagirians plunked down an additional $1.2 million for a trio of luxury yachts. Within weeks, they paid $3.8 million more for three posh homes in San Francisco. More boats followed, including a 40-foot high-speed cigarette boat and some 15 other vehicles. An $18 million Gulfstream twin-engine corporate jet was picked up, as was a chain of a half-dozen Bay Area gas stations. In all, the ADA bosses bought 18 pieces of property across Northern California, including five luxury condo sites on Lake Tahoe worth $4.4 million.
Whether Bychkov, Yeltsin's gem commissioner, knew of this extravagance would later be a matter of dispute. "Bychkov . . . kept the company's activity in the United States firmly under his control," Kozlenok claimed. "Any decision demanded his personal consent." Bychkov had flown to the grand opening in San Francisco, where he heartily approved of Kozlenok's progress. And, investigators say, millions of dollars of Golden ADA funds were wired back to Moscow, where they disappeared into real estate, including a new dacha for Bychkov--a charge Bychkov denies.
Golden ADA also wired money to Belgium, Liechtenstein, and Israel, as well as Bermuda, where Kozlenok built himself a $5 million home. In San Francisco, he lived in an upscale East Bay suburb, in two adjacent buildings behind a gated entrance down a private cul-de-sac. Immendorf was astonished when he visited. "Did somebody plunder the Metropolitan Museum of Art?" he remembers thinking. There were paintings by Rembrandt and Picasso, Faberge eggs, statues, and figurines. Immendorf was particularly struck by a pair of 5-foot clocks encased in gold, and a chess set made of silver and gold, with diamonds on every piece.
Kozlenok later said the expenditures were needed to project "a solid financial image" and that the luxury homes were for vacations for employees of Russian mining companies--"a reward for their hard work." Most of the rewards, however, seemed to accrue to Kozlenok and his partners. In February 1994, Bychkov signed off on new shipments to Golden ADA, this time huge supplies of raw diamonds. Most would simply disappear. By then, however, police on both sides of the world had started asking questions. Maj. Viktor Zhirov shook his head as he looked at the file before him. He had seen it all before. Zhirov had spent much of his lengthy career in Moscow at the financial-crimes division of the Interior Ministry. This new case had all the markings of, as he put it, "a swindling deal by thieves." The original tip had come to Interpol when U.S. Customs asked if shipments of diamonds and gold to a California firm were legal, and for information about two Armenian fellows named Shagirian.