Former Ukranian leader Lazarenko sentenced
in San Francisco
By Julia Cheever, Bay City News Service
August 25, 2006
SAN FRANCISCO (BCN) - A former prime minister of Ukraine
was sentenced by a federal judge in San Francisco today to nine
years in prison and fined $10 million for laundering millions
of dollars in extortion funds through U.S. banks.
U.S. District Judge Martin Jenkins said "a significant sentence
is appropriate" for Pavel Lazarenko, 53, because of his "utilization
of the financial system of this country to conceal ill-gotten
Lazarenko was prime minister -- the second-highest position in
Ukraine -- in 1996 and 1997.
He was convicted by a jury in Jenkins' court in 2004 of 14 counts
of laundering $21.7 million through American banks, money laundering
conspiracy, wire fraud and transfer of stolen funds.
Prosecutors said he obtained the funds through extortion and
kickbacks while holding a series of Ukrainian government posts
in the 1990s. Lazarenko fled to the United States in 1999.
Prosecutors said the 14 counts concerned a total of $44 million
in illegally gained funds, including $30 million extorted from
former Ukrainian businessman Peter Kiritchenko and $14 million
skimmed off from Naukovy State Farm, a state-owned dairy farm.
The unusual trial required prosecutors to prove both that the
money laundering, fraud and stolen property transfers took place
in violation of American law and that the money was gained illegally
under Ukrainian law in effect at the time.
Lazarenko is only the second former foreign leader to be prosecuted
in a U.S. court.
The other was deposed Gen. Manuel Noriega of Panama, who was
sentenced in federal court in Miami in 1992 to 30 years in prison
for cocaine trafficking. U.S. Attorney Kevin V. Ryan said after
Lazarenko's sentencing, "The defendant's crimes lasted for
over seven years and resulted in a $44 million loss to Ukrainian
citizens and the laundering of over $21 million through the American
"As this case shows, we will persevere and obtain convictions
and lengthy sentences for corrupt public officials -- even if
they are from foreign countries -- especially when they abuse
the American banking system to conceal their gains," Ryan
Defense attorney Doron Weinberg said that if the conviction were
upheld, he would consider the sentence fair, but said Lazarenko's
lawyers expect the conviction to be overturned on appeal.
"We believe no American crime was committed," Weinberg
said. "We expect that will be the result on appeal and so
we expect the conviction will be set aside."
Defense attorneys argued during the trial that Lazarenko gained
his wealth legally through business deals during a tumultuous
time in the early 1990s as the former Soviet republic moved from
a Communist to a capitalist economy.
Weinberg said that Lazarenko is likely to serve only three and
one-half to five years in prison, with credit for previous time
in jail and for good behavior.
Defense attorneys had suggested a sentence of a little more than
four years, while prosecutors, charging he "engaged in massive
abuse of both his public office and the United States' financial
system," urged the judge to impose a penalty of more than
Last fall, Lazarenko told a Ukrainian television interviewer
he had cleared his name in the U.S. courts and in March, he was
elected in absentia to a regional parliament in Dnepropetrovsk,
according to the government brief, which accused him of "an
ongoing refusal to accept any responsibility for his criminal
Jenkins scheduled a further hearing for Sept. 29 to consider
the government's bid for forfeiture of $22.8 million in money
laundering proceeds and a request by Kiritchenko for $17.3 million
in restitution. Kiritchenko, who pleaded guilty to a felony charge
and became a prosecution witness against Lazarenko, is awaiting
The forfeiture request includes $21.7 million in money laundering
proceeds plus another $1.2 million for an increase in value of
a Novato house Lazarenko bought with some of the proceeds in 1998.
Lazarenko bought the house, which once belonged to actor Eddie
Murphy, for $6.7 million, but it was re-appraised at $7.9 million
this spring, according to a prosecution brief.
Jenkins will also consider on Sept. 29 Lazarenko's motion for
release on bail while he appeals.
Lazarenko has been on home detention at an undisclosed location
on an $86 million bond since 2003 and is paying for the costs
of a security task force to maintain the house arrest.
Lazarenko was originally convicted of a total of 29 counts, but
last year, the judge dismissed 15 counts of wire fraud and transfer
of stolen property, saying there wasn't enough evidence for those
Earlier, midway through the 2004 trial, the judge dismissed 24
other counts related to alleged kickbacks on a natural gas distribution
contract and a housing enterprise.
The two actions together left only 14 counts in place from a
53-count indictment filed against Lazarenko in 2000.
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