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A New Breed of Gangster Is Globalizing Russian Crime

Corruption: Authorities say these wise guys work both sides of the law and rival the Mafia and drug cartels.

September 23, 1998|RICHARD C. PADDOCK | TIMES STAFF WRITER

GENEVA — To Swiss authorities, Sergei Mikhailov is a dangerous man who heads one of Russia's largest crime groups from the isolation of his Geneva jail cell. He has been locked up without trial since October 1996 and going to occasional court appearances in an armored Mercedes with a SWAT team escort.

Police arrested one of his Swiss lawyers, accusing him of smuggling Mikhailov's letters out of jail and passing them to an accomplice who faxed them to Moscow. And, fearing Mikhailov's long reach, the Swiss government took the extraordinary step of granting asylum to the main witness against him--a Russian police inspector.

But to Mikhailov and his defenders, the 40-year-old prisoner is a legitimate businessman who has been unfairly imprisoned simply because he is Russian. He is a dealer in the export of gas and oil, they say, a generous man who buys bells for churches in Russia and donates money to an orphanage.

"I haven't done anything illegal," Mikhailov protested to a panel of judges during a recent court hearing. "I am an honest person. If I did something wrong, show me concrete proof. Where is this alleged criminal organization?"

For the Record
Los Angeles Times Wednesday September 30, 1998 Home Edition Part A Page 3 Metro Desk 1 inches; 28 words Type of Material: Correction
Russian crime--The caption for a photograph accompanying a Sept. 23 Times article on the globalization of Russian crime should have identified the man pictured as defense attorney Alec Reymond.

The answer, police say, is: all over the world. Although Mikhailov's accusers have been slow to bring their evidence to court, authorities allege that he is the boss of the notorious Solntsevo gang--reputed to be the largest Russian crime syndicate. If what they say is true, that would make him one of the most feared and powerful criminals anywhere.

Since the collapse of the Soviet Union, the operations of ruthless, well-financed Russian crime groups have spread internationally with lightning speed. From Moscow to Geneva to Los Angeles, law enforcement officials say the Russian mob has become one of the world's biggest crime threats over the past six years, rivaling the Italian Mafia and the Colombian drug cartels in scope and power.

"I look at the 1990s as the decade of the Russians," said Larry Langberg, who heads the FBI's Russian organized crime task force in Los Angeles. "We do have a big problem. This is a very active group."

Billions Smuggled From Homeland

Western countries that once worried about the Soviets' military might are now trying to combat the invasion of the brutal and disciplined Russian mafia. With the collapse of the Iron Curtain, Russian gangs have smuggled as much as $50 billion out of Russia and into other parts of Europe, Asia and the Americas, Interpol estimates.

Much of this newfound wealth has been laundered through banks in Switzerland, as well as Cyprus, the Caribbean and other offshore banking havens, officials say. Billions of dollars have gone to finance criminal operations ranging from prostitution and car theft rings to extortion and contract murder. Billions more have been used to buy into legitimate businesses and purchase real estate in locations from the Mediterranean to Manhattan.

Cunning survivors of one of the harshest regimes in history, Russian criminals have easily moved their operations into more than 50 countries, according to the FBI. In the process, they have struck up cooperative relations with powerful international mafia clans and drug cartels.

"What was once organized crime has become transnational crime," said Stephen Handelman, author of the book "Comrade Criminal" and an expert on the Russian mafia. "The Russians were better prepared than other crime groups to take part in the global economy. They have now emerged as a full-blown network, passing huge amounts of money around the world."

Russian gangs have roots deep in the Soviet past. Despite the Communists' efforts to destroy them, they formed a close-knit brotherhood with strict rules of behavior. Their training grounds were Soviet prison camps, and their operations were often run from behind bars by senior bosses.

During the final years of Soviet rule, the mafia grew increasingly stronger, forging alliances with corrupt Communist officials. The black market became one of the principal distributors of goods throughout the country--helping to keep the economy running and the Soviets in power.

When the Communist state collapsed at the end of 1991, the crime syndicates were in a perfect position to take advantage of privatization. Cooperating with corrupt officials, they took over government enterprises and factories and won a controlling stake in the country's economy. Then they stripped wealth from their homeland, shipped it abroad and went into business in the West.

Russian gangs have proved themselves to be a new breed, bringing together crime overlords, entrepreneurs, former KGB operatives and government bureaucrats and engaging in diversified activities on both sides of the law.

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