Californian Wins Libel Judgment Against Izvestia

In an unprecedented libel ruling, a Los Angeles federal judge has awarded more than $413,000 to a California businessman who said he was falsely accused by the Soviet government newspaper Izvestia of being an American spy.

U.S. District Judge David V. Kenyon awarded the sum to Raphael Gregorian, 56, owner of a Palo Alto medical equipment import-export company, who charged that his $10-million-a-year business was destroyed when he was branded a U.S. spy in a 1984 Izvestia article.

“It is, of course, very small compared to what I lost,” Gregorian said.

Gerald Kroll, Gregorian’s attorney, said he will seek immediate payment from the Soviet Union, which declined to contest the libel suit in U.S. courts. If the Soviets refuse, Kroll said, he will ask Kenyon to seize Soviet assets in the United States.

First of Its Kind

“This is the first time an American citizen has won a libel judgment against the Soviet Union,” Kroll said. “I don’t know what the Russians will do about it, but I am hopeful that they will pay.

“If they don’t, we have already commissioned a survey of their assets in the U.S.,” Kroll added.

Kroll said those assets include a number of private companies, the largest of which is Amtorg, a huge trading company that he said is valued at millions of dollars. He also mentioned a Soviet art exhibit currently in Los Angeles, but said he would not seek to attach it.

Izvestia itself, Kroll added, also has U.S. assets.

License Withdrawn

Gregorian, owner of California International Trade Corp., had imported medical and laboratory equipment into the Soviet Union for 14 years before the spy allegations. His license for doing business in the Soviet Union was subsequently withdrawn by the Soviet Ministry of Foreign Trade. Because of the Soviet Union’s refusal to contest the libel suit in U.S. courts, Kenyon had granted Gregorian a default judgment last year.

The judge decided the actual damages on Friday, granting Gregorian $250,000 for injury to his reputation and $163,165.17 for loss of medical equipment delivered to Moscow but never paid for by the Soviets.

While Gregorian said Monday that he was pleased by the verdict, he expressed disappointment that Kenyon did not award him more substantial punitive damages. He had originally sued for $320 million.

“I feel I’ve been personally vindicated,” Gregorian said. “I’m happy the judge made the award. The Russians thought they had me dead.”

Kenyon said in his ruling that he could not impose larger sanctions partly because the Soviet government itself “is immune from the imposition of punitive damages.” He added that imposing punitive damages on Izvestia would not serve the legal purpose of deterrence.

“It does not appear to this court that a punitive damages award would in any manner deter these defendants from further activity of this kind,” Kenyon wrote. “The publication choices of such defendants are certainly beyond the control of this court.”

Effect on Reputation

Gregorian charged in his damage suit that after his company was ousted by the Soviet Union, his business reputation was ruined and he was unable to gain new customers. Kroll said Gregorian was forced to fire 20 employees and is now operating out of the basement of his Palo Alto home.

A naturalized U.S. citizen who was born in the Soviet Union, Gregorian has charged that the spy allegations were made against him in October, 1984, as retaliation for the arrests of Russian emigres Nikolai and Svetlana Ogorodnikov in connection with the Richard W. Miller spy case.

The Ogorodnikovs were convicted as Soviet agents last year, and Miller, a former FBI agent, was found guilty June 19 of passing secret documents to the Soviet Union. Kenyon also presided over those trials.