U.S. Backing Soviets in Libel Case--Lawyer

An angry Los Angeles lawyer denounced the U.S. Justice Department and the State Department on Tuesday for siding with the Soviet Union in a dispute over collection of a $413,000 libel judgment against the Soviet newspaper Izvestia.

“This is unbelievable,” attorney Gerald Kroll said. “What I can’t believe is they are siding with the Russians against an injured American citizen.

“It’s hard enough fighting the Soviet Union by itself,” Kroll said. “This is now a battle between the Soviet Union and the U.S. Treasury against one man’s savings account.”

Kroll won the libel award in June on behalf of Palo Alto businessman Raphael Gregorian, who had been called a U.S. spy by Izvestia and banned from operating his medical import-export firm inside the Soviet Union.

U.S. District Judge David V. Kenyon granted the award in the form of a default judgment because the Soviets refused to defend themselves, claiming that U.S. courts have no jurisdiction over the Soviet Union.

In recent weeks, however, Kroll has aggressively hunted after Soviet assets in the United States and received one court order permitting him to attach both property and cash assets of Izvestia and other Soviet agencies named in the suit.

Last month he won his first victory--seizing a Russian-language typewriter from the office of the Izvestia correspondent in Washington. He also moved to attach more than $450,000 in Soviet funds in the Bank of America in New York.

Low Legal Profile

Until Kroll actually seized the Izvestia typewriter, which the Soviets now want returned, the Soviet Union had maintained a low legal profile. In Kroll’s view, they were hoping that he would be unable to find any seizable assets.

However, Kroll’s success in locating assets set off a series of countermoves by the Soviets, who have hired lawyers in both New York and Los Angeles to represent two Soviet trading companies with substantial U.S. assets--Medexport and Licensintorg.

Joining the Soviets in urging Kenyon to reopen the case have been top officials of both the State and Justice departments, who have cited U.S. foreign policy interests as the primary reason for their intercession on behalf of the Soviets.

Last week, Thomas W. Simons Jr., deputy assistant secretary of state responsible for Soviet relations, directly urged Kenyon to reopen the case and hold off any judgment awards for a range of foreign policy reasons, including the future of arms control talks.

“This case, including the default judgment and actions already taken to execute on Soviet assets pursuant to that judgment, has become a significant issue in bilateral U.S.-Soviet relations,” he wrote.

Citing the October meeting of President Reagan and Soviet leader Mikhail S. Gorbachev in Iceland, Simons stressed in his letter that “maintaining a stable environment conducive to working bilaterally with the Soviet Union . . . is a matter of high priority in United States foreign policy.”

He warned:

“Denying the Soviet Union an opportunity to present its views in court, particularly given our diplomatic efforts to encourage its participation, can be expected to affect our bilateral relations with that country.

“Specifically, denial could result in reciprocal measures against U.S. interests in the Soviet Union.”

Supporting the State Department position, Justice Department lawyers in New York moved last week to block release of the $456,413 in Soviet assets that had been frozen in the Bank of America.

In Los Angeles, both the U.S. attorney’s office and the Justice Department filed a “statement of interest” declaring support of the Soviet move to set aside the default judgment and to stay any further seizure of Soviet assets.

“Permitting the Soviets to have their day in court will significantly further U.S. foreign policy interests,” the Justice Department declared.

Kroll, who filed the libel case almost two years ago, protested that there is no legal reason to give the Soviet Union any more of a break in the U.S. legal system than any other defendant.

“The State Department is obviously bending to Soviet pressure and the Justice Department is going along with it,” he said. “It’s like they think the Russians are going to nuke us because we seized some guy’s typewriter.”

Consolidate Case

Kroll said the Soviet Union is now belatedly involved in legal efforts to overturn the libel judgment both in Los Angeles and New York and said he is moving to consolidate the case in Los Angeles so that he does not have to travel back and forth across the country at Gregorian’s expense.

“This whole thing is bizarre, absolutely bizarre,” he said. “A fair fight is fine, but this isn’t a fair fight.”

Kenyon sent back unread a letter from one State Department official urging him to reopen the case on grounds that it was improper to send him a private letter in the case. The Simons declaration followed, contained in the legal papers filed by the Justice Department.

Kenyon rejected a move by lawyers for the Soviet trade agencies to hear their petition to have the case dismissed Monday, but has agreed to listen to arguments Jan. 16. In New York, meanwhile, another federal judge has scheduled a hearing for Monday to determine if Kroll can legally attach the Soviet account in the Bank of America.

Justice Department officials noted Tuesday that part of their job is to represent all branches of the U.S. government in the courts. Beyond that explanation, one Justice Department official said in another letter to Kenyon that “it has been U.S. policy to encourage foreign governments to participate in U.S. courts . . . within the framework of the U.S. legal system.”

Inform Courts

U.S. Atty. Robert C. Bonner said it is “perfectly legitimate” for the Justice Department to inform federal courts of important foreign policy concerns and to advocate that Kenyon give the Soviet Union a chance to belatedly defend itself against the libel allegations.

“It’s not the Soviet Union particularly, it’s foreign countries in general,” Bonner said. “There are a lot of mysteries about the U.S. legal system and there are also certain doctrines of international law, such as sovereign immunity, that are disputed by some countries, including the Soviet Union.”