Andrey Kuznetsov made his way in just two years from a dank cell in a Soviet prison camp to the glamour of the Beverly Hills art scene. Dashingly handsome, he seemed to always have a beautiful woman on his arm, a champagne glass in his hand and a scheme to make a million dollars overnight.
Ten weeks ago, one of those illegal schemes got Kuznetsov, 28, killed. He and an accomplice were shot execution-style, and all their fingers were chopped off, by two fellow Russians who, authorities said, were working with them to try to bilk merchants out of millions of dollars worth of artworks, jewelry and electronic goods.
“He was movie-star gorgeous,” Diane Bennett said about her friend Kuznetsov, “but he was a one-man crime wave.”
Federal and local authorities now say Kuznetsov was much more than that.
They believe he was the mastermind of a local fraud ring with ties to Russian criminals in New York and what was once the Soviet Union. They also suspect that his remarkably rapid rise to affluence, and his murder, are but the latest evidence that Organizatsiya , the Russian mafia, has come to Southern California.
Already rooted in the Russian community in New York City, authorities say these so-called glasnost gangsters have been setting up loosely organized criminal networks in dozens of cities, including Boston, Chicago, Cleveland, Dallas, Detroit, Miami, Philadelphia and San Francisco.
But it is the Los Angeles area, home to the nation’s second-largest Russian population, that has seen a “tremendous” rise in organized crime activities by Russians, according to Thomas Parker, assistant agent in charge of the FBI’s Los Angeles office.
And with the more liberal immigration policies and economic turmoil that have come with the dissolution of the Soviet Union, authorities and immigrants fear, many more are on the way.
“Our borders are all open for them, and they are all coming,” said Studio City businessman Lev Leznik, a victim of Russian mafia extortion. “For them, this is the land of opportunity.”
Such concerns have prompted fact-finding missions from Soviet law enforcement authorities, and unprecedented cooperation between the FBI and its Russian counterpart. About seven months ago, dozens of local and federal law enforcement agencies quietly banded together to create the Soviet Organized Crime Intelligence Team. That group monitors crime by Russians, Armenians and immigrants from the Ukraine, Georgia and the many other former Soviet countries.
Credit card and check-kiting scams, like the ones allegedly orchestrated by Kuznetsov, are common in Southern California, and so are extortion, loan-sharking, racketeering, gasoline bootlegging, forgery, insurance and medical fraud and myriad other scams, authorities say. And, authorities believe, there is drug-trafficking, money-laundering, gun-running and even murder for hire occurring within the local Russian community.
“They’re into everything,” said Los Angeles Police Detective William Pollard, the department’s Soviet organized crime expert. “If there’s a way to defraud someone, or steal, they’ll do that.”
So few sources or victims have come forward that the FBI’s Parker and other law enforcement officials admit they are unsure of the size and scope of the problem. Making matters worse, most of the groups from the old Soviet Union are loosely affiliated and shift alliances rather than forming into corporate structures of traditional organized crime families.
There are some concerns that ill-gotten gains in this country are being shipped back home to some of the estimated 5,000 crime syndicates there so they can get an upper hand economically as the once-communist economies move to a free market. And there are fears that former members of the KGB may even be involved.
To be sure, most emigres are hard-working and honest, and fear that talk of such organized crime groups is an unfair smear on their community’s reputation, said Ara Khachatourian, spokesman for the regional Western Armenian Committee. Most organized crime experts stress that there is no larger percentage of criminals among emigres from the former Soviet Union than in any other ethnic community.
But authorities fear that the Russian gangsters in Southern California will follow the evolutionary pattern of the Italian Mafia, gelling into organized godfather-style families, initiating bloody turf battles and moving into legitimate businesses. Not content with victimizing their own community, they already have branched out into complex crimes targeting the general population and the government.
Authorities say the Russian criminal groups in Southern California are growing at a troubling rate and, like their counterparts in New York, are orchestrating schemes on a grand scale.
One such sign of that transition is the lucrative gasoline bootlegging business--long a staple within the New York Russian and Italian crime syndicates. The mobsters use dummy corporations to conceal from the Internal Revenue Service the fact that they are making millions of dollars in profits from the sale of gasoline.
In November, Oleg (Alex) Yasko, one of the Russians suspected of bringing the scam to Los Angeles recently, was sentenced to 10 years in prison and ordered to pay $1.3 million in restitution. Yasko, 38, of Sherman Oaks and five co-conspirators were convicted of using dummy corporations to rob the U.S. Treasury of as much as 40 cents in unpaid taxes on each gallon of gas they sold to wholesalers or retail gas outlets. The federal government recently indicted four other local men for conspiracy to run a similar scheme, and is actively investigating others.
Gasoline tax schemes, mostly in New York and Los Angeles, have cost the government more than $1 billion and put many gasoline merchants at risk. “This is people running around with guns, making threats, and using force,” said Assistant U.S. Atty. Gary S. Lincenberg in Los Angeles.
Insurance fraud also has been common, from staged auto accidents to false billing schemes. In a case considered the largest of its kind, the U.S. attorney’s office in Los Angeles has returned a 175-count indictment charging 12 defendants in a $1-billion false medical billing scheme headed by Russian emigre brothers Michael and David Smushkevich.
Authorities allege that the brothers orchestrated a massive scheme to use rolling medical labs to conduct unneccessary and fake tests on patients and then sent hugely inflated bills to insurance companies.
Having survived a homeland in which the KGB ruled by terror and even a petty crime could bring years in a labor camp, authorities say, the Russian criminals are fearless and have creative criminal minds. “We are finding that they are extremely violent,” said the FBI’s Parker.
In the Brighton Beach section of New York City, where Russian syndicates have become entrenched, a Ukrainian father and his son were gunned down Jan. 12 in what authorities say was the latest evidence of internecine warfare. Like Kuznetsov, the New York victims--Vyacheslav Lyubarsky, 49, and his son Vadim, 26--were shot several times in the torso, and once in the head.
Authorities suspect Russian crime groups are responsible for several recent murders in Southern California, but will not comment further, citing ongoing investigations. Family members believe Russian mobsters working in the Oriental rug trade killed Adeline Ouzounian, a 65-year-old Hollywood rug dealer, for her merchandise, and then dumped her in a ditch.
“These people are worse than animals. Animals kill when they are hungry,” one of Ouzounian’s family members said bitterly. “They have no respect for law, or order, just greed. Soon, it will be like the days of Al Capone. It might even become worse,” he said.
Much more commonplace than murder, however, are the pain and intimidation the Russian mobsters inflict on their victims, most of whom are fellow emigres who are afraid to go to police. Most, too, are so fearful of authority figures that they will not cooperate once approached.
In a case authorities say is typical, Leznik, the Studio City businessman, ended up paying $475,000 in loan shark money to Russian mobsters. Leznik said loan sharks--backed up by menacing thugs and former Russian athletes--threatened to cut out his tongue and eyes, burn off his skin with acid, kill his family and shut down his businesses.
“Seven years I worked for those bastards,” he said. “Everywhere I would go, they would follow me. . . . I wasn’t the only victim; there are plenty more.”
Afraid for his family’s life, Leznik finally went to the police in February, 1991. When he met with the alleged loan sharks in Hollywood last May to give them another $16,000, police arrested three suspects for allegedly threatening to kill Leznik. They plea bargained and two received probation.
Most scams and crimes are less ambitious and focus on Russian immigrants themselves, and those who want to follow them to America. In one fraud scheme that originated with local Russian mobsters, thousands of people lost money to promoters of a “find work in America” scheme in which would-be immigrants supplied money for jobs that turned out to be nonexistent.
Just identifying criminals in the growing Russian community has kept law enforcement agencies busy.
The LAPD’s four-man intelligence team for the Russian mob, in the “embryonic stages” of gathering information, desperately needs more manpower, said Detective James L. Miller, a Russian organized crime specialist. “We could quadruple the size of the crew we have and we still wouldn’t be solving the problems.”
Few law enforcement agents speak Russian, and even fewer know the many dialects and understand the divergent cultures and customs enough to blend in.
The LAPD’s Pollard says law enforcement agencies have given up on most undercover operations. “When we have gone in to their restaurants and clubs, the whole place gets terribly quiet. Not a word is said.”
The Kuznetsov case appears to be one of their first breaks. When they stumbled onto the murder scene Jan. 26, police found what one investigator described as “mountains” of evidence, including detailed financial records.
By following the Byzantine money trails left by Kuznetsov, they hope to gain insight into how a Russian crime ring operates.
Kuznetsov apparently had connections in New York and Russia, said a Los Angeles County sheriff’s deputy who gathers intelligence on Russian organized crime. Kuznetsov’s American wife said he introduced her to what he called “well-respected” Russian mafia leaders and soldiers here and in New York City.
Kuznetsov’s wife and his mother, Galina Ivanovna, said Kuznetsov spent four years in Soviet prisons for working the black market. When he was released from prison, “he did something again, and they came after him, so he came here, to America,” said his wife, who requested anonymity.
Kuznetsov persuaded a female Los Angeles art dealer to invite him to visit the United States. He got married last July, friends say, so he could stay.
Kuznetsov’s passport shows he left what was then Leningrad on Dec. 19, 1989, and other records show he began renting a house in West Hollywood a year later. Authorities believe he started his criminal activities immediately.
In his last scheme, visitors--some of them convicted criminals--would come over from Russia, receive false identities and checking accounts and then go on whirlwind shopping sprees with him at the finest stores and auctions.
By managing the criminal careers of several such accomplices at a time, and taking 80% of the profits for himself, Kuznetsov easily netted $1 million, friends and authorities said.
Kuznetsov loved the high life, and he drove a gold Mercedes 300E with a car phone. He dressed in the finest clothes and shoes, and became a connoisseur of fine art and expensive French champagne. He spent lavishly on his wife and many beautiful girlfriends, frequented the hot nightclubs and moved in rarefied social circles, thanks to his job at a Beverly Hills art gallery. And he was planning to buy a house in Malibu or the Hollywood Hills.
But those plans died with Kuznetsov when he was shot on the night of Jan. 26.
Los Angeles County sheriff’s deputies stumbled upon the murder scene when responding to reports of a car left idling in front of Kuznetsov’s rented house on West Knoll Drive, just south of the Sunset Strip.
When two deputies knocked on the door, a Russian identified as Serguei Ivanov appeared, drenched with blood and carrying a semi-automatic handgun. The deputies subdued Ivanov and another tenant of the house, Alexander Nikolaev. They caught the two, both former members of the Soviet Army, in the act of dismembering Kuznetsov and another Russian, Vladimir Litvinenko.
Ivanov, 28, and Nikolaev, 31, already had cut off all their victims’ fingertips and stuffed them into a Michelob beer bottle to hinder their identification, authorities said. And they had started ripping the bullets from the bodies, to erase any ballistics trail.
Found in the house were more than 60 unopened boxes of electronic equipment such as computers, copiers, camcorders, television sets, fax machines and stereo components, search warrants show. There also were watches, Persian rugs, antiques, works of art and other valuables that authorities believe were stolen or bought illegally.
Police say that Ivanov and Nikolaev have confessed to killing Kuznetsov because he hid their passports and forced them to stay in the criminal enterprise. But both have pleaded innocent.
Ivanov, who his lawyer said was the shooter, identified Kuznetsov as a Russian mobster in interviews with authorities. And he said his and Nikolaev’s lives--and the lives of their families in Russia--had been threatened. “Kuznetsov had connections in the Soviet Union,” said Rita Smith, Ivanov’s public defender. “He had ways of taking care of people over there.”
Authorities know little about Kuznetsov’s alleged killers, except that they came from Russia via New York several months before the slayings, and then moved to Los Angeles to live with Kuznetsov and allegedly take part in criminal activities.
Authorities are not sure of a motive. They say that Ivanov’s and Nikolaev’s passports were found in the house, and that if they wanted all of Kuznetsov’s loot, they probably could have stolen it over the Christmas holidays, when he and Litvinenko were in New York.
Sheriff’s homicide Sgt. Dirk Edmundson said he does not buy the confessions made regarding the killings. “It seems a little ridiculous to say ‘I won’t steal with you but I’ll kill you and cut your fingers off,’ ” he said. “There’s more to this.”
Kuznetsov’s wife agrees, citing the many explanations and rumors circulating within the close-knit emigre community.
“I think they were just low-lifes who came to work with Andrey and then blew him away,” she said of the two men. “But some people say there’s no doubt the mafia, KGB and paid killers were involved.”
“But who knows?” she added. “I don’t know if we’ll ever find out.”