From Russia With Diamonds

In 1995, Golden ADA Inc., a San Francisco diamond-importing firm, collapsed, unveiling an international trail of theft and betrayal that embarrassed San Francisco luminaries involved with the company. Now, newly unsealed court files show that high-level m

But the rest of the proceeds is squandered on exorbitant salaries for Golden staff and consultants, transferred wholesale to Bychkov's Russian associates through the loosely held Golden subsidiaries in Moscow, or sequestered in offshore bank accounts.

And newly released records make clear that the siphoning of state assets into private hands is directly connected to officials in the Russian government. Court records reveal a paper trail in which Bychkov, as chairman of the Golden ADA board, writes and signs letters to himself, chairman of the Committee on Precious Metals and Gems. That is, the private-sector Bychkov authorizes himself to embezzle -- and reports to the governmental Bychkov that all is well with the government assets "invested" in Golden ADA.

But all is not at all well at Golden ADA and its worldwide blizzard of subsidiaries and bank accounts. Increasingly, Kozlenok believes the Shagirian brothers are skimming cash out of the gasoline-station arm of the business. In frustration, he offers them $5 million to get lost -- permanently. Fearing harm -- they say their lives were threatened by Kozlenok -- the Shagirians move their families to Florida.

Bychkov and Kozlenok then hire the president of the firm's Rubin & Sons subsidiary, a Belgian named Peter Michaels, as Golden's new CEO.

But getting rid of the Shagirians and hiring a new executive don't even begin to keep Golden ADA's problems out of the courts, and the public eye.

In the fall of 1994, Russian tax police arrest the head of Star of the Urals for tax evasion. Star of the Urals, which existed for a single purpose -- the smuggling of $88 million in diamonds out of Russia -- is shut down, and its bank account is frozen. Suddenly, official questions are being asked: What happened to the gold and diamonds that were sent to America? And suddenly Bychkov -- Bychkov of both the public and private sectors -- orders Kozlenok to return $12 million in cash and polished and unpolished diamonds to the Committee.

Internal investigations are launched, and the Russian press sensationalizes the Golden caper. Bychkov tries to cover his tracks with a series of backdated documents and stern letters.

Golden has $20 million in diamonds still sitting in its vaults, but since its inception, the firm has kept no accounting books. In mid-1994, an accountant joins the company, and some financial records are created. But to this day, no one can be certain of the actual value of the gold and diamond shipments received, the amounts for which they were sold, or the final resting place of the cash.

Aborted Coup. San Francisco. December 1994.
As Golden's problems percolate through the Russian press, the new Golden ADA CEO, Peter Michaels, decides to stage a coup. It is a ridiculous, hapless, theatri-cal effort.

In return for being anointed as majority stockholder of Golden ADA, Michaels is prepared to turn on both Kozlenok and, it seems, Bychkov, by giving Bychkov's top deputy information he can use to depose his boss. Michaels defects, flying Golden's Gulfstream to Moscow with a cabin full of cash and corporate records.

Maneuvering to take control of the firm from Kozlenok, Michaels promises the Committee that he will make payments on the Russian debt, in return for more rough diamonds.

A frantic Kozlenok -- vacationing in Bermuda -- hears of the plot and calls Jack Immendorf, a San Francisco private investigator. Immendorf has known Kozlenok since earlier in the year, when Golden's majority stockholder needed someone to investigate his partners, David and Ashot Shagirian, whom Kozlenok suspected of playing games with the cash receipts of Golden's four gas stations.

But Immendorf is more than a detective; he has some political cachet in San Francisco, having served, among other things, as a city Park and Recreation commissioner. Immendorf calls state Sen. Quentin Kopp, with whom he had recently worked to get Frank Jordan elected mayor of San Francisco. Kopp -- a name partner in the law firm Kopp & DiFranco -- oversees the immediate termination of the usurper Michaels and other Golden personnel involved in the failed rebellion.

The palace coup is dead in the water, and Golden ADA suddenly decides to obtain local leadership.

A grateful Kozlenok offers Immendorf an unusual reward: the job of CEO of Golden ADA. Immendorf demands a signing bonus, a hefty salary, and the authority to hire and fire at will. The first two demands are honored; the third becomes problematic.

Soon thereafter, Immendorf and Kopp, who has been hired as Golden ADA's general counsel, fly to Moscow and hold a press conference, where Immendorf announces that Golden owes "a debt of honor" (and tens of millions of dollars) to the Russian government. But the only way the Russians will ever recover a ruble of the debt, Immendorf says, is for Russia to ship $10 million of rough diamonds to San Francisco every month.

The Russian press has a field day with the government's resounding answer: Nyet.

Local Control. San Francisco. Winter 1995.
Although he now claims not to have known the depth of Golden's insolvency when he took over as chief executive, by his own admission Immendorf began hunting for operating cash almost as soon as he took over as head of the firm. He needed $2 million a month just to keep the doors open.

« Previous Page
Next Page »
My Voice Nation Help

I am Dow Patten, an employment law attorney in San Francisco, working as a senior attorney in smith Patten. Who represents state, federal, and local government employees, as well as private employees in employment matters?

San Francisco Concert Tickets
©2014 SF Weekly, LP, All rights reserved.