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

One of the first moves is to mortgage the $20 million company jet for $10 million. Another initial act, perhaps of more lasting import: a consulting agreement with Andre Chernukhin, an official of Ecoprom, the energy conglomerate formed inside the chaos of the post-Soviet Union from for-merly public assets. Immendorf awards Chernukhin $50,000 per month, plus 10 percent of Golden ADA's profits, as well as a car, a house, office space, and a staff. (Eventually, the Cyprus-based Chernukhin pulls in at least $500,000 from Golden. He now claims Golden ADA owes him $2.5 million.)

Jack Immendorf had grand plans for Golden. He wanted to use it to start a general aviation company, to enter a joint venture (probably with Chernukhin) to exploit Russia's natural resources, and to found a school for diamond cutters.

Along with those plans, however, come some strange expenditures. A court order attests that when Immendorf assumed command, Golden had $1.2 million in an investment account at the Bank of California. Not only did the $1.2 million soon disappear, but, "significant sums of money [were] deposited to and then transferred from the account."

In a sworn statement, Melanie Talsky, accounts manager for Golden ADA, says Immendorf ordered her to send $12 million in rough diamonds to a broker in Israel as collateral for a $5 million loan. Talsky sent only $10 million in diamonds, and the deal fell through. The broker eventually returned half the diamonds, Talsky's statement says, buying the rest at a 75 percent discount. (Immendorf says he does not remember the deal: "I often signed some papers before they were translated to my satisfaction. Plus, these guys lied all they time, and they were forgers, too.")

And U.S. District Judge Justin L. Quackenbush asserts in a court order that Immendorf was paid "in excess of $2 million" during his eight-month association with Golden ADA. Immendorf says that is an exaggeration, but he will not disclose how much he did make.

At any rate, Immendorf says he soon learned that he had no real power over the firm. The reconstituted board of directors is composed of Andre Kozlenok and his wife, Irina; Andre Chernukhin; Edward Sarkasian, a cousin of the Shagirians; and a moonlighting San Francisco police captain, Willis Garriot.

(The tale of Capt. Garriot is as strange as any in the Golden ADA saga: When he resigned in late 1995, Garriot received severance pay of $69,000. Garriot says he was paid $30 an hour for security consulting and earned a $1,000 monthly base salary for selling diamonds. When he became a board member, Garriot says, Immendorf raised his pay to $60,000 a year. Capt. Garriot says he worked up to 50 hours a week for Golden, while working his full 40 hours for the SFPD.)

In a recent interview, Immendorf -- a corporate security expert and private eye for 35 years -- says he was "used" and would not do business with the Russian government again. "Sometimes," he says, "we believe what we want to believe."

Quentin Kopp says his law firm billed Golden at a reduced rate, and as general counsel to Golden, although he hired outside lawyers and took minutes at board meetings, he was not privy to financial information.

Even so, Kopp, a frequent critic of the ethics of other Bay Area politicians, says he originally thought he was hired for his legal expertise, but now believes that Kozlenok and the Russians probably took him on because he was a public official. And on one occasion, according to published reports, Kopp sent a letter over his own signature to President Boris Yeltsin. The letter noted that Kopp was a state senator, and asked the Russian government to send more rough diamonds to Golden ADA.

Loss Control. San Francisco. Spring 1995.
For good or ill, Immendorf and Kopp are able to influence Golden ADA for only a short time.

In mid-March of 1995, a delegation of Russian officials, headed by Boris Pozdynakov, deputy chairman of the Committee, arrives in San Francisco for a series of meetings with Immendorf and the board. Pozdynakov demands to see the firm's diamond inventory; Immendorf refuses, continuing to insist the firm's debt will not be paid unless Golden is sent more diamonds. And Kopp's law partner, Thomas DiFranco, advises the board to divulge nothing.

Thereafter, Pozdynakov meets secretly with the FBI and demands indictments. The Justice Department's Organized Crime Strike Force has been investigating Golden ADA for months.

In fact, by this time investigation of Golden is becoming an international industry. In the spring of 1995, the Control Committee of the President of the Russian Federation, the accounting and investigative arm of the Russian government, writes its secret report on the Golden ADA affair. The report names ex-Finance Minister Boris Fyodorov and Y.M. Bychkov, head of the Committee, as perpetrators of a fraud on the Russian state.

Neither man is prosecuted. Eventually, Bychkov is pardoned, based on his military service in World War II. And eventually, Fyodorov becomes Russian minister of taxation. The Russian Federation does, however, issue arrest warrants.

For Kozlenok and the Shagirians. The small fry.

Bankrupt and Going Strong. San Francisco. Spring and Summer 1995.
By June 1995, Golden's outside accountants are reporting to Immendorf that Golden ADA has been looted. All that remains from selling $178 million in diamonds and gold is $37 million in hard assets. The auditors give Golden three months to live. When Immendorf and Kozlenok fail to take immediate steps to improve operations, the accounting firm resigns.

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1 comments
gleinmaxwell
gleinmaxwell

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?

 
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