September 1, 1999, Wednesday

$6.75 Million Mansion Awaits Jailed Ukrainian Owner


ven in a state familiar with jaw-dropping displays of wealth, a mansion set on 18 acres in northern California is opulent. Once occupied by the Hollywood star Eddie Murphy, the property in Marin County boasts two helicopter landing pads, five dog kennels, a barn-sized ballroom, granite floors inlaid with brass, and gold-plated doorknobs. And it was sold last September for $6.75 million -- in cash.

The estate's owner is a former Ukrainian Prime Minister, Pavlo Lazarenko, who ensconced his wife and children in the 41-room mansion late last year. But Lazarenko has been unable to join his family. Federal authorities are detaining him while they consider requests from Switzerland and Ukraine that he be extradited on charges of embezzling s tate funds and money laundering. As Federal investigators continue to examine the filtering of billions of dollars through the Bank of New York from Russia, there is increased concern in the West that ill-gotten gains from the former Soviet Union are infiltrating the United States and Europe. In a recent press release Lazarenko denied charges that he looted money from Ukraine.

He said he was a victim of political intrigue back home where, not surprisingly, his personal wealth has become an issue. Hardly a thief, Lazarenko is, the statement said, "fighting to bring about gradual reform leading to an improved economic climate in his native country." But questions have also arisen about how Lazarenko's own economic position has improved. As a political official who traversed the line between public authority and private deal making, Lazarenko made money buying and selling natural gas contracts when he was energy minister, United States authorities say.

As Prime Minister, he may have pocketed millions of dollars from state programs, according to Ukrainian and Swiss authorities. In fact, his wealth led to a falling out with the Ukraine President. Lazarenko declined to be interviewed. Michael Handwerker, an attorney representing Lazarenko, said his client con tests the charges against him in Europe and dismisses them as politically motivated. "It is my position that this is a political witch hunt being orchestrated by the political powers that be in the Ukraine," said Handwerker. He declined further comment, but Lazarenko has said in the past that he fears for his life if he is sent back to face charges in Ukraine.

Since the fall of Communism, Ukraine, Russia and other former Soviet Union countries, many of which still share close economic and political ties, embraced capitalism with a raft of privatizations, foreign investment and a speculative frenzy that came to a screeching halt with the financial crisis in Russia last year. In Ukraine and in neighboring countries, there were few legal or regulatory constraints on those with the financial or political clout to reap the rewards of the rush to capitalism. "In the industrial sectors that mean anything in Ukraine you will see many of the same problems as in Russia," said a United States Government official b ased in the Ukraine who requested anonymity.

"There's a lot of room for manipulation and diversion of profits." Lazarenko's wealth and power were growing so briskly during 1996 and 1997, his two years as Prime Minister, that it sparked a rift with President Leonid Kuchma, who dismissed Lazarenko from his influential post. Lazarenko subsequently formed an opposition party and planned to run for the presidency until he suddenly fled the country late last year, only days before prosecutors there charged him with embezzling and misusing millions of dollars in government funds as part of a long-running corruption scheme.

Before he fled, he told Parliament in a written statement that he was going to Greece for treatment of a stress-related heart ailment. La st December, the Swiss Government arrested Lazarenko at the border when he tried enter on a Panamanian passport and charged him with laundering millions of dollars through numbered bank accounts in Switzerland. He was freed on $2.6 million bail. He turned up in the United States in February, and was taken into Federal custody in Queens after he arrived at Kennedy International Airport and was judged to have an invalid visa. He has not been charged with any crime in the United States and, at his request, Federal authorities transported him to California so he could be near his family while awaiting a court decision on the extradition request.

Whatever the merits of the charges in Ukraine, Lazarenko's California mansion offers proof that his financial wherewithal outstrips typical government employees. The multimillion-dollar estate was purchased last September by a Sausalito, Calif., company, Dugsbery Inc., according to real estate records. But United States law enforcement officials said the real buyer is Lazarenko, who awaits his fate in a Dublin, Calif., detention center. "Lazarenko has definitely diverted a lot of dollars and whether or not it was billions, it shows you what is possible in Ukraine," said the American Government official based there. }}