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Pair indicted in $9 million nuclear fraud
Accused of using shell companies, maze of accounts to steal money
Friday, May 06, 2005

The former Russian Federation minister of atomic energy and a former Westinghouse Electric Corp. nuclear power plant engineer living in Monroe-ville were indicted yesterday on charges of stealing $9 million intended to improve safety at Russian nuclear plants.

Yevgeny O. Adamov, 66, the ex-atomic energy minister from Moscow, and Mark M. Kaushansky, 53, of Trotwood Drive in Monroeville, are accused of defrauding aid programs in Russia and laundering the money through a maze of bank accounts and shell corporations here and abroad.

Investigators said Adamov was arrested May 2 in Bern, Switzerland, on a warrant based on a long-running investigation by the Criminal Investigation Division of the Internal Revenue Service and the FBI.

U.S. Attorney Mary Beth Buchanan said the United States will seek to extradite Adamov to Pittsburgh for trial within 45 days.

Kaushansky is not under arrest, but his lawyer, Fred Thiemann, said he will report to U.S. District Court next week.

Kaushansky and Adamov, a nuclear physicist who owned two corporate entities in Pittsburgh with Kaushansky, are accused of diverting $15 million provided by the United States and other countries and depositing it into accounts in Pittsburgh and Delaware between 1993 and 2003.

The indictment alleges that the two then diverted at least $9 million of that amount into two shell investment companies, Omeka Ltd. and Aglosky International, which had accounts in the United States, France and Monaco.

In addition to the indictment, the U.S. attorney's office has moved to forfeit the money held in the Monaco accounts.

Throughout most of the years in which the alleged fraud occurred, Adamov was head of NIKIET, a Russian nuclear research institute which designed the RBMK reactor, the same type used at Chernobyl, the site of a disastrous nuclear accident.

President Boris Yeltsin in 1998 appointed him minister of the Russian Federal Ministry of Atomic Energy, but in 2001 he was discharged from that job and went back to heading NIKIET.

In 1992, the United States and other nations started providing money and technical help to upgrade nuclear safety at 15 power plants in Russia and Eastern Europe.

NIKIET contracted with companies around the world, including Westinghouse, to perform the upgrade work, and designated an entity called Energopool-RF as the payee for money owed to NIKIET.

According to the indictment, Adamov and Kaushansky diverted the money intended for NIKIET to bank accounts they established in Pittsburgh and later in Delaware in names similar to Energopool-RF.

Energopool-RF was a forum for Russian and Western scientists to discuss safe energy production strategies. NIKIET designated Energopool-RF to collect money from the United States for nuclear facility improvements.

Buchanan said they also created fake contracts to hide the nature of their investments and filed false corporate tax returns.

Attorneys for the two men have maintained that the money was not stolen but deliberately sent to accounts outside of Russia to keep it from disappearing in the chaotic Russian banking system.

Thiemann said the money did make it back to Russia.

"There was no fraud," he said yesterday in his Downtown office.

He and Adamov's lawyer, Lanny Breuer, have both said the men were cleared of wrongdoing by Russian authorities and that establishing accounts abroad was the standard way of doing business in Russia at the time.

Thiemann also said the defense asked prosecutors to accompany them to Russia to investigate for themselves, but they wouldn't go.

"The U.S. attorney's office is seeing only half of the picture," Thiemann said. "We invited them to see the other side but they declined."

Investigators said Adamov and Kaushansky used variations of the Energopool name to set up accounts.

In 1993, they said, the two men incorporated a business in Pennsylvania named Energo Pool Inc., opened an account for it in Pittsburgh, then dissolved the corporation.

The account remained active, however, until October 1998, Buchanan said. During that time, she said, more than $11 million in nuclear aid money was deposited into the account. In 1997, she said, the men had created another corporation in Delaware called Energopool and deposited $4 million into its account.

According to the indictment, more than $4.6 million was later transferred from the original Energopool account in Pittsburgh to personal accounts controlled by Adamov and his wife. She is not charged.

That money, and funds from the other accounts, was used to fund Omeka Ltd., Buchanan said, which Adamov and Kaushansky incorporated in 1994.

They then used Omeka to finance loans and investments, including approximately $2 million in loans paid back to NIKIET at high interest rates.

Buchanan said profits from the investments were channeled into other bank accounts in the names of Omeka and Aglosky, another corporate entity in Monaco.

First published on May 6, 2005 at 12:00 am
Torsten Ove can be reached at tove@post-gazette.com or 412-263-2620.
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