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Following Kozeny’s Money

The Justice Department obtained a federal court order ten days ago against Viktor Kozeny, barring him from touching any of the proceeds from the 2001 sale of his Aspen, Colorado residence (left), amounting now to about $23 million. The government said the funds came from the money laundering offenses alleged in U.S. v. Kozeny, a federal criminal prosecution in New York that includes Foreign Corrupt Practices Act charges. A copy of the restraining order can be downloaded here.

The DOJ sought the order after Kozeny settled a nine-year-old London High Court case last month. Bloomberg has the story here. During the London suit, court orders obtained by the plaintiff, Omega Advisors, Inc., froze $177 million of Kozeny’s assets, including the Aspen house. Last month’s settlement resulted in the freeze orders being discharged. Omega had sued Kozeny for more than $100 million in damages — the amount Omega invested in Kozeny’s 1998 failed attempt to take over the Azerbaijan state oil company, Socar. Omega lost its investment and, in 2007, paid a civil penalty of $500,000 in an FCPA enforcement action brought because of bribery allegations in the Socar deal.

Czech-born Kozeny has been a fugitive for about a decade. From the Bahamas, he’s been fighting extradition to the United States and the Czech Republic. He was indicted in 2003 in a New York state criminal case for stealing $182 million from investors, including Omega and AIG. And in 2005, he and co-defendant Frederic Bourke were charged under the Foreign Corrupt Practices Act for bribing Azerbaijan officials in the Socar privatization. Kozeny hasn’t appeared in the case, which is scheduled for trial in June this year.

After Kozeny fled the jurisdiction of the United States, his house in Aspen sat empty. In 2001, a federal judge in Denver allowed the house to be sold, with the proceeds to remain frozen. The buyer, boss Richard Braddock, paid $22 million — a Colorado record at the time. The money went into an escrow at Wells Fargo for Kozeny’s creditors, where it still sits today.

Kozeny bought the “Peak House,” as it’s known, in 1997 for $19.7 million. It has 24,000-square-feet, five bedrooms and nine bathrooms and sits on Red Mountain, overlooking Aspen. Kozeny threw fancy parties there and hosted investment seminars for his wealthy neighbors. Frederic Bourke, Kozeny’s eventual co-defendant in the FCPA case, was a part-time resident of Aspen when Kozeny was there.

The Justice Department’s restraining order freezing the “Peak House” proceeds is bad news for Kozeny. Although he’s entering his second decade of exile in the Bahamas, it looks like the Justice Department isn’t likely to forget about him (or his money) any time soon.

* * *

Bloomberg’s David Glovin visited Viktor Kozeny last year in the Bahamas. Glovin’s account of their meeting (here) is a great piece of reporting and writing. Here’s an excerpt:

. . . The life of a fugitive is tough, Kozeny says during three days of interviews at his $29 million estate in July. “I feel a little like Napoleon sent to St. Helena,” the 45-year-old Czech native says of his life in the Bahamas, which he hasn’t left since 1999.

“Havel was jailed,” he says of the former Czech president. “People would have laughed if they saw him as a president.” He rattles off the names of other famous figures who’ve been imprisoned: “Nelson Mandela. Alexander Solzhenitsyn.” Kozeny says he plans to clear his own name and run for the European Parliament by 2014.

Prosecutors would like to thwart Kozeny’s political ambitions and send him to jail. New York District Attorney Robert Morgenthau says Kozeny stole $182 million from Americans who invested in his 1998 bid to win control of an oil company in the former Soviet republic of Azerbaijan.

U.S. Attorney Michael Garcia in New York says Kozeny offered millions of dollars in bribes to Azeri leaders to cement the acquisition. Czech prosecutors, meanwhile, are presenting evidence to a court that is trying Kozeny in absentia on charges of embezzling $1.1 billion from mutual funds he established in the early 1990s. . . .

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