Monday 4 October 2021
When Andrei Kozlenok went on the mother of all spending sprees, the FBI joined forces with Russian police in an investigation that led to a treasure house under the streets of Moscow, and to the Kremlin
Listen to Part I
Andrei Kozlenok: What’s very important, Russia itself deliver it to me – diamonds. It’s not me deliver it.
Giles Whitell: Yeah.
Andrei: Russia itself deliver it. And if you see quality inside, this is rough diamonds.
Giles Whitell, narrating: That’s a man named Andrei Kozlenok, talking about diamonds. A lot of diamonds. Boxes and boxes of diamonds.
Andrei: It was $90 million.
Giles, narrating: Ninety million dollars’ worth, all belonging to the Russian state – the Russian people. Diamonds that he got his hands on early in the 1990s, and disposed of.
Giles: And is it true that it arrived in a jet?
Giles, narrating: Diamonds that in some cases arrived on an executive jet.
Andrei: It’s gonna be a private jet, it’s gonna be charter, it’s gonna be…
Giles, narrating: Kozlenok was the man in the middle of the strangest, most brazen jewel heist of the post-Communist era. I would say that wouldn’t I? Because I’ve been obsessed with it for more than 20 years. And by the time I caught up with Andrei Kozlenok, that’s how long I’d been looking for him. More than 20 years.
But it is hard to think of a case quite like it, conducted in broad daylight, over several years, with full permission from the authorities. And never in my working life have I been more excited to meet anyone. Kozlenok – who was then in his 30s, now in his 60s, was going to answer questions I’d been itching to ask all that time. Questions about a story for the ages, larceny beyond your wildest dreams, and the way it went right to the very top. It was going to be huge.
Why huge? Because I’ve always thought of the tale of Andrei Kozlenok and his diamonds as the origin story of Vladamir Putin’s kleptocracy – as the template for everything that followed. All the timber, oil, nickel, platinum, palladium. Their time would come. Billionaires would buy football clubs with the proceeds. But in those early years nothing was more tempting, more transportable, more liquid, than diamonds. There was a market out there ready made to turn them into money, no questions asked. They were mined in Siberia, stored in strongrooms under the streets of Moscow. All you had to do was get them out of there.
So how did he do it? Who was really behind it? And where did all the money go?
I’m Giles Whittell, and you’re listening to the Slow Newscast. This is From Russia with Diamonds, Part I.
I was in Moscow for The Times in the late 90s and I passed through quite a bit in the early 90s. And Kozlenok’s story seemed to follow me everywhere. Actually it grabbed me and it never let me go, even though when I first heard it no one knew how it started or how it ended.
But we can at least date the beginning at roughly 1992. Russia’s on its knees.
“The government has fallen apart, the economic system has fallen apart”
Giles, narrating: The whole Soviet experiment has collapsed. And so has the ruble.
“Millions of Russian citizens stumble daily through the economic rubble left by communism.”
Giles, narrating: There are no pensions – none that are worth anything anyway. Old people are standing on street corners selling anything they can just to eat.
“Surplus US army rations are being served up in soup kitchens like this one in the southern outskirts of Moscow. It’s recipients are among those left almost destitute by President Yeltsin’s reforms.”
Giles, narrating: I first went to Russia in 1992. I stayed with an academic who’d been to the west for the first time for a conference, and his response was to have a nervous breakdown. The culture shock, the sheer abundance of everything he saw there, was just too much to take. And I wondered then what would happen to a younger person with more energy and sudden limitless access to that intoxicating western drug known as money.
And Andrei Kozlenok, in a way, turned out to be that person.
Andrei: For all my assets and all my money, Russia cannot do with me nothing because I have not paid one penny from state.
Giles, narrating: He’s tall, suave, charming, supremely confident, even though he doesn’t speak much English. He claims to have diamonds in his veins, so to speak – to come from a family that had a stake in the Russian diamond business before the 1917 revolution.
He tells me that his mother’s side of his family used to own gold and diamond mines in the Urals and also in Siberia. Then again, he claims a lot of things – he claims to be an economist, a professor of accountancy, a scientist, as we shall see.
What’s pretty clear is that he was a chancer with the gift of the gab and nerves of steel. To understand what he pulled off with the diamonds, first you need to picture where they came from.
David Kaplan: Think about a place that is literally full of treasure. Underground vaults full of tsarist gold coins, Fabergé, eggs, figurines, and of course, Siberian diamonds, piled on shelves reaching to the ceiling. And at a time when Russia is falling apart, the guy literally with the key to the vault, is emptying it on Lear jets bound for San Francisco and then selling it off as fast as they can. It really is one of the great heists of modern history and we still don’t know the scope of it.
Giles, narrating: Today David E Kaplan is Director of the Global Investigative Journalism Network, but back in the 90s he was at the US News and World Report where he was one of the first reporters to break the Golden ADA story – or golden ADA as we’ll come to see. Like me, he also spent years chasing Andrei Kozlenok
David: We tried to get him to talk a number of times. He was most interested in keeping as low profile as possible. He had pissed off the wrong kind of people.
Giles, narrating: Now back in the depths of the Cold War nothing was more precious in Moscow than hard currency – you needed it to buy western technology, to pay off western spies, to stock fancy shops for party apparatchiks. And so, to get more of it, Russia did a deal with De Beers, the founders of the original diamond cartel. De Beers got to control the supply of Russian diamonds, which otherwise could have tanked the world market and Moscow got cash. A lot of cash. About a billion dollars a year.
Here’s Mike Pretoro, the FBI’s first ever man in Moscow back in the 90’s.
Mike: As I understand, the rationale behind the diamonds from Russia going to San Francisco was that the Russians had entered into contracts with De Beers as far as the distribution of their diamonds. And they weren’t pleased with that. And they wanted to find another outlet for their diamonds, so that they could kind of get around the monopoly that De Beers had on the Russian diamonds. But it was in some ways a giant looting of Russia. I mean Russia is a very wealthy country as far as natural resources, whether it’s oil, gas, timber, diamonds, and it wasn’t just diamonds that were being looted.
Giles, narrating: Thanks to his charm, and possibly his background, Kozlenok was well connected. His key connection in this story was a man named Yevgeniy Bychkov. Bychkov was a hard-nosed, stern-faced former Communist official from the Urals, who happened to be a close and loyal friend of Boris Yeltsin’s. And in return for his loyalty, when Yeltsin became the first president of Russia, he put Bychkov in charge of the state treasury. In charge of all those strong rooms full of diamonds.
Jack Immendorf: And it was Bychkov who was the head of Roskomdragmet, the organisation, the department and the Russian Federation that had control of all of the minerals, the diamonds, the gold, probably the oil and the lumber and everything else. I was only really concerned and involved in the diamonds, but they were completely under the control of Roskomdragmet and the head of that of course was Yevgeniy Bychkov. Does anybody want anything to drink or eat?
Giles: I’m good. We had coffee on the way.
Jack: All you guys are just good guys. What do you know?
Giles, narrating: It’s ten months since my meeting with Kozlenok and I’m in Jack Immendorf’s house in Napa, California. It’s an 80s-style villa that backs onto a river leading directly to San Francisco Bay. You could sail straight from here to the Golden Gate Bridge. The sun’s out. It’s a nice little spot, and Immendorf has worked long and hard for it. He’s well known in San Francisco as a private eye and, for a while, he was Kozlenok’s chief executive. And that meant spending time with Kozlenok and Bychkov.
Jack: And Bychkov and Andrei, I don’t know whether it’s through friends or family, but they had a very good, strong relationship, you know, and the original scheme was dreamed up between them.
Giles, narrating: As I understand it, it was Kozlenok who came to Bychkov with an idea.
This was his scheme: set up a diamond factory a long way from Russia, a long way from any traditional diamond centres. Send Russia’s rough diamonds there. Cut them, polish them, sell them and return the proceeds to the Russian treasury.
It was clever. The De Beers deal applied only to rough diamonds. Make them sparkle and they were free to sell to the highest bidder. And Bychkov could say he was doing better for the Russian people. Making them a bigger margin. So Bychov bought into the plan.
Now at this point Kozlenok is in his early 30s. Born and raised in Moscow, he’s now at large in San Francisco. He’s registered a company called Golden A.D.A. or Golden ADA and is on the receiving end of a shipment of diamonds – and emeralds and rubies and ancient gold coins as it turns out – a shipment worth $90 million.
For his scheme to look respectable, it needs an address. He chooses, 999 Bannan Street. It’s a four-story building with black granite columns and an entire façade of glass bricks.
Jack: And they wanted to build the diamond factory up on the fourth floor, but the owners were not allowed to do it, they couldn’t get the lease, whatever. So they decided maybe we can buy the building. The building at it’s time was worth about six and a half million, I think. And they went down and paid him over 11 million. And they were out within 30 days, no shit, I’d have been out too. And they built the diamond factory up on the fourth floor.
Giles: Apparently it was pretty impressive.
Jack: Oh, you wouldn’t believe it. God, it was impressive. When you finally got in there, you couldn’t get to the fourth floor unless you had special clearance and a card that would let the elevator go up. And then you even had palm readers. And then you had a Russian up there with a kalashnikov.
Giles: How many diamonds were actually cut there?
Jack: Oh, I couldn’t tell you.
Jack: Oh, many! Oh, hundreds of thousands of dollars worth, yes. I saw lots of diamonds. And we had a huge – they built a humongous walk-in safe on the fourth floor where a lot of these things were stored.
Giles, narrating: Kozlenok bought a jet for the company, the latest Gulfstream IV, conveniently capable of flying all the way to Antwerp, the world capital of diamonds, in one nine-hour hop. He also got a helicopter, a Kamov Ka-32, designed for military transport. It was a massive machine with two rotors spinning in opposite directions. Jack Immendorf pulled out some photos to show me.
Jack: Oh, this is them on the tarmac after we came in. And here’s Andrei, here’s Andrei on the end. This is the first time they brought it in. So they brought it in and landed on the roof. And I don’t think anybody understood the tornado that this thing created when it was coming down. The wind draft from that chopper coming down was so strong that it went into the air ducts of the building, went through the building and it blew the doors off of the front of the building, out into the street. Can you believe it?
Giles: Of 999 Bannan?
Jack: Of 999 Bannan, blew the front doors off. It was unbelievable. And so when that plane took off again, and when we landed it again, we’re all very careful.
Giles: Did you ever understand why it was so important to them that they could land a helicopter on the roof of their building?
Jack: Oh, allegedly when the jewels were coming over, you know, they could get them from the airport in San Francisco without, you know, having to travel through the city. I think it was a big fucking toy for Andrei. Everything was a toy for Andrei. You know, I mean, this was this fantasy world. These people were living in Captain Marvel.
Giles, narrating: So Kozlenok has a big, fancy building in downtown San Francisco. He has his colleagues. A trading name. And he has what every business needs: a steady flow of cash.
Of course, this cash inflow is going to attract attention. So Kozlenok needs something else. Protection. In Russia they call this your “krysha”. Your roof. It consists of connected people who’ll have your back when things get tough. Who’ll shield you from enemies, and if necessary from rules and regulations
How is Kozlenok going to get his krysha?
Kozlenok has a plan – he’ll throw a party.
It’s February 1994 and well-tailored guests sip champagne and eat caviar milling around the big chopper on the roof of Golden ADA. All of San Francisco is there. Nancy Pelosi, who is now the Speaker of the House of Representatives, she puts in an appearance. And Yevgeni Bychkov flies in from Russia.
Jack: And I had the mayor, the chief of police, the fire captain, Admiral Tedeschi from the Navy. I had them all get up into the Coplin and I took pictures of them all. And we had a lot of fun. Great party – more champagne and booze and food than you could ever imagine. All catered, you know, violin players, music, you know, everybody in tuxedos, absolute tuxedos.
David: They tried to transport their notion of a krysha from Moscow to San Francisco and it didn’t quite work. You know, they were using ex-Russian special forces guys with automatic weapons. They were hiring ex and current off duty San Francisco cops. They hired a well known private investigator, Jack Immindorf, because they thought he had juice and he knew politicians and started spreading money around and basically thought they could ensconce themselves into San Francisco society, and that would provide political cover because everyone could be bought. That’s how they were used to operating.
Giles, narrating: At this point, the company is wiring money to Belgium, to Liechtenstein, to Israel, as well as Bermuda where Kozlenok built himself a five-million-dollar home. In San Francisco, he lives east of the bay in a pair of mansions on a gated compound in the hills.
Jack: And you wouldn’t believe, when you walk into the house and it looked like you walked into the museum. I mean, there were you know like this one up here, his were real…
Jack: Yeah, he had Picassos
Giles: Picasso’s plural?
Jack: Well he had more than one, I mean, I’m not an art critic. But I mean everywhere you looked there were just nothing but you know, unbelievable things. He had a chess set that looked like the figures were made out of ivory or something. There were jewels everywhere, it was unbelievable.
Giles, narrating: By mid 1994, Kozlenok’s spending is out of control. On one day he strolled into a luxury car dealership in LA and buys not one but three cars, and not just any cars.
Joe Davidson: Two Aston Martin’s and a Rolls Royce. They were like 400, 400 and 200, roughly. And he went down – I think he had a million bucks.
Giles, narrating: That’s Joe Davidson, FBI special agent and a veteran undercover organised crime investigator.
Joe: When they went up to Tahoe, they wanted to spend $12 million for a house – $12 million, right? They go up there, there was no homes for 12 million, you know, there just wasn’t any and on what they wanted – they wanted it on water, some kind of water. They found these townhouses that were being built in collections, like a deal and they were 2 million each. So they had $12 million. So they bought six of them.
David Kaplan: They buy condos, they buy luxury car after car. They melted down tens of millions of dollars of these tsarist gold coins at LA’s biggest gold smelter. Literally just showed up one day with a van full of gold, saying can you melt this for us? And you know, the gold dealer took the week off to help these guys and that was sold off.
Giles: What did you think of Andrei as a person?
Jack: Andrei Kozlenok? Always a smile. And he tried to be believable. You know, even when you know he was lying to you, you know, he’d be smiling and you know, it was very manipulative and very good.
Giles: What kind of things did he lie about?
Jack: You didn’t know anything he said could be true, really. And then he liked to impress you at times. So I remember one day, he came in, I think it was on a Saturday. He was in jeans, he usually wore a suit, and he reached into his pocket and he pulled out a couple of rocks. I swear they must have been 20 or 30 carat diamonds just you know to play with your mind.
Giles, narrating: For years I tried to track him down. In Moscow we had an office manager who could find anyone in any corner of the Soviet Union. She was brilliant, tireless. But she couldn’t find Kozlenok. And I tried all the usual channels myself, I tried some unusual ones too. Without luck. And then, last year, I went back over everything that had been written about him when his story first broke. And I found a name, and then a number, and then – long story short – he’s driving for three days across Europe from Ukraine to Antwerp in a friend’s VW Golf, to meet me.
It seemed too good to be true.
I wondered if David Kaplan might have any advice on how handle him.
David: Well, the people involved in the actual looting were professional criminals. And this is one of the great heists of modern history. To expect the truth from them, even at this point 20 years later, where we still don’t know what happened, it’s probably too much to hope for. Even so, Kozlenok never talked publicly to any extent before, I think there was one interview in Russian we found with him on the run years ago so it would be great to hear what he has to say today. But you gotta take it with a grain of salt.
Andrei Kozlenok: You need 45 signatures to move up levels, ministers say.
Giles, narrating: A central mystery about this scheme is who really signed off on it. Because tonnes of state-owned diamonds simply don’t leave Russia on a junior ministers’ say-so. When I asked him, Kozlenok told me 45 senior officials signed off on the scheme, and even if his “45 signatures” is off by a mile, others had to know.
Giles: Now we were discussing before that you cannot get diamonds out of Russia without KGB FSB approval.
Giles, narrating: Everything to do with the diamonds was under the control of the KGB, Kozlenok told me. But when I asked if he’d ever been a member of the KGB or its successor the FSB, he denied it. They’d wanted to recruit him, and they’d tried to repeatedly he told me, but he says he’d always refused.
Giles: They asked you to and you said no.
Andrei: Yeah, I tell them all the time, no.
Giles: But am I right that whether they ended up leaving the building as rough, or as cut and polished, the proceeds, they were still sold and the proceeds, were technically…
Jack: Technically the proceeds of the sale of the diamonds, or the polished diamonds themselves, were supposed to be sent back to Moscow.
Giles: But only a small fraction…
Jack: But only small bits ever came back.
Giles: You probably know that the kind of number that has been reported as missing is between 100 and 130 million.
Jack: It’s possible.
Giles: Does that sound about right?
Jack: I thought at the time it was more like 60 or 70 million.
Giles: Have you got any theories about where it ended up?
Jack: Yeah, they spent it. Look around, you buy a $20 million aeroplane, six yachts, two cigarette boats, six condominiums, a string of gas stations, apartment buildings, limousines, you know, and start sending tens of millions all over the world. They just squandered it.
Giles, narrating: In 1994, Joe Davidson was part of a newly formed FBI squad working nothing but Russian organised crime and his supervisor handed him a folder. It was the case file on Andrei Kozlenok and Golden ADA.
Joe: I was just coming off my gambling, money laundering mafia case, when my supervisors dropped… we call it the open volume, the most recent volume, dropped it on my desk and said, take a look at this, tell me what you think. So that’s the first time I read in depth. And I went all the way back to the beginning and I read the whole thing. And I went into Skip’s office and said, I want this case. This was ready made for a wiretap. Customs had an informant, the IRS had an informant, but we had no hard evidence. There was no phone numbers associated with these people. So they would say, okay, who’s calling Bychkov? Well, where’s Bychkov? Where is it? You know, where’s the contact?
Giles, narrating: We’re sitting in a park in bucolic Clayton, California, a stone’s throw from the sports bar where Davidson many years ago wrote the affidavit that he needed to present to a judge to get permission for doing the wiretap on Kozlenok.
Joe: You have to say you tried traditional methods and it proved to not give you enough evidence to show conspiracy. Such as pen registers, right? So I have to say, okay, we tried pen registers. Yes, it did give us contact between this phone number and this phone number but it did not give us the content of the conversation. Surveillance. Yes, we did surveillance here on Golden ADA, we followed this person around, but we can’t do surveillance in Moscow, so it doesn’t give us what we need. Informants. Yes, we have informants here but we can’t get informants in Moscow, because the way the chain of command works, they’re going to know. The people that are involved in this case, will know that you have an undercover. So I have to address all those issues and say, it would not give us the full content of it, that’s why I need the wiretap, I have to listen to the actual conversations.
Giles, narrating: But Davidson was stuck. He wasn’t sure who Kozlenok was talking on the phone lines he wanted to tap, because he didn’t have the full phone numbers. The AT&T data they usually used consisted of ten-digit numbers. Calls to Russia, complete with the country code, had eleven digits. So in every case the last digit was missing.
Davidson needed those extra digits, and he needed to get them from Russia. Now before 1994 there was no chance, then something changed.
In June 1994, Mike Pretoro arrives to set up the FBI’s first office in Moscow.
Mike Pretoro: FBI had never been in Russia before and law enforcement never been there before. And the Russians, you know, we’re kind of feeling each other out. There’s a lot of mistrust.
Giles, narrating: He’d been in Moscow for just over a month when he got a call. It was from a group within the Ministry of the Interior, the economic crime control department, and it was headed by a senior officer named Victor Zhirov
Mike: But basically we got a call saying, where are you guys, we want to meet with you, we have something we want to discuss with you and can you come meet with us. And we said, certainly we are happy to talk to you. And so we went and met them at the MVD headquarters on Zhitnaya. And that’s when we first learned about what they were doing and they described it as a bolshaya problema, a big problem, that they were investigating. And that diamonds were leaving Russia and they weren’t coming back. And they described it as a major investigation, which they’re looking for the FBI to help them with on the US side of things.
Giles, narrating: Davidson asked for Zhirov’s help identifying who Golden ADA’s owners were calling. And Zhirov traced the numbers. When he saw them, he wouldn’t phone them, he wouldn’t fax them, he wouldn’t send them. He insisted on flying personally to the states to bring the information to Davidson. He wouldn’t even put his bag in the hold on the plane.
Joe: And the next day he came into our office and brought his records. I started copying. These are presidential documents, I think there were three or four of them. He couldn’t tell who was in at any particular time, it’s corruption at the highest level.
Giles, narrating: Of course, it could have been simply that senior people were very concerned about what was going on with Golden ADA in San Francisco. And that is certainly their version of events. But if Davidson is right this was the Kremlin kleptocracy in action. The records Zhirov provided proved contact between the Golden ADA crew in San Francisco and people in President Yeltsin’s inner circle. Soon after he returned from the US, Zhirov was attacked, savagely, by two men in the stairwell of his apartment building.
Mike: It was directly attributed to the work he was doing on Golden ADA. It was basically warning him off you know, you keep going with this next time we come back and you’re not going to be you’re not going to be alive.
Giles, narrating: In the next episode of From Russia with Diamonds: kidnap, body doubles and the man from Moscow they called The Cleaner.
Thanks for listening to this episode. This story was written and reported by me, Giles Whittell. It was produced by Emily Williams of Feast Collective, and Danny Carissimi. Original music by Tom Kinsella. The editor was Basia Cummings.