U.S. Owner of Siberian Pizza Chain Detained

A Novosibirsk court on Wednesday released on bail a U.S. businessman who has operated a chain of pizza restaurants in Siberia for more than a decade and is suspected of tax evasion, regional authorities said Wednesday. Eric Shogren, owner of the New York Pizza chain, is accused of failing to pay more than 9 million rubles ($263,900) in taxes, Novosibirsk regional police spokeswoman Tatyana Bukova told Interfax. Shogren is also being investigated in connection with other criminal cases, Bukova said, though she did not specify what the accusations in those cases entail. If charged and convicted of large-scale tax evasion, Shogren, a well-known figure in the foreign business community, could face up to seven years in prison. Shogren was detained Tuesday in connection with the tax evasion case, regional police spokesman Anton Surnin said by telephone. Novosibirsk's Leninsky District Court on Wednesday declined to place Shogren under arrest, releasing him on 1 million ruble ($29,500) bail on the condition that he not leave the city, regional court spokeswoman Marianna Glushkova told The Moscow Times. Investigators had asked the court to place Shogren in a pretrial detention facility, saying he was a flight risk. The director of Shogren's company Top Shelf, Yevgenia Golovkova, was released on 800,000 ruble ($23,000) bail, Glushkova said. Shogren remained in detention Wednesday and was to be released at 9 a.m. Thursday, his wife, Olga Shogren, said in a telephone interview from Novosibirsk. Shogren's company has about 50 million rubles ($1.5 million) in debt and fell behind on its taxes and payments to suppliers after it was unable to refinance its loans, his wife said, speaking in fluent English with an American accent. "Banks were already in crisis in May, and so they were calling back credit and weren't giving any more," she said. "That's when we acquired most of the debts." Employees and suppliers of New York Pizza picketed in Novosibirsk in February over delays in payments, Kommersant reported. In September, court marshals raided Shogren's restaurants, confiscating money from the registers to cover debts, Vedomosti reported. More than 90 complaints have been filed against New York Pizza in the Novosibirsk Regional Arbitration Court since last year, including by tax and pension authorities, according to the court's web site. The company hopes to pay off its debts, Olga Shogren said. "We're working on attracting investment groups and some investment capital, but it's very difficult," she said. Shogren is also being investigated on suspicion of fraud, Kommersant reported in March, citing police investigators. A native of Minneapolis, Shogren started up a joint car business with a Novosibirsk partner in the early 1990s. He moved to Novosibirsk a few years later and founded New York Pizza in 1996. The chain consists of 15 restaurants, according to its web site. The web site says Shogren also runs five other restaurants, a cinema and a bakery. It also says Shogren has set up a farm business called Siberian Frontier Farms, whose board includes James Collins, a former U.S. ambassador to Russia. Reached by telephone Wednesday at the Carnegie Endowment for International Peace in Washington, Collins said he had heard that Shogren had been detained. Collins said he was not familiar with the details of the case and declined to comment. He said, however, that he is "part of a board related to all [of Shogren's] businesses." The U.S. Embassy in Moscow said it could not comment on the case because of privacy laws. The Moscow Times interviewed Shogren in Novosibirsk in 2002. At that time, he said, New York Pizza was making several million dollars annually. Shogren has dual U.S. and Russian citizenship, his wife said.