Ukrainian Journalist's Apartment Set On Fire

DONETSK, Ukraine -- Ukrainian and international NGOs are calling on officials to accelerate an investigation into an arson attack on the apartment of an investigative journalist.

Someone barricaded his apartment door with bags of cement on July 31 and set fire to it.

A funeral wreath was left at the door reading: "To Oleksiy Vitaliyovych, from grieving friends." Matsuka was not at home at the time.

The police have classified the incident as hooliganism and opened a criminal investigation.

Matsuka told RFE/RL on August 1 the attack was linked to his professional activities.

The News of Donbass website recently published a number of articles about the lavish lifestyle of local elite figures.

In his blog on July 28, Matsuka wrote: "Who would believe the Donetsk mayor lives on his monthly salary of 8,000 hryvnas [$1,000]? Who would believe that the 23-year-old son of the Donetsk regional governor bought a mansion in the city center with his own money? Who would believe that the Donetsk city secretary earned his millions honestly?"

The Paris-based watchdog Reporters Without Borders and the Kyiv-based NGO Stop Censorship called on the Ukrainian authorities on August 1 to ensure Matsuka's personal safety by providing him with police protection until the attackers are found.

Matsuka said the police provided him with a bodyguard only the first night after the attack.

"They think that my position is not high enough and I am not the [sort of] person that should have guards. But I have received direct threats to my life," he said.Donetsk Mayor Oleksandr Lukyanchenko asked the police on August 1 to conduct a thorough investigation and to review all possible motives for the attack on Matsuka.

Matsuka also heads the Donetsk Institute of Information, a local NGO.

Odesa Maritime Merchant Port chief arrested

Simferopol, July 22 (Ukraine) – The head of the State Enterprise Odesa Maritime Merchant Port was detained on Friday, a measure of restraint is currently being chosen for him, the press service of the Prosecutor's Office of Crimea reported.

The Crimean Prosecutor's Office is investigating a criminal case against the seaport's chief on charge of abuse of authority or office (part 2 of Article 364 of the Criminal Code).

"This official, through abusing his office, illegally spent more than Hr 170,000 in the interests of a commercial structure on repairs to the Odesa Hotel," the press service said.

Fake alcohol kills four Russian sailors

Four Russian sailors have died after drinking counterfeit alcohol in a port in Indonesian, according to local channel MetroTV.

The four, Anatoly Bagin, Gennady Bogdanov, Olga Smetanina and Yevgeny Yakutin, are believed to have used a bootleg Chinese liquor to make cocktails. Three crewmates have been hospitalized.

Last month a group of Russian tourists in Turkey were poisoned by fake booze on a yacht trip. Four of them died and a fifth was declared brain dead this week

Budanov murder ‘not revenge’ for Kungayeva killing

Investigators and observers are groping for the motives in Friday’s shooting death of Colonel Yury Budanov – who, while considered a war criminal by some rights activists over his brutal military operations in Chechnya in 2000, has become a poster child for ultra-nationalist radicals.

Budanov, who had been sentenced to 10 years in prison for the kidnapping, rape and murder of a Chechen woman, Elza Kungayeva, but released on parole in 2009, was gunned down in broad daylight around noon near a children’s playground on central Moscow’s Komsomolsky Prospekt.

He died on the spot from four gunshot wounds to the head. The attackers reportedly drove off in a Mitsubishi Lancer, which they set fire to in a neighboring yard before fleeing the scene.

Investigators have launched a criminal case, with Investigative Committee spokesman Vladimir Markin saying that a composite photo of a suspect has been released, and that at least one of the two attackers had Slavic features.

“Investigators do not rule out that the murder was meticulously planned, and it is possible that the victim was being followed,” .

But investigators are warning against jumping to conclusions, adding it is too early to implicate Chechen groups in the shooting. “Given who Budanov was, the investigation cannot rule out that the murder was a provocation,” a source in the Investigative Committee as saying.

Vendetta?

Memorial chairman Oleg Orlov said that a blood feud may have been behind the murder.

A blood feud is plausible as a motivation, but isn’t likely to be linked to Elza Kungayeva’s family, because Budanov had served a prison sentence for her murder, according to Alexander Cherkassov, one of the heads of Memorial who has closely studied human rights abuses in Chechnya.

“But by far not everyone who has suffered at the hands of Budanov’s unit has seen justice done,” Cherkassov said. “For instance, his unit is responsible for least seven people disappearing in January 2000. Orders for four of those people had been issued by Budanov personally,” Chekassov said, citing Budanov’s subordinates.

Elza’s father, Visa Kungayev, who now lives in Norway, has denied that Budanov’s death had anything to do with his daughter. “Other people do not need to take revenge for my daughter, and they would not do it,” he was quoted as saying. “And I am in Norway with my family, I found out about this from journalists.”

Nor does he believe that Chechen revenge is behind the murder. “This is something else, the investigators will find out. A dog gets a dog’s death,”.

Rights activists in Chechnya also doubt that Chechens could have taken revenge on Budanov.

“There is no revenge,” Mikhail Yezhiyev, head of the Chechen Human Rights Center, and a former representative of the Kungayev family, told The Moscow News. “From the military environment Budanov had entered a civilian environment. Perhaps he was connected to criminal groups. If Chechens wanted to take revenge on him, they would have done it while he was serving time in the prison colony.”

The Markelov connection

Stanislav Markelov, the lawyer who was gunned down in Moscow in 2009, had represented Kungayeva’s family and was shot shortly after attending a press conference on Budanov’s early parole.

Ultranationalists Nikita Tikhonov and Yevgeniya Khasis were convicted of the murder last month.

With nationalist groups blaming the Chechens for Budanov’s death, some have warned ofpending unrest in response to Budanov’s murder. And Gazeta.ru quoted Markelov’s brother, Mikhail, as saying that the murder itself could have been a provocation to provoke further unrest.

“[Stanislav] Markelov had said before his death that Budanov’s early parole isn’t in his own best interests,” Cherkasov informed. “It would have been better for him to serve out his term. Otherwise, the government was giving out a signal that there is no law.”

Kaspersky’s son kidnapped in Moscow

Ivan Kaspersky, 20, the son of antivirus Mogul Yevgeny Kaspersky, has been kidnapped in Moscow.

Neither Kaspersky Lab, nor law-enforcement are confirming the information. Sources said the young man has been missing for two days.

“At first security services were looking for him, then the police joined the search,” sources said. Lifenews claims the kidnappers are asking for 3 million euros ransom.

Yevgeny Kaspersky has flew from London to Moscow after the news came through.

Doctors Charged Over Illegal Kidney Trade

KIEV, Ukraine -- Three Ukrainian doctors have been charged with removing kidneys from victims of human trafficking for sale to wealthy foreigners for up to $200,000 US per kidney, Ukraine’s interior ministry said on Friday.
The doctors, who have been arrested, “were part of an international criminal group whose members had for a long time trafficked people from Ukraine into one of the southern ex-Soviet nations,” it said in a statement.

It said authorities had identified more than 30 victims of the alleged illegal transplant ring, including “citizens of Ukraine, Moldova and Uzbekistan who had been trafficked abroad.

“(Each of them) came back home without a kidney, thus becoming disabled,” the ministry statement said.

It said buyers paid $100,000 to $200,000 per kidney.

The ministry did not name the country where the organs were removed from the victims or say whether the buyers travelled there for transplants.

Most of the recipients were from a country where Ukrainians had “emigrated en masse in the early 1990s”, it said, in a possible reference to Israel.

The Interior Ministry said suspected members of the crime ring had bought real estate worth over $1 million apiece and spent lavishly on luxury cars and trips abroad.

If convicted, the doctors face prison terms of up to 12 years.

'Let's Return Lazarenko's Money To Ukraine' Public Movement Created In Ukraine

KIEV, Ukraine -- Representatives of political parties and public organizations have created a movement titled Let's Return Lazarenko's Money to Ukraine.
"We are establishing this organization to unite all concerned people, who want, together with us, to achieve one aim – to return money that at present is on the accounts of [former Prime Minister Pavlo] Lazarenko to the Ukrainian public," the former deputy prosecutor general and co-chairman of the public organization "Strength and Honor," Mykola Obykhod, said at a press conference in Interfax-Ukraine on Oct. 8.

According to him, the movement will carry out its work "openly and transparently," and it plans to release relevant documents.

Explaining the reasons for the creation of such a movement, Obykhod said: "It became clear that Ukraine has dissociated itself from active participation in the U.S. trial [on the case against Lazarenko] where the U.S. raised the issue of confiscating the funds of Pavlo Lazarenko that are in blocked accounts outside Ukraine."

MP from the Regions Party Yuriy Boldyrev, in turn, said he sent an inquiry at the end of July of the current year to Chairman of the Supreme Court of Ukraine, Vasyl Onopenko, with a request to confirm whether charges brought by the Prosecutor General’s Office in 2000-2005 against former Premier Yulia Tymoshenko had been dismissed.

"The reply by the Supreme Court reads that as I did not specify which personal rights of mine were infringed… it refuses to give such information to me," the MP said.

He added that in this case he "could only call on the prosecutor’s office to request the court to give it the information, and then the prosecutor’s office will decide whether to give this information to me."

MP from the Communist Party of Ukraine Oleksandr Holub noted that the founders of the movement do not plan to initiate proceedings against Yulia Tymoshenko.

"The relevant law enforcement agencies should do this if there are reasons. Our task is to [ensure] that the law receives support at the level of law enforcement agencies and the state. This is our main task," he said.

Lazarenko was convicted in the United States of embezzling funds illegally received and transferring them to foreign accounts in 1994-1999.

In 2004, a U.S. court dismissed a number of charges against Lazarenko, including all counts related to the corporation Unified Energy System of Ukraine, which was earlier headed by Ukrainian Premier Yulia Tymoshenko, and all charges related to the energy provider Itera.

The official indictment retained the fraud charges related to the Naukova agricultural company and the extortion charges related to businessman Petro Kyrychenko's testimony.

A Californian court sentenced Lazarenko to nine years in prison in August 2006. He remained in his apartment in San Francisco under house arrest pending the consideration of the appeal against his conviction.

On April 10, 2009, a panel of judges of the U.S. 9th Circuit Court of Appeals reconsidered its previous ruling and exonerated Lazarenko from charges of "shifting of stolen funds using computer transfers," said Maryna Dolhopola, who was Lazarenko's attorney at the time.

Ukraine: Tracking Down The Hackers

KIEV, Ukraine -- Amid the steady drumbeat of dismal economic news from the former Soviet Union, one sector is exhibiting remarkable growth: cyber crime.
Industry experts say that the ex-communist republics are one of the world’s largest sources of malicious software, or malware — pernicious viruses that surreptitiously infect computers to extract personal financial information, such as credit card numbers, bank accounts and passwords.

The region’s pre-eminence in the world of e-crime was in full evidence last month, as law enforcement officials from four countries, including the FBI and Ukraine’s state security service (SBU), announced that they had broken a criminal ring responsible for some $70 million in thefts in the past few years. Five of the group’s ring leaders came from Ukraine.

The group used the Zeus Trojan virus, also known as the ZBot, and reportedly aimed to steal some $220 million worldwide. In the United States, 92 people have been charged and 39 arrested in connection with the scam, while a further 19 were nabbed in a dawn police raid in London.

“Operation Trident Breach,” as the FBI called the anti-cyber crime campaign, began in May 2009, when agents in Omaha, Neb. were alerted to suspicious transactions involving 46 separate bank accounts.

“We believe we have disrupted a highly organized criminal network, which has used sophisticated methods to siphon large amounts of cash from many innocent peoples’ accounts, causing immense personal anxiety and significant financial harm, which of course, banks have had to repay at considerable cost to the economy,” FBI Deputy Chief Inspector Terry Wilson said in an official statement.

At the same time, officials announced that Ukraine’s SBU had arrested five people who were “key subjects responsible for this overarching scheme.” SBU authorities later revealed that the five were based in the eastern city of Donetsk, and that another 15 individuals were under investigation, but it was still unclear their level of involvement.

The Russian author of the ZBot, however, still remains at large.

Trident Breach’s success gives hope that eastern Europe — long-considered a black hole for cyber crime enforcement — will now open up to further international efforts.

Ukrainian authorities deny that the former communist bloc in general, or their country specifically, has become a center for cyber bandits.

“We have reached absolutely no official conclusion that Ukraine has become a center for cyber crime,” said Alexander Zagrebelny, the SBU’s deputy chief of information security.

“The reason is simply that Ukrainian law enforcement bodies have begun to work more effectively in this sphere, and now come across such crimes more regularly. That’s why you are hearing more about it.”

But computer security experts maintain that the opposite is true: The former Soviet Union (FSU) has emerged as one of the largest producers of computer programs for cyber crime.

According to the software security firm Kaspersky, Brazil produces close to half of the world’s malicious software for banks, though this is targeted mostly at Brazilian and Latin American institutions.

China is second with 18 percent — though a good deal of this is involved in online gaming — and the former Soviet Union third with 13 percent.

“We have good statistics where malware is created,” said Maksym Schipka, Kaspersky’s director of hosted and streaming technology research. “[Hackers from the former Soviet Union] go for high profile banks, and focus a lot on western banks.”

The FSU’s pole position in cyber crime can be attributed to two factors primarily: a lax legal atmosphere that allows hackers to work relatively unmolested, and an overabundance of highly-trained specialists.

“People in the FSU have very strong technical educations and understand various technical systems in depth,” said Schipka by telephone from Moscow. “It’s something about them that they want to understand every system in fine detail.”

If anything, the tools to copy financial data from another individual’s laptop or PC has become even easier, he says. New versions of the Zeus Trojan are readily available on the internet or in underground chatrooms even on You Tube. At last count, there were about 40,000 distinct versions of the ZBot.

Schipka says that he is not trying to excuse those who choose a life of crime — the vast majority of computer experts in the region choose not to steal other peoples’ money. Still, he understands where the impetus comes from.

“These are people with a university-level education, and when they look for work, they find that they cannot sustain themselves — and we are not even talking about a posh life,” he said. “When morals are relaxed, this leads to cyber crime and making money in shady ways.”

Hackers Siphoned $70 Million

WASHINGTON, DC -- An international computer-crime ring that was broken up this week siphoned about $70 million in a hacking operation targeting bank accounts of small businesses, municipalities and churches, the Federal Bureau of Investigation said Friday.
FBI officials provided new details of a broad probe that included the arrests earlier in the week of people allegedly involved in a network of "mules," those recruited to move stolen funds via bank accounts opened with fake names.

Authorities in the U.S., U.K., the Netherlands and Ukraine have detained or charged more than 100 people. According to the FBI, the organization running the hacking ring included computer-code writers in Ukraine, and the mule-network operators spread out in the U.S., U.K. and Ukraine.

Victims were mostly in the U.S., though some bank accounts were also targeted in the U.K., the Netherlands, and Mexico.

Thieves using iterations of the Zeus computer program managed to steal hundreds of thousands of dollars at a time—the result of focusing on business accounts instead of individual consumers, the FBI said. Investigators said the transactions attempted could have led to losses of up to $220 million, but many weren't completed.

Authorities had earlier cited losses of at least $3 million, a figure that included only a subset of the larger probe described Friday by the FBI.

Since emerging in 2007, the Zeus software, or "malware," has become the weapon of choice for most cyber bank robbers, experts say. The software has been updated multiple times, becoming more sophisticated, and it is sold on the black market to criminals.

Russell Brown, an FBI special agent in the bureau's cyber division, said the ring focused on accounts owned by municipalities and churches in addition to smaller corporate accounts.

The thieves realized "there was more money if you compromise a small-medium business," Mr. Brown said. "They were particularly focused on small and medium businesses because of the technological limitations" often found in security systems at smaller companies, he said.

Gordon Snow, FBI assistant director and chief of the cyber division, said the probe began in May 2009, when FBI agents in Omaha, Neb., began investigating 46 suspicious bank payment transactions, and it grew to a probe of thefts from about 400 victims.

The "technical sophistication of their operation made it difficult to investigate and disrupt," he said.

Even as investigators shut down one major operation using the Zeus malware, they acknowledged that new iterations of it were wreaking havoc in the business world.

Don Jackson is director of threat intelligence at information-security firm SecureWorks, and has provided information on Zeus operations to federal law enforcement. He said the Zeus malware's staying power could largely be attributed to its business model.

Its Russian author, known in the underground by his online handle A-Z, has developed a corporate operation complete with licensing agreements and tech support that have made it easy to use for aspiring cyber bank robbers.

Mr. Jackson said that with the arrests this week, international law enforcement put a major dent in the Zeus operations around the world.

Small Victory In The Fight Against Global Cybercrime

NEW YORK, NY -- At the Kiev offices of Innovative Marketing Ukraine, hundreds of programmers, translators and database engineers created a software product that made the company a world leader — an exceptional achievement in the impoverished former Soviet republic
But the way the company made its multimillion-dollar profits is nothing to celebrate, according to the criminal charges its owners now face in a district court in Chicago.

Innovative Marketing, say investigators and Internet-security researchers, was one of the biggest and cleverest propagators of "scareware" — programs that run fake scans on computers of unsuspecting users and then claim to find viruses that can only be removed by downloading some software.

Except the viruses don't exist and the software — which can cost between $30 and $70 — is either useless or can infect the computer itself.

Scareware is one of the fastest-growing and most prevalent types of Internet fraud. Security-software firm McAfee says it saw a 400% increase in incidents reported last year and predicts the use of scareware will be the most costly online scam in 2010, infecting around 1 million computers per day and bringing in illegal global profits of over $300 million.

Charges against Innovative Marketing, run by Swede Bjorn Daniel Sundin and Indian-born Shaileshkumar Jain, put it squarely in the frame as one of the leading perpetrators of the scam.

Sundin and Jain are yet to appear before the Chicago court, which on May 27 charged them with computer fraud and wire fraud, but two months before that indictment they had already been ordered to pay $163 million by a court in Maryland by a default judgment in a civil suit brought against them by the Federal Trade Commission (FTC).

The FTC case was a rare victory in the fight against cybercriminals, who use lax law enforcement in countries like Ukraine to stay beyond the reach of the law. "This is one of the largest Internet-based fraud cases the FTC has ever prosecuted," says Ethan Arenson, an attorney at the FTC who led that investigation. "[Innovative Marketing] were the biggest players in scareware operations for a long time."

According to the FTC, in 2003, Innovative Marketing began peddling hundreds of antivirus products under names such as WinAntiVirus and DriveCleaner. Misleading advertisements placed on websites — including those of the National Hockey League, the Economist magazine and Major League Baseball — were used to automatically launch the bogus scans before directing the user to purchase the malicious software.

After receiving more than 1,000 complaints from computer users who had been duped, the FTC began tracking the suspects through shell companies set up around the world. A major breakthrough came when Dirk Kollberg, a researcher with McAfee in Germany, decided to investigate Innovative Marketing's servers in 2008, after discovering that some of its ads were being used to automatically download software without the user's consent.

Astonishingly, the company's servers were not password-protected, meaning the information they held was publicly available. The data gave Kollberg an insight into the inner workings of the company and its products. What he saw convinced him that, behind its smart logo and customer-care hotline, Innovative Marketing was producing and selling fake antivirus software on a massive scale.

Using figures obtained from the servers, Kollberg calculates that the alleged scam scored $180 million in sales in 2008 alone. His findings helped the FTC build its case against the company.

Attempts to crack down on the scareware industry are hamstrung by the fact that many of the companies are run out of countries with weak legislation, ineffective law enforcement and corrupt officials. Paul Ferguson, a threat researcher at California-based Trend Micro, says a number of major threats have emanated from Ukraine, including the Zeus trojan, which steals bank-account details and ran rampant in early 2009.

According to Ferguson, the shifty business is run by organized criminal gangs who trade control of infected computers — and the information stolen from them — for cash "like at a bazaar." "It's like the Wild West," he says. "There's no sheriff."

Ukraine is slowly waking up to the need to take on its cybercriminals. The Interior Ministry set up an anticybercrime unit last year, but according to unit leader Ruslan Pakhomov they are fighting an uphill battle. Pakhomov says he lacks vital resources and laments that judges and prosecutors don't have the knowledge they need to bring cases to a conviction.

And in a country where the average wage is a miserable $200 a month, young computer specialists are queuing up for work wherever they can find it — even if it's at a scareware company. "There are lots of talented, well-educated programmers, but there aren't enough jobs," says Pakhomov. "They try to find a place to use their skills."

According to profiles posted on the LinkedIn careers networking website, former Innovative Marketing staff are now working at leading banks and consulting companies, while others have moved to another Kiev-based antivirus software company. Innovative Marketing's former bosses, meanwhile, are facing their day in court.

According to the U.S. Department of Justice, Sundin is believed to be in Sweden, while Jain is thought to be in Ukraine and is listed as wanted by Interpol. A third defendant from Ohio is expected to present himself for arraignment at the Chicago court at a later date.

As far as anyone can tell, Innovative Marketing shut its doors last year, but Ukraine's Interior Ministry says it could still be operating from another location. McAfee researcher Kollberg says many of the scareware scams traced to the company are still running, although it's difficult to tell who is behind them now.

"If you have a business and you're making hundreds of millions," he says, "why would you just give it up?"

Blind Eye Turned to Counterfeit Cell Phones

It's a typical sight in many of Moscow's electronics markets: a 3,000 ruble Blackberry, a gold-plated Nokia and an iPhone with a television antenna.

Counterfeit and other illegal mobile phones have been flooding into the country, but while law enforcement, mobile providers and phone makers have all pledged to tackle the problem, illegal mobile phones continue to be openly sold in most electronics markets with impunity.

Counterfeit phones currently make up 2 percent to 3 percent of the Russian market, according to estimates by Mobiset.ru, a telecoms portal. Total contraband phones, a category that includes both counterfeit and authentic phones that have been smuggled into the country, account for about half of all mobile phones currently sold in Russia.

Counterfeit phones are pouring into the country almost exclusively from China, giving consumers the option of choosing anything from a cheap, disposable knockoff to a high-quality reproduction at a fraction of the price.

Counterfeit mobiles can be divided into three main groups, ranging from low-quality knockoffs to exact copies of the latest models, said Eldar Murtazin, editor of telecoms portal Mobile Review.

"The first category are mobile gadgets that are labeled 'Nukua' or something that sounds like a well-known brand and can only be mistaken as genuine from a distance," he said.

"The second type is a more precise copy, which looks much like the original one and has an official logo, but offers a primitive interface. You can also find a high-quality falsification made of decent materials, using exact copies of the original microchips and even screws."

The last group includes the exact replicas, which have the unit's original software installed and for which the only visible difference from the original is the price — which is several times lower.

Moscow's markets are flooded with the imitations, ranging from cheap knockoffs with "enhancements" added, to jewel-studded luxury brands.

"Here is one that looks exactly like an iPhone 3G. It costs 3,400 rubles ($114), but I can give you a small discount if you will take the memory card too," said Sergei, a salesman from Savyolovsky Market, who pointed to iPhone-like gadgets, all of which are sporting a small, sliding television antenna and slots for two SIM cards, options that a real iPhone 3G doesn't have.

Sergei, who wouldn't give his last name because of the illegal nature of his enterprise, also offered a more expensive model that was labeled as containing 32 gigabytes of memory. But it only works well with 16 gigabytes, the salesman said, advising a reporter not to "put too much memory in, or it will freeze up."

Both phones had the Apple logo, but fine print on the back said, "Designed by Cpple in California, made in China," an apparent attempt by the manufacturer to protect itself from trademark lawsuits.

A spokeswoman for Apple Europe wouldn't give an estimate for how much it loses from falsifications or say whether the company is fighting the illegal trade at all.

Sellers say China is the sole source of counterfeit mobile handsets that make it to Moscow markets.

"I don't really know who exactly manufactures these 'masterpieces,'" Sergei said, "but they are assembled in China where there are numerous illegal factories."

The factories are technically operating underground, but look like legal assembly lines, said Murtazin, who recently visited a factory near Guangzhou, an industrial Chinese city near Hong Kong.

"The producers work underground and are sometimes raided by the police, but they still manage to function normally," he said. "I remember trying to take pictures in Guangzhou at a shopping center where they sell these fakes, but they thought I was from an international phone company, and the guide told me to delete the pictures if I wanted to leave the market unharmed."

Other knockoffs run the gamut from the absurd to the gaudy.

Another salesman at Savyolovsky was selling a so-called iPhone 2G, a replica of the original iPhone — only half the size. "We call it a mini-iPhone, a good present for a lady. Only 4,600 rubles!" he said.

A Vertu Ascent Ferrari 1947 Limited Edition, which is on sale for 7,480 euros ($10,500) in an official Vertu shop in Moscow, is on sale for just 8,000 rubles in Gorbushkin Dvor, a market in the west of Moscow.

"Few would see the difference. Look, ours has leather, titanium and looks exactly the same. So why pay more?" a seller said.

A golden-plated Nokia 8800 with rhinestones, selling for 3,000 rubles instead of the 70,000 to 80,000 ruble price tag for a genuine model, and a phone resembling a Blackberry but labeled as "Bloakberry" were the "hot sales hits," another seller at Savyolovsky said.

"Counterfeit phones are one of our most serious problems," Viktoria Yeremina, a spokeswoman at Nokia Eurasia, said in e-mailed comments. "They not only damage the brand, but they can be dangerous for users," she said.

"We have a special team working in China, and we also fight bootlegged goods in other countries, and naturally, in Russia."

Spokespeople for Vertu and Research in Motion could not be reached for comment.

It's unclear how much help the phone makers are getting from Russian law enforcement, however, as two Interior Ministry departments each said the other was responsible for dealing with trafficking in illegal smartphones.

"We can't assign a police officer to every salesman of illegal goods. This will just not work," said Andrei Pilipchuk, a spokesman for the Interior Ministry's economic security department. "We curb the channels of illegal supplies on a strategic level."

"Illegal dealers bribe officials at customs and carry whatever they want to inside the country, whether it be phones or other gadgets, in containers that may be listed as 'clothes' in customs forms, for example," he said.

Plipchuk directed all further questions to the Interior Ministry's department "K," which is tasked with dealing with high-tech crimes.

A spokeswoman for department "K" said only that the department didn't deal with illegally imported smartphones and directed all further questions back to the economic security department.

If a smartphone makes it through the border, it is as good as sold, so the most effective way to curtail the sale of counterfeit phones is at the border.

The Federal Customs Service discovered 7 million units of counterfeit goods and initiated more than 1,000 legal cases countrywide in the first two weeks of 2010 alone, said a spokesman for the customs service, who declined to be identified. He did not say how many of these cases involved counterfeit phones.

"Counterfeit phones are usually smuggled in peoples' luggage in lots that rarely exceed 200 to 300 units, which on average are valued at 600,000 to 2 million rubles," the spokesman said.

In every shipment that crosses the border, customs officials crosscheck the names of the product and the importer with a database to confirm that the importer is officially accredited by the manufacturer to sell the goods in Russia.

"In some cases when we have doubts, we detain the goods and consult the manufacturer to find out whether the goods are of legal origin," he said.

But heading off all illegal phones at the border runs the risk of throwing out the baby with the bathwater.

The introduction of the iPhone 3Gs into Russia has been pushed back several times because of customs problems. Last month, RIA-Novosti quoted sources close to mobile operators as saying new customs regulations were hampering the introduction of Apple's smartphone on the Russian market.

According to new customs regulations that went into force on Jan. 1, importers of radios and other electronic devices must get licenses and inform the Federal Security Service if the devices have encoding functions.

Theoretically, it should be easier to curtail the counterfeit phone trade at the point of sale. But unlike smuggling, which is easy to prove and get a court ruling on, selling counterfeit phones falls under a number of articles of the Administrative and Criminal codes, and it is difficult to successfully prosecute such cases, lawyers say.

"The police say they lack expertise to differentiate fake smartphones from the genuine ones, which could be true in the case of high-tech sophisticated falsifications," said Oleg Moskvitin, a senior lawyer with Muranov, Chernyakov & Partners. "But most Chinese fakes have defects, or, alternatively, have an abundance of functions that the original model does not offer, so in most cases it is easy to track those."

Even if law enforcement did crack down on illegal phone retailers, it would be a piecemeal effort, requiring them to prosecute individual sellers rather than the markets at which they are sold.

"The trade center itself does not sell mobiles — they lease properties to tenants who may be honest businessmen or may not be," Moskvitin said. "The news of a 'piracy orgy' on the territory of a trade center or a market creates reputational and political risks, rather than legal risks, which, however, may result in the closure of the property, as was the case with the old Gorbushka."

A chaotic outdoor weekend flea market near the Gorbunov recreation center in the west of Moscow was closed in 2001 after an anti-piracy campaign orchestrated by city authorities, but a new modern trade center with the same name was soon opened nearby.

The most effective tool to fight counterfeit phones is in the hands of mobile operators, but they may be loathe to use it.

All legally produced phones are hardwired with an International Mobile Equipment Identity, a unique code assigned to each device, which would allow operators to immediately detect when a call was placed from an illegal phone.

In December, mobile operators in India blocked all phones that didn't have an IMEA code, rendering useless most counterfeit phones.

But to do so would not necessarily be in the interest of Russian operators, who would be effectively dropping many of their subscribers.

"The problem is that phone operators are more interested in getting as many subscribers as possible and don't care about the fakes," said Sergei Vasin, a telecommunications analyst at Metropol.

Mobile operators say they are against the use of illegal phones, as they can damage the operators' networks, but that they cannot solve the problem on their own.

"It is impossible to fight [illegal trade] using only the resources of the mobile operators," Ksenia Korneyeva, a spokesperson for Beeline, said in e-mailed comments.

She said blocking illegal phones by tracking their IMEI could be a useful tool, but doesn't look like a realistic option quite yet.

"We should first work out the technical procedure necessary to carry out this project, the logistics and the areas of responsibility," she said.

"Of course, phone handsets can be identified by IMEI code, and it is logical that one IMEI should correspond to one particular phone. But sometimes phones can be cloned, in which case a large number of devices are assigned one IMEI," she said.

But while mobile operators and law enforcement mull over how best to deal with the issue, sellers aren't particularly worried that their trade is in any danger.

One retailer of illegal phones at Savyolovsky brushed off concerns about the legality of his trade. "If everyone does this here, it is supposed to be OK."

Russian programmer indicted over software theft

Sergei Aleynikov, an ex-programmer in Goldman Sachs was indicted today for theft and faces up to 25 years in jail.
Sergei Aleynikov, 40, has allegedly stolen trading software code from Goldman Sachs, where he worked for two years until June 2009 on a $400,000 a year salary. Aleynikov was arrested in July and released on $750,000 bail. He could face up to 25 years of imprisonment for charges on theft of trade secrets, transportation of stolen property and unauthorized computer access.
Aleynikov, who holds dual U.S. and Russian citizenship and who has lived in America for the last twenty years, is said to have downloaded 32 out of 1,024 megabites of the code for the platform that Goldman Sachs uses for high-frequency trading (a system in which computers generate trades on stock and commodity markets at fractions of a second).
The prosecution claims that he wrote a programme that compressed the files and sent them to a server in Germany, and then Aleynikov removed all the traces of his actions from the company computer. Later he went to meet with his new employers, Teza Technologies LLC in Chicago, where he took the laptop with the stolen files with intention to use the data for building a similar platform for Teza. He was arrested in the airport on his way back from the meeting. Soon after Aleynikov's arrest Teza fired him.
Aleynikov denies the charges and says that he used some data to work from home, but Goldman was aware of it, and he might have downloaded some secret files unintentionally. He claims that he has not shown or sold the files to anyone.

Worker injured in St. Petersburg rail blast

An explosion on the railway near St. Petersburg injured a worker early on Tuesday morning and caused delays in the rail service.
A bomb, thought to contain 200 to 400 grams of TNT, went off just after 4 a.m. on the main line between Moscow and St. Petersburg.
The incident comes in the wake of a Nov. 27 bomb hit the Nevsky Express on the same route. In that attack, 28 people died and more than 90 were injured.
On Tuesday, the device went off under the wheels of a railway carriage, injuring a guard's leg, police said. The man was hospitalised.
Police are investigating what they suspect to be a terrorist attack.

Fallen Oil Magnate's Fortunes on the Rise

Billionaire Mikhail Gutseriyev has returned to the world of Russian business after patiently waiting out a two-year Russian investigation from the safety of London.
His next anticipated step is actually returning to Russian soil, where his vast business and political experience make him a top candidate to steer efforts to stabilize his native Ingushetia and promote economic recovery there.
"Gutseriyev is a very powerful manager and economist who could tremendously help us here," said Kaloi Akhilgov, a spokesman for Ingush President Yunus -Bek Yevkurov.
"He and his expertise and knowledge would be highly desired by the republic's presidential administration," Akhilgov told The Moscow Times.
Gutseriyev, who fled Russia in mid-2007 after the Prosecutor General's Office piled up charges of tax evasion, fraud and license violations against him, regained control of his Russneft oil company earlier this month, reportedly on Jan. 4, from billionaire Oleg Deripaska. A clause in the sales agreement reached in July 2007 stipulated that it would be cancelled if Deripaska failed to secure government clearance in two years, said Deripaska's company En+.
Approval never came from the Federal Anti-Monopoly Service, whose director, Igor Artemyev, said Russneft's ownership was so complex that his agency was unable to deliver a judgment in two years.
Artemyev confirmed Thursday that Gutseriyev remained the owner of Russneft, Interfax reported.
Gutseriyev, who received $3 billion for the company from Deripaska in 2007, paid either nothing or $600,000 to take it back, Vedomosti reported last week, citing various unidentified sources. The lack of repayment stemmed from a large debt that the company ran up during those two years, the sources said.
Russneft is the only large Russian company that does not trace its origins to the dubious loans-for-shares auctions of the mid-1990s. Gutseriyev crafted it in 2002 out of numerous smaller production and retail assets that he had bought on the market.
What prompted the criminal case against Gutseriyev remains unclear. In July 2007, Gutseriyev wrote in an open letter that he had decided to step down as Russneft's president and sell the company to save it and its 25,000 jobs after being tormented by Russian law enforcement agencies. Gutseriyev accused investigators of targeting him personally but would not say why.
Commentators speculated at the time that Russneft was being punished for snatching away minor pieces of the Yukos oil giant — which was carved up after the politically tinged arrest of its founder Mikhail Khordorkovsky — from the state oil behemoth Rosneft, which gobbled up most Yukos assets. Another version floated by political pundits was that Gutseriyev had been targeted because of his support for the Ingush opposition, which was at odds with then-Ingush President Murat Zyazikov.
Gutseriyev was a big name in Ingushetia under Zyazikov's predecessor, Ruslan Aushev. In 1994, the Russian government appointed Gutseriyev as head of the administration of a free economic zone that was established and lasted in Ingushetia throughout most of the 1990s. Twice Gutseriyev was elected to represent Ingushetia in the State Duma, where he served as a deputy speaker from 1995 to 1999.
President Dmitry Medvedev's decision to replace the unpopular Zyazikov in the fall of 2008 with Yevkurov is widely seen as his first major independent personnel decision.
Yevkurov, who enjoys broad popular support, has opened a dialogue with the opposition and started a campaign against local corruption. But he has failed to curb violence and economic crime in Ingushetia, which remains Russia's least developed and poorest region. He barely survived an assassination attempt last year.
Medvedev pledged 32 billion rubles ($1.07 billion) in financial aid to Ingushetia from 2010 to 2016 in his state-of-the-nation address Nov. 12. A day before the announcement, the Prosecutor General's Office removed Gutseriyev from Interpol's international wanted list. Two weeks earlier, the Interior Ministry's Investigative Committee, which led the probe into Russneft, had called off its warrant to arrest Gutseriyev in absentia.
These moves immediately stirred speculation that Gutseriyev was being given the green light to return and help Yevkurov facilitate economic recovery in Ingushetia.
A criminal case in which Gutseriyev and other Russneft managers are charged with evading 20 billion rubles ($750 million) in taxes remains open.
Akhilgov said the Ingush presidential administration has not held any negotiations with Gutseriyev, adding that the Gutseriyev affair was being decided in the Kremlin and Prime Minister Vladimir Putin's Cabinet.
Vedomosti, citing an unidentified Kremlin source, reported in October that Yevkurov had asked Medvedev to allow Gutseriyev to return and that Medvedev had embraced the idea but Putin had opposed it.
Spokesmen for Medvedev and Putin said they were unaware of any negotiations over Gutseriyev.
Gutseriyev could not be contacted this week.
"Medvedev has placed his bets on Yevkurov, and he doesn't want him to fail in Ingushetia," said Alexei Makarkin, an analyst at the Center for Political Technologies. "If Gutseriyev can help Yevkurov, this could be his guarantee to criminal immunity."
Unlike several other Russian businessmen — including Boris Berezovsky and, more recently,Yevgeny Chichvarkin, who turned into outspoken critics of Putin after fleeing to Britain to avoid Russian prosecution — Gutseriyev has kept mum, although he reportedly applied for political asylum in October 2007.
Gutseriyev has not become a major irritant for Russia's leadership, Makarkin said.
In the meantime, the pro-Putin siloviki faction in the government that has sought Gutseriyev's arrest has weakened politically, opening the door for his return home, said Nikolai Silayev, a Caucasus specialist at the Moscow State Institute of Foreign Relations.
A strong reason for Gutseriyev to return to Russia is Russneft, which the businessman has fondly described as his brainchild but would be difficult to manage from abroad, especially in its current financial situation, Silayev said.
Gutseriyev reclaimed Russneft in much worse shape than when he left. Russneft has remained the country's eighth-largest oil company but saw annual output drop by 14 percent to 12.7 million tons last year in comparison with 2006, the last full year when Gutseriyev was at the helm.
Russneft's debt burden surged to nearly $7 billion during the time when the company had no formal owner and was managed by a mixture of Deripaska and Gutseriyev appointees.
In a statement announcing Gutseriyev's departure from the company in 2007, Russneft said it had 30 production units and 311 gas stations and operated in 22 regions of Russia and in Belarus.
Russneft said in a statement last week that it now runs 21 production units and 96 gas stations across 13 regions of Russia and in Belarus.
Russneft could expand if it teamed up with a partner like billionaire Vladimir Yevtushenkov, who last month announced that his company Sistema was interested in buying as much as 49 percent of the oil firm. Sistema in March agreed to pay $2.5 billion for control in another oil producer, Bashneft, a company that has capacity to refine more crude than it produces.
Russneft would complement that asset because it pumps more oil than it can refine, said Sergei Karykhalin, an analyst at asset management company Kapital.
Much of Russneft's debt is long-term or appears easy to refinance because the credit market is unfreezing as the country's economic situation improves, he said.
"The company hasn't been managed very well in recent years," he said. "It probably was forced to live through worse conditions than its peers, but a change for the better is possible."
State-owned Sberbank may take a token 1 percent or 2 percent stake in Russneft to act as a moderator between Gutseriyev and Sistema, Vedomosti reported Tuesday. Sberbank is the company's largest creditor and has all its stock as a collateral.
Russneft spokesman Eduard Sarkisov said he was unaware of the possible arrangement. Sberbank declined comment.
Russneft elected a new board of directors last week, but Gutseriyev was not among them. The board includes a representative of Swiss commodities trader Glencore, Yana Tikhonova; Sberbank executive Ashot Khachaturyants; and three Russneft executives, including company president Oleg Gordeyev, a Gutseriyev ally.

Moscow Police Chief Blames Migrants for Crime

The economic crisis contributed to a growth in crimes committed by migrants but overall crime dropped sharply last year, Moscow police chief Vladimir Kolokoltsev said Wednesday.
The number of crimes committed by migrants rose by 7 percent to 54,600 cases, or 48.6 percent of the total number of solved crimes, Kolokoltsev said at a news conference, Interfax reported.
"Many people from other cities who had come to work in the capital at the moment when the crisis started found themselves without jobs," Kolokoltsev said, RIA-Novosti reported.
City police shut down more than 50 crime groups involving more than 160 people, including 63 Caucasus natives and 40 foreigners, he said.
Last year, Moscow saw a 36.2 percent decrease in the number of murders, a 76 percent decrease in the number of robberies, a 19.8 percent decrease in the number of violent robberies, a 7.9 decrease in the number of car thefts and a 4.4 decrease in the number of violent attacks, Kolokoltsev said.
The number of police officers charged with criminal offenses rose by about 50 percent, while the number of senior police officials disciplined for not following work procedures rose 20 percent, he said.
At the same time, the number of complaints from citizens about illegal actions by police "fell drastically in recent months," Kolokoltsev said, without providing any figures.
Police illegally failed to register 170 appeals from crime victims, but the figure was 18 percent lower than the previous year's, he said.
Kolokoltsev said citizens could complain to him directly on his personal web page at Petrovka-38.org, which opened in December.
A total of 62 attacks on people of "non-Slavic" appearance were registered in the city last year, including 26 murders and 25 cases of intentionally causing severe injuries, five of which ended in deaths, Kolokoltsev said.
Sova Center, a watchdog that tracks hate crimes, said 116 people were injured and 27 killed in racist attacks in Moscow and the Moscow region in the first 11 months of 2009, according to its web site.
City police and the Federal Security Service last year disbanded 10 racist groups with a total of 33 members who carried out 34 of the 62 attacks on people of "non-Slavic" appearance, including 14 murders, Kolokoltsev said.
President Dmitry Medvedev appointed Kolokoltsev as Moscow's police chief in September, filling a position vacated in April when he fired the previous chief in the wake of a supermarket shooting spree by a Moscow police officer that left two people dead. Kolokoltsev, a native of the Penza region, previously served as first deputy head of the Interior Ministry’s criminal police department

Melnychenko Ties Lytvyn To Gongadze’s 2000 Murder

KIEV, Ukraine -- Mykola Melnychenko, a former bodyguard of ex-President Leonid Kuchma, this week repeated allegations that parliamentary speaker Volodymyr Lytvyn was behind the murder of journalist Georgiy Gongadze.
After saying on television that Lytyvn had ordered the murder of the muckraking journalist in 2000, he alleged in a telephone interview with the Kyiv Post that Lytvyn had convinced Kuchma to have Gongadze dealt with outside the law.“Lytvyn brought articles [by Gongadze] to Kuchma that were critical about Kuchma and his family. But when Kuchma wanted to take Gongadze to court, Lytvyn convinced him to get [former Interior Minister Yuriy] Kravchenko to deal with him using his methods,” he said.Lytvyn, Kuchma’s chief of staff in 1999 and 2000, denies involvement in the murder. Olha Chorna, a spokesperson for Lytvyn, dismissed Melnychenko’s claims as part of the presidential election campaign. “It’s ridiculous. It’s not the first time he’s brought this up. Melnychenko has learnt to make money from these accusations,” she said.Gongadze, who co-founded the opposition Ukrainska Pravda web site in April 2000, disappeared in September 2000. His decapitated remains were found in November, two months later, outside Kyiv. In recordings made secretly in Kuchma’s office by Melnychenko, a voice resembling Kuchma’s told Kravchenko to “deal with” Gongadze.“Take his pants off and give him to the Chechens,” the voice said.The 10-year investigation into who ordered murder accelerated this summer after the capture of Oleksiy Pukach, a police general who allegedly carried out the killing. Pukach is currently being held in police custody, but there has been no report of progress since his arrest.Melnychenko fled Ukraine in November 2000, taking up to 1,000 hours of highly compressed digital audio recordings to Ostrava in the Czech Republic. The United States granted the former guard, his wife and young daughter refugee status in April 2001.The International Press Institute in February 2001 vouched for the authenticity of 45 hours of the recorded conversations. Lytvyn and Kuchma have denied giving a direct order to murder Gongadze.The results of analysis by experts in Germany were received by the Prosecutor General’s Office in November, although its examination of the materials was delayed by the poor quality of the translation into Ukrainian. Yuri Boichenko, spokesman for the prosecutor’s office, on Dec. 6 declined to say exactly what recordings were analyzed.“I cannot comment on the analysis because it is part of a criminal investigation,” Boichenko said. He added that Melnychenko, who is a witness in the case, had also signed a confidentiality agreement not to talk publicly about the recordings.Last month, officials from the prosecutor’s office complained that Lytvyn refuses to cooperate with the investigation where he is also a witness. As a member of parliament possessing immunity he cannot be forcefully detained for questioning.Melnychenko told the Kyiv Post on Dec. 9 that he possesses a recording of the conversation between Kuchma and Lytvyn. On Dec. 10 he gave the Kyiv Post one of the 18 recorded excerpts checked this year for authenticity by German audio forensic experts, saying the minutes-long audio file demonstrates Lytvyn’s role in the abduction and murder of Gongadze. Voices resembling former president Kuchma and Lytvyn are heard on the recording.Chorna accused Melnychenko of working for Lytvyn’s opponents in order to sabotage his support rating in the presidential campaign. A survey at the end of November by the FOM-Ukraine pollster put Lytvyn’s support at 2.5 percent.Melnychenko denied allegations of attempts to sabotage Lytvyn’s campaign, saying, “For me it’s important only that people whose hands are covered in blood are brought to justice.”Melnychenko isn’t the only one who’s bringing up Lytvyn’s alleged involvement in Gongadze’s murder. Oleksandr Moroz, the leader of the Socialist Party who revealed the Melnychenko tapes in parliament in 2000, also accused the current parliamentary speaker in November. Moroz is also running in the current presidential race.

YUKOS owners win ruling in $100 billion case against Russia

Dec 1 - The former owners of YUKOS said on Dec. 1 they had won a court ruling clearing the way for a claim of upto $100 billion against the Russian state over the way it broke up Russia's biggest oil company. YUKOS's top shareholder GML told Reuters it aimed to win the right to seize Russian assets abroad if Moscow did not meet the claim, made under an international treaty designed to protect foreign investments in Eastern Europe and the former Soviet Union.The Russian government demanded billions of dollars in tax from YUKOS in 2003 in a move which led to the company's bankruptcy and the jailing of top owners Mikhail Khodorkovsky and Platon Lebedev on tax evasion and fraud charges.Khodorkovsky denied the accusations and said the destruction of YUKOS, which was eventually bought by state oil major Rosneft , was motivated by his political opposition to then-President Vladimir Putin.A tribunal of the Permanent Court of Arbitration (PCA) in The Hague ruled on Monday that Russia was bound by the Energy Charter Treaty (ECT), despite having never ratified the document, YUKOS's top shareholder GML said.GML will have to go through two more stages in The Hague, which would take another two to three years, before claiming full victory in its battle, said Tim Osborne, a director at GML."Ultimately we would go after the Russian assets whenever we can find them," said Osborne. Russian Prime Minister Vladimir Putin's spokesman, Dmitry Peskov, declined to comment on the ruling and GML's comments.Some of Khodorkovsky's former partners, such as Leonid Nevzlin, fled Russia and promised a "life-time litigation" over YUKOS, at that time Russia's largest oil firm. The arbitration began in 2005.International investors, including U.S. pensions funds, were spooked by the fall of the country's largest private company, which had a market value of over $40 billion before the state began its tax case.Kremlin critics said the YUKOS campaign marked a turning point in Putin's presidency and was a deliberate move to curb the power of so-called oligarchs and bring key sectors of the economy back under state influence.Putin has said the tycoons were prosecuted according to the law and sentenced fairly.TheNov. 30ruling, unavailable on the PCA web site but confirmed by the non-affiliated Energy Charter Secretariat in Brussels, stated that Russia is bound by its 1994 signatory membership in the Energy Charter Treaty (ECT).The ECT - established in 1991 to take into account "the problems of reconstruction and restructuring in the countries of Central and Eastern Europe and in the USSR" - provides for the protection of foreign investments and dispute resolution between 51 European countries, including Russia.Russia opted out of its signatory status in August this year and its provisional membership in the Energy Charter expired on Oct. 18.Osborne said that GML would now have to prove in the same court in The Hague that it had been discriminated against during the YUKOS demise and then win an enforcement of the award.Should GML win all rulings in two to three years, it would get the right to go after Russian assets abroad, except for diplomatic assets, if Moscow declines to redeem damages, he said.

Russian gangster said to have ordered murder of 4 Room shopping center director

The director of the Kyiv-based 4 Room shopping center, Shabab Aloyan, was threatened by Mirab S., a relative, before being killed, while a gangster known by the nickname of Mirab ordered the murder, Inferior Minister Yuriy Lutsenko said at a press conference in Kyiv on Wednesday.
The minister said that a second suspect detained by the police is wanted by the United States and Armenia.
"As our Russian colleagues testify, he is in the elite of killers," Lutsenko said.
According to him, the trial of the alleged killer should be conducted in Ukraine, as he is a suspect in three murders, including a murder of a policeman, in the country.
"According to our data, there are two Mirabs, one of them is a gangster and another is Mirab S. We think that the direct threats came from Mirab S., while the gangster ordered the murder…," the minister said.
When asked whether they had been detained, Lutsenko said: "They have been identified. Currently we're resolving questions: what their citizenship is, under which conditions they live in Russia and whether Ukraine has enough evidence to bring them to account."
As reported, the director of 4 Room shopping center died of gunshot wounds in hospital, while two security guards, employees of the Titan special unit detachment, died at the scene of the shooting at the 4 Room shopping center on October 2.
One of the two attackers died in hospital on Saturday of gunshot wounds and injuries received during a traffic accident.

Michigan man denies committing World War II crimes in Ukraine

An 88-year-old retired auto engineer told a judge through his attorney Tuesday that he never shot Jews while serving in a Nazi-controlled police force in Ukraine during World War II, as the government began laying out its case as to why he should be deported.
John Kalymon, of suburban Detroit, denied the U.S. Department of Justice's assertion that he claimed to have fired his gun at least eight times and killed a Jew in August 1942, when Jews were being rounded up and removed from what is now Lviv, Ukraine.
During Tuesday's initial hearing, Judge Elizabeth Hacker told the Justice Department to file a brief detailing its case by early 2010. Xenos would have until Feb. 26 to respond to the brief. A trial date has not been set.
Kalymon was stripped of his U.S. citizenship in 2007, and the government is seeking to deport him. It hasn't been determined where he would go.
"My heart is pounding a little bit harder. I'm too old and sick," Kalymon told The Associated Press after the brief hearing.
There is no dispute that Kalymon, in his early 20s, served in the Nazi-sponsored Ukrainian Auxiliary Police in Lviv, which was part of Poland until the Soviet Union invaded in 1939.
His lawyer, Elias Xenos, described the police unit as a group with little authority, comparable to a reserve force guarding streets and rooms in police stations.
But the government says Kalymon should be deported because his service resulted in the persecution of civilians. He also failed to disclose the police job when he applied to enter the United States in 1949.
The Justice Department became aware of Kalymon after the fall of the Soviet Union in 1991 when World War II-era archives became accessible. Xenos insists the government is relying on forged handwriting that doesn't belong to his client.
In 2007, however, a federal judge stripped him of his citizenship, a decision that was upheld by an appeals court.
"It's turned our life upside down," Kalymon's son, Alex Kalymon, said of the case. "I'm very
disturbed. My father's not done anything wrong."

Children are raped in Artek camp, claims Ukrainian parliamentarian

Ukrainian parliamentarian Vadym Kolesnichenko (party of regions faction) says children have been raped in the international children's camp Artek.
"I was contacted by a mother of two children who were raped in Artek. I immediately raised an alarm and we checked that information. Unfortunately, it was confirmed. We are now doing everything to prevent high-ranking officials from avoiding responsibility," Kolesnichenko said in a statement released by the press service of the Party of Regions on Tuesday.
The parliamentarian contacted the law enforcement agencies, the Prosecutor General's Office, the human rights ombudsman, asking them to prevent the closure of the criminal case, which has already been opened, and not drag it out.