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Soviet Bank Loses Bid to Unfreeze NY Assets in Libel Battle

December 23, 1986

NEW YORK (AP) _ A federal judge has rejected a Soviet bank’s attempt to release some $450,000 frozen in a Los Angeles libel judgment and to keep its countersuit in New York.

U.S. District Judge Mary Johnson Lowe refused to grant the Soviet Union’s Bank for Foreign Trade a preliminary injunction Monday against the freezing of some $450,000 ordered by another federal judge in California.

Ms. Lowe also ordered a Soviet countersuit against the libel action transferred to the California court and refused to hold a fact-finding hearing.

″This is a clean sweep. The first, full-blown battle we’ve had with the Russians head to head,″ said Gerald Kroll, attorney for Raphael Gregorian.

Gregorian, 56, a California businessman, sued the Soviet Union for libel in Los Angeles, claiming he lost a multimillion-dollar export business after being accused in the Soviet news media of spying.

In June, U.S. District Judge David Kenyon of Los Angeles entered a default against the Soviets after they failed to respond to Gregorian’s lawsuit.

In issuing her ruling Monday, Ms. Lowe said she could not bypass Kenyon’s decision. ″If you want those accounts unfrozen the place to be is either the (federal) appeals court in California or before Judge Kenyon,″ she said.

Gregorian was awarded $456,413 when Kenyon found he had been libeled by the Soviet newspaper Izvestia. He also sued the Soviet Union itself, the Ministry of Foreign Trade and two trading companies run by the ministry.

Gregorian, who for 15 years exported medical instruments to the Soviet Union, was ousted from that country in 1984 after Izvestia accused him of spying.

Kenyon ordered the Bank of America to turn over Soviet assets to Gregorian to satisfy the judgment. Kenyon later stayed his order but Bank America International in New York has segregated the money from the rest of the funds in an account of the Bank for Foreign Trade.

John Mage, a U.S. attorney for the Soviet bank, and lawyers for Bank America International claimed an innocent third party in the libel action was being hurt by the order freezing the account.

But Kroll maintained the Bank for Foreign Trade was the ″paying arm″ of one of the trading companies named as a defendant in the libel suit.

The Soviet countersuit, which Ms. Lowe transferred to California, contends that the libel judgment is void because U.S. courts lack jurisdiction.

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