GM Max Dlugy aquitted in $9 million embezzlement charge

by ChessBase
12/21/2005 – For some time now American GM and former chess prodigy Max Dlugy has been languishing in a Russian prison. Yesterday the Solikamsk City Court acquitted him of all charges, which included attempts to embezzle $9 million from the Magnesium plant he had helped to run. Dlugy can now claim compensation for the time spent in prison. Details...

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Konstantin Sterledev reports that the Solikamsk City Court of Perm Territory acquitted Max Dlugy, U.S. citizen and former chair of the board of the Solikamsky Magnesium Works, yesterday. The former rapid chess champion and international grand master was charged with the 48,000 rubles misappropriation and an attempt at the embezzlement of $9 million from the plant’s budget.

GM Max Dlugy, former Junior World Champion

The announcement of the verdict took an hour. Max Dlugy and his lawyers were in a good mood as it was already clear that the defendant would be acquitted. The prosecutor of Solikamsk, Ilya Ivanov, who was personally presenting the prosecution in court, had dropped the gravest charges – an attempt to embezzle $9 million from the plant’s budget.

Prosecutors alleged that in 2003 Dlugy had masterminded a deliberately fictitious deal aimed to misappropriate funds of the plant. But court hearings showed that the prosecution had no substantial evident to support this theory. The judge ruled to acquit Dlugy due to the absence of corpus delicti and the abandonment of the testimony by witnesses of the state prosecution.

Staff writer Adrienne Lu of spoke to Dlugy's wife Marina, before news of the acquittal had broken, and filed the following report (excerpts):

The Dlugys' tale appears tailor-made for Hollywood, part love story, part international intrigue, though the ending remains to be written. Max and Marina Dlugy were both born in Moscow. They were introduced by their mothers when he was 7 and she was 6. The two became fast friends, and when he moved to the United States with his parents at age 11, the two wrote each other letters.

Max Dlugy learned chess from his grandfather in Russia. In the United States, he won a chess and math scholarship to attend the exclusive Dalton School in Manhattan. In 1985, at age 19, he won the World Junior Chess Championship. Marina Dlugy moved to the United States in 1987. Four months later, they were married.

Their life seemed ideal. Max Dlugy served as president of the U.S. Chess Federation from 1990 to 1993. He studied finance at New York University, then turned to Wall Street, working for Bankers Trust as a securities trader. In 1995, he started doing business in Russia. He and his partners acquired shares in Russian factories and applied what they knew about American management.

One company he invested in was Solikamsk Magnesium Works, where he served as a member of the board of directors for part of 2003. But a "commercial quarrel," in Marina Dlugy's words, eventually led to the current charges. She said she is unclear on the exact nature of the allegations but that he had been framed. "They decided it was cheaper to put Max behind the bars than to negotiate," she said.

He was detained at Sheremetyevo Airport in Moscow on April 12, on his way back into Russia from New York. The next morning, he called his wife and told her he had been sent to prison, but that he was innocent. He was accused of trying to steal $9 million and faced up to 10 years in prison.

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