The Pirate of Prague's Newly Restored Grin

Incredible as it seems, Viktor Kozeny could indeed ride again.

Accused of bribing Azerbaijan leaders, the Harvard-educated, lavish-living Kozeny has sat for almost two years in a Bahamas jail fighting extradition to the U.S. But now a U.S. prosecutor says the government may have to drop most charges against him. The reason -- the statute of limitations.

If it does, and Kozeny is freed or lightly sentenced, it will put a bow around the charmed life that he has led the last 17 or so years, in which he masterminded two of the most controversial investment schemes of the Gorbachev and post-Soviet era.

This story actually broke last month, but appears to have been largely overlooked. Tip to Paul Sampson for pointing it out to me. Here is the first paragraph of an AP story: NEW YORK — The government is seeking to resurrect its case against three men accused of offering hundreds of millions of dollars to top officials in the former Soviet republic of Azerbaijan to get favorable treatment in oil deals. Read story

Steve's comment: The 43-year-old Kozeny is famous for investment schemes in which lots of people lose most of their money.

He first attracted attention in the early 1990s when he swooped into his native Prague and persuaded hundreds of thousands of Czechs to invest their state-issued privatization vouchers with him, and become fabulously wealthy. Almost all lost most or all of their money, but Kozeny left the country worth tens of millions of dollars and never returned. For that Fortune magazine dubbed him "The Pirate of Prague."

Kozeny bought lavish homes in London, the Bahamas and elsewhere with the money.

Next, he turned up on the Caspian Sea. He decided that there were even greater earnings to be had, particularly in Baku. In 1997, he threw a now-famous party in Aspen, Colorado, where he persuaded some of America's most savvy investors and their friends that they could own, then flip, the state oil company of Azerbaijan, or Socar.

Those who tossed in a bundle totalling more than $200 million included Wall Street hedge fund doyen Lee Cooperman, former Senate Majority leader George Mitchell and Frederic Bourke of the Dooney & Bourke luxury handbag company.

The problem, as (almost) anyone who has set foot in Azerbaijan knows, is that there is no way the Azerbaijan government would part with its cash cow.

In October 2005, U.S. prosecutors charged Kozeny and two of the investors with bribery and money laundering. Specifically, the government said that the defendants provided financial incentives to a "senior Azeri official" (the late President Heydar Aliyev) in order to privatize Socar.

In June of this year, a U.S. district judge said the statute of limitations had passed on charges against Kozeny's two co-defendants, and dismissed most of them. And in an appeal last month, prosecutors said that, if the decision holds, most charges will also have to be dropped against Kozeny.

The appeal hasn't been decided yet. But those who follow the Azerbaijan case always wondered -- why, given Kozeny's history, did so many smart people entrust so many millions with him? To a person, his investors replied that they felt they had done their due diligence.

That rang hollow. The truth was that Kozeny dangled the prospect of an enormous windfall before Aspen's and Wall Street's moneyed crowd -- in addition to great fun and adventure -- and they simply grabbed for it.

Ten years later, there is the prospect of Kozeny going onto his next adventure.