In addition to the University, the suit names Professor of Economics Andrei Shleifer '82, his wife Nancy Zimmerman, former Harvard employee Jonathan Hay and his wife Elizabeth Hebert as defendants. Shleifer was principal investigator and project director of the aid program and Hay was the general director.

The suit claims that while providing economic and legal advice for the development of Russian capital markets, the individual defendants violated conflict-of-interest rules prohibiting them from investing in the Russian economy. The suit claims they even diverted U.S. government resources for their own use.

The complaint alleges that Shleifer and Zimmerman invested $200,000 in various Russian companies and Russian government debt. In addition, the couple and Hay allegedly purchased "several hundred thousand dollars worth" of shares in Russian oil companies in the name of Shleifer's father-in-law.

The complaint also includes claims that all four individuals used their position to gain official approval to launch mutual funds in Russia. Hay and Zimmerman are also accused of using U.S. government-funded staff and offices for purposes like performing research for their private oil investments.

Lawyers for the individual defendants said the government's suit is misguided.

"There is no substance to what was alleged," said Hebert's attorney Lloyd Macdonald.

HIID, the Harvard organization that administered the program, was disbanded July 1. The move was recommended to Provost Harvey V. Fineberg '67 last winter by a special University taskforce. Administrators said the decision was not influenced by the alleged improprieties in the Russian program.

However, the report said that "overseeing a large number of advisory projects located throughout the world" had become a "formidable challenge" for Harvard. This lack of oversight was one of the chief complaints of the lawsuit.