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When the economy nosedives, the scams – a la Madoff and Stanford Financial – rise to the surface.

But the criminal case against Frederic Bourke and Viktor Kozeny, who encouraged investors to put millions into a high-risk oil venture in Azerbaijan, was assembled when the market was still in the stratosphere. They were indicted in 2005, on charges that they conspired to bribe Azerbaijan government officials to seize control of the state oil company.

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Bourke, a founder of the fashion accessories firm Dooney & Bourke, is now on trial in federal court in New York.

Kozeny, president and chairman of Oily Rock Group Ltd., is a fugitive living in the Bahamas. He has admitted paying off authorities, but says U.S. anti-bribery laws don’t apply to him. Charges have been dropped against a third defendant, former American International Group executive David Pinkerton.

Kozeny is a Czech native with a history of exploiting opportunities in eastern Europe. Fortune magazine has called him the “Pirate of Prague” for the profits he made in his homeland in the early 1990s.

Bourke, former husband of Eleanor Clay Ford of the Detroit Fords, met Kozeny in Aspen, where they both have houses. Bourke also has homes in Greenwich, CT, and Seal Harbor, ME.

Kozeny pitched Oily Rock as a venture that could return high profits from privatization occurring in Azerbaijan after the breakup of the Soviet Union. The company attracted investments from George Mitchell, current envoy to the Middle East and former Democratic Senate majority leader; hedge funder Leon Cooperman; and the now-beleaguered AIG.

Reuters reports that Bourke has denied knowing about the bribes and has accused Kozeny of stealing $180 million from him and other investors.

Mitchell also testified last week that he had no idea that bribes were being paid. “If I’d known of any fraud or other illegal activity, I would not have become involved,” he told jurors.

The Azeri oil operation, SOCAR, is still state-owned. The company announced last week that it had begun development of a Caspian oil field without any foreign investment.

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