The guilty verdict in the second trial of Russia's best-known prisoner, Mikhail Khodorkovsky, sparked protests outside a Moscow court overnight and drew immediate international condemnation.
Khodorkovsky was once Russia's richest oil tycoon who fell out with Russian prime minister Vladimir Putin when he backed opposition politicians.
He has been in jail for tax evasion since 2003 and has now been found guilty of embezzlement and money laundering.
White House spokesman Robert Gibbs says the United States is "troubled by the allegations of serious due process violations and what appears to be an abusive use of the legal system for improper ends".
"The apparent selective application of the law to these individuals undermines Russia's reputation as a country committed to deepening the rule of law," Mr Gibbs said.
Earlier, secretary of state Hillary Clinton said the verdict "raises serious questions about selective prosecution and about the rule of law being overshadowed by political considerations".
There were shouts of "freedom" as the fallen billionaire, who has already spent seven years behind bars, was led into court.
Supporters of Khodorkovsky were bundled away, while cameras were kept out of the court room.
The guilty verdict was widely expected among observers and during the trial Khodorkovsky said he was prepared to die in prison.
Mr Putin seemed to predict the outcome of the trial when asked about Khodorkovsky in a call-in show earlier this month.
"A thief must be in jail," he said.
"According to a court ruling, Khodorkovsky is considered guilty of theft, quite a substantial one."
Oil wealth made Khodorkovsky the richest person in Russia but he was convicted of fraud and his assets were stripped after he split with the Kremlin.
Many analysts say the latest charges, accusing him of stealing his own company's oil, make no sense legally.
Maria Lipman, editor in chief of the Carnegie Moscow Centre, says the ruling sends "a very alarming message".
"The top of the executive has monopolised decision making and has control over other branches of power," she said.
"This is going to be the political order in this country."
The ruling also sends a message to anyone who might think Mr Putin's grip is loosening on Russian politics.
Robert Amsterdam, Khodorkosky's lawyer during his first trial, was arrested and eventually barred from Russia.
"This is a method by which Putin can exert pressure on those who have political influence and let them know that everyone is vulnerable to his whims," Mr Amsterdam said.
The determined but often marginalised opposition has rallied to Khodorkovsky's cause, but many Russians simply do not care.
More often than not demonstrators in support of Khodorkovsky and his co-accused business partner Platon Lebedev are outnumbered by the media.
Alexander Myslenkof, a Khodorkovsky supporter, says Khodorkovsky and Lebedev "are symbols of our freedom, of free business and free society".
"They are our icons in standing against the state - the authorities that are not free and they are enemies of our freedom."
The final verdict may take days or even weeks to be read out in court.
The prosecution has asked for a sentence that would see Khodorkovsky spend six more years in prison, but it is widely believed he will stay in jail at least until after the next presidential election is held in 2012.
His lawyers say they will appeal.
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