The U.S. government has charged 11 people and firms in Texas and Russia with illegally exporting high-tech microelectronics.
The Justice Department said the electronic parts "are subject to strict
government controls due to their potential use in a wide range of
military systems, including radar and surveillance systems, weapons
guidance systems, and detonation triggers."
An indictment unsealed Wednesday in U.S. District Court for the
Eastern District of New York charged 11 members of what the government said was a Russian military
procurement network operating in the United States and Russia, as well
as a Texas-based export company, Arc Electronics, and a Russia-based procurement firm with allegedly exporting goods to Russia illegally.
Alexander Fishenko, an owner and executive of the American and Russian companies, is also charged with operating as an unregistered agent of the Russian government inside the United States by illegally procuring the high-tech microelectronics on behalf of the Russian government.
In addition to the unsealing of the charges, search warrants were executed at seven residences and business locations associated with the defendants, and seizure warrants were executed on five bank accounts held by Fishenko and defendant Arc Electronics.
The Commerce Department also added 165 foreign persons and companies who received, transshipped, or otherwise facilitated the export of controlled commodities by the defendants to its Entity List. This designation imposes a license requirement before any commodities can be exported from the United States to these persons or companies, and establishes a presumption that no such license will be granted.
In the indictment, the U.S. government alleges that between roughly October 2008 and the present, Fishenko and the other defendants engaged in a surreptitious and systematic conspiracy to obtain cutting-edge microelectronics from manufacturers and suppliers located in the United States and to export those high-tech goods to Russia, while carefully evading the government licensing system set up to control such exports.
The government said Fishenko was born in Kazakhstan, graduated from the Leningrad Electro-Technical Institute in St. Petersburg, and immigrated to the United States in 1994, and became a naturalized citizen of the United States in 2003.
In 1998, he founded defendant Arc and between 2002 and the present, Arc shipped about $50 million worth of microelectronics and other technologies to Russia.
The defendants allegedly exported many of these high-tech goods, frequently through intermediary procurement firms, to Russian end users, including the Russian military and intelligence agencies.
To induce manufacturers and suppliers to sell them these high-tech goods, and to evade applicable export controls, the defendants often provided false end-user information in connection with the purchase of the goods, concealed the fact that they were exporters, and falsely classified the goods they exported on export records submitted to Commerce.
For example, to obtain microelectronics containing controlled, sensitive technologies, Arc claimed to American suppliers that rather than exporting goods to Russia it merely manufactured benign products such as traffic lights. Arc also falsely claimed to be a traffic light manufacturer on its Website. Arc actually manufactured no goods and operated exclusively as an exporter.
According to court documents, the defendants went to great lengths to conceal their procurement activities for the Russian military.
The indictment said in addition to owning and controlling Arc, Fishenko is also a controlling principal of the Russian procurement firm Apex.
“Today’s action is a perfect example of two of the core benefits of the (Obama) administration’s export control reform effort – higher enforcement walls around controlled items and extensive coordination and cooperation among the enforcement agencies. I applaud our special agents who worked with the Justice Department in the interagency effort that led to today’s actions,” said Undersecretary of Commerce Eric L. Hirschhorn, in a statement.
“The receipt of U.S.-made, cutting-edge microelectronics has advanced Russia’s military technological capabilities. NCIS and the Department of the Navy have worked closely with the FBI, the Department of Justice, and the Department of Commerce in this investigation due to the potential for significant enhancement of Russian naval weapons systems that would result from the illegal acquisition of these export-controlled technologies,” added Special Agent in Charge Timothy W. Reeves of the NCIS Central Field Office.
As a result of this case, the Justice Department said there may be victims and witnesses who need to contact the agencies involved in the investigation. It asked businesses that have been approached by one of the defendants, or by someone trying to obtain export-protected, sensitive technology to report that information to email@example.com
Additional information and a list of the defendants can be found in a press release
issued by the Justice Department and Commerce's Bureau of Industry and Security. - Chris Dupin