The Justice Department promised aggressive enforcement of export controls and sanctions against Russia.  To that end, DOJ initiated the KleptoCapture task force to focus law enforcement investigations of export violators.  DOJ and the KleptoCapture task force have delivered.  The first significant case confirms the importance of tracking DOJ and law enforcement resources.  When an initiative is announced and includes assignment of personnel, you can rest assured that DOJ will deliver. 

DOJ brought two separate cases in its first significant action with the filing of charges in New York (Eastern District) and Connecticut. against a dozen individuals  and several corporate entities with unlawful conspiracies to export civil-military dual-use technologies to Russia, some of which were recovered on Ukraine battlefields while another nuclear proliferation technology was intercepted before reaching Russia.

New York (Eastern District)

Five Russian nationals and two Venezuelan oil brokers were charged for evading sanctions and money laundering. One defendant was arrested in Germany and another was arrested in Italy. The defendants obtained military technology from U.S. companies, smuggled millions of barrels of oil from Petrolos de Venezuela S.A. (“PDVSA”) and laundered tens of millions of dollars for Russian industrialists, sanctioned entities and the world’s largest energy conglomerate.

Yury Orekhov, Artem Uss, and two other Russian nationals, along with two Venezuelan nationals, were charged for enabling oligarchs, obtaining U.S. military technology and sanctioned oil through  shell companies and cryptocurrency. Orekhov was CEO and managing director of NDA, a German private industrial and commodity trading company.  Uss was the other owner of the company.

NDA was a front company that sourced and purchased sensitive military and dual-use products from U.S. manufacturers, including advanced semiconductors and microprocessors used in fighter aircraft, missile systems, smart munitions, radar, satellites, and other spaced-based military applications.  These items were shipped to Russian end users, including sanctions companies that serviced Russia’s military.  Some of the electronic components were found in Russian weapons seized on the battlefield in Ukraine.

Orekhov and Uss also used NDA as a front to smuggle hundreds of millions of barrels of oil from   Venezuela to Russian and Chinese customers, including a sanctioned Russian aluminum company and the world’s largest oil refining, gas and petrochemical conglomerate based in Beijing.  Orekhov admitted he was acting on behalf of a sanctioned Russian oligarch, stating “He [the oligarch} is under sanctions as well. That’s why we [are] acting from this company [NDA]. As fronting.”  To escape detection, the defendants used false shipping documents and supertankers that deactivated their GPS navigation systems.

Payments were often conducted in U.S. dollars routed through U.S. banks and correspondent bank accounts.  The defendants submitted false KZYC documentation and bank accounts, which resulted in U.S. banks processing tens of millions of dollars in violation of U.S. sanctions and other criminal laws.  In one conversation, Orekhov bragged that “there were no worries . . . this is the shittiest bank in the Emirates . . . they pay everything.”  The defendants also used bulk cash drops with couriers in Russia and latin America, as well as cryptocurrency transfers worth millions of dollars.

Connecticut

In a superseding indictment, four individuals were charged (three of whom were arrested in Latvia and one in Estonia) and two companies in Europe for export violations for smuggling a high-precision computer-controlled grinding machine, aka jig grinder, which is used in nuclear proliferation and defense programs.

Two Latvia defendants, Eriks Mamonovs, and Vadims Ananics, who operated CNC Weld, a Latvia company, conspired with Stanislav Romanyuk, Ukrainian citizens, who operated Estonia company, BY Trade OU, Janis Uzbalis from Latvia and a number of Russian individuals to violate U.S. export laws and smuggle a jig grinder, which was manufactured in Connecticut. A jig grinder is a high-precision grinding machine systems with applicaations in nuclear proliferation and defense programs.