I am sticking with my 2023 prediction – DOJ is committed to aggressive enforcement of the Russia sanctions.  Most of its efforts to date have been directed against Russian Oligarchs and significant evaders who are moving products and facilitating financial transactions that directlty or indirectly further Russia’s invasion of the Ukraine.

On the one-year anniversary of Russia’s unprovoked invasion of the Ukraine, DOJ announced a significant prosecution, which was a follow up to another recent prosecution.

Voronchenko Indictment

On February 7, 2023, DOJ announced the indictment of Vladimir Voronchenko, a Russian citizen and U.S. legal resident, with making over $4 million in payments to maintain four real properties in the U.S. owned by Viktor Vekselberg, a notorious Russian Oligarch.  Voronchenko is also charged with contempt of court for his flight from the United States following receipt a grand jury subpoena for his testimony and documents.

Voronchenko, who resided in New York and Florida, was a businessperson, art collector and art dealer, and a close associate of Vekselberg.  OFAC designated Vekselberg as a Specially Designated National (“SDN”) on April 6, 2018. In March 2022, OFAC redesignated Vekselberg as an SDN and blocked Vekselberg’s yacht and private airplane.

Voronchenko retained an attorney in New York to acquire and manage the properties. The New York attorney paid common charges, property taxes, insurance premiums and other fees from the attorney’s IOLTA (trust account). Prior to Vekselberg’s designation, over a nine-year period, Vekselberg sent approximately 90 wire transfers totaling approximately $18.5 million to the trust account.  The attorney used these funds to make U.S. payments for the properties.  After designation, the trust account started to receive payments from a bank account in the Bahamas in a name of a shell company controlled by Voronchenko and a bank account in the name of Voronchenko’s family member.  25 wire transfers were sent from these accounts.  The New York attorney made payments as directed by Voronchenko and his family member.

Voronchenko was served a grand jury subpoena on May 13, 2022 – nine days later, Voronchenko left the United States, flew to Dubai and then to Moscow. Voronchenko did not appear on the date for his scheduled grand jury subpoena.

Forfeiture Actions

Later in February, DOJ announced the filing of civil forfeiture actions against six real properties located in New York, Southampton, New York and Fisher Island, Florida, with a combined worth of $75 million.  DOJ’s complaint alleges that the properties are beneficially owned  by Vekselberg. Prior to his designationas an SDN, Vekselberg acquired six real properties through a series of shell companies, including 19 Duck Pond Lane, Southampton, New York; 515 Park Avenue, Units 21 and 2I, New York, New York; 7002 Fisher Island Drive, Unit 7002 PH2, Miami Beach, Florida; and 7183 Fisher Island Drive, Units 7182 and 7183, Miami Beach, Florida.

Balakaev Indictment

In an unrelated but equally significant matter, the Eastern District of New York, announced a five-count indictment against Ilya Balakaev with a long-term scheme to illegally smuggle sensitive devices used in counterintelligence operations from the United States to Russia for the Federal Security Service, Russian’s intelligence agency.  In addition, he is charged with illegally exporting a gas detector and software for the benefit of North Korea.

Between 2017 and present Balakaev contracted with the FSB to repair spectrum analyzers and signal generators, which are used to detect surveillance equipment and to and transmit encrypted communications.  Balakaev relied on a network of individuals to disguise the true nature of the transactions.

In a separate action, the Department of Commerce issued a Temporary Denial Order denying export privileges to Balakaev and his company, Radiotester.