Source: United States Department of Justice Criminal Division
From the outset of Russia’s unprovoked, full-scale invasion of Ukraine, one year ago today, the Department of Justice has prioritized enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed alongside our global partners. Today, the Department continues that work by actions in two separate federal cases to disrupt sanctions evasion and smuggling networks supporting the Russian regime.
“Over the past year, the Ukrainian people have shown the world what courage looks like,” said Attorney General Merrick B. Garland. “For as long as it takes, the Department of Justice will continue to stand shoulder-to-shoulder with our Ukrainian and international partners in defense of justice and the rule of law.”
“It has been one year since Russia launched an unprovoked invasion of its neighbor, but the FBI has been working with our Ukrainian partners for years to battle Russian aggression there — and we aren’t going anywhere,” said FBI Director Christopher Wray. “The FBI’s commitment to Ukraine remains unwavering, and we will continue to stand against Russia at home and abroad.”
The U.S. Attorney for the Southern District of New York has filed a civil forfeiture complaint against six real properties located in New York, New York; Southampton, New York; and Fisher Island, Florida, worth approximately $75 million. The complaint alleges that the properties beneficially owned by Russian oligarch Viktor Vekselberg are the proceeds of sanctions violations and were involved in international money laundering transactions. The case arises in the wake of the indictment of Vekselberg’s alleged strawman, Vladimir Voronchenko, a fugitive previously charged in the Southern District of New York. In the Eastern District of New York, a five-count indictment was unsealed today charging Ilya Balakaev, 47, of Moscow, with various offenses related to a years-long scheme to illegally smuggle sensitive devices used in counterintelligence operations from the United States to Russia for the benefit of the Federal Security Service of the Russian Federation (FSB), the principal intelligence and security agency of the Russian government. Balakaev is further charged with illegally exporting a gas detector and related software from the United States to Russia for the benefit of the Democratic People’s Republic of Korea (DPRK or North Korea). Concurrent with today’s action in the Eastern District of New York, the Department of Commerce separately issued a Temporary Denial Order denying the export privileges of Balakaev and his company, Radiotester OOO (aka Radiotester LLC), for 180 days with the possibility of renewal.
Today’s actions coincide with the one-year mark of Russia’s unprovoked war in Ukraine. Read more about the Justice Department’s efforts to hold Russia accountable here.
The Vekselberg Properties
According to court documents, on April 6, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) designated Vekselberg as a Specially Designated National (SDN) in connection with its finding that the actions of the Government of the Russian Federation in Ukraine constituted an unusual and extraordinary threat to the national security and foreign policy of the United States.
Prior to his designation by OFAC, between in or about 2008 and in or about 2017, Vekselberg, through a series of shell companies, acquired six real properties in the United States, today worth approximately $75 million:
- 19 Duck Pond Lane, Southampton, New York 11968.
- 515 Park Avenue, Units Units 21 and 2I, New York, New York 10022.
- 7002 Fisher Island Drive, Unit 7002 PH2, Miami Beach, Florida 33109.
- 7183 Fisher Island Drive, Units 7182 and 7183, Miami Beach, Florida 33109.
The FBI and HSI are investigating the case. The Justice Department’s National Security Division and Office of International Affairs, and OFAC provided valuable assistance.
Assistant U.S. Attorneys Jessica Greenwood, Joshua A. Naftalis, and Sheb Swett for the Southern District of New York are prosecuting the case.
United States v. Ilya Balakaev
As alleged in the indictment, between 2017 and the present, Balakaev contracted with a part of the FSB that is responsible for the Russian government’s communication security and cryptology, to repair spectrum analyzers and signal generators, devices used to detect surveillance equipment and to transmit covert communications. Because the devices were not readily available in Russia, the defendant established a network of individuals in the United States to assist him in purchasing the equipment, which the defendant then smuggled out of the United States, in violation of U.S. export control and sanctions laws.
In addition to his scheme to evade Russian sanctions, the defendant also illegally exported U.S. technology on behalf of a North Korean government official, in violation of U.S. export laws. As alleged, the defendant contracted with the First Secretary of the North Korean Embassy to the Russian Federation, based in Moscow, to obtain hazardous gas detectors and software from the United States for the benefit of the North Korean government.
If convicted on all counts, Balakaev, currently a fugitive, faces a maximum of 75 years in prison.
The FBI, HSI, Commerce Department’s Office of Export Enforcement (OEE), and CBP are investigating the case.
Assistant U.S. Attorney Sara K. Winik for the Eastern District of New York is prosecuting the case with assistance from Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section.
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These cases were coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls, and economic countermeasures that the United States, along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.