Department of Justice
U.S. Attorney’s Office
Eastern District of New York
FOR IMMEDIATE RELEASE
Wednesday, December 7, 2022
Russian Intelligence Agent Charged with Fraud and Money Laundering in Connection with Purchase and Use of Luxury Beverly Hills Real Estate
Defendant Was Sanctioned in 2020 for Attempting to Interfere in the U.S. Presidential Election
A seven-count indictment was unsealed today in federal court in Brooklyn charging Andrii Derkach with conspiracy to violate the International Emergency Economic Powers Acts (IEEPA), bank fraud conspiracy, money laundering conspiracy and four counts of money laundering in connection with the purchase and maintenance of two condominiums in Beverly Hills, California. Derkach allegedly purchased the properties in violation of new U.S. sanctions imposed earlier this year and concealed his interest in the transactions. Derkach remains at large.
Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, and Andrew Adams, Director of Task Force Kleptocapture announced the charges.
“The conduct of this Kremlin asset, who was sanctioned for trying to poison our democracy, has shown he is ready, willing, and capable of exploiting our banking system in order to advance his illicit goals. The U.S. will not be a safe haven where criminals, oligarchs or sanctioned entities can hide their ill-gotten gains or influence our elections,” stated United States Attorney Peace. “This Office, together with our law enforcement partners, will use every tool available to prosecute those who evade sanctions and abuse the U.S. financial system, and we will identify, freeze and seize criminal proceeds whenever and wherever possible.”
“Kremlin-backed Ukrainian politician and oligarch, Andrii Derkach, was sanctioned for his efforts to influence the 2020 U.S. Presidential election on behalf of the Russian Intelligence Services. While participating in a scripted Russian disinformation campaign seeking to undermine U.S. institutions, Derkach simultaneously conspired to fraudulently benefit from a Western lifestyle for himself and his family in the United States. The FBI will continue to use all the tools at its disposal to identify Russian intelligence operations, disrupt Russian information laundering networks, and bring to justice those who seek to engage in criminal conspiracies to undermine the integrity of U.S elections and evade U.S. sanctions,” stated Assistant Director-in-Charge Driscoll.
“Attempting to enjoy the safety, security, and freedoms of an open society, while secretly working to undermine that very society, is a hypocrisy that runs through every sanctions charge announced by the Task Force. It is a particularly egregious hypocrisy in the case of Andrii Derkach – sanctioned for attempts to undermine American democracy, while corruptly seeking to benefit from its protections,” said Task Force KleptoCapture Director Andrew C. Adams.
Since 1998, except for a hiatus from November 2006 to November 2007, Derkach was a member of the Verkhovna Rada (Rada), Ukraine’s Parliament. During his time in the Rada, Derkach was a member of the Party of Regions, a pro-Russia political party, which was the ruling party in Ukraine from 2010 until the 2014 Ukrainian Euromaidan Revolution. On September 10, 2020 the United States Department of Treasury’s Office of Foreign Asset Control (OFAC) sanctioned Derkach and several companies he controlled pursuant to Executive Order 13848, calling him “an active Russian agent for over a decade, maintaining close connections with the Russian Intelligence Services” who “waged a covert influence campaign” to undermine the 2020 U.S. presidential election.
As alleged in the indictment, beginning in 2013, Derkach and a co-conspirator devised a scheme to purchase and maintain two luxury condominiums in Beverly Hills while concealing his interest in the transactions from U.S. financial institutions. Specifically, Derkach used the services of a corporate nominee, a multi-tiered structure of California-based shell companies, and numerous U.S. bank and brokerage accounts. Using this framework, Derkach wired approximately $3.92 million to the nominee from overseas accounts in Latvia and Switzerland belonging to companies registered in the British Virgin Islands. The money was then used to pay $3.2 million in cash in the name of a corporate entity set up by the nominee, with Derkach having no visible affiliation with the purchase. The remaining $800,000 was invested in a brokerage account maintained by the nominee for Derkach’s benefit and used to pay expenses on the condominiums, including taxes, homeowners’ fees, and utilities. Because Derkach had fraudulently obscured details about his identity and involvement from the financial institutions holding the aforementioned bank and brokerage accounts, he prevented those financial institutions from moving funds into blocked accounts, and instead caused those financial institutions to engage in transactions involving blocked funds and transactions for the benefit of the condominiums, which were blocked property pursuant to the sanctions.
A parallel civil forfeiture action has been initiated to seize the condominiums and the remaining funds in the U.S. brokerage and bank accounts that Derkach controls.
If convicted, Derkach faces a maximum of 30 years’ imprisonment. The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Artie McConnell and Jonathan E. Algor are in charge of the prosecution, with assistance from Trial Attorney Adam Small of the National Security Division’s Counterintelligence and Export Control Section and Litigation Analyst Ben Richmond. Assistant United States Attorney Madeline O’Connor of the Office’s Asset Recovery Section is handling forfeiture matters.
The investigation was 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 Attorney General Merrick Garland on March 2, 2022 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.
E.D.N.Y. Docket No.: 22-Cr-432 (DLI)U.S. Department of Justice Press Release
Here’s the indictment:
And the civil complaint:
Categories: Anti-Money Laundering Bank Fraud Department of Justice (DOJ) Updates Enforcement Actions Fraud Indictments and Arrests
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