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Five Russians, 2 US Nationals, charged with Russian Sanctions Evasion

Department of Justice

U.S. Attorney’s Office

Eastern District of New York


FOR IMMEDIATE RELEASE

Tuesday, December 13, 2022

Five Russian Nationals, Including Suspected FSB Officer, and Two U.S. Nationals Charged with Helping the Russian Military and Intelligence Agencies Evade Sanctions

The Defendants Conspired to Obtain Military-Grade and Dual-Use Technologies from U.S. Companies for Russia’s Defense Sector

A 16-count superseding indictment was unsealed yesterday in Brooklyn charging five Russian nationals, Yevgeniy Grinin, Aleksey Ippolitov, Boris Livshits, Svetlana Skvortsova and Vadim Konoshchenok with conspiracy and other charges related to a global procurement and money laundering network on behalf of the Russian government.  Konoshchenok, a suspected officer with Russia’s Federal Security Service (FSB), was arrested in Estonia on December 6, 2022 and will undergo extradition proceedings to the United States.  Grinin, Ippolitov, Livshits and Skvortsova remain at large.  Estonian authorities searched a warehouse used by Konoshchenok and recovered approximately 375 pounds worth of U.S.-origin ammunition.  Alexey Brayman, a lawful permanent resident of the United States residing in New Hampshire, and Vadim Yermolenko, a U.S. citizen residing in New Jersey, were also arrested and charged as part of scheme.

As alleged, the defendants were affiliated with Serniya Engineering and Sertal LLC, Moscow-based companies that operate under the direction of Russian intelligence services to procure advanced electronics and sophisticated testing equipment for Russia’s military industrial complex and research and development sector.  Serniya and Sertal operated a vast network of shell companies and bank accounts throughout the world, including the United States, that were used in furtherance of the scheme to conceal the involvement of the Russian government and the true Russian end users of U.S.-origin equipment.  The defendants unlawfully purchased and exported highly sensitive and heavily regulated electronic components, some of which can be used in the development of nuclear and hypersonic weapons, quantum computing and other military applications. 

Following Russia’s invasion of Ukraine in February 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce (DOC) Bureau of Industry and Security (BIS) levied sanctions against Serniya, Sertal, Yevgeniy Grinin and several companies used in the scheme, as well as multiple individuals affiliated with the network, including defendant Yevgeniy Grinin, calling them “instrumental to the Russian Federation’s war machine.”

As alleged in the indictment, Sertal was licensed to conduct highly sensitive and classified procurement activities by Russia’s Federal Security Service (FSB), Russia’s principal security agency and the main successor agency to the Soviet Union’s KGB.  The Serniya network’s clients included State Corporation Rostec, the state-owned defense conglomerate; State Atomic Energy Corporation Rosatom (Rosatom); the Ministry of Defense; the Foreign Intelligence Service (SVR); and various components of the FSB, including the Department of Military Counterintelligence and the Directorate for Scientific and Technological Intelligence, commonly known as “Directorate T.”

Merrick B. Garland, United States Attorney General, Breon Peace, United States Attorney for the Eastern District of New York, Lisa O. Monaco, Deputy Attorney General for the Department of Justice, Christopher A. Wray, Director, Federal Bureau of Investigation (FBI), Michael J. Driscoll, Assistant Director-in-Charge, FBI, New York Field Office, Matthew Axelrod, Assistant Secretary of Commerce for Export Enforcement, U.S. Department of Commerce, and Andrew Adams, Director, Task Force KleptoCapture, announced the charges.

“The Department of Justice and our international partners will not tolerate criminal schemes to bolster the Russian military’s war efforts,” said Attorney General Merrick B. Garland. “With three of the defendants now in custody, we have disrupted the procurement network allegedly used by the defendants and Russian intelligence services to smuggle sniper rifle ammunition and sensitive electronic components into Russia. The Justice Department will continue to vigorously enforce our economic sanctions and export controls against those who enable the Russian government to continue its unjust war in Ukraine. I am grateful for the tireless efforts of the Department’s Task Force KleptoCapture, the National Security Division, the Office of International Affairs, the U.S. Attorney’s Office for the Eastern District of New York, and the FBI on this case.”

“As alleged, the defendants perpetrated a sophisticated procurement network that illegally obtained sensitive U.S. technology to facilitate the Russian war machine,” stated United States Attorney Peace.  “Our Office will not rest in its vigorous pursuit of persons who unlawfully procure U.S. technology to be used in furtherance of Russia’s brutal war on democracy.”                                 

“Today the Department of Justice proves once again that we will relentlessly pursue those who support the Russian war machine by evading sanctions and export controls,” stated Deputy Attorney General Monaco.  “By exposing the defendants’ smuggling of ammunition and transfer of sensitive U.S. technologies — from quantum computing to hypersonic weapons development —the Department of Justice is holding accountable those who are fueling Russia’s unlawful and unprovoked aggression in Ukraine.”

“The FBI’s work, with our partners, to identify and stop illegal transfers of weapons and dual use-technology to Russia shows that we can and will reach around the world to keep Americans safe,” said FBI Director Christopher Wray. “The industries that these illegal transfers could support – quantum computing, hypersonic weapons – pose great danger in the hands of our adversaries.  The FBI will remain relentless against illegal transfers that support such industries in hostile nations, while we also continue to focus on protecting strategic technology innovation here at home.”

“We continue to protect military and dual-use technologies from adversaries seeking to undermine the United States or bring harm to our allies. Russia has shown it will use any means necessary to skirt our laws, including illegally procuring sensitive electronic components, for the purpose of bolstering its intelligence services and military wartime capabilities. Today’s actions represent outstanding collaborative work by FBI New York and our partners who have relentlessly disrupted these illicit activities, a mission that has become increasingly more critical following Russia’s invasion of Ukraine, and sends a strong message to those who jeopardize the national security of the United States,” stated FBI Special Agent-in-Charge Driscoll.

“The powerful export controls we’ve put in place have been successful in isolating Russia from the global economy,” said Assistant Secretary of Commerce for Export Enforcement Axelrod.  “Today’s coordinated DOJ and Commerce enforcement actions demonstrate our vigilance in uncovering Russian tactics to illicitly acquire the items they need to keep their brutal war going.”

“From the outset of the Task Force, robust enforcement of U.S. export controls and restrictions on the transfer of sensitive technology has been a key strategic priority,” said Task Force KleptoCapture Director Adams. “Today’s indictment demonstrates the reach of those controls and the United States’ commitment to choking off access to military grade equipment by the Russian regime. We will continue the steady pace of seizures, indictments and arrests, while the Kremlin continues shopping for spare parts in North Korea.”

As alleged in the indictment, Ippolitov received requests from Russian end users and relayed them to Grinin and Skvortsova, who were both employees of Sertal.  Grinin and Skvortsova secured funding and shipping routes for the transactions, and tasked Livshits with procuring the items from U.S. companies.  Livshits, a former resident of Brooklyn, New York, opened and controlled a variety of shell companies and associated bank accounts in the New York City area, which he used to route shipments and layer financial transactions in furtherance of the scheme.  Livshits also interfaced directly with U.S. companies—often using the alias “David Wetzky”—and made materially false statements about how the items would be used and the ultimate end user. 

Based in the United States, Brayman and Yermolenko would fabricate shipping documents and invoices, repackaging and reshipping items to intermediate destinations around the world—including to Konoshchenok in Estonia—before eventually arriving in Russia.  Yermolenko and Brayman also helped Livshits set up and manage dozens of shell companies and corresponding bank accounts throughout the U.S. that were used in the scheme.

Konoshchenok—a self identified “Colonel” in the FSB—would ship or physically smuggle U.S.-origin items from Estonia to Russia, including dual-use electronics, military-grade tactical ammunition and other export-controlled items.  As alleged in the indictment, on October 27, 2022, Konoshchenok was stopped at the Estonian border with 35 different types of semiconductors and other electronic components ordered by Livshits, as well as thousands of U.S.-made 6.5mm bullets, which are used in military sniper rifles.  On November 24, 2022, Konoshchenok was again stopped attempting to cross into Russia with approximately twenty cases containing thousands of U.S.-origin bullets, including tactical rounds and .338 military sniper rounds.  Konoshchenok discussed “fabricating” business records with Livshits to conceal the ammunition shipments, on one occasion describing them as “auto parts.”  Incident to Konoshchenok’s arrest, Estonian authorities searched a warehouse used by Konoshchenok and recovered approximately 375 pounds worth of ammunition.  

If convicted, the defendants face a maximum of 30 years’ imprisonment.  The charges in the indictment are allegations, and the defendants are 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 Attorney Artie McConnell and Craig Heeren are in charge of the prosecution, along with Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section, with assistance from Litigation Analyst Ben Richmond.  The United States thanks the Estonian Internal Security Service and the Prosecutor’s Office for their valuable support.

The Defendants:

Alexey Ippolitov
AGE: 57
Moscow, Russia

YEVGENIY GRININ
age: 44
Moscow, Russia

BORIS LIVSHITS
Age: 52
St. Petersburg, Russia

SVETLANA SKVORTSOVA
AGE: 41
Moscow, Russia

VADIM KONOSHCHENOK
AGE: 48
Tallin, Estonia

ALEXEY BRAYMAN
AGE: 35
Merrimack, New Hampshire

VADIM YERMOLENKO
AGE: 41
Upper Saddle River, New Jersey

E.D.N.Y. Docket No. 22-CR-409 (HG)

U.S. Department of Justice Press Release

Links:

DOJ Press Release

Indictment

Detention Memo

Categories: Department of Justice (DOJ) Updates Enforcement Actions Indictments and Arrests Sanctions Evasion

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