On Tuesday, the United States (US) Department of Justice (DOJ) unsealed a 16-count indictment at a Brooklyn court in New York, charging five Russians and two Americans “with conspiracy and other charges related to a global procurement and money laundering network on behalf of the Russian government.”
In a statement, the DOJ alleged that “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.”
Russian Military and Intelligence Agencies Procurement Network Indicted in Brooklyn Federal Court
— Justice Department (@TheJusticeDept) December 13, 2022
Charges in Connection with Task Force KleptoCapture’s Mission to Hold Accountable Corrupt Russian Oligarchs and Enforce Robust Export Restrictionshttps://t.co/PYNw1FYSo0
The five Russians—Yevgeniy Grinin, Aleksey Ippolitov, Boris Livshits, Svetlana Skvortsova, and Vadim Konoshchenok – and two Americans – Alexey Brayman and Vadim Yermolenko—were affiliated with Moscow-based companies Serniya Engineering and Sertal LLC, which are known to work under the Russian intelligence services. The companies obtain advanced electronics and sophisticated testing equipment for the Russian military via a vast network of shell companies and bank accounts across the world, including the US.
Attorney Breon Peace stated that “the defendants perpetrated a sophisticated procurement network that illegally obtained sensitive US technology to facilitate the Russian war machine.”
After Russia’s invasion of Ukraine in February, the Department of the Treasury’s Office of Foreign Assets Control and the Department of Commerce’s Bureau of Industry and Security levied sanctions against Serniya, Sertal, Grinin, and several other companies used in the scheme, calling them “instrumental to the Russian Federation’s war machine.”
Konoshchenok, a suspected Federal Security Service (FSB) officer, was arrested in Estonia last week and will be extradited to the US soon. The remaining four Russians remain at large. Brayman, who is a permanent resident in New Hampshire, and Yermolenko, from New Jersey, were also arrested. However, Brayman and Yermolenko were released on $150,000 and $500,000 bonds, respectively. “Like all defendants, Mr. Brayman is entitled to the presumption of innocence,” said his lawyer, David Lazarus.
Attorney General Merrick Garland asserted that the DOJ “will not tolerate criminal schemes to bolster the Russian military’s war efforts,” adding that with three of the suspects in custody, the US had “disrupted the procurement network.”
“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. https://t.co/DdfbIw7EFE pic.twitter.com/9WwPvYwkHa
— US Attorney EDNY (@EDNYnews) December 13, 2022
According to the DOJ, Ippolitov would get requests from Russian end users and relay them to Grinin and Skvortsova, who were Sertal employees. The two would then secure funds and shipping routes for the transactions and ask Livshits to acquire the items from American companies.
Livshits, a former resident of Brooklyn, had opened and controlled a variety of shell companies and associated bank accounts in New York City to route consignments. He would also use an alias, “David Wetzky,” in order to directly interact with American companies, making “false statements about how the items would be used and the ultimate end user.”
US-based Brayman and Yermolenko would fake shipping documents and invoices, repackaging and reshipping items to intermediate destinations worldwide, including to Konoshchenok in Estonia, before they eventually arrived in Russia.
Konoshchenok, a self-identified “Colonel” in the FSB, would ship or physically smuggle US-made items from Estonia to Russia, including dual-use electronics, military-grade tactical ammunition, and other export-controlled items. In fact, he was stopped at the Estonian border with 35 different types of semiconductors, thousands of American-made 6.5mm bullets used in military sniper rifles, and other electronic components ordered by Livshits on 27 October this year.
Less than a month later, he was stopped again while attempting to cross into Russia with about 20 cases containing thousands of US-made bullets for tactical rounds and .338 military sniper rounds. In fact, when he was arrested in Estonia last year, authorities found 375 pounds of US-made ammunition at one of the warehouses he used.
If convicted, the suspects face a maximum of 30 years in prison.