Four individuals were arrested, and an indictment and criminal complaint were unsealed this week in the Eastern District of New York regarding two separate conspiracies to unlawfully export controlled, dual-use technologies to Russia following Russia’s full-scale invasion of Ukraine.
On October 31st, a criminal complaint was unsealed, and a Brooklyn, New York, resident and two Canadian nationals were arrested in connection with a sophisticated global procurement scheme in which the defendants used two corporate entities registered in Brooklyn to unlawfully source and purchase millions of dollars’ worth of dual-use electronics on behalf of end-users in Russia, including companies affiliated with the Russian military.
Some of the electronic components and integrated circuits shipped by the defendants are the same make, model, and part number that have been found in seized Russian weapons platforms and signals intelligence equipment in Ukraine.
Separately, earlier on November 1st, a Brooklyn resident was arrested, and a four-count indictment was unsealed alleging an illegal exports scheme to procure dual-use electronic components for entities in Russia involved in the development and manufacture of drones for the Russian war effort in Ukraine.
“Russia relies on critical technologies to wage its unlawful war in Ukraine, and the Justice Department will use all of our legal tools and authorities to deny them those technologies,” said Deputy Attorney General Lisa O. Monaco. “Today’s actions underscore the Department’s determination to hold accountable those who flout our laws by trying to evade sanctions and export controls to aid the Russian war machine. The defendants arrested over the last two days will now face justice for allegedly using false names and front companies to funnel sensitive electronics to Russia.”
“Protecting American technologies and securing innovation from foreign adversaries is of the utmost importance to U.S. national security,” said FBI Deputy Director Paul Abbate. “The conduct alleged in the charging documents represent a complete disregard for our nation’s security and our laws. The FBI and our partners remain committed to protecting American-made military and dual-use technologies by using every tool at our disposal. These law enforcement actions send a strong message that the FBI will never rest in our pursuit of those who intend to harm the United States and our allies.”
“In the past two days alone, the Justice Department and its law enforcement partners have arrested and charged multiple individuals accused of perpetrating sophisticated schemes to unlawfully acquire, conceal, and ship U.S. electronic components on behalf of the Russian defense industry,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The National Security Division is committed to holding accountable individuals who would defy U.S. law in support of Russian aggression in Ukraine.”
“We will continue to do everything in our power to take down Russian military procurement schemes like those alleged in these cases,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod. “When we identify U.S. components inside the types of Russian weapons being used to wreak destruction and death in Ukraine, we take action.”
“As both of these important cases demonstrate, in Brooklyn and around the world, the U.S. Attorney’s Office for the Eastern District of New York will not rest in making sure that military technologies do not fall into the wrong hands,” said U.S. Attorney Breon Peace for the Eastern District of New York. “As alleged, we have now stopped these six defendants from conducting sophisticated schemes to evade American sanctions and ship dual use electronics to fuel Russia’s war effort on the battlefield against Ukraine.”
United States v. Goltsev et al.
According to court documents, Nikolay Goltsev, 37, of Montreal, Canada; Salimdzhon Nasriddinov, 52, of Brooklyn; and Kristina Puzyreva, 32, of Montreal, Canada are charged in a sanctions evasion and export control scheme, in which millions of dollars’ worth of semiconductors, integrated circuits and other dual-use electronic components were unlawfully exported to Russia through two Brooklyn front companies.
Nasriddinov, a Brooklyn resident and dual citizen of Russia and Tajikistan, was arrested on Oct. 31 in Brooklyn. Goltsev and Puzyreva were arrested at a hotel in Manhattan on Oct. 31 during a trip to New York to visit Nasriddinov.
As alleged, the defendants used two corporate entities registered in Brooklyn – SH Brothers Inc. and SN Electronics Inc. – to facilitate the scheme and unlawfully source, purchase, and ship millions of dollars’ worth of dual-use electronics from U.S. manufacturers to sanctioned end-users in Russia. Many of the electronic components and integrated circuits shipped by the defendants through SH Brothers were, according to the Department of Commerce “of the highest concern due to their critical role in the production of advanced Russian precision-guided weapons systems, Russia’s lack of domestic production, and limited global manufacturers.”
According to the complaint, some of the electronic components and integrated circuits shipped by the defendants through SH Brothers are the same make, model, and part number that have been found in seized Russian weapons platforms and signals intelligence equipment in Ukraine, including the Torn-MDM radio reconnaissance complex, the RB-301B “Borisoglebsk-2” electronic warfare complex, the Izdeliye 305E light multi-purpose guided missile, the Vitebsk L370 airborne counter missile system, Ka-52 helicopters, Orlan-10 unmanned aerial vehicles (UAVs), and T-72B3 battle tanks.
During the period charged in the complaint, SH Brothers made hundreds of shipments valued at over $7 million to Russia.
As alleged, Goltsev received orders from Russian end-users in the defense and technology sectors who sought to acquire a particular item or part from the United States. Goltsev then communicated directly with U.S. manufacturers and distributors, typically using aliases such as “Nick Stevens” or “Gio Ross.” Nasriddinov and Goltsev purchased electronic components from U.S. manufacturers and distributors under the auspices of SH Brothers and SN Electronics and arranged for the items to be sent to various locations in Brooklyn. Nasriddinov and Goltsev then unlawfully shipped the items to a variety of intermediary corporations located in other countries, including Turkey, Hong Kong, India, China, and the United Arab Emirates, where they were rerouted to Russia. Puzyreva operated numerous bank accounts and conducted financial transactions in furtherance of the scheme.
As described in the complaint, the defendants were aware that the electronics being exported had potential military applications. For example, in a November 2022 message exchange between Nasriddinov and Goltsev, Goltsev commented how shipping to Russia had become “dangerous” and discussed a shipment of electronic components that had been detained by U.S. officials at John F. Kennedy International Airport. Nassridinov responded that “Ukrainians alleged that they’re being bombed from parts from there [the U.S. manufacturer], maybe that’s why they started investigating everything?” Goltsev responded that, “we need to figure out why they keep holding the package … I don’t really understand how they figured [it] out.” In a subsequent message, Goltsev commented that, “in the future we will need to load from several companies, not to attract attention … for now large packages will be dangerous until we understand what they figured out … we will need to think of diversifying the load … so that not everything is not moving from the same deck.” Additionally, in a February 2023 message, Nasriddinov wrote to Goltsev, “Happy Defender of the Fatherland,” referring the holiday in Russia and parts of the former Soviet Union celebrating those who served in the armed forces. Goltsev responded, “happy holiday to you too my friend, we are defending it in the way that we can [smile emoji].”
The FBI, Department of Commerce’s Bureau of Industry and Security, and Department of Homeland Security Homeland Security Investigations are investigating the case.
Assistant U.S. Attorneys Artie McConnell and Ellen H. Sise for the Eastern District of New York and Trial Attorney Christopher M. Cook of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case, with assistance from Litigation Analyst Mary Clare McMahon. Assistant U.S. Attorney Laura Mantell for the Eastern District of New York is handling forfeiture matters.
United States v. Grigorev et al.
In a four-count indictment unsealed today in the Eastern District of New York, Nikita Arkhipov, 39, and Artem Oloviannikov, 37, both of St. Petersburg, Russia; and Nikolay Grigorev, 36, of Brooklyn; are charged with conspiracy and other offenses related to an export control scheme to benefit companies affiliated with the Russian military, including SMT-iLogic, a sanctioned Russian entity that has been identified as part of the supply chain for producing Russian military drones used in Russia’s war against Ukraine.
Grigorev was arrested on November 1st.. Arkhipov and Oloviannikov remain at large.
As alleged in the indictment and other court filings, the defendants used a corporate entity, Quality Life Cue LLC (QLC), to facilitate their illegal export control scheme. QLC was registered in Brooklyn and controlled by Grigorev and Oloviannikov, with Arkhipov utilizing a QLC email account from Russia. Through QLC, the defendants procured dual-use electronic components, including semiconductors, for entities in Russia involved in the Russian war effort in Ukraine.
According to court documents, between Oct. 22, 2021, and Feb. 22, 2022, QLC accounts controlled by Grigorev received wire transactions from iLogic totaling approximately $273,000. These funds were used almost entirely to make payments to a Brooklyn-based electronics distributor or to pay Grigorev’s credit cards, which he used to buy goods from the Brooklyn-based company. Email and chat communications amongst the defendants explicitly reference efforts to circumvent U.S. sanctions; use “test” or “fictitious” orders to test new supply lines to Russia; and to discuss front companies in third countries, including Kazakhstan. In June 2023, a court-authorized search warrant of Grigorev’s residence in Brooklyn successfully interdicted over 11,500 electronic components purchased from the Brooklyn-based company that were awaiting unlawful export to Russia.
The FBI and Department of Commerce’s Bureau of Industry and Security are investigating the case.
Assistant U.S. Attorneys Artie McConnell, Rebecca Schuman, and Kate Mathews for the Eastern District of New York and Trial Attorney Natalya Savransky of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case, with assistance from Litigation Analyst Mary Clare McMahon.
Today’s actions were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force and the Justice Department’s Task Force KleptoCapture. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine.
A criminal complaint and an indictment are merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Photo: Federal prosecutors allege that these dozens of boxes, recovered from defendant Nasriddinov’s residence in Brooklyn, contained thousands of semiconductors and other electronic components.
Source: U.S. Department of Justice