BROOKLYN, NY—An indictment was unsealed today in U.S.
District Court for the Eastern District of New York charging 11 members
of a Russian military procurement network operating in the United States
and Russia, as well as a Texas-based export company and a Russia-based
procurement firm, with illegally exporting high-tech microelectronics
from the United States to Russian military and intelligence agencies.
Alexander Fishenko, an owner and executive of the American and
Russian companies, is also charged with operating as an unregistered
agent of the Russian government inside the United States by illegally
procuring the high-tech microelectronics on behalf of the Russian
government. The microelectronics allegedly exported to Russia are
subject to strict government controls due to their potential use in a
wide range of military systems, including radar and surveillance
systems, weapons guidance systems, and detonation triggers.
The charges were announced by Loretta E. Lynch, U.S. Attorney for the
Eastern District of New York; Lisa Monaco, Assistant Attorney General
for National Security; Stephen L. Morris, Special Agent in Charge, FBI,
Houston Field Office; Under Secretary of Commerce Eric L. Hirschhorn,
Department of Commerce; and Timothy W. Reeves, Special Agent in Charge,
Naval Criminal Investigative Service, Central Field Office.
The defendants arrested yesterday and today will be arraigned this
afternoon before U.S. States Magistrate Judge George C. Hanks, Jr., at
the U.S. Courthouse in Houston, where the government will seek their
removal to the Eastern District of New York.
In addition to the unsealing of the charges, search warrants were
executed today at seven residences and business locations associated
with the defendants, and seizure warrants were executed on five bank
accounts held by Fishenko and defendant Arc Electronics Inc., the
Texas-based export company. In conjunction with the unsealing of these
charges, the Department of Commerce has added 165 foreign persons and
companies who received, transshipped, or otherwise facilitated the
export of controlled commodities by the defendants to its “Entity List.”
This designation imposes a license requirement before any commodities
can be exported from the United States to these persons or companies and
establishes a presumption that no such license will be granted.
The Scheme
As alleged in the indictment, between approximately October 2008 and
the present, Fishenko and the other defendants engaged in a
surreptitious and systematic conspiracy to obtain advanced,
technologically cutting-edge microelectronics from manufacturers and
suppliers located within the United States and to export those high-tech
goods to Russia, while carefully evading the government licensing
system set up to control such exports. The microelectronics shipped to
Russia included analog-to-digital converters, static random access
memory chips, microcontrollers, and microprocessors. These commodities
have applications and are frequently used in a wide range of military
systems, including radar and surveillance systems, missile guidance
systems, and detonation triggers. Russia does not produce many of these
sophisticated goods domestically.
According to the indictment and a detention motion filed by the
government today, defendant Alexander Fishenko was born in what was, at
the time, the Soviet Republic of Kazakhstan, and graduated from the
Leningrad Electro-Technical Institute in St. Petersburg, Russia. He
immigrated to the United States in 1994 and became a naturalized citizen
of the United States in 2003. In 1998, he founded defendant Arc
Electronics Inc. in Houston. Between 2002 and the present, Arc has
shipped approximately $50,000,000 worth of microelectronics and other
technologies to Russia. Fishenko and his wife are the sole owners of
Arc, and Fishenko serves as the company’s president and chief executive
officer. Fishenko is also a part owner and executive of defendant Apex
System LLC, a Moscow, Russia-based procurement firm. Apex, working
through subsidiaries, served as a certified supplier of military
equipment for the Russian government. Between 1996 and the present,
Fishenko has regularly traveled back and forth between the United States
and Russia. Defendant Alexander Posobilov entered the United States
from Russia in 2001 and became a naturalized citizen in 2008. He joined
Arc in 2004 and serves as its director of procurement. Posobilov was
arrested at George Bush Intercontinental Airport in Houston on his way
to Singapore and Moscow.
The defendants allegedly exported many of these high-tech goods,
frequently through intermediary procurement firms, to Russian end users,
including Russian military and intelligence agencies. To induce
manufacturers and suppliers to sell them these high-tech goods and to
evade applicable export controls, the defendants often provided false
end-user information in connection with the purchase of the goods,
concealed the fact that they were exporters, and falsely classified the
goods they exported on export records submitted to the Department of
Commerce. For example, in order to obtain microelectronics containing
controlled, sensitive technologies, Arc claimed to American suppliers
that, rather than exporting goods to Russia, it merely manufactured
benign products such as traffic lights. Arc also falsely claimed to be a
traffic light manufacturer on its website. In fact, Arc manufactured no
goods and operated exclusively as an exporter.
According to the court documents, the defendants went to great
lengths to conceal their procurement activities for the Russian
military. For example, on one occasion, defendants Posobilov and Yuri
Savin, the director of marketing at another Russian procurement firm,
discussed how best to conceal the fact that certain goods Savin had
purchased from Arc were intended for the Russian military. Savin asked
Posobilov, “What can we do if a client is military all over?” Posobilov
replied, “We can’t be the ones making things up. You should be the
ones.” Similarly, on another occasion, defendant Fishenko directed a
Russian procurement company that, when the company provided false
end-user information, to “make it up pretty, correctly, and make sure it
looks good.” On yet another occasion, Posobilov instructed a Russian
procurement company to “make sure that” the end-use certificate
indicated “fishing boats and not fishing/anti-submarine ones....Then
we’ll be able to start working.”
Despite this subterfuge, according to the documents, the
investigation revealed that the defendants were supplying Russian
government agencies with sophisticated microelectronics. For example,
the investigation uncovered a Russian Ministry of Defense document
designating an Apex subsidiary as a company “certified” to procure and
deliver military equipment and electronics. The FBI recovered a letter
sent by a specialized electronics laboratory of Russia’s Federal
Security Service (FSB), Russia’s primary domestic intelligence agency,
to an Apex affiliate regarding certain microchips obtained for the FSB
by Arc. The letter stated that the microchips were faulty and demanded
that the defendants supply replacement parts.
In addition, in anticipation of an inquiry by the Department of
Commerce regarding the export of certain controlled microelectronics,
defendants Fishenko, Posobilov, and Arc salesperson Viktoria Klebanova
allegedly directed Apex executives Sergey Klinov and Dmitriy Shegurov,
as well as other Apex employees, to alter Apex’s website and forge
documents regarding certain transactions to hide Apex’s connections to
the Russian military. In connection with the cover-up, Apex removed
images of Russian military aircraft and missiles and other links to the
Russian Ministry of Defense from its website.
The Arc Defendants
In addition to Fishenko, Posobilov, and Klebanova, the indictment
charges Arc salespersons Lyudmila Bagdikian, Anastasia Diatlova, Sevinj
Taghiyeva, and Svetalina Zagon, as well as Arc shipping manager Shavkat
Abdullaev, with one count of conspiring to violate and 21 counts of
violating the International Emergency Economic Powers Act (IEEPA) and
the Arms Export Control Act (AECA) and with conspiring to commit wire
fraud. According to the indictment, these defendants obtained controlled
microelectronics by lying and submitting false information regarding
the true nature, users, and intended uses of the high-tech goods, then
exporting the goods, without the required licenses, to procurement firms
in Russia. The defendants’ principal port of export for these goods was
John F. Kennedy International Airport in the Eastern District of New
York.
The Foreign Defendants
According to the indictment, in addition to owning and controlling
Arc, Fishenko is also a controlling principal of the Russian procurement
firm Apex, the defendant Sergey Klinov is the chief executive officer
of Apex, and the defendant Dmitriy Shegurov is an employee of Apex. Apex
and its affiliates supplied microelectronics to Russian government
agencies, including Russian military and intelligence agencies. The
defendant Yuri Savin was the director of marketing at Atrilor Ltd.,
another Russian procurement firm. Klinov, Shegurov, and Savin conspired
with Fishenko and the Arc defendants to obtain controlled U.S.-origin
microelectronics and to export those technologically sensitive goods to
Russia without the required export licenses by falsifying information to
hide the true nature, users, and intended uses of the goods. In
addition, Fishenko, Posobilov, Klebanova, Klinov, and Shegurov were
charged with obstruction of justice, and Fishenko and Arc were charged
with conspiring to commit money laundering.
The individual defendants face maximum terms of incarceration of five
years for the conspiracy charge, 20 years for each of the substantive
IEEPA and AECA charges, and 20 years for the obstruction of justice
charge. In addition, Fishenko faces a maximum term of incarceration of
20 years for conspiring to commit money laundering and 10 years for
acting as an unregistered agent of the Russian government. The corporate
defendants face fines of up to $500,000 for the conspiracy count and $1
million for each of the substantive IEEPA and AECA counts.
“As alleged in the indictment, the defendants spun an elaborate web
of lies to evade the laws that protect our national security. The
defendants tried to take advantage of America’s free markets to steal
American technologies for the Russian government. But U.S. law
enforcement detected, disrupted, and dismantled the defendants’
network,” stated United States Attorney Loretta E. Lynch. “We will not
rest in our efforts to protect the technological advantage produced by
American ingenuity. And, we will expose and hold responsible all who
break our counter-proliferation laws, particularly those, like Fishenko,
who serve foreign governments.” Ms. Lynch thanked the United States
Attorney’s Office for the Southern District of Texas for its assistance
in this matter.
“Today’s case underscores the importance of safeguarding America’s
sensitive technology and our commitment to disrupt and prosecute
networks that attempt to illegally export these goods,” said Lisa
Monaco, Assistant Attorney General for National Security. “I applaud the
many agents, analysts, and prosecutors who worked on this extensive
investigation.”
“In this day and time, the ability of foreign countries to illegally
acquire sensitive and sophisticated U.S. technology poses a significant
threat to both the economic and national security of our nation,” said
Houston FBI Special Agent in Charge Stephen L. Morris. “While some
countries may leverage our technology for financial gain, many countries
hostile to the United States seek to improve their defense capabilities
and to modernize their weapons systems at the expense of U.S.
taxpayers. The FBI will continue to work aggressively with our partners
in the U.S. Intelligence Community to protect this technology and hold
accountable those companies that willfully choose to violate our U.S.
export laws.”
“Today’s action is a perfect example of two of the core benefits of
the administration’s export control reform effort—higher enforcement
walls around controlled items and extensive coordination and cooperation
among the enforcement agencies. I applaud our special agents who worked
with the Justice Department in the interagency effort that led to
today’s actions,” said Under Secretary of Commerce Eric L. Hirschhorn.
“The receipt of U.S.-made, cutting-edge microelectronics has advanced
Russia’s military technological capabilities. NCIS and the Department
of the Navy have worked closely with the FBI, the Department of Justice,
and the Department of Commerce in this investigation due to the
potential for significant enhancement of Russian naval weapons systems
that would result from the illegal acquisition of these
export-controlled technologies,” said Special Agent in Charge Timothy W.
Reeves, NCIS Central Field Office.
As a result of this case, there may be victims and witnesses who need
to contact the agencies involved in the investigation. If your business
has been approached by one of the defendants or by someone trying to
obtain export-protected, sensitive technology who appeared not to be
legitimate, please report that information to businessoutreach@leo.gov.
The information will remain confidential and will be handled by the
appropriate authorities.
The government’s case is being prosecuted by Assistant U.S. Attorneys
Daniel Silver, Hilary Jager, and Claire Kedeshian, as well as Trial
Attorney David Recker of the Counterespionage Section of the Justice
Department’s National Security Division.
The charges contained in the indictment are merely allegations, and
the defendants have not yet been convicted of these offenses.
The Defendants:
Arc Electronics Inc.
Principal Place of Business: Houston, Texas
Apex System LLC
Principal Place of Business: Moscow, Russia
Alexander Fishenko, age 46
Shavkat Abdullaev, age 34
Lyudmila Bagdikian, age 58
Anastasia Diatlova, age 38
Viktoria Klebanova, age 37
Sergey Klinov, age 44
Alexander Posobilov, age 58
Yuri Savin, age 36
Dmitriy Shegurov, age unknown
Sevinj Taghiyeva, age 32
Svetalina Zagon, age 31
The
AC-130U Spooky is equipped with weapons that sync with
laser-designators, like those that Woods, Doherty and Ubben had on that lonely rooftop above
the CIA Annex. The laser-designator was used to “paint” the mortar
targets during the attack, subsequently claiming the lives of Woods and
Doherty, and leaving Ubben without a leg. Had the AC-130U been on
station, over the CIA Annex in Benghazi, moments before the mortar
rounds were fired, instead of "awaiting further instructions," the
entire outcome of the Benghazi fiasco would have been different.
The second, and most troubling aspect of the refusal to issue Cross Border Authority is, who issued the refusal. Rather than the President, the Commander In Chief, making critical decisions, granting or denying the authority to initiate offensive-actions in support of our valiant fighting men, the decision not to take action was made by a person, to whom the people did not elect, nor did the Congress have confirmation power over.
