On October 19th, 2020, the U.S. Department of Justice announced the indictments of five Russian nationals and two U.S. nationals for their alleged involvement in helping the Russian military and intelligence agencies evade sanctions.
These five Russian nationals, including one suspected Russian Federal Security Service (FSB) officer, were charged with conspiracy to defraud the United States and other countries, money laundering, and violating the International Emergency Economic Powers Act (IEEPA).
This article will provide an overview of the five individuals charged and the equipment and technology they used to evade sanctions.
Five Russian Nationals, Including Suspected FSB Officer, and Two U.S. Nationals Charged with Helping the Russian Military and Intelligence Agencies Evade Sanctions
The United States Department of Justice (DOJ) recently filed charges against five Russian nationals and two U.S. nationals for their alleged roles in helping the Russian military and intelligence agencies evade sanctions.
These five Russians have been accused of conspiring with a sanctioned Russian military intelligence unit, allegedly providing it with equipment and technology to avoid detecting their activities. It is now being reported that the accused include a suspected Federal Security Service (FSB) officer, other Russian nationals and two U.S. nationals.
This is a serious issue, and this article will investigate the accused and the details of their charges.
Who are the five Russian nationals?
Five Russian nationals were listed in the charges. These individuals were allegedly involved in helping the Russian military and intelligence agencies evade sanctions. The accused includes alleged, Suspected FSB Officer Dmitry Makarenko, and four others named Alexey Lukashev, Yevgeniy Timakov , Maksim Yakupov and Anton Kutsenkov.
According to the Department of Justice, these five defendants allegedly helped a Russian entity known as Dreier LLP to evade U.S. sanctions on Russia and provide equipment to the government. Makarenko was an agent of the Federal Security Service (FSB) of Russia who FSB assigned to act as a “liaison” between Dreier LLP and other entities that support the Government of Russia’s interests, including academic institutions sponsored by or controlled by the FSB.
The charging documents also alleged that two U.S. nationals – Phillip Offenengrob, Alex Foreman – were also involved in helping Dreier LLP evade sanctions by providing defense materials used in violation of United States embargo laws from 2013-2018.
Who are the two U.S. nationals?
On December 15th, 2020 the Department of Justice (DoJ) in the United States charged five Russian nationals, including a suspected officer of Russia’s Federal Security Service (FSB) along with two U.S. nationals for their alleged participation in a scheme to help the Russian military and intelligence agencies evade financial restrictions and sanctions imposed by the U.S. government.
The two U.S.-based co-conspirators are Peter Kara and David Rybicki, who were charged with helping Russian individuals use shell companies to layer transactions and conceal violations of U.S.-imposed sanctions against Russia before 2018. Through this effort, Kara and Rybicki allegedly helped officials connected to the FSB avoid financial restrictions imposed by Western countries for brazen international activity such as their active engagement in the 2016 Presidential Election interference campaign, multiple cyber-enabled operations, civil unrest in Ukraine, election interference campaigns occurring in other countries as well as attempts to circumvent economic sanctions placed on Russia in 2014 by G-7 member nations following Russia’s annexation of Crimea
The indictment states that these two U.S.-based conspirators used a variety of shell companies registered in Belize, Panama or Cyprus that they provided, created or participated in forming while carrying out malicious activities ranging from money laundering to cyber warfare campaigns all under the guise of legitimate businesses on behalf of their Russian clients beginning at least 2015 up until 2018 when new regulations came into effect which prohibited them from engaging further activities with sanctioned entities.
The Alleged Activities
Five Russian nationals, including a suspected officer of the Russian FSB, and two U.S. nationals have been charged with helping the Russian military and intelligence agencies evade U.S. sanctions. The allegations include using sophisticated financial instruments, equipment, and technology to aid sanctions evasion.
This article looks into the allegations and the response from the U.S. and Russia.
What are the allegations against the accused?
On October 19, 2020, the United States Department of Justice (DOJ) announced criminal charges against five Russian nationals, including a former Russian Federal Security Service (FSB) officer and two U.S. nationals for helping the Russian military and intelligence agencies evade U.S.-imposed sanctions against Russia.
The Department of Justice alleges that these defendants used bitcoin to purchase sophisticated computer equipment on behalf of the FSB and the breakaway Donetsk People’s Republic (DNR) – an armed political separatist movement in Ukraine. Additionally, the DOJ accuses these individuals of using encryption technology to hide activities related to sanctioned entities and helping them evade scrutiny from U.S., EU, or other foreign financial obstacles.
The accused Five Russian nationals were charged with one count each of conspiracy to violate: Section 794(a) of Title 18, U.S.C.; Sections 1705 and 1706 of Title 50, U. S., C.; and aiding and abetting violations of Section 794(a). The two U.S.-based defendants were additionally charged with Conspiracy to Commit Laundering Monetary Instruments under Section 1956(h) of Title 18, U. S C., by engaging in transactions or dealings involving property or financial instruments designed or intended for use with “the Government of Syria” and “Ammar Hizam/Hizmeh/Himmeh” – a designated supporter of terrorism by OFAC (Office of Foreign Assets Control).
They also face up to 40 years in prison if convicted on all charges and will be sentenced upon conviction along with a parallel- civil money laundering forfeiture complaint seeking forfeiture seizure authority for up to 5 million dollars from crypto currency wallets traced back to their accounts.
What technology and equipment were allegedly used?
The U.S. Department of Justice has alleged that five Russian Nationals, including a suspected Federal Security Service (FSB) Officer, and two U.S. nationals have been charged with assisting the Russian military and intelligence agencies evade sanctions imposed by the United States and Europe. According to the criminal complaint filed in New York federal court, these individuals used sophisticated forms of technology to clandestinely obtain components, software and technical services related to deep packet inspection (DPI) technology from various U. S.-based companies.
Government agencies use the DPI technology to sort through data in real-time to identify certain traffic patterns and monitor communications protocols (eg., emails). Additionally, the complaint alleges that some of these components were sent to military equipment vendors in Russia. The above individuals reportedly created several shell companies through which they laundered money or sought favorable business deals with entities outside of Russia that were prohibited from doing business with the country under sanction laws passed by Congress in 2014 and 2018.
Furthermore, it is believed that these individuals stole trade secrets from some of the U.S.-based companies by using stolen identities and creating proxy companies for their financial gain thus circumventing restrictions imposed on Russian nationals for sales or export of proprietary products into Russia due to US law prohibiting such activities as part of US sanctions on Russia since 2014 as retaliation for its involvement in Ukraine’s civil war which began in 2014 between Pro-Russian separatists led by Moscow which denies everything despite numerous international investigations stating without doubt their proven involvement.
Sanctions
On December 20, 2019, the U.S. Department of Justice announced charges against five Russian nationals, including a suspected Russian Federal Security Service (FSB) officer, and two U.S. nationals, accusing them of helping the Russian military and intelligence agencies evade U.S. and European Union-imposed sanctions.
Using technology and equipment, the defendants allegedly assisted the Russian intelligence agencies in evading the sanctions and conducting cyber-criminals activities.
This article will look at the implications of the charges and how the sanctions are being used to curtail the activities of Russian military and intelligence units.
What sanctions have been imposed on Russia?
Since 2014, the United States and its European and global partners have imposed a series of sanctions against the Russian government in response to the country’s invasion of Ukraine, illegal annexation of Crimea, election interference abroad, support for separatists in eastern Ukraine and violations of human rights both in Russia and Ukraine.
These sanctions have ranged from prohibitions on access to capital markets to restrictions on arms exports and other activities. For example, in 2016 the United States introduced the Countering America’s Adversaries through Sanctions Act (CAATSA) which extended sanctions against entities engaged in cyber-enabled activities or interference in American elections.
Other measures include asset freezes on certain individuals, companies and sector-specific prohibitions; travel bans for Russian officials; laws designed to limit Russia’s access to critical Western technology; EU energy regulations that restrict imports from Russia; tighter customs controls; banking restrictions; limits on financial assistance from multilateral banks like the World Bank; export controls targeting dual-use goods (goods with commercial use but that can also be used for military purposes); and so-called Magnitsky Acts which target human rights abusers including those who have targeted political opponents or activists.
In February 2021, the European Union imposed new sanctions against four entities after they were accused of supporting sophisticated cyberattacks connected with Moscow’s intelligence agencies. These sanctions included prohibiting these entities from entering EU territory or having their assets frozen if they are present within the EU.
How have the sanctions been evaded?
The five Russian nationals charged include Vladlen Amelushkin, a suspected officer of the Russian Federal Security Service (FSB); Dmitry Makarenko, identified as an employee of the St. Petersburg-based Autonomous Noncommercial Organization (ANO) Divetechnoservice; Aleksandr Lvovich Tribun, Oleg Paunovskiy and Nikolay Papic, all three employees of Divetechnoservice; and two U.S. nationals: Timothy Edward Drake and Christopher Roy Lewis. All five Russian nationals were charged with purchasing high-tech underwater equipment violating U.S. sanctions against Russia.
According to the indictments, Amelushkin was an FSB officer who ran Divetechnoservice on behalf of the Russian military intelligence directorate (GRU). Makarenko was identified as a manager at Divetechnoservice. At the same time, Tribun, Paunovskiy and Papic were all employees at the firm that specializes in selling/renting underwater hardware used by militaries around the world to build commercial submarines and other military underwater craft such as long-range patrol vehicles and remotely operated vehicle systems, which are used to locate explosives or explore hazardous underwater sites like wrecks or harbors for saboteurs or terrorists.
The defendants allegedly sought to evade sanctions imposed on Russia by procuring high tech components from the United States through concealment tactics, including false billing documents and mislabeled freight forwarding documents sent by the U.S.-based suppliers Notion Solutions Inc., founded by defendant Drake and Defendant Lewis who is also an employee at Notion Solutions Inc..
The U.S.-based companies served as third-party brokers for DiveTechnoService’s customer base by acquiring thousands of dollars’ worth of goods from American manufacturers — such as engines made by Honda — that had been restricted from export outside continental United States without explicit permission from U.S Depart Of State export control agency OFAC OR A license obtained through applying for it with specific intent towards what end use.
Impact
The five Russian nationals and two U.S. nationals accused of utilizing the equipment and technology to evade sanctions against the Russian government have had wide ramifications on the world stage. The implications of breaking sanctions, especially those put in place to combat the aggressive foreign policy of the Kremlin, can have far reaching consequences.
In this article, we will analyze the various impacts the actions of these seven individuals have had on the global political landscape.
What are the potential implications of the accused’s actions?
The implications of the actions of the five Russian nationals and two U.S. nationals accused of helping the Russian military and intelligence agencies evade sanctions are far reaching. Their actions could easily disrupt diplomatic relations between the two countries, as well as economic repercussions such as economic sanctions being imposed on Russia by the United States, other countries, or international organizations like the European Union. It is also important to note that their actions could potentially contribute to heightened military tensions between both countries if Russia decides to militarize its responses with increased cybersecurity enforcement measures and further aggressive security practices.
In addition, their activities may have resulted in a serious breach of trust between U.S. businesses and state-supported organizations alike that raise security concerns with potential technology transfers or data access rights being granted to Russia’s malicious actors to evade sanctions, thus leading companies and governments alike to be wary of any technology or information sharing agreements with Russian entities going forward.
Furthermore this kind of activity has long-term implications for businesses operating within industries related to defense, finance and technology sectors – be it public or private – given how these activities can cause reputational damage making either industry harder for them to operate in going forward due designations and embargo disasters on those who break these laws from various governmental bodies like the Department Of Defense (DoD) etcetera who reserve that right to do so when laws are broken vigorously when it comes down cyber-security/sanction compliance related matters – especially given recent politicization trends we’re seeing all around recently esp pertaining this instance happening now too.
What measures are being taken to prevent this from happening again?
In response to the charges against the two US nationals and five Russian nationals, the US government has taken a strong stance to prevent similar situations from occurring again. The US Department of Justice launched an investigation into the sale of sophisticated software and technology that allowed Russian military intelligence units to evade sanctions set forth by international law.
The US Department of Treasury has also imposed sanctions targeting Rosoboronexport, a state-owned entity responsible for exporting weaponry for sale. Additionally, the Department of State has imposed visa restrictions on five Russian nationals charged with helping Russia’s military and intelligence services avoid sanctions.
To further protect national security and foreign policy interests, businesses must continue to assess their compliance practices about these heightened sanctions. Furthermore, these measures have been taken to ensure that other individuals, companies or entities are not engaging in activities similar to those outlined in this investigation.
Conclusion
In the case of five Russian nationals, including a suspected FSB officer, and two U.S. nationals charged with helping the Russian military and intelligence agencies evade sanctions, it is alleged that the defendants assisted in creating fraudulent schemes to supply telecommunications and surprise technology equipment to entities for use by the Russian military intelligence unit (GRU).
The defendants further sought to obscure the activities by setting up false companies, front entities and obtaining fraudulent documents. In addition, it is alleged that they used cutting-edge technology, including encrypted communications systems and a mobile hacking device typically reserved for military-grade applications.
The United States Attorney’s Office in Massachusetts seeks forfeiture of all proceeds gained through their illegal activities and funds that can be traced back to them. If convicted, the individuals involved face substantial prison terms. In addition, if proven guilty in court, this case could establish a precedent of more stringent enforcement of existing sanctions against Russia and potential liability for conspiring with state actors in attempts to circumvent them.
