US Suspends Export Privileges of People Indicted in Russian Sanctions Evasion Scheme

The Bureau of Industry and Security issued a 180-day temporary denial order this week against three people and two companies for illegally sending controlled exports to Russia as part of a Moscow-led sanctions evasion scheme. Along with the denial order, DOJ indicted the three people, along with others, on charges related to the illegal exports, including money laundering, wire fraud, bank fraud and conspiring to defraud the U.S.

BIS issued the denial order for Boris Livshits, Svetlana Skvortsova and Aleksey Ippolitov -- along with New York-based companies Advanced Web Services and Strandway -- who were charged Dec. 13 with conspiring to violate U.S. export controls by sending electronic signal generator and measurement equipment, along with other items, to Russian entities on the Entity List. DOJ also charged Yevgeniy Grinin, Vadim Konoshchenok, Alexey Brayman and Vadim Yermolenko in connection with the violations.

BIS said Livshits, Skvortsova and Ippolitov used Advanced Web Services and Strandway to illegally export equipment controlled under the Export Administration Regulations to multiple Russian entities, including OOO Serniya Engineering, a Moscow-based wholesale machinery and equipment company added to the Entity List in March (see 2203040020). BIS said Serniya leads a procurement network that works for Russia’s intelligence services to “evade U.S. sanctions to acquire sensitive military grade and dual-use technologies,” including advanced semiconductors, for Russia’s military defense sector and research institutions.

Livshits, Skvortsova and Ippolitov were aware of export control laws and took “active steps” to hide their illegal export activities, BIS said. Ippolitov acted as a liaison for Serniya and Moscow-based Sertal LCC by soliciting orders from Russian end-users for U.S.-origin parts and items, and relayed those orders to Grinin and Skvortsova. Ippolitov also oversaw the purchase and shipping of the items from the U.S. companies through Serniya’s network of front companies and bank accounts. Skortsova and Grinin procured the items from U.S. companies, BIS said, including by preparing false shipping documents. Brayman and Yermolenko worked to "fabricate" shipping documents and repackage and reship items to "intermediate destinations around the world" before eventually being routed to Russia, DOJ said.

BIS said Livshits was “frequently tasked to interface directly” with U.S. companies and often misrepresented information about how the item would be used, the parties involved in the transactions and the ultimate end-user. Livshits used the alias “David Wetzky” and an email address associated with Advanced Web Services in “an effort to frustrate due diligence efforts by U.S. companies,” the TDO said. He also created shell companies -- which included Advanced Web Services and Strandway -- and bank accounts to “fund unlawful export activities” "in coordination with Konoshchenok, Brayman and Yermolenko.

In one instance, Livshits “initiated” a payment for an account held in his name for an oscilloscope, which was controlled under Export Control Classification Number 3A992.a for anti-terrorism reasons, BIS said. In other cases, Konoshchenok, who DOJ suspects of being a Russian Federal Security Service officer, 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," the agency said. Konoshchenok was stopped at the Estonian border in October with "35 different types of semiconductors and other electronic components ordered by Livshits" and thousands of U.S.-made 6.5mm bullets, DOJ said.

The people also worked to “evade detection by law enforcement,” the TDO said. BIS pointed to one purchase in 2019 in which they tried to buy a "chip set" of 45 advanced semiconductors controlled under ECCN 3A0013a.2.c, for the Physics Institute of the Russian Academy of Sciences. Livshits “cautioned” that the “part required an export license and that ‘you need to buy such positions carefully, at 5-10 pieces at a time.’” In another instance, Konoshchenok discussed “fabricating” business records with Livshits to hide the ammunition shipments and instead describe them as “auto parts,” DOJ said.

The TDO describes several other instances of Livshits, Skvortsova and Ippolitov trying to illegally export EAR-controlled items, both before and after Russia invaded Ukraine earlier this year. Between February and April, BIS said they illegally bought a $14,000 spectrum analyzer classified under ECCN 3A992.a from a Florida-based electronics company and tried to arrange a Hong Kong freight forwarder to ship the item to Russia. BIS said the forwarder refused the request because of sanctions against Russia, but Livshits eventually “directed another individual” to ship the item from New Hampshire to a Serniya “transshipment point” in Hamburg, Germany. The item was eventually sent to Russia.

In another instance, Livshits used his alias and his front companies to buy a $25,000 "MSO54-BW100 Mixed Signal Generator" in April from an Illinois-based electronics distributor. BIS said a package was shipped the next month via DHL from Strandway’s New Hampshire location to Hamburg, and it was declared as a “Oscilloscope – Used, No Warr.” Shipping documents said the item was worth $2,482, just below the $2,500 threshold that would have triggered a required filing of Electronic Export Information with CBP, BIS said.

BIS said Livshits “continues to engage in attempts at illicit procurement,” including through Advanced Web Services. The agency said he bought semiconductors and electronic components in May from a Texas distributor and tried to buy a $56,000 signal generator from an Illinois company in August.

Matthew Axelrod, BIS’ top export enforcement official, said the coordinated action with DOJ demonstrates “our vigilance in uncovering Russian tactics to illicitly acquire the items they need to keep their brutal war going.” Office of Export Enforcement Director John Sonderman said OEE will “continue to leverage our unique authorities and global reach to target those who violate U.S. export control laws.”

Brayman surrendered to the FBI Dec. 13 and Yermolenko was arrested in New Jersey, DOJ said. Brayman and Yermolenko will be arraigned in New Hampshire and New York, respectively. Konoshchenok was arrested by Estonian authorities on Dec. 6 at the request of the U.S. and is awaiting extradition. The others remain at large. The people face a maximum of 30 years in prison if convicted of bank fraud or bank fraud conspiracy.