Last month, a naturalized U.S. citizen born in Moscow admitted that he was a part of network designed to smuggle approximately $65 million worth of electrical components from the U.S. to Russia. He has been charged with several export violations, including “one count of conspiracy to commit money laundering, one count of conspiracy to smuggle electronics from the United States, and one count conspiracy to violate the International Emergency Powers Act (IEEPA).”
The man in question, Alexander Brazhnokov Jr., was arrested at home on June 26, 2014. He operated four microelectronics export companies from 2008 – 2014 that he used to help facilitate these illegal activities. After he was arrested, over $4 million in profits from the alleged offenses and $600,000 in assets were taken from him.
The components Brazhnokov Jr. exported were used for the design of nuclear warheads, weapons and tactical platforms. He conspired with his father, Alexander Brazhnikov Sr., and sent the parts to false addresses in Russia that were then rerouted to a central warehouse in Moscow.
The operation was funded through Russian purchases and initially deposited into a Russian bank account. The money was then funneled through foreign accounts in the British Virgin Islands, Latvia, Marshall Islands, Panama, Ireland, England, United Arab Emirates and Belize. Finally, the money made its way into a U.S. bank account where Brazhnokov Jr. could access it.
He faces up to 20 years in prison and a $500,000 fine for the money laundering conspiracy charge in addition to five years in prison and a $250,000 fine for each count of the smuggling and IEEPA conspiracy charges. He already agreed to a fine of $65 million. Sentencing will take place on September 15, 2015.
For more on this story, you can read the press release here. To learn how to automate your export compliance process and prevent penalties for yourself and your organization, check out our Building an Export Compliance Program white paper by clicking the button below.
