A group of people accused of smuggling sensitive American electronics to the Russian military appeared in federal court in Houston on Thursday.
Eleven members of a Russian military procurement network have been accused of illegally exporting microelectronics from the United States to Russian military and intelligence agencies.
According to the Department of Justice, the group was operating in Russia and the United States, including at Arc Electronics in Houston.
Seven of the defendants met a judge on Thursday morning. Hearings to determine if they will be allowed out of jail before they stand trial will begin to be held on Friday. The trials will not be held in Houston. All of the trials will be held in Brooklyn, N.Y., where the indictments against them were unsealed.
According to the indictment, the group engaged in a conspiracy to obtain advanced, technologically cutting-edge microelectronics from manufacturers and suppliers in the United States to export to Russia. The microelectronics included analog-to-digital converters, static random access memory chips, microcontrollers and microprocessors, investigators said. Those items can be used in a wide variety of military systems, including radar and surveillance systems, missile guidance systems and detonation triggers.
Arc Electronics was founded by Alexander Fishenko, 46, who was born in what was then-known as the Soviet Republic of Kazakhstan. He immigrated to the United States in 1994 and became a naturalized United States citizen in 2003. Fishenko is also part owner of Apex System, a Moscow-based procurement firm. According to court documents, Arc Electronics has shipped about $50 million worth of microelectronics and other technologies to Russia since 2002.
The Department of Justice claims that the group gave false end-user information to manufacturers and suppliers in order to get the high-tech goods, many of which are not produced in Russia. Investigators said the group concealed that they are exporters and falsely classified the items on export records submitted to the Department of Commerce. Detectives said Arc Electronics claimed to American suppliers that it manufactured traffic lights in order to get the sensitive technologies. Officials said Arc did not manufacture any goods and operated exclusively as an exporter.
According to court documents, the group went to great lengths to conceal their procurement activities for the Russian military. Investigators said they instructed procurement companies to make up end-user information.
"The receipts of U.S.-made, cutting-edge microelectronics has advanced Russia's military technological capabilities," NCIS Central Field Office Special Agent In Charge Timothy W. Reeves said. "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.
Some members of the group have also been accused of altering Apex's website and forging documents to hide the company's connection to the Russian military.
Fishenko, Alexander Posobilov, 58, Viktoria Klebanova, 37, Lyudmila Bagdikian, 58, Anastasia Diatlova, 38, Sevinj Taghiyeva, 32, Svetalina Zagon, 31, and Shavkat Abdullaev, 34, all of whom are connected to Arc Electronics, have been charged with one count of conspiring to violate and 21 counts of violating the International Emergency Economic Powers Act and the Arms Export Control Act and with conspiring to commit wire fraud. They have all been accused of obtaining controlled microelectronics by lying and submitting false information regarding the true nature, users and intended uses of the goods and them exporting them without required licenses to procurement firms in Russia.
Sergey Klinov, 44, Dmitriy Shegurov and Yuri Savin, 36, have been accused of conspiring with Fishenko to obtain controlled U.S-origin microelectronics and export those goods to Russia without the required export licenses by falsifying information to hide the end user.
Fishekno, Posobilov, Klebanova, Klinov and Shegurov has also been charged with obstruction of justice. Fishenko and Arc have also been charged with conspiracy to commit money laundering.
"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," United States Attorney Loretta E. Lynch said.