NEWARK, N.J. – A Russia resident and citizen was indicted by a federal grand jury on Thursday for his alleged role in an international procurement network that smuggled over $65 million worth of electronics from the United States to Russia in violation of export control laws, U.S. Attorney Craig Carpenito announced.
Alexander Brazhnikov Sr., 72, of Moscow, is charged by indictment with one count each of conspiracy to commit money laundering, conspiracy to smuggle goods from the United States, and conspiracy to violate the International Emergency Economic Powers Act (IEEPA). Brazhnikov Sr. is currently at large.
His son, Alexander Brazhnikov Jr., a Mountainside resident, pleaded guilty in June 2015 to his role in the scheme and was sentenced June 30, 2016, to 70 months in prison. Brazhnikov Jr., a naturalized United States citizen, was arrested at his Mountainside home on June 26, 2014, following a joint investigation by the FBI, the U.S. Department of Commerce (DOC), and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
According to documents filed in the case against Brazhnikov Sr., and statements made in court:
Brazhnikov Sr. was the owner, chief executive officer, and principal operator of ABN Universal, a privately held Russian microelectronics import/export company in Moscow. His son, Brazhnikov Jr., 39, owned and operated four New Jersey-based microelectronics export companies in Carteret, Mountainside, Union, and Manalapan.
Brazhnikov Sr. and Brazhnikov Jr. participated in a sophisticated procurement network that secretly acquired large quantities of electronic components from U.S. manufacturers and vendors and exported those parts to Russia on behalf of Russian business entities authorized to supply those parts to the Ministry of Defense of the Russian Federation, the Federal Security Service of the Russian Federation (FSB) and Russian entities involved in the design of nuclear warheads and other weapons.
As part of the scheme, Brazhnikov Sr., through his Moscow business, obtained initial requests for quotes for the U.S.-based electronics components from various Russian entities and sent these requests directly to U.S.-based vendors electronically or to his son for implementation. Brazhnikov Sr., Brazhnikov Jr., and others then used Brazhnikov Jr.’s New Jersey export companies to purchase the electronic components from the U.S.-based distributors and re-package them for shipment to Moscow.
In order to obscure the extent of the network’s procurement activities and avoid filing the necessary export control forms, Brazhnikov Sr., Brazhnikov Jr., and others routinely falsified the true end-users and value of the components they exported. Each shipment from the United States was sent to one of 12 false addresses or shell locations in Moscow established at Brazhnikov Sr.’s direction, re-directed to a central warehouse he and others controlled, and ultimately shipped to the end-users in Russia, including the Russian defense contracting firms.
The funds for these illicit transactions were obtained from various Russian purchasers and initially deposited into one of Brazhnikov Sr.’s primary accounts in Russia. In order to further conceal the actual customers and the source of the funds, disbursements for purchases were then made through one or more foreign accounts held by shell corporations in the British Virgin Islands, Latvia, Marshall Islands, Panama, Ireland, England, United Arab Emirates, and Belize, and ultimately into one of Brazhnikov Jr.’s U.S.-based accounts.
The money laundering conspiracy charge carries a maximum potential penalty of 20 years in prison and a $500,000 fine. The conspiracy to violate the IEEPA carries a maximum potential penalty of 20 years in prison. The charge of conspiracy to smuggle goods carries a potential penalty of five years in prison and a $250,000 fine.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark; the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, under the direction of Special Agent in Charge Jonathan Carson in New York; and the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Brian Michael in Newark, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney Dean C. Sovolos of the U.S. Attorney’s Office National Security Unit in Newark, with assistance from Trial Attorney David Recker of the Department of Justice National Security Division’s Counterintelligence and Export Control Section.
The charges and allegations contained in the indictment are merely accusations, and Brazhnikov Sr. is considered innocent unless and until proven guilty.