Thursday, September 10, 2015

Russian Agent Pleads Guilty To Leading Scheme To Illegally Export Controlled Technology To Russian Military

The U.S. Justice Department released the below information:

Alexander Fishenko, 49, of Houston, and a dual citizen of the United States and Russia, pleaded guilty today to acting as an agent of the Russian government within the United States without prior notification to the Attorney General, conspiring to export and illegally exporting controlled microelectronics to Russia, conspiring to launder money and obstruction of justice.
The plea was announced by Assistant Attorney General for National Security John P. Carlin and Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York.
“Alexander Fishenko illegally acted as an agent of the Russian government in the United States and evaded export laws by sending microelectronics and other technology with military applications to Russia,” said Assistant Attorney General Carlin.  “By purposefully circumventing U.S. law, including the International Emergency Economic Powers Act and the Arms Export Control Act, the defendant jeopardized our national security.  I would like to thank the many members of law enforcement whose tireless efforts led to this guilty plea.”
“Fishenko lined his pockets at the expense of our national security,” said Acting U.S. Attorney Currie.  “This prosecution highlights the importance of vigorously enforcing United States export control laws.” 
As alleged in the indictment and reflected in court filings, between approximately October 2008 and October 2012, Fishenko led a conspiracy to obtain advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and to export those high-tech goods to Russia, while carefully evading the government licensing system set up to control such exports.  The microelectronics shipped to Russia included analog-to-digital converters, static random access memory chips, microcontrollers and microprocessors.  These commodities have applications in and are frequently used in a wide range of military systems, including radar and surveillance systems, missile guidance systems and detonation triggers.  Russia does not produce many of these sophisticated goods domestically.
According to the indictment and other court filings, in 1998, Fishenko founded Arc Electronics Inc. (Arc), which was also indicted, in Houston.  Between 2002 and the present, Arc has shipped approximately $50 million worth of microelectronics and other technologies to Russia.  Fishenko also served as an executive of co-defendant Apex System L.L.C. (Apex) a Moscow-based procurement firm.  Apex, working through subsidiaries, served as a certified supplier of military equipment for the Russian government.  Fishenko exported many of these high-tech goods, frequently through intermediary procurement firms, to Russian end users, including Russian military and intelligence agencies.  To induce manufacturers and suppliers to sell them these high-tech goods and to evade applicable export controls, Fishenko and his co-conspirators often provided false end user information in connection with the purchase of the goods, concealed the fact that they were exporters and falsely classified the goods they exported on export records submitted to the Department of Commerce.  For example, Arc falsely claimed to be a traffic light manufacturer on its website.  In fact, Arc manufactured no goods and operated exclusively as an exporter.
Despite this ploy, the investigation revealed that the defendants were supplying Russian government agencies with sophisticated microelectronics.  For example, the investigation uncovered a letter sent by a specialized electronics laboratory of Russia’s Federal Security Service (FSB), Russia’s primary domestic intelligence agency, to an Apex affiliate regarding certain microchips that Arc obtained for the FSB.  The letter stated that the microchips were faulty and demanded that the defendants supply replacement parts.
The guilty plea took place before U.S. District Judge Sterling Johnson Jr. of the Eastern District of New York.  At sentencing, Fishenko faces up to 20 years in prison for each violation of the International Emergency Economic Powers Act and the Arms Export Control Act, up to 20 years in prison for money laundering conspiracy and obstruction of justice and up to 10 years in prison for acting as a Russian agent.  The defendant will also face potential criminal forfeiture and fines.
Ten other individuals and two corporations were originally charged in October 2012.  Four members of the conspiracy have pleaded guilty and three are scheduled to commence trial on Sept. 21, 2015.
The case is being investigated by the FBI and the Department of Commerce.  The case is being prosecuted by Assistant U.S. Attorneys Daniel Silver, Una Dean, Richard Tucker and Claire Kedeshian of the Eastern District of New York, as well as Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section. 

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