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. 

Former CIA Officer Sentenced To 42 Months In Prison For Leaking Classified Information And Obstruction of Justice

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

Jeffrey A. Sterling, 47, of O’Fallon, Missouri, was sentenced today to 42 months in prison for disclosing national defense information and obstructing justice.  Sterling disclosed classified information about a clandestine operational program concerning Iran’s nuclear weapons program to a New York Times reporter in 2003.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew McCabe of the FBI’s Washington, D.C. Field Office made the announcement.

“For his own vindictive purposes, Jeffrey Sterling carelessly disclosed extremely valuable, highly classified information that he had taken an oath to keep secret,” said U.S. Attorney Boente.  “His attempt to leverage national security information for his own malicious reasons brought him to this sentence today.  I would like to thank the trial team and our partners at the FBI’s Washington Field Office and the Central Intelligence Agency for their hard work and commitment to this case.”

“The sentence handed down by a federal judge is the culmination of a lengthy investigation, a protracted prosecution and a unanimous decision by a federal jury to convict Mr. Sterling for the unauthorized disclosure of national security information,” said Assistant Director in Charge McCabe.  “The time and effort dedicated to this case by FBI special agents, intelligence analysts and prosecutors working on this matter exemplify the extent the FBI will undertake in pursuit of justice.”

Sterling was found guilty by a federal jury on Jan. 26, 2015.  According to court records and evidence at trial, Sterling was employed by the CIA from May 1993 to January 2002. From November 1998 through May 2000, he was assigned to a classified clandestine operational program designed to undermine the Iranian nuclear weapons program.  He was also the operations officer assigned to handle a human asset associated with that program, a person identified at trial as Merlin.  Sterling was reassigned in May 2000, at which time he was no longer authorized to receive or possess classified documents concerning the program or the individual.

In connection with his employment, Sterling, who is a lawyer, signed various security, secrecy and non-disclosure agreements in which he agreed never to disclose classified information to unauthorized persons, acknowledged that classified information was the property of the CIA, and also acknowledged that the unauthorized disclosure of classified information could constitute a criminal offense. 

These agreements also set forth the proper procedures to follow if Sterling had concerns that the CIA had engaged in any “unlawful or improper” conduct that implicated classified information.  These procedures permit such concerns to be addressed while still protecting the classified nature of the information.  The media was not an authorized party to receive such classified information.

In August 2000, Sterling pursued administrative and civil actions against the CIA.  Evidence at trial showed that Sterling, in retaliation for the CIA’s refusal to settle those actions on terms favorable to him, disclosed information concerning the classified operational program and the human asset to a New York Times reporter working on an unpublished article in early 2003 and a book the reporter published in January 2006.  Sterling’s civil and administrative claims were ultimately dismissed by the court.

Evidence demonstrated that in February and March 2003, Sterling made various telephone calls to the reporter’s residence and e-mailed a newspaper article about the weapons capabilities of a certain country that was within Sterling’s previous clandestine operational assignment.  While the possible newspaper article containing the classified information Sterling provided was ultimately not published in 2003, evidence showed that Sterling and the reporter remained in touch from December 2003 through November 2005 via telephone and e-mail.  In January 2006, the reporter published a book that contained classified information about the program and the human asset.

Evidence at trial showed that Sterling was aware of a grand jury investigation into the matter by June 2006 when he was served a grand jury subpoena for documents relating to the reporter’s book.  Nevertheless, between April and July 2006, Sterling deleted the e-mail containing the classified information he had sent from his account in an effort to obstruct the investigation.

This case was investigated by the FBI’s Washington Field Office, with assistance in the arrest from the FBI’s St. Louis Field Office.  This case was prosecuted by Deputy Chief Eric G. Olshan of the Criminal Division’s Public Integrity Section and Senior Litigation Counsel James L. Trump and Assistant U.S. Attorney Dennis Fitzpatrick of the Eastern District of Virginia. 

US Air Force Veteran Charged With Attempting To Provide Material Support To ISIL

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

U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department announced that yesterday, a federal grand jury in New York City returned a two-count indictment charging Tairod Nathan Webster Pugh, an American citizen and veteran of the U.S. Air Force, with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization, and obstruction and attempted obstruction of justice. 

The defendant will be arraigned on the indictment tomorrow, March 18, at 11 a.m. before U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York.

“Born and raised in the United States, Pugh allegedly turned his back on his country and attempted to travel to Syria in order to join a terrorist organization,” said U.S. Attorney Lynch.  “We will continue to vigorously prosecute extremists, whether based here or abroad, to stop them before they are able to threaten the United States and its allies.”  U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region.  U.S. Lynch also thanked U.S. Customs and Border Protection, the U.S. Attorney’s Office of the District of New Jersey, the Asbury Park, New Jersey Police Department and the Neptune, New Jersey, Police Department for their assistance.

“Pugh, an American citizen and former member of our military, allegedly abandoned his allegiance to the United States and sought to provide material support to ISIL,” said Assistant Attorney General Carlin.  “Identifying and bringing to justice individuals who provide or attempt to provide material support to terrorists is a key priority of the National Security Division.”

“As alleged, Pugh, an American citizen, was willing to travel overseas and fight jihad alongside terrorists seeking to do us harm,” said Assistant Director in Charge Rodriguez.  “U.S. citizens who offer support to terrorist organizations pose a grave threat to our national security and will face serious consequences for their actions.  We will continue to work with our partners, both here and abroad, to prevent acts of terrorism.  This investigation demonstrates the importance of law enforcement coordination and collaboration here and around the world.”

“We thank the members of the NYPD Joint Terrorism Task Force and our Federal law enforcement partners for their work in this case and for their tireless efforts to identify threats of terrorism here and abroad,” said Commissioner Bratton.  “It is this type of collaboration that results in swift investigative work to stop individuals such as this from making any further contribution to terrorist organizations such as ISIL.”

As alleged in the complaint, indictment and other court filings, the defendant served in the Air Force as an avionics instrument system specialist and received training in the installation and maintenance of aircraft engine, navigation and weapons systems.  After leaving the Air Force, the defendant worked for a number of companies in the United States and Middle East as an avionics specialist and airplane mechanic.  The defendant lived abroad for over a year before his arrest in this case.

Earlier this year, weeks after being fired from his last job as an airplane mechanic based in the Middle East, the defendant attempted to join ISIL.  On Jan. 10, 2015, the defendant traveled from Egypt to Turkey in an effort to cross the border into Syria to join ISIL and fight violent jihad.  Turkish authorities denied the defendant entry, however, and sent him on a return flight to Egypt.

 Upon his arrival in Egypt, the defendant was carrying multiple electronic devices, including four USB thumb drives that had been stripped of their plastic casings and an iPod that had been wiped clean of data.  The defendant also had a cellular telephone that contained, among other things, a photograph of a machinegun.  The defendant was soon thereafter deported to the United States.
On Jan. 14, 2015, JTTF agents obtained a search warrant for the defendant’s electronic devices, including his laptop computer.  Subsequent exploitation of the laptop revealed, among other things, the following:

• recent internet searches for “borders controlled by Islamic state”,
• recent internet searches for “who controls kobani,” “kobani border crossing,” and “jarablus border crossing,” all references to Syrian cities under ISIL’s control near the Turkish border,
• a chart of crossing points between Turkey and Syria indicating the areas on the Syrian side of the border controlled by ISIL and other groups, and
• internet searches for “Flames of War,” an ISIL propaganda video, as well as downloaded videos, including one showing ISIL members executing prisoners.

The defendant was arrested pursuant to a federal complaint on Jan. 16, 2015, in Asbury Park, New Jersey, and he has been in custody ever since.  After the defendant’s arrest, JTTF agents seized and later obtained warrants to search two backpacks that the defendant had when he was overseas.  Agents recovered from the backpacks, among other things: two compasses, a solar-powered flashlight, a solar-powered power source, shards of broken USB thumb drives, a fatigue jacket and camping clothes.

If convicted, the defendant faces a maximum sentence of 35 years in prison.  The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by Assistant U.S. Attorneys Samuel P. Nitze and Tiana A. Demas, with assistance provided by Trial Attorneys Larry Schneider and Andrew Sigler of the National Security Division.