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Arthur Petrov Allegedly Participated in a Russia-Based Illicit Procurement Network That, Subsequent to Russia’s Invasion of Ukraine, Illegally Procured Large Quantities of Sensitive Microelectronics for a Russian Company That Supplies Manufacturers for the Russian Military
Damian Williams, the United States Attorney for the Southern District of New York, Matthew G. Olsen, the Assistant Attorney General of the Justice Department’s National Security Division, James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Matthew S. Axelrod, the Assistant Secretary for Export Enforcement of the Commerce Department, announced the unsealing of a Complaint charging ARTHUR PETROV with export control violations, smuggling, wire fraud, and money laundering offenses based on PETROV’s alleged participation in a scheme to procure U.S.-sourced microelectronics subject to U.S. export controls on behalf of a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military. PETROV was arrested on August 26, 2023, in the Republic of Cyprus at the request of the United States.
U.S. Attorney Damian Williams said: “Arthur Petrov is alleged to have participated in an international illicit procurement network based in Russia, using shell companies to smuggle shipments from U.S. distributors of microelectronics with military applications through intermediary countries in order to conceal the ultimate destination of these sensitive materials: Russia. As alleged, Petrov knew that the transactions and shipments were in contravention of U.S. export controls relating to Russia. Efforts to illicitly supply Russia with U.S.-sourced military technology represent an affront to national security and will continue to be met with criminal prosecutions by this Office.”
Assistant Attorney General Matthew G. Olsen said: “As alleged in the complaint, Arthur Petrov conspired to smuggle U.S. microelectronics technology with military applications to Russia, the type of components used by the Russian military in its unjust invasion of Ukraine. The Justice Department will not tolerate efforts to circumvent our export control laws to fuel the Russian war machine and those who try will find no refuge from U.S. justice. We thank our partners in the Republic of Cyprus for their law enforcement cooperation and continued support.”
FBI Assistant Director in Charge James Smith said: “After Russia’s further invasion of Ukraine in February 2022, we allege Petrov participated in a global scheme to use shell companies from around the world to establish a clandestine procurement network and supply Russia’s military industrial complex with critical U.S. technology, including types of microelectronics recovered in Russian military equipment on the battlefield in Ukraine. Petrov and his co-conspirators knowingly misrepresented their business activities to evade export controls in order to procure and transship components associated with Russian guided missiles, drones, and electronic warfare devices. This is yet another example of Russia using illicit procurement networks to not only advance their military, but ultimately harm the national security of our country. The FBI is resolute in its commitment to stopping Russia from rearming its military with U.S. technology. Along with our international partners, we will bring to justice anyone who evades sanctions or violates the laws of the United States.”
Assistant Secretary for Export Enforcement Matthew S. Axelrod said: “Those who evade our export control restrictions to support Putin’s brutal war machine will be held accountable. In conjunction with today’s criminal action, we are issuing a Temporary Denial Order to shutter this alleged illicit procurement network’s access to the type of U.S. microelectronics embedded in Russian missiles and drones that have been used in its unprovoked war against the Ukrainian people.”
According to the allegations contained in the Complaint unsealed today in Manhattan federal court:[1]
ARTHUR PETROV is a dual Russian-German national who has resided in Russia and Cyprus and works for LLC Electrocom VPK (“Electrocom”), a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military. PETROV and two co-conspirators (“CC-1” and “CC-2”), who are Russian nationals also working for Electrocom, operated an illicit procurement network in Russia and elsewhere overseas. They have fraudulently procured from U.S. distributors large quantities of microelectronics subject to U.S. export controls on behalf of Electrocom. To carry out the scheme, PETROV, CC-1, and CC-2 used shell companies and other deceptive means to conceal that the electronics components were destined for Russia. The technology that PETROV and his co-conspirators have procured in contravention of export controls during the course of the conspiracy have significant military applications and include various types of electronics components that have been recovered in Russian military hardware on the battlefield in Ukraine, such as Russian guided missiles, drones, and electronic warfare and communications devices.
To perpetrate the scheme, PETROV first acquired the controlled microelectronics from U.S.-based electronics exporters using a Cyprus-based shell company, Astrafteros Technokosmos LTD (“Astrafteros”), which he operates. PETROV procured these sensitive electronics components by falsely representing to the U.S. exporters that Astrafteros was purchasing the items for fire security systems, among other commercial uses, and that the ultimate end-users and destinations of the electronics are companies in Cyprus or other third countries — when in fact the components are destined for Electrocom in Russia, which supplies manufacturers for the Russian military. The microelectronics that PETROV has procured as part of the conspiracy include, among other things, microcontrollers and integrated circuits that are on the Commerce Control List maintained by the Commerce Department and cannot lawfully be exported or reexported to Russia without a license from the Commerce Department. Invoices provided to PETROV by the U.S. distributors expressly noted that these microcontrollers and integrated circuits are subject to U.S. export controls.
To evade these controls, PETROV, CC-1, and CC-2 worked together to transship the controlled items procured by PETROV using pass-through entities operated by CC-1 and CC-2 in third countries. CC-1 and CC-2 then caused the items to be shipped, sometimes through yet another country, to the ultimate destination: Electrocom in Saint Petersburg, Russia. At all times, PETROV, CC-1, and CC-2 concealed from the U.S. distributors that they were procuring the controlled electronics components on behalf of Electrocom and that the items were destined for Russia. During the course of the conspiracy, PETROV, CC-1, and CC-2 procured from U.S. distributors and shipped to Russia more than $225,000 worth of controlled electronics components with military applications.
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PETROV, 33, a dual Russian-German citizen who has resided in Russia and Cyprus, is charged with one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison; one count of conspiracy to violate the Export Control Reform Act (“ECRA”), which carries a maximum sentence of 20 years in prison; three counts of violating the ECRA, which each carry a maximum sentence of 20 years in prison; one count of conspiracy to smuggle goods from the United States, which carries a maximum sentence of five years in prison; three counts of smuggling goods from the United States, which each carry a maximum sentence of 10 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division and the New York Field Office of the Bureau of Industry and Security of the Department of Commerce. Mr. Williams also thanked the FBI’s Legal Attaché offices in Poland, Germany, and Athens, Greece; the Department of Justice’s National Security Division, Counterintelligence and Export Control Section; and the Department of Justice’s Office of International Affairs for their assistance. The Cyprus Police also provided critical assistance in effecting the defendant’s arrest and detention at the request of the United States.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorney Kevin Sullivan is in charge of the prosecution, with assistance from Trial Attorney Maria Fedor of the Counterintelligence and Export Control Section.
Today’s actions were coordinated through the Justice Department’s Task Force KleptoCapture and the Justice and Commerce Departments’ Disruptive Technology Strike Force. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.
The charges in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
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