The American Front in Russia’s War on Ukraine: DOJ’s “Task Force KleptoCapture” Continues Focus on Operations of Sanctioned Oligarchs

Ballard Spahr LLP

Ballard Spahr LLP

We previously have blogged on actions taken by the DOJ’s “Task Force KleptoCapture,” an interagency law enforcement task force with a mandate to target sanctioned Russian and pro-Russian oligarchs. While explicitly launched in May 2022 as a direct response to Russia’s full-scale invasion of Ukraine, the task force’s mission is consistent with the U.S. government’s characterization of Russia as a kleptocratic regime (see our post here) and the Biden Administration’s promotion of anti-corruption as a “core United States national security interest” (see our posts here and here).

This week, DOJ announced (via both a press release and a filmed podium announcement by Attorney General Merrick Garland) a series of enforcement actions in five separate federal cases in districts up and down the East Coast, dealing with money laundering and evasion of sanctions, in several cases centered on quintessentially oligarchic luxury goods: high-end real estate and superyachts.  The enforcement actions also emphasize the continuing themes in these cases of the use of shell companies, proxies and lawyers to allegedly evade sanctions.

The Enforcement Actions

  • In the Southern District of New York, an indictment was unsealed charging sanctioned Russian oligarch Andrey Kostin, president and chairman of Russian state-owned VTB Bank, with participating in two schemes to violate U.S. sanctions. Kostin, who was sanctioned by the Office of Foreign Assets Control of the Treasury Department (“OFAC”) in 2018 for being an official of the Russian Federation government, allegedly engaged in schemes to evade sanctions (a) to support the maintenance and operation of two superyachts worth a total of over $135 million, and (b) to maintain, improve, and eventually sell a luxury residence in Aspen, CO. Two men alleged to be U.S.-based “facilitators” of these schemes – legal permanent resident Vadim Wolfson (aka Belyaev) of Texas, and U.S. citizen Gannon Bond of New Jersey, were arrested the same day that the indictment was unsealed. Kostin is charged with two counts of conspiracy to violate and two counts of violating the International Emergency Economic Powers Act (“IEEPA”), as well as one count of conspiracy to commit international money laundering – each of which carries a 20 year maximum prison sentence. Wolfson and Bond are each charged with two counts of violating IEEPA and one count of conspiracy to violate IEEPA.
  • In the Middle District of Florida, a federal grand jury returned an indictment charging Ukrainian oligarch Sergey Vitalievich Kurchenko with conspiracy to violate the IEEPA and U.S. sanctions against Russia, and conspiracy to commit money laundering. Kurchenko, who is believed to be living in Moscow, was sanctioned by OFAC in 2015 for “misappropriating state assets of Ukraine or of an economically significant [Ukrainian] entity[.]” The indictment alleges that over a five year period terminating shortly before the spring 2022 invasion of Ukraine, Kurchenko used a network of shell companies he controlled to sell metal products produced in his factories in Ukraine’s Donbas region to U.S.-based individuals and entities. It further alleges that he committed money laundering by transferring funds into and out of the U.S. in connection with the scheme.
  • In the Northern District of Georgia, an Atlanta-based Russian citizen pleaded guilty earlier this month to one count of conducting an unlicensed money transmitting business. According to his April 2023 indictment, Feliks Medvedev allegedly created eight shell companies, through the bank accounts of which he allegedly made more than 1300 transfers of a total of over $150 million. Earlier this month, a federal grand jury returned an indictment against KSK Group, a Moscow-based business consulting firm, which allegedly conspired with Medvedev in the financial transfers and laundered the proceeds. Two Russian nationals affiliated with the KSK Group have been charged with money laundering and related offenses in connection with the scheme.
  • In the Southern District of Florida, the U.S. government filed a civil forfeiture complaint seeking forfeiture of two luxury condominiums in Bal Harbour, the northern tip of Miami Beach, on the basis of violations of IEEPA, OFAC sanctions, and federal money laundering statutes. The complaint alleges that these condos were owned by Viktor Perevalov and Valeri Abramov, the Russian founders of a construction company operating in Crimea, sanctioned by 2018 following the Russian invasion of that region of Ukraine. Soon after the sanctions, an unnamed Miami real estate agent managing the properties allegedly transferred the properties to an LLC the agent formed with a law firm, named a minor relative of Perevalov as the LLC’s purported sole beneficial owner, and continued to lease and maintain the properties.
  • In the District of Columbia, a newly-unsealed superseding indictment charged Validslav Osipov, a previously Swiss-based Russian national, with five new counts of bank fraud in connection with operation of a luxury superyacht allegedly owned by sanctioned Russian Oligarch Viktor Vekselberg, and seized at the U.S.’s request following the 2022 Russian invasion of Ukraine. Osipov was previously indicted in November 2022, and is currently charged with a grand total of 17 federal counts, including violation of U.S. sanctions, conspiracy to defraud the United States, and money laundering. Osipov’s whereabouts are unknown – the State Department has offered a reward of up to $1 million for information leading to his arrest or conviction. This is not the first compatriot of Vekselberg to face federal charges (and allegedly flee) – we previously blogged about a civil forfeiture complaint in the Southern District of New York connected with the indictment of Vladimir Voronchenko, who facilitated the purchase and maintenance of multiple New York and Florida properties for Vekselberg, and who allegedly fled to Moscow after receiving a grand jury subpoena.

Attorney General Garland was explicit in characterizing the above actions as an effort “to cut[] off the flow of illegal funds that are fueling Putin’s war and to hold[] accountable those who continue to enable it.” Similarly, Deputy Attorney General Lisa Monaco stated in part that “so long as Russia’s aggression continues, so too will our resolve to hold its enablers accountable.” And FBI Director Christopher Wray declared that “[t]he FBI remains steadfast in our efforts to disrupt and hold accountable the criminals supporting the Russian War, and we will continue to stand with you [Ukrainians] to fend off Russian aggression for as long as it takes.”

These statements were likely calibrated, in part, to reassure Ukrainian leadership that the United States government remains supportive, despite the seemingly insurmountable obstacles to getting a renewed aid package through Congress. Although not mentioned in this release, it is likely that DOJ’s support of Ukraine may also take monetary form: earlier this month, at the Munich Security Conference, Deputy AG Monaco announced that half a million dollars in forfeited Russian funds seized by Task Force KleptoCapture would be transferred to Estonia for the purpose of assisting Ukraine.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP

Ballard Spahr LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide