Regulatory intelligence for US exporters

BIS Issues Denial Order Against People, Companies Involved in Russian Export Control Evasion Scheme

The Bureau of Industry and Security issued a temporary denial order on Nov. 7 against seven people and three companies for orchestrating a scheme to illegally export millions of dollars worth of export-controlled dual-use electronics to Russia. BIS said the U.S.-origin items were bought by Russian procurement agents and transshipped through other countries before being delivered to Russian companies with ties to the country’s military.

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The order came days after the U.S. unsealed indictments against at least three of the people and two of the companies (see 2311010039). Along with violating U.S. export controls, BIS also said the people and companies made “false and misleading statements” in the Automated Export System to hide the ultimate end destination and end user of the items.

The temporary denial order applies to New York resident Salimdzhon Nasriddinov and Russian-Canadian nationals Nikolay Goltsev and Kristina Puzyreva -- all of whom were arrested last week -- as well as Russian residents Oleg Zenchenko, Yekaterina Vetoshkina, Pavel Chernikov and Vladimir Bochkarev. The TDO also names SH Brothers Group Inc., SN Electronics, Inc. and Suntronic F.Z.E., the companies they used to illegally ship the goods.

The denial order, effective for 180 days from Nov. 7, generally blocks the people and companies from participating in transactions subject to the Export Administration Regulations. “By cutting off access to U.S. items, today’s temporary denial order prevents a global Russian procurement ring of brokers and companies, including two storefronts in Brooklyn, from supporting the Russian war machine,” said Matthew Axelrod, BIS’ assistant secretary for export enforcement.

Many of the details in the order were previously disclosed in DOJ’s indictment last week, which outlined efforts by Nasriddinov, Goltsev and Puzyreva -- using Brooklyn-based companies SH Brothers and SN Electronics -- to export hundreds of shipments of dual-use goods from U.S. manufacturers to Russia. DOJ is also indicting the others involved in the scheme, who the agency said are the Russian procurement agents that helped organize the shipments. That indictment wasn’t available as of press time.

As part of the scheme, Nasriddinov and Goltsev used SH Brothers and SN Electronics to buy electronic components from U.S. manufacturers before illegally sending them to “intermediary corporations” in other countries, including in Turkey, India, China and the United Arab Emirates, before they were rerouted to Russia. One of those intermediaries was Suntronic, a front company named in the TDO and used by Bochkarev for “multiple procurement operations,” BIS said. Puzyreva, Goltsev’s spouse, “utilized numerous bank accounts” to help with the scheme.

The others worked as procurement officers for Russian companies, including Vetoshkina, who has worked for OOO Radioavtomatika, a Moscow-based defense firm that was added to the Entity List in 2022, and OOO Komtech, a Moscow-based electronics distributor, BIS said. Chernikov has worked as a procurement officer for OOO Testkomplekt, another Moscow-based electronics distributor that has contracted with Russian military entities and that was sanctioned by the Office of Foreign Assets Control in May.

BIS said Bochkarev, Chernikov, Vetoshkina and Zenchenko received orders from Russian end users in the country’s defense and technology sectors for U.S.-origin items before relaying those orders to Goltsev, who bought those items from U.S. companies. BIS said Goltsev “made material misrepresentations” about the end-users in conversations with those U.S. companies. Some of those shipments included items listed on Tier 1 of BIS’ list of common high-priority items, including electronic integrated circuits.

The agency added that some of those electronic parts were the same make, model and part number of items found in seized Russian weapons systems and intelligence equipment in Ukraine, including the “Torn-MDM radio reconnaissance complex, the RB-301B ‘Borisoglebsk-2’ electronic warfare complex, the Izdeliye 305E light multi-purpose guided missile, the Vitebsk L370 airborne counter missile system, Ka-52 helicopters, Orlan-10 unmanned aerial vehicles (UAVs) and T-72B3 battle tanks.” In total, the agency said SH Brothers sent more than $7 million worth of items to Russia.

BIS said it obtained multiple sets of communications that show the people knew they were violating U.S. export controls and were familiar with export regulations, including Export Control Classification Numbers. In one message to Goltsev, Zenchenko asked: “ECCN: 5A991.b.4 can you get this?” Other messages discussed ways to conceal the destination of the shipments, including one message in which Goltsev advised Vetoshkina to use a Hong Kong-based company as the “bill-to” company, even though the items would be shipped to entity-listed Radioavtomatika.

SH Brothers also made false Electronic Export Information filings, including by declaring items were being shipped to one party when they were being shipped to another, part of an effort “to evade detection by law enforcement,” BIS said. In one February EEI filing, they indicated an export-controlled shipment was destined for China and listed an intermediary consignee also located in China, but according to DHL records, BIS said the items were shipped to a location “not identified on the EEI.”

BIS added that its investigation into the scheme “remains ongoing.”