Prosecutors say that the seven defendants, including a U.S. citizen and permanent resident as well as five Russian nationals—one of whom is a suspected intelligence operative with Russia’s Federal Security Service (FSB)—unlawfully sourced, purchased and shipped millions of dollars in military equipment from U.S. manufacturers to end users in the Russian defense sector.
Three of the suspects are in custody, while four remain at large.
Collectively, the group is said to have acted on behalf of the “Serniya Network”, which operated a vast web of shell companies and bank accounts across the world, in order to amass stockpiles of military hardware for the Russian war machine, under the direction of the country’s intelligence services, the 16-count indictment read.
The hardware referred to in the indictment is not small arms, such as pistols or assault rifles, but rather technologies used in the development of nuclear and hypersonic weapons.
“The industries that these illegal transfers could support – quantum computing, hypersonic weapons – pose great danger in the hands of our adversaries," said FBI Director Christopher Wray.
To smuggle the military hardware out of the U.S. and into Russia, the Serniya Network procured orders through a variety of front companies and bank accounts, the DOJ said. The items would be reshipped across several intermediate locations—also registered to shell companies controlled by the network—throughout Europe and Asia before ultimately arriving in Russia.
Fraudulent shipping manifests were created to circumvent reporting requirements, in defiance of various U.S. export laws, which allowed the packages to sidestep additional inspections during their long journey.
When asked by OCCRP, the DOJ did not comment on how much of this dual-use military technology has made it into Russia’s hands.
Two of the largest companies identified in the network are Serniya Engineering, a Moscow-based wholesale machinery and equipment company; and Sertal LLC, which conducts “highly sensitive and classified procurement activities” on behalf of the FSB, the DOJ said.
These two companies—both sanctioned by the U.S. following Russia’s invasion of Ukraine—are where the trail of shell companies and bank accounts ends, according to the indictment.
They are also “instrumental to the Russian Federation’s war machine,” according to U.S. authorities.
Russian government entities that allegedly benefited from the Serniya Network’s efforts include: the Ministry of Defense; the Foreign Intelligence Service; and several FSB divisions, including its Directorate for Scientific and Technological Intelligence, commonly known as “Directorate T.”
Other entities implicated in the conspiracy are: the Rosatom State Nuclear Energy Corporation, the state-owned nanotechnology company JSC Rusnano, and the Moscow Engineering Physics Institute.
“The defendants are charged with participating in a transnational fraud, money laundering and sanctions evasion scheme controlled by a foreign power that is actively engaged in armed conflict,” said U.S. Attorney Breon Peace, in a letter he wrote to Hector Gonzalez, U.S. District Judge of the Eastern District of New York, who is overseeing the case.
Vadim Konoshchenok, one of the alleged co-conspirators, is a suspected Russian intelligence operative. Peace said that Konoshchenok had identified himself in electronic communications as an FSB Colonel.
Another alleged conspirator, Aleksey Ippolitov, is affiliated with the Moscow-based All-Russian Scientific Research Institute of Electromechanics, a subsidiary of Roscosmos, Russia’s state-owned space corporation which develops satellites and military spacecraft.
Ippolitov allegedly relayed requests from the Russian end users to fellow co-conspirators Yevgeniy Grinin and Svetlana Skvortsova, who were both Sertal employees. The two would then arrange funding and shipping routes before tasking Boris Livshits, another conspirator, with activating the shell accounts needed to hide any trace of Russia’s involvement from U.S. authorities, according to the indictment.
U.S. citizen Vadim Yermolenko and permanent resident Alexey Brayman would then fabricate the shipping documents and invoices used to smuggle the sensitive military hardware out of the country and around the world before they finally ended up in Russian hands, the indictment says. They also allegedly shipped large orders to be delivered to Konoshchenok.
“As alleged, the defendants perpetrated a sophisticated procurement network that illegally obtained sensitive U.S. technology to facilitate the Russian war machine,” said Peace.
Konoshchenok was detained on Oct. 27 as he attempted to cross the Estonian-Russian border. He had in his possession semiconductors and other electronic components as well as thousands of rounds of U.S.-made ammunition, the DOJ said.
He was detained again, and this time arrested, by Estonian authorities last week, shortly after they caught him transporting high-caliber ammunition and documents, supplied by Livshits. A subsequent police search of a warehouse he used turned up some 375 pounds of ammunition.
The DOJ has stated its intent to try to extradite Konoshchenok from Estonia to the U.S. for prosecution.
Brayman and Yermolenko have since been arrested by U.S. authorities. In his letter to Judge Gonzalez, Peace requested that their bail be set at US$250,000 and $500,000, respectively, and that their passports be seized due to flight risk concerns.
Grinin, Ippolitov, Livshits, and Skvortsova, however, remain at large.
If convicted, the seven each face a maximum of 30 years’ imprisonment.