Article United States: Department of Justice Announces Charges Against Russian and Venezuelan Nationals Under Task Force KleptoCapture Initiative

On October 19, 2022, the United States District Court for the Eastern District of New York unsealed an indictment charging five Russian and two Venezuelan nationals with the illegal sale of U.S. military goods and technology to Russia to support its war with Ukraine. The case, United States v. Orekhav, et al., involves the company Nord-Deutch Industrienlaganblau (NDA), which is headquartered in Germany but operated by several Russians with ties to oligarchs. U.S. military technology sourced by NDA has been found on battlefields in Ukraine. The company was also used as a front to traffic smuggled Venezuelan oil. The investigation was a part of a larger Department of Justice initiative, Task Force KleptoCapture, created in response to the Russian invasion of Ukraine.

Relevant Laws and Criminal Actions

The investigation and allegations stem from the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701–1708, which establishes the process for imposing sanctions to protect U.S. national security. The IEEPA is further implemented by executive orders, in this case EO 13660, which created a national emergency related to Russian attacks on Ukrainian sovereignty. President Obama issued EO 13660 in 2014, and it was most recently renewed on March 2, 2022. (Indictment in United States v. Orekhav at 5.) President Obama issued EO 13692 in 2015, providing for sanctions against individuals aiding the Venezuelan government with human rights issues. These executive orders authorize the Office of Foreign Asset Control (OFAC) to regulate financial transactions with suspected companies and individuals in violation of the IEEPA and their related executive orders. (Indictment at 6.)

Along with the regulations set by OFAC, two other sets of laws and regulations were also relevant to the indictment: the Export Control and Reform Act (50 U.S.C. §§ 4801–4852) and Export Administration Regulations, and the Arms Control and Export Act (22 U.S.C. § 2778) and International Traffic in Arms Regulations. (Indictment at 7–9.)

The indictment categorized the charges in three general areas: Procurement of Military and Sensitive Dual Use Technologies, Smuggling Oil from Venezuela to Russian and Chinese End Users, and Bank Fraud and Money Laundering.

Procurement of Military and Sensitive Dual Use Technologies

The defendants were involved in procuring parts for fighter jets and advanced weapons systems. They misrepresented their identities and other information when contracting with U.S. companies to purchase these materials and systems. (Indictment at 11–13.) For example, in 2018 the defendants purchased semiconductors from a U.S. company by claiming the materials were to be used by a German company involved with space exploration. (Indictment at 22–23.) Similar transactions were still occurring after the Russian invasion of Ukraine. (Indictment at 28.)

Smuggling Oil from Venezuela to Russian and Chinese End Users

The defendants allegedly procured millions of dollars’ worth of oil from sanctioned Venezuelan oil companies and had the oil delivered to China and Russia. The defendants used NDA and companies from China, Dubai, and Russia to mask the oil transfers. (Indictment at 14–19.) Specifically, the defendants procured almost 700,000 gallons of oil (valued at about $33 million) from Petroleos de Venezuela S.A., the Venezuelan state-owned oil and natural gas company. (Indictment at 30.)

Bank Fraud and Money Laundering

The defendants relied on shell companies, bulk cash transfers, and cryptocurrencies to transfer funds for the illegal transactions. (Indictment at 19–20.) Most of the criminal actions described in the indictment concerned bank fraud and money laundering. A specific example of the alleged bank fraud involving the dual use technologies category in the indictment is the use of a Malaysian shell company to avoid export controls. (Indictment at 26.) A specific example of the alleged bank fraud involving the oil smuggling category described in the indictment is the defendants’ use of various bank accounts under the name “Melissa Trade.” (Indictment at 34.)

Charges

A variety of charges were filed in the 12-count indictment, specifically, conspiracy to defraud the United States, conspiracy to violate the IEEPA, conspiracy to commit bank fraud, wire fraud, money laundering, conspiracy to violate the Export Control and Reform Act, and smuggling goods from the United States. There were also significant criminal forfeiture proceedings contained in the indictment. The two primary defendants, Orekhav and Uss, were arrested in Germany and Italy, and extradition proceedings are currently ongoing.

Louis Myers, Law Library of Congress
November 8, 2022

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Chicago citation style:

United States: Department of Justice Announces Charges Against Russian and Venezuelan Nationals Under Task Force KleptoCapture Initiative. 2022. Web Page. https://www.loc.gov/item/global-legal-monitor/2022-11-07/united-states-department-of-justice-announces-charges-against-russian-and-venezuelan-nationals-under-task-force-kleptocapture-initiative/.

APA citation style:

(2022) United States: Department of Justice Announces Charges Against Russian and Venezuelan Nationals Under Task Force KleptoCapture Initiative. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2022-11-07/united-states-department-of-justice-announces-charges-against-russian-and-venezuelan-nationals-under-task-force-kleptocapture-initiative/.

MLA citation style:

United States: Department of Justice Announces Charges Against Russian and Venezuelan Nationals Under Task Force KleptoCapture Initiative. 2022. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2022-11-07/united-states-department-of-justice-announces-charges-against-russian-and-venezuelan-nationals-under-task-force-kleptocapture-initiative/>.