A seven-count indictment was unsealed today in federal court in Brooklyn charging Andrii Derkach, 55, of Ukraine, with conspiracy to violate the International Emergency Economic Powers Acts (IEEPA), bank fraud conspiracy, money laundering conspiracy, and four counts of money laundering in connection with the purchase and maintenance of two condominiums in Beverly Hills, California. Derkach allegedly concealed his interest in the transactions and violated sanctions imposed in 2020. Derkach remains at large. The charges and forfeiture action announced today include the first use of criminal and forfeiture powers targeting the concealment of ownership by senior foreign political officials, passed as part of the National Defense Authorization Act of 2021.
“The conduct of this Kremlin asset, who was sanctioned for trying to poison our democracy, has shown he is ready, willing and capable of exploiting our banking system in order to advance his illicit goals,” said U.S. Attorney Breon Peace for the Eastern District of New York. “The U.S. will not be a safe haven where criminals, oligarchs or sanctioned entities can hide their ill-gotten gains or influence our elections. This office, together with our law enforcement partners, will use every tool available to prosecute those who evade sanctions and abuse the U.S. financial system, and we will identify, freeze and seize criminal proceeds whenever and wherever possible.”
“Kremlin-backed Ukrainian politician and oligarch, Andrii Derkach, was sanctioned for his efforts to influence the 2020 U.S. Presidential election on behalf of the Russian Intelligence Services,” said Assistant Director in Charge Michael J. Driscoll of the FBI New York Field Office. “While participating in a scripted Russian disinformation campaign seeking to undermine U.S. institutions, Derkach simultaneously conspired to fraudulently benefit from a Western lifestyle for himself and his family in the United States. The FBI will continue to use all the tools at its disposal to identify Russian intelligence operations, disrupt Russian information laundering networks and bring to justice those who seek to engage in criminal conspiracies to undermine the integrity of U.S elections and evade U.S. sanctions.”
“Attempting to enjoy the safety, security and freedoms of an open society, while secretly working to undermine that very society, is a hypocrisy that runs through every sanctions charge announced by the Task Force,” said Task Force KleptoCapture Director Andrew C. Adams. “It is a particularly egregious hypocrisy in the case of Andrii Derkach – sanctioned for attempts to undermine American democracy, while corruptly seeking to benefit from its protections.”
According to the indictment filed in the Eastern District of New York, on or about Sept. 10, 2020, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Derkach for his efforts to influence the 2020 U.S. Presidential election. According to information publicly released by OFAC, Derkach was “an active Russian agent for over a decade, maintaining close connections with the Russian Intelligence Services,” who “waged a covert influence campaign” to undermine the 2020 Presidential election. As alleged, beginning in at least 2013 and continuing after Derkach’s OFAC designation, Derkach and a co-consiprator (CC-1) devised a scheme to purchase two luxury condominiums in Beverly Hills, California, (the Subject Condominiums) while concealing Derkach’s interest in the transactions from U.S. financial institutions. The scheme utilized a U.S.-based financial services professional (the Nominee). The Nominee assisted Derkach and CC-l in setting up and managing several corporate entities designed to hide Derkach’s ownership interest in the Subject Condominiums and related financial holdings. The Nominee understood that Derkach and CC-1 would occupy one of the Subject Condominiums, and the other would be used by Derkach’s children.
At the direction of Derkach and CC-1, the Nominee established two corporate entities in California. As part of the scheme, Derkach and CC-l misrepresented details about Derkach’s identity to the Nominee. Derkach and CC-l caused the Nominee to falsely represent ownership of funds and bank accounts to U.S. financial institutions, thereby deceiving those institutions into processing transactions related to, involving and on behalf of Derkach and his blocked property.
At all times relevant to this indictment, and since the date of his OFAC designation, Derkach has been aware of and actively working to evade the OFAC sanctions placed upon him. As alleged, on or about Sept. 10, 2020, the day that OFAC designated Derkach, Derkach posted a response on Facebook, stating the “decision was drawn up on a piece of paper by several congressman of [a U.S. political party] and inspired by representatives of the State Department.”
Moreover, in the years and months preceding his designation, the defendant spent significant time in the United States, including at the Subject Condominiums. In conducting that travel to, and spending time in, the United States, Derkach was actively involved in deceiving U.S. law enforcement and border authorities even prior to his SDN designation. For example, in December 2019 and February 2020, Derkach was in the United States to meet with U.S. persons and conduct media appearances. To obtain a U.S. visa, and to ostensibly attend meetings and conferences related to human rights issues in Ukraine, Derkach retained the services of a U.S.-based consulting firm (Firm-1). The written contract purported to be between Firm-l and a Ukrainian shipping company and did not refer to Derkach, notwithstanding Derkach’s direct involvement in the provision of services that the contract purported to reflect. In or about and between July 2018 and December 2018, Derkach paid Firm-l approximately $100,000. In a July 2018 email communication with Firm-l, Derkach’s representative expressed concern that, “given the fact that my client [Derkach] is a politically exposed person, as well as the statements he made concerning Ukraine’s interference into U.S. elections and the insider information we have in our possession,” the visa application process could be potentially complicated for Derkach.
Derkach, through the Nominee, continued to conduct U.S. financial transactions in support of his real estate holdings even after Sept. 10, 2020, the day that OFAC designated the defendant Derkach and added him to the SDN List. Because Derkach and CC-l had obscured details about Derkach’s identity and involvement from relevant financial institutions, Derkach and CC-1 succeeded for a time in conducting financial transactions valued at several hundred thousands of dollars in violation of OFAC’s sanctions.
If convicted, the defendant faces a maximum of 30 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Concurrent with today’s announcement, the U.S. Attorney’s Office for the Eastern District of New York has filed and announced a civil forfeiture suit naming the Subject Condominiums and two financial accounts as defendants in rem, seeking forfeiture of those properties on the basis of their involvement in, and status as proceeds of, criminal violations of the federal money laundering laws, the IEEPA, and federal law criminalizing the concealment of assets of senior foreign political figures.
U.S. Attorney Breon Peace for the Eastern District of New York, Task Force KleptoCapture Director Andrew C. Adams and Special Agent in Charge Michael J. Driscoll of the FBI New York Field Office made the announcement.
Assistant U.S. Attorneys Artie McConnell and Jonathan E. Algor for the Eastern District of New York are prosecuting the case, with assistance from Trial Attorney Adam Small of the National Security Division’s Counterintelligence and Export Control Section. Assistant U.S. Attorney Madeline O’Connor for the Eastern District of New York is handling the forfeiture matters. The Justice Department’s Office of International Affairs provided valuable assistance.
The investigation was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls, and economic countermeasures that the United States, along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2 under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the Department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Discussion about this post