Maxim Marchenko Participated in an Overseas Illicit Procurement Network That, After Russia’s Invasion of Ukraine, Illegally Procured Large Quantities of Dual-Use, Military Grade OLED Micro-Displays for Russian End Users
Damian Williams, the United States Attorney for the Southern District of New York, and Matthew G. Olsen, the Assistant Attorney General of the Justice Department’s National Security Division, announced that MAXIM MARCHENKO pled guilty to charges of money laundering and smuggling goods from the U.S. MARCHENKO was arrested in September 2023 and pled guilty before U.S. Magistrate Judge Victoria Reznik.
U.S. Attorney Damian Williams said: “Maxim Marchenko admitted in court that he illicitly sought to procure U.S.-manufactured, military grade microelectronics to deliver to end users in Russia. Marchenko concealed his scheme to funnel these microelectronics – which had application for use in rifle scopes, night-vision goggles, thermal optics, and other weapons systems – by using shell companies and other elaborate money laundering techniques. This guilty plea should send a strong message to those who attempt to break the law by supplying Russia with U.S. military technology that this Office will vigorously pursue such smuggling schemes and hold those involved to full account.”
Assistant Attorney General Matthew G. Olsen said: “By his own admission, Mr. Marchenko conspired to smuggle military-grade technology to Russia, using a complex network of front companies to hide his illicit activity. Today, once again, the Justice Department is holding accountable those who would enable the Kremlin and its unjust war of aggression against Ukraine.”
According to the allegations contained in the Information, the allegations in the Complaint, and other filings and statements made in public court proceedings:
At all relevant times, MARCHENKO was a Russian national who resided in Hong Kong and operated several Hong Kong-based shell companies. MARCHENKO and two co-conspirators (“CC-1” and “CC-2”), who are also Russian nationals, operated an illicit procurement network in Russia, Hong Kong, and elsewhere overseas. This procurement network fraudulently obtained from U.S. distributors large quantities of dual-use, military grade microelectronics, specifically OLED micro-displays, on behalf of Russia-based end users. To carry out this scheme, MARCHENKO, CC-1, and CC-2 used shell companies based in Hong Kong and other deceptive means to conceal from U.S. government agencies and U.S. distributors that the OLED micro-displays were destined for Russia. The technology that MARCHENKO and his co-conspirators fraudulently procured had significant military applications, such as in rifle scopes, night-vision googles, thermal optics, and other weapon systems.
To perpetrate the scheme, MARCHENKO and other members of the conspiracy acquired the dual-use OLED micro-displays from U.S.-based distributors using MARCHENKO’s Hong Kong-based shell companies. Members of the conspiracy, including MARCHENKO, procured these sensitive microelectronics by falsely representing to the U.S. distributors (who, in turn, are required to report to U.S. agencies) that the Hong Kong shell entity was sending the shipments to end users located in China, Hong Kong, and other countries outside of Russia for use in electron microscopes for medical research. In reality, the OLED micro-displays were destined for end users in Russia. MARCHENKO and other members of the conspiracy concealed the true destination (Russia) from U.S. distributors for the purpose of causing false statements to the U.S. agencies.
To conceal the fact that these OLED micro-displays were destined for Russia, MARCHENKO and other members of the conspiracy worked together to transship the illicitly procured OLED micro-displays by using pass-through entities principally operated by MARCHENKO in third countries, such as Hong Kong. MARCHENKO then caused the OLED micro-displays to be shipped to the ultimate destination in Russia using, among other entities, a freight forwarder known to provide freight forwarding services to Russia. In addition, MARCHENKO and other members of the conspiracy used Hong Kong-based shell companies, principally operated by MARCHENKO, to conceal the fact that payments for the OLED micro-displays were coming from Russia.
MARCHENKO, 51, a Russian citizen who resided in Hong Kong, pled guilty to one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of smuggling goods from the U.S., which carries a maximum sentence of 10 years in prison. MARCHENKO is scheduled to be sentenced on June 6, 2024, before the Honorable Nelson S. Román.
The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”) and its New York Field Office, Counterintelligence Division and the New York Field Office of the Bureau of Industry and Security of the Department of Commerce. Mr. Williams also thanked the FBI’s Legal Attaché office in Australia; the U.S. Department of State’s Diplomatic Security Service; the Department of Justice’s National Security Division, Counterintelligence and Export Control Section; and the Office of International Affairs of the Department of Justice’s Criminal Division for their assistance.
This case is being handled by the Office’s Illicit Finance & Money Laundering Unit and White Plains Division. Assistant U.S. Attorneys Jennifer N. Ong and Shiva H. Logarajah are in charge of the prosecution, with assistance from Trial Attorney Garrett Coyle of the National Security Division’s Counterintelligence and Export Control Section.
This case 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 U.S., 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, 2022, and 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.
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