Brooklyn Company Received Over $250,000 from Sanctioned Russian Entity to Purchase and Export Electronic Components
In federal court in Brooklyn, Nikolay Grigorev pleaded guilty to conspiring to defraud the United States for his role in an illicit export control scheme to ship electronic components from the United States to companies affiliated with the Russian military. The proceeding was held before United States District Judge Nicholas G. Garaufis. When sentenced, Grigorev faces up to five years in prison. Co-defendants Nikita Arkhipov and Artem Oloviannikov remain at large.
Breon Peace, United States Attorney for the Eastern District of New York; Lisa O. Monaco, United States Deputy Attorney General; Matthew G. Olsen, Assistant Attorney General of the Justice Department’s National Security Division; James Smith; Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Jonathan Carson, Special Agent-in-Charge, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office (DOC-BIS-OEE), announced the guilty plea.
“Grigorev admitted that he conspired to supply Russia with U.S.-sourced, dual-use technologies, knowing full well that his actions violated export controls and sanctions designed to stop those items from being sent to Russia and used in the production of drones like those found on the battlefields in Ukraine,” stated United States Attorney Peace. “Today’s guilty plea reaffirms that my Office will pursue anyone who violates our export controls and threatens our national security.”
“In pleading guilty, the defendant admitted he conspired to smuggle over $250,000 worth of sensitive American drone technology to Russian companies fueling Putin’s unlawful war against Ukraine,” stated Deputy Attorney Monaco. “Swift action by agents and prosecutors unraveled a web of fake orders and wire transfers to prevent over 11,500 electronic components from making their way to the Russian war machine. The Justice Department will continue to hold accountable those who defy our sanctions and export controls to support Russia’s unprovoked and unjustified aggression in Ukraine – whether they’re based in New York City or overseas.”
“When I visited Ukraine last November, I saw firsthand the death and destruction that such drones and other Russian weapons of war have caused and heard from our counterparts about the importance of stopping the illicit flow of technology to support the Russian war machine,” stated Assistant Attorney General Olsen. "This plea reinforces our commitment to hold accountable those who violate our laws and our determination to undermine the Russian government’s unjustified campaign of aggression against the Ukrainian people.”
“Nikolay Grigorev intentionally avoided export controls by masking his business’s production and shipment of technologies designed to support Russian military operations, especially its ongoing attacks in Ukraine,” stated FBI Assistant Director-in-Charge Smith. “These sanction violations intentionally subvert those laws designed to protect international trade and illustrate the defendant’s malintent in this scheme. The FBI prioritizes all threats to our national security and will disrupt any entity attempting to covertly collaborate with our adversaries”
“Deliberately circumventing U.S. export controls to enable production of drones that support Russia’s full-scale invasion of Ukraine and the indiscriminate bombing of Ukrainian citizens and critical infrastructure will not be tolerated,” stated DOC-BIS-OEE Special Agent-in-Charge Carson. “This guilty plea demonstrates the direct impact that OEE investigations have in supporting U.S. national security interests.”
As alleged in the indictment, Grigorev utilized a Brooklyn-based corporate entity, Quality Life Cue LLC (“QLC”), to facilitate the scheme. QLC was registered and controlled by Grigorev and Oloviannikov, with Arkhipov utilizing a QLC email account from Russia. Through QLC, the defendants procured dual-use electronic components for entities in Russia involved in the development and manufacture of drones for the Russian war effort in Ukraine. The most notable of these entities is SMT-iLogic, a Russia-based technology company. On or about May 19, 2023, SMT-iLogic was also added to the Specially Designated Nationals and Blocked Person List (“SDN List”). According to the Office of Foreign Assets Control, SMT-iLogic is known to be involved in the supply chain for producing Russian military drones used in Russia’s war against Ukraine. SMT-iLogic is associated with an entity known as the Special Technology Centre (“STC”). STC is a Russia-based entity that was added to the SDN List on or about December 29, 2016, for assisting the foreign military intelligence agency of Russia’s armed forces, commonly known by the acronym “GRU,” in conducting signals intelligence operations. On or about January 4, 2017, STC was added by the U.S. Department of Commerce, Bureau of Industry and Security to the Entity List for supporting the GRU. STC was involved the production of the “Sea Eagle Orlan 10 UAV,” a drone vehicle that has been involved in Russian military operations in Ukraine. STC’s largest customer is Russia’s Ministry of Defense, which paid STC the equivalent of nearly $99 million between February and August of 2022.
Between October 22, 2021 and February 22, 2022, QLC accounts controlled by Grigorev received wire transactions from SMT-iLogic totaling approximately $272,830. These funds were used almost entirely to make payments to a Brooklyn-based electronics distributor (the “Brooklyn Company”) or pay Grigorev’s credit cards, which he used to buy goods from the Brooklyn Company. In email and chat communications, the defendants explicitly discussed their efforts to circumvent U.S. export restrictions, including through the use of front companies in third countries, such as Kazakhstan, and they also forwarded invoices listing SMT-iLogic as the recipient of semiconductors and other electronic components purchased from the Brooklyn Company. In addition, in December 2022, in response to negative press coverage of SMT-iLogic, Grigorev forwarded a news article to his co-defendants and stated, “they are already writing about your (sic) guys in articles about how Russia is getting American components for drones.” In June 2023, a court-authorized search warrant of Grigorev’s residence in Brooklyn resulted in the successful seizure of over 11,500 electronic components that had been purchased from the Brooklyn Company and were awaiting unlawful export to Russia.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States
These actions were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force and the Justice Department’s Task Force KleptoCapture. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine.
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