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Counter Proliferation Investigation Unit
07/02/2016

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New Jersey man gets nearly 6 years for role in sensitive electronics smuggling network

NEWARK, N.J. — A New Jersey man was sentenced in federal court Friday to 70 months prison term of for his role in an international procurement network that obtained and smuggled more than $65 million worth of sensitive electronics from the United States to Russia in violation of export control laws.

This sentence resulted from an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, and the FBI.

Alexander Brazhnikov Jr., 37, a naturalized United States citizen born in Moscow, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with one count of conspiracy to commit money laundering, one count of conspiracy to smuggle electronics from the United States, and one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA). Brazhnikov also agreed to the entry of a forfeiture money judgment against him in the amount of $65 million. Judge Martini imposed the sentence today in Newark federal court.

“HSI will continue to use all the resources at its disposal to prevent sensitive and restricted technology from being exported illegally,” Special Agent in Charge Terence S. Opiola, HSI Newark, said. “HSI, as the principal enforcer of export controls, will continue to ensure that sensitive technology doesn’t fall into the wrong hands.”

From January 2008 through June 2014, he was the owner, chief executive officer, and principal operator of four New Jersey microelectronics export companies, each of which were used in the various conspiracies uncovered by the investigation. Following his arrest, special agents seized $4,075,237 in proceeds related to the charged offenses, as well as real property and other assets valued at more than $600,000.

According to documents filed in this case and statements made in court:

Brazhnikov Jr. and his companies are part of a sophisticated procurement network that has surreptitiously acquired large quantities of license-controlled electronic components from American manufacturers and vendors and exported those items to Russia on behalf of Russian business entities that were authorized to supply them to the Ministry of Defense of the Russian Federation, the Federal Security Service of the Russian Federation (the FSB), and Russian entities involved in the design of nuclear warheads, weapons, and tactical platforms.

The defendant conspired with his father, Alexander Brazhnikov Sr., owner of a Moscow-based procurement firm whose agents helped initiate the purchase of electronics components from United States vendors and manufacturers on behalf of the conspirators’ clients in Russia. Brazhnikov Jr. finalized the purchase and acquisition of the requested components from the various distributors, then repackaged and shipped them to Moscow. He routinely falsified the true identity of the end-user of the components and the true value of the components in order to avoid filling out required export control forms. Brazhnikov Jr. purposefully concealed the true destination of the parts that were exported by directing that the shipments be sent to various “shell” addresses in Russia – some of which have been identified as vacant storefronts and apartments – which were established and controlled by the Moscow-based network. All shipments initially directed to the shell addresses were redirected to a central warehouse controlled by the conspirators’ Moscow-based network.

The funds for the network’s illicit transactions were obtained from the various Russian purchases and initially deposited into one of the conspirators’ primary Russia-based accounts. Disbursements for purchases were made from the primary Russian account through one or more foreign accounts held by shell corporations in the British Virgin Islands, Latvia, Marshall Islands, Panama, Ireland, England, United Arab Emirates, and Belize, and ultimately into one of the defendant’s U.S.-based accounts. The network’s creation and use of dozens of bank accounts and shell companies abroad was intended to conceal the true sources of funds in Russia, as well as the identities of the various Russian defense contracting firms receiving U.S. electronics components.

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Last Reviewed/Updated: 07/05/2016