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The US charges the first Russian oligarch with violating sanctions since the invasion of Ukraine

US authorities have charged Kremlin-affiliated businessman Konstantin Malofeev with violating US sanctions in the first criminal case against an oligarch since the conflict in Ukraine began.

Malofeyev, a Russian investor and founder of a Putin-affiliated media empire, is accused of violating sanctions imposed in response to Moscow’s 2014 annexation of Crimea by hiring a US citizen to manage his television stations, and tried to acquire a station in Bulgaria.

The couple and others are also said to have conspired to illegally wire a $10 million investment Malofeyev made in a Texas bank in 2015 to a business partner in Greece, in violation of the same sanctions package.

The mutual funds, which were converted by the Texas bank into cash held in an account with another US lender in 2016, were seized by US authorities.

US Attorney General Merrick Garland said Wednesday: “Our message to those who continue to support the Russian regime through their criminal behavior is: It doesn’t matter how far you sail your yacht. It doesn’t matter how well you hide your wealth. . . The Department of Justice will use any means available to locate you. . . and hold yourself accountable.”

In a telephone interview with the Financial Times, Malofeyev – who faces two counts, each with a maximum sentence of 20 years in prison – called the lawsuit against him “weird”.

“I haven’t had any assets in the west since 2014,” he said, claiming the transfer from the Texan bank to the Greek counterpart happened eight years ago, just before it fell under western sanctions.

However, the DoJ alleges that a 2015 agreement aimed at transferring ownership of the shell company used for the Texan bank investment to the Greek partner was fraudulently backdated to July 2014 to appear as if it had taken place before US sanctions were imposed.

“In the last eight years nothing has happened with it. It’s very old stuff,” Malofeyev said. “It looks like [Garland] tries to take political credit for [his predecessors’] Work.”

In recent weeks, the DoJ has signaled its willingness to crack down on evasive Russians sanctions. Last month it set up a special task force to enforce restrictions related to Moscow’s invasion of Ukraine.

The charges against Malofeyev come as mounting evidence of war crimes committed by Russian forces in Ukraine has sparked international condemnation and an escalation of Western sanctions against Moscow.

In recent days, the US has announced further enforcement actions against Russians. On Wednesday, the FBI said it disrupted a network of bots built by the Russian government’s military intelligence agency before it could deploy.

“We will not wait for the end of our investigation to act,” said FBI Director Christopher Wray.

On Tuesday, German and US authorities worked together to seize the Hydra market, the world’s largest dark web market, and its cryptocurrency wallets, which contained $25 million worth of Bitcoin, the DoJ said. Hydra allegedly allowed users in primarily Russian-speaking countries to trade illegal goods, the DoJ said, which also announced criminal charges against a Russian resident who allegedly managed the platform’s servers.

Hydra, which has since disbanded, could not be reached for comment.

At the request of the Ministry of Justice, the Spanish authorities confiscated on Monday a 255 foot yacht worth at least $90 million owned by Russian oligarch Viktor Vekselberg, whom the US sanctioned in 2018 in connection with the Russian invasion of Crimea. US authorities claimed the seizure was prompted by violations of bank fraud, money laundering and sanctions regulations.

Vekselberg did not immediately respond to a request for comment.

https://www.ft.com/content/1334537c-7146-4a4d-afce-ebed58bba0ea The US charges the first Russian oligarch with violating sanctions since the invasion of Ukraine

Adam Bradshaw

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