Justice Department Transfers Approximately $500,000 in Forfeited Russian Funds to Estonia for Benefit of Ukraine
Ilya Kahn, 66, a citizen of the United States, Israel and Russia, and resident of Brooklyn, New York, and Los Angeles, California, was arrested yesterday in Los Angeles for his alleged involvement in a years-long scheme to secure and unlawfully export sensitive technology from the United States for the benefit of a Russian business. The business was sanctioned by the U.S. government following Russia’s unprovoked invasion of Ukraine in February 2022 and whose clients include elements of the Russian military and the Federal Security Service (FSB), the main successor agency to the Soviet Union’s KGB.
According to court documents, Kahn is charged by criminal complaint with conspiracy to violate the Export Control Reform Act (ECRA). Kahn will make his initial appearance in the Central District of California.
“Mr. Kahn stands accused of repeatedly exporting sensitive technology to Russia before, during, and after Russia launched its unprovoked invasion of Ukraine,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Violations of U.S. sanctions and export control laws that aid Russia and other hostile powers endanger our nation’s security and will be met with the full force of the Justice Department.”
“This arrest reflects our continued aggressive enforcement of export control violations involving the Russian military and the Federal Security Service,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod of the Commerce Department’s Bureau of Industry and Security (BIS). “Stopping the flow of semiconductors and sensitive technologies to those aiding Russia’s unjust war in Ukraine is a critical priority for BIS and our Disruptive Technology Strike Force partners.”
“As alleged, Kahn illegally sent specialized technology from the United States to a Russian semiconductor manufacturer with ties to multiple other sanctioned Russian entities and did so by circumventing U.S. export laws and regulations,” said U.S. Attorney Breon Peace for the Eastern District of New York. “Evading U.S export regulations to send goods to benefit the Russian military complex presents a danger to our national security and our allies and partners abroad. We will continue to use all of our law enforcement and national security tools to hold these enablers, both individuals and corporations, accountable for flouting the rule of law.”
“This arrest marks the end of Ilya Khan's alleged involvement in a years-long scheme to secure and export millions of dollars’ worth of sensitive technologies from the U.S. to Russia to be used by its military and intelligence services,” said Executive Assistant Director Larissa L. Knapp of the FBI's National Security Branch. “Any attempt to circumvent U.S. laws, sanctions, and regulations will not be tolerated, and thanks to a coordinated interagency effort, our national security and our partners' are stronger than ever.”
According to court documents, Kahn is the owner of Senesys Incorporated, which is based in California, and Sensor Design Association, which maintains a contact address in Brooklyn. As alleged in the complaint and other public filings, Kahn operated these two businesses – ostensibly involved in “security software development” and the testing of silicon wafers for military avionics and space users – through which he engaged in a years-long conspiracy to acquire and export sensitive and sophisticated electronics from the United States to a sanctioned Russian business without acquiring the appropriate licenses. The Russian business, Joint Stock Company Research and Development Center ELVEES (Elvees) was added to the Commerce’s Department’s Entity List in March 2022 and was sanctioned by the Treasury Department in September 2022 because of its critical role in facilitating Russia’s military and its invasion of Ukraine.
For example, according to the complaint, in 2019, Kahn exported multiple U.S.-origin microcontrollers to Elvees in Russia, and in 2022, he exported U.S.-origin network interface controllers and a radio-frequency transmitter to Elvees in Russia by way of a Hong Kong-based shipping company. Each of these items required an export license from the Commerce Department, which Kahn did not obtain, and were controlled for national security and anti-terrorism reasons.
As alleged, Kahn also arranged for Elvees to continue to receive semiconductors manufactured in Taiwan following Russia’s invasion of Ukraine in February 2022. Specifically, after the Taiwanese company that manufactured Elvees-designed semiconductors refused to ship those semiconductors to Russia, Kahn arranged for the semiconductors to be sent to the United States and then re-exported them to Russia, often through a shipping company based at John F. Kennedy International Airport in Queens, New York. Kahn also used Hong Kong and other locations around the world as transshipment points to evade U.S. export laws and regulations and to conceal the Russian end users.
Even after Elvees was added the Entity List, Kahn continued to work with the company. In May 2022, Kahn emailed design guidance for an Elvees-branded microchip to a Taiwan manufacturer. Subsequently, Kahn shipped thousands of units of this microchip – through a New York-based shipper – to a Hong Kong shipping company, and then to a company located in mainland China. Kahn noted in communications with the Hong Kong shipping company that he received a “call from Russia” about the Chinese business to which he was directing the goods.
If convicted, Kahn faces a maximum penalty of 20 years in prison for conspiracy to violate the ECRA.
The FBI and Department of Commerce’s BIS New York Field Office are investigating the case. The U.S. Attorney’s Office for the Central District of California provided significant assistance.
Assistant U.S. Attorneys Craig R. Heeren, Artie McConnell, and Matthew Skurnik for the Eastern District of New York and Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case, with assistance from Litigation Analysts Joseph Levin and Mary Clare McMahon.
Today’s 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.
A complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.