Nonfungible Token (NFT) Developer Pleads Guilty to an International Scheme to Defraud NFT Purchasers
Earlier today, Alexander Fishenko, a dual citizen of the United States and Russia, was sentenced to 120 months’ imprisonment and ordered to forfeit more than $500,000 in criminal proceeds following his guilty plea on September 9, 2015 to a nineteen-count indictment. Fishenko was charged with acting as an agent of the Russian government within the United States without prior notification to the Attorney General, conspiring to export, and illegally exporting, controlled microelectronics to Russia, conspiring to launder money, and obstruction of justice.
Fishenko, ten other individuals, and two corporations – ARC Electronics, Inc. (ARC) and Apex System, L.L.C. (Apex) – were indicted in October 2012. Five individual defendants previously pleaded guilty, three individuals were convicted in October 2015 after trial, and three remain at large. ARC is now defunct, and Apex, a Russian-based procurement firm, failed to appear in court.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and John P. Carlin, Assistant Attorney General for National Security.
“U.S. export laws exist to check the proliferation overseas of dangerous military technologies, but Fishenko, while working illegally as an agent of the Russian government, flouted these laws in order to line his pockets,” stated United States Attorney Capers. “Today’s sentence sends a powerful message of deterrence to others, who like Fishenko and his co-conspirators, would be willing to sacrifice the national security of the United States for their personal financial gain.” Mr. Capers extended his grateful appreciation to the Federal Bureau of Investigation, Houston Field Office and the Department of Commerce for their leading roles in the investigation.
“Alexander Fishenko illegally shipped millions of dollars of high-technology products to Russian military affiliated actors in clear violation of United States law,” said Assistant Attorney General Carlin. “Export laws exist as an important part of our national security framework and protecting national assets from ending up in the hands of our potential adversaries is one of our highest priorities.”
In 1998, Fishenko founded ARC, and he also served as an executive of Apex. Between approximately October 2008 and October 2012, Fishenko led the conspiracy to obtain advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and to export those high-tech goods to in Russia, while evading the government licensing system set up to control such exports. These commodities have applications and are frequently used in a wide range of military systems, including radar and surveillance systems, missile guidance systems, and detonation triggers. Russia does not produce many of these sophisticated goods domestically. Between 2002 and 2012, ARC shipped approximately $50,000,000 worth of microelectronics and other technologies to Russia. ARC’s largest clients – including Apex subsidiaries – were certified suppliers of military equipment for the Russian Ministry of Defense.
To induce manufacturers and suppliers to sell these high-tech goods to ARC, and to evade applicable export controls, Fishenko and his co-conspirators provided false end user information in connection with the purchase of the goods, concealed the fact that they were exporters, and falsely classified the goods they exported on export records submitted to the Department of Commerce.
Ultimate recipients of ARC’s products included a research unit for the Russian FSB internal security agency, a Russian entity that builds air and missile defense systems and another that produces electronic warfare systems for the Russian Ministry of Defense.
Today’s sentencing took place before United States District Senior Judge Sterling Johnson, Jr.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Richard M. Tucker and Una A. Dean, as well as Trial Attorney David Recker from the Department of Justice’s Counterintelligence and Export Control Section, are in charge of the prosecution. Assistant United States Attorney Claire Kedeshian is handling the forfeiture aspects of the case.
E.D.N.Y. Docket No. 12 CR 626 (SJ)