Nonfungible Token (NFT) Developer Pleads Guilty to an International Scheme to Defraud NFT Purchasers
Earlier today, Volodymyr Nedoviz, a lawful permanent resident of the United States and citizen of Ukraine, was arrested on federal charges of illegally exporting controlled military technology from the United States to end-users in Ukraine. Federal agents also executed a search warrant at a Philadelphia, Pennsylvania location that was used in connection with Nedoviz’s illegal scheme.
Nedoviz is scheduled to make his initial appearance today at 2:00 p.m. at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York, before United States Magistrate Judge Ramon E. Reyes, Jr.
The arrest and charges were announced by U.S. Attorney Robert L. Capers of the Eastern District of New York; Acting Assistant Attorney General for National Security Mary B. McCord; FBI Assistant Director in Charge William F. Sweeney, Jr., New York Field Office; Special Agent in Charge Angel M. Melendez, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) for New York; and Special Agent in Charge Jonathan Carson, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office.
The complaint alleges that the defendant conspired with others located in both Ukraine and the United States to purchase export-controlled, military-grade equipment from sellers in the United States and to export that equipment to Ukraine without the required licenses. The devices obtained by the defendant and his co-conspirators included some of the most highly powerful and technologically sophisticated night vision rifle scopes and thermal imaging equipment available, including, among others, an Armasight Zeus-Pro 640 2-16x50 (60Hz) Thermal Imaging weapons sight, a FLIR Thermosight R-Series, Model RS64 60 mm 640x480 (30Hz) Rifle Scope, and a ATN X-Sight II 5-20x Smart Rifle Scope. In many cases, the devices purchased by the defendant and his co-conspirators retail for almost $9,000, and they are specifically marketed to military and law enforcement consumers.
As part of the conspiracy, in order to induce U.S.-based manufacturers and suppliers to sell them the export-controlled devices and to evade applicable controls, the defendant and his co-conspirators falsely purported to be United States citizens and concealed the fact they were exporters. The defendant and his co-conspirators also recruited, trained, and paid other U.S.-based individuals to export the controlled devices to Ukraine via various freight forwarding companies. Among other things, the defendant and his co-conspirators instructed the U.S.-based individuals to falsely describe the nature and value of the equipment they were attempting to export. In addition, to conceal their identities, as well as the true destination of the rifle scopes and thermal imaging equipment, the defendant and his co-conspirators instructed that the items be shipped using false names and addresses.
The export of military-grade rifle scopes and thermal imaging equipment requires a license from either the United States Department of State or the United States Department of Commerce. Both the Department of State and the Department of Commerce have placed restrictions on the export of items that they have determined could make a significant contribution to the military potential and weapons proliferation of other nations and that could be detrimental to the foreign policy and national security of the United States.
“The defendant tried to circumvent laws that protect our national security by preventing specialized technologies from falling into the wrong hands,” said U.S. Attorney Capers. “Those who seek to evade the scrutiny of U.S. regulatory and law enforcement agencies by operating in the shadows present a danger to our national security and our allies abroad. We will continue to vigorously prosecute violations of our laws that help maintain the superiority of our armed forces on land, sea, and air.” Mr. Capers expressed his grateful appreciation to the FBI’s Joint Terrorism Task Force.
“Export controls on military technology and equipment are put in place so military-grade gear doesn’t end up in the wrong hands. As we alleged, Nedoviz colluded with co-conspirators to illegally purchase highly powerful, technologically sophisticated equipment intended for law enforcement and military and then export to Ukraine without the proper licenses. The FBI will continue to protect our national security assets as we work with our partners to prevent the exportation of restricted materials,” said Sweeney, FBI Assistant Director in Charge, New York Field Office.
“Nedoviz, a Ukrainian national, falsely pretended to be a citizen of the United States in order to purchase highly sensitive military grade equipment, that would later be illegally exported to Ukraine” said Melendez, Special Agent in Charge, Melendez of HSI New York. “These items including rifle scopes and thermal imaging equipment have strict export controls in order to make sure that our soldiers overseas never have to encounter them on the battlefield. It is a mission we at HSI take very seriously.”
“Today’s arrest demonstrates the Office of Export Enforcement's strong commitment to enforcing our nation's export control and public safety laws. We will continue to work with our law enforcement partners to keep the most sensitive goods out of the most dangerous hands,” said Special Agent in Charge Carson, U.S. Department of Commerce Bureau of Industry and Security, Office of Export Enforcement, New York Field Office.
If convicted of the charges, the defendant faces up to 20 years in prison and a $1 million fine.
The case is being handled by the Office’s National Security and Cybercrime Section. Assistant U.S. Attorneys Peter W. Baldwin and Michael Keilty are in charge of the prosecution, with assistance from Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.
Queens, New York
E.D.N.Y. Docket No. 17-M-208