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SAN FRANCISCO – Naum Morgovsky and Irina Morgovsky pleaded guilty today for their respective roles in a scheme to export components for the production of night vision and thermal devices in violation of the Arms Export Control Act, announced Acting United States Attorney Alex G. Tse, Assistant Attorney General for National Security John C. Demers, and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. Naum Morgovsky also pleaded guilty to laundering the proceeds of from the scheme. The pleas were accepted by the Honorable Vince Chhabria, U.S. District Judge.
According to their guilty pleas, Naum Morgovsky, 69, and Irina Morgovsky, 66, both residing in Hillsborough, Calif., admitted that from April 2012 until August 25, 2016, they conspired to export without the necessary license to a company in Moscow, Russia, numerous scope components, including image intensifier tubes and lenses. They further admitted a coconspirator in Russia communicated to them lists of components necessary for the Russian business to manufacture certain night vision devises. The defendants used their U.S. business, Hitek International, to purchase these components and misrepresented to the sellers that the products would not be exported. The defendants then shipped the products to Russia and other countries in Europe where an associate arranged for them to be hand-carried into Russia. Further, the defendants admitted the scope components they exported were on the United States Munitions List and that they therefore were not permitted to export the items without a license from the Department of State, Directorate of Defense Trade Controls. The defendants admitted they knew a license was required to export the components and that they did not obtain a license.
“Protecting sensitive technology from unlawful export is crucial to our national security, especially when that technology has military uses,” said Acting U.S. Attorney Tse. “This prosecution and today’s guilty pleas demonstrate the Department of Justice’s continuing commitment to using all available tools, including criminal charges, to safeguard national security.”
In addition to exporting the components, Naum Morgovsky admitted he took steps to conceal his crimes so that the couple could continue to run the illegal export business undetected. Specifically, he admitted he laundered the proceeds of the export crimes and used the name of a deceased person to conceal the fact that he was the source and owner of an US-based account.
On April 27, 2017, a federal grand jury issued a superseding indictment charging the Morgovskys, along with Mark Migdal, 72, of Portola Valley, Calif., for their respective roles in three related schemes—the illegal export scheme resolved by today’s plea agreements, and two additional bank fraud schemes allegedly involving Naum Morgovsky. The charges related to the alleged bank fraud scheme remain pending against Naum Morgovesky. The defendant is presumed innocent until proven guilty beyond reasonable doubt with regard to those charges.
With respect to the illegal export scheme, the grand jury charged Naum Morgovesky with conspiracy to violate the Armed Export Control Act, in violation of 22 U.S.C. § 2778, and two counts of money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and (a)(2)(A). The grand jury charged Irina Morgovesky with the § 2778 conspiracy and with misuse of a passport, in violation of 18 U.S.C. § 1544. Today the defendants pleaded guilty to all the charges with the exception of the passport charge pending against Irina Morgovesky—that charge will be dismissed at the time of sentencing if she complies with the terms of the plea agreement. Bank fraud charges alleged in the indictment against Naum Morgovsky remain pending and will be scheduled for trial.
The defendants face a maximum sentence of 20 years in prison for each of the counts to which they pleaded guilty. The maximum fine for the Armed Export Conspiracy charges is $1,000,000, and the maximum fine for the money laundering charges is $500,000. Any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Judge Chhabria has scheduled a hearing for sentencing with respect to today’s guilty pleas for September 18, 2018. No date has been scheduled yet to resolve the remaining charges against Naum Morgovsky.
The case is being prosecuted by Assistant United States Attorneys Colin Sampson and Erin Cornell and National Security Division Trial Attorney Jason McCullough. The prosecution is the result of an investigation by the counterintelligence squad of the Federal Bureau of Investigation; Internal Revenue Service, Criminal Investigation; and the Department of Commerce, Bureau of Industry and Security.