NEW YORK
A Russian national is charged with allegedly violating U.S. sanctions in 2014, officials announced Wednesday.
According to an indictment unsealed Wednesday in federal court, Konstantin Malofeyev, 47, of Russia, is charged with conspiracy to violate U.S. sanctions.
Malofeyev hired an American citizen, Jack Hanick, to work for him in operating television networks in Russia and Greece and attempting to acquire a television network in Bulgaria, according to officials.
As alleged, Malofeyev also conspired with Hanick and others to illegally transfer a $10 million investment that Malofeyev made in a U.S. bank to a business associate in Greece, in violation of the sanctions blocking Malofeyev’s assets from being transferred.
Along with the indictment, the United States issued a seizure warrant for Malofeyev’s U.S. investment. Malofeyev remains at large and is believed to be in Russia.
“Konstantin Malofeyev is closely tied to Russian aggression in Ukraine, having been determined by OFAC to have been one of the main sources of financing for the promotion of Russia-aligned separatist groups operating in the sovereign nation of Ukraine,” said U.S. Attorney Damian Williams for the Southern District of New York. “The United States sanctions on Malofeyev prohibit him from paying or receiving services from United States citizens, or from conducting transactions with his property in the United States.”
Adding, “but as alleged, he systematically flouted those restrictions for years after being sanctioned. The indictment unsealed today shows this office’s commitment to the enforcement of laws intended to hamstring those who would use their wealth to undermine fundamental democratic processes. This office will continue to be a leader in the Justice Department’s work to hold accountable actors who would support flagrant and unjustified acts of war.”
Read the 21-Page Indictment Click Here: USDOJ
According to court documents, in 2014, the president issued Executive Order 13660, which declared a national emergency with respect to the situation in Ukraine.
Executive Order 13660, along with certain regulations issued pursuant to it (the Ukraine-Related Sanctions Regulations) prohibits, among other things, making or receiving any funds, goods or services by, to, from or for the benefit of any person whose property and interests in property are blocked.
On Dec. 19, 2014, the Department of Treasury’s Office of Foreign Assets Control designation of Malofeyev explained that he was one of the main sources of financing for Russians promoting separatism in Crimea, and has materially assisted, sponsored, and provided financial, material, or technological support for, or goods and services to or in support of the so-called Donetsk People’s Republic, a separatist organization in the Ukrainian region of Donetsk.
As alleged in the indictment, Malofeyev hired a U.S. citizen named Jack Hanick in 2013 to work on a new Russian cable television news network (the Russian TV Network) that Malofeyev was creating.
Malofeyev negotiated directly with Hanick regarding Hanick’s salary, payment for Hanick’s housing in Moscow, and Hanick’s Russian work visa, and Malofeyev paid Hanick through two separate Russian entities through the end of 2018.
Malofeyev also dispatched Hanick to work on a project to establish and run a Greek television network and on efforts to acquire a Bulgarian television network.
At Malofeyev’s direction, Hanick traveled to Greece and to Bulgaria on multiple occasions in 2015 and 2016 to work on these initiatives and reported directly back to Malofeyev on his work.
For instance, in November 2015, Hanick wrote to Malofeyev that the Greek television network would be an “opportunity to detail Russia’s point of view on Greek TV.”
In connection with Malofeyev’s efforts to acquire the Bulgarian television network, Malofeyev instructed Hanick to take steps to conceal Malofeyev’s role in the acquisition by conducting the negotiations through a Greek associate of Malofeyev (the Greek Business Associate), so that it would appear the buyer was a Greek national rather than Malofeyev.
Malofeyev also employed Hanick to assist Malofeyev in transferring a $10 million investment in a Texas-based bank holding company (the Texas Bank) to the Greek Business Associate in violation of the Ukraine-Related Sanctions Regulations.
In 2014, Malofeyev used a shell company to make the investment, and beginning in or about March 2015, Malofeyev began making plans to transfer ownership of the shell company to the Greek Business Associate as a means to transfer the investment in the Texas Bank.
In or about May 2015, Malofeyev’s attorney drafted a Sale and Purchase Agreement that purported to transfer the shell company to the Greek Business Associate in exchange for one U.S. dollar.
In June 2015 Malofeyev had Hanick physically transport a copy of Malofeyev’s certificate of shares in the Texas Bank from Moscow to Athens to be given to the Greek Business Associate.
Malofeyev signed the Sale and Purchase Agreement in June 2015, but the agreement was fraudulently backdated to July 2014 to make it appear that the transfer had taken place prior to the imposition of U.S. sanctions.
Malofeyev’s attorney then falsely represented to the Texas Bank that the transfer had taken place in July 2014, even though Malofeyev and his attorney well knew that the transfer of the shell company was executed in June 2015.
Along with the unsealed indictment, a seizure warrant was issued in the Southern District of New York for Malofeyev’s Texas Bank investment, which had been converted by the Texas Bank in 2016 to cash held in a blocked U.S. bank account. The United States recovered those funds pursuant to the warrant and will seek forfeiture of those funds as property that constitutes or is derived from proceeds traceable to the commission of the offenses alleged in the indictment.
Each of the two sanctions charges in the indictment carries a maximum penalty of 20 years in prison.
The FBI is investigating the case, with valuable assistance provided by the Justice Department’s National Security Division and Office of International Affairs.