US authorities have charged Kremlin-connected businessman Konstantin Malofeyev with violating US sanctions in the first criminal proceedings against an oligarch since the start of the conflict in Ukraine.
Malofeyev, a Russian investor and founder of a pro-Putin media empire, is accused of breaching sanctions imposed in response to Moscow’s 2014 annexation of Crimea by hiring a US citizen to manage his television networks and attempting to acquire a network in Bulgaria.
The pair and others also allegedly conspired to illegally transfer a $ 10mn investment that Malofeyev had made in a Texas bank to a business associate in Greece in 2015, in violation of the same package of sanctions.
The investment funds, which were converted by the Texas bank in 2016 to cash held in an account at a different US lender, have been seized by the US authorities.
US Attorney-General Merrick Garland said on Wednesday: “Our message to those who continue to enable the Russian regime through their criminal conduct is this: it does not matter how far you sail your yacht. It does not matter how well you conceal your assets. . . The justice department will use every available tool to find you. . . and hold you accountable. ”
In a telephone interview with the Financial Times, Malofeyev – who faces two charges that carry a maximum penalty of 20 years in prison each – called the legal action against him “comical”.
“Since 2014, I have not had any assets in the west,” he said, alleging that the transfer from the Texas bank to the Greek business associate had taken place eight years ago, just before he had fallen under western sanctions.
However the DoJ alleges that a 2015 agreement that sought to transfer ownership of the shell company used for the Texas bank investment to the Greek associate was fraudulently backdated to July 2014, to make it appear as if it took place ahead of the imposition of US sanctions .
“Nothing has been happening with this for the last eight years. This is very old stuff, ”Malofeyev said. “It looks like [Garland] is trying to take political credit for [his predecessors’] work. ”
In recent weeks the DoJ has signaled a willingness to bring tougher action against Russians evading sanctions. Last month it set up a special task force to enforce restrictions relating to Moscow’s invasion of Ukraine.
The charges against Malofeyev come as mounting evidence of war crimes perpetrated by Russian forces in Ukraine has sparked international condemnation and prompted an escalation of western sanctions against Moscow.
In recent days the US has announced other enforcement actions against Russians. On Wednesday the FBI said it had disrupted a network of bots built by the Russian government’s military intelligence agency before it could be deployed.
“We are not going to wait for our investigations to end to act,” said Christopher Wray, FBI director.
On Tuesday, the German and US authorities collaborated on seizing Hydra Market, the world’s largest dark web market, and its cryptocurrency wallets, which contained bitcoin worth $ 25mn, the DoJ said. Hydra allegedly allowed users in mainly Russian-speaking countries to trade illicit goods, said the DoJ, which also announced criminal charges against a Russian resident who allegedly administered the platform’s servers.
Hydra, which has since disbanded, could not be reached for comment.
At the DoJ’s request, Spanish authorities on Monday seized a 255-foot yacht worth at least $ 90mn owned by Russian oligarch Viktor Vekselberg, whom the US sanctioned in 2018 in relation to Russia’s invasion of Crimea. US authorities alleged that the seizure was triggered by violations of bank fraud, money laundering and sanction statutes.
Vekselberg did not immediately respond to a request for comment.