Union County Man Admits Smuggling Sensitive Electronics to Russia

A naturalized United States citizen in Union County pleaded guilty today to smuggling sensitive electronics from the United States to Russia, violating export control laws, authorities said.

Alexander Brazhnikov Jr., 36, of Mountainside, a naturalized U.S. citizen born in Moscow, pleaded guilty to an information charging him with one county of conspiracy to commit money laundering, one county of conspiracy to smuggle electronics from the United States and one county of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), according to the United States Attorney’s Office.

Brazhnikov smuggled more than $65 million worth of sensitive electronic components to the Ministry of Defense of the Russian Federation, the Federal Security Service of the Russian Federation (the FSB), and Russian entities involved in the design of nuclear warheads, weapons, and tactical platforms, the U.S. Attorney’s Office said.

“As he admitted in court, Brazhnikov was responsible for nearly 2,000 illegal shipments of regulated, sensitive electronics components, many of which wound up in the hands of Russian military and security forces,” U.S. Attorney Paul J. Fishman said in a release from the U.S. Attorney’s Office. “He also admitted going to extraordinary lengths to conceal the nature and destination of the shipments, as well to hide the tens of millions of dollars in illegal proceeds generated by the scheme. Shutting down schemes like this keep all of us safer.”

According to documents filed in this case and statements made in court:

Brazhnikov Jr. and his companies were a part of a sophisticated network that covertly obtained large quantities of license-controlled electronic components from American manufacturers and vendors and exported those items to Russia, according to a release from the U.S. Attorney’s Office.

Brazhnikov Jr. conspired with his father, Alexander Brazhnikov Sr., owner of a Moscow-based procurement firm which helped initiate the purchase of electronics components from U.S. vendors and manufacturers for the Russian clients. Brazhnikov Jr. finalized the purchase and acquisition of the requested components from the various distributors, then repackaged and shipped them to Moscow, routinely falsifying the components’ value and the identity of the end-users to avoid filling out required export control forms, the U.S. Attorney’s Office said.

The true destination of the components was purposefully concealed by being sent to various “shell” addresses in Russia, authorities said. All shipments sent to the shell addresses were then redirected to a central warehouse controlled by the conspirators’ Moscow-based network.

The funds in which the conspirators used for the illicit transactions were obtained from various Russian purchases and initially deposited into a Russia-based account, authorities said.

According to the U.S. Attorney’s Office, disbursements for purchases were made from that primary Russian account through one or more foreign accounts held by shell corporations in the British Virgin Islands, Latvia, Marshall Islands, Panama, Ireland, England, United Arab Emirates and Belize, and ultimately into one of the defendant’s U.S.-based accounts.

The conspirators used dozens of bank accounts and shell companies across the globe in order to conceal the true sources of funds in Russia and to conceal the identities of the Russian defense contracting firms receiving the electronics components.

The money laundering conspiracy charge against Brazhnikov Jr. carries a maximum potential sentence of 20 years in prison and a $500,000 fine, authorities said. The smuggling and IEEPA conspiracy charges to which he pleaded guilty carry a maximum potential sentence of five years in prison and a $250,000 fine, per count.

Brazhnikov Jr. is scheduled to be sentenced on Sept. 15, 2015. He also agreed to the entry of a forfeiture money judgment of $65 million.