U.S. Alleges Smuggling Ring Shipped Guarded Technology To Russian Military

Eleven Russian nationals have been indicted in U.S. District Court for being part of a false-front operation to procure sensitive microelectronics for Russian military and state security agency use. The Department of Justice is charging that the Russian company APEX, Ltd. worked through a Houston-based front company, ARC, Inc. to illegally export these U.S.-made components to Russia. The court documents show several instances of APEX falsifying reports to circumvent U.S. customs.

APEX is the owner of several subsidiary companies within Russia and its clientele includes the Russian Ministry of Defense, to which it is a certified supplier of electronics, and the FSB, the domestic intelligence agency that replaced the KGB. To aid in their deception, APEX allegedly ordered several of its employees to delete from its webpage images of missiles and other military equipment and references to the company’s ties to the Russian military.

APEX is charged with circumventing both the International Emergency Economic Powers Act and the Arms Export Control Act. These laws require providing notification of “end user information” and “end use information,” or just who will be the entity actually utilizing the parts in question and how. The Justice Department says in a press release on the case:

[T]he defendants went to great lengths to conceal their procurement activities for the Russian military. For example, on one occasion, defendants Posobilov and Yuri Savin, the Director of Marketing at another Russian procurement firm, discussed how best to conceal the fact that certain goods Savin had purchased from Arc were intended for the Russian military. Savin asked Posobilov, “What can we do if a client is military all over?” Posobilov replied, “We can’t be the ones making things up. You should be the ones.” Similarly, on another occasion defendant Fishenko directed a Russian procurement company that, when the company provided false end user information, to “make it up pretty, correctly, and make sure it looks good.” On yet another occasion, Posobilov instructed a Russian procurement company to “make sure that” the end use certificate indicated “fishing boats, and not fishing/anti-submarine ones … Then we’ll be able to start working.”

Among the items that the defendants are alleged to have smuggled include analog-to-digital converters, digital signal processors, micro-controllers, static random access memory chips, and field programmable gate arrays. None of these items are in themselves illegal to own or sell. However, their export is strictly controlled by the Department of Commerce in light of their application in such equipment as radar and sonar, weapons targeting systems and detonation triggers. As part of their case against APEX, Justice cites an FBI-acquired letter from the FSB to an APEX-affiliate stating that received “microchips were faulty, and demanded that the defendants supply replacement parts.”


Russian President Vladimir Putin is in the middle of an ongoing crackdown against opposition leaders and democracy activists in the country. Among the tools Putin uses is the FSB, which has recently been empowered through a series of amendments to the Russian constitution to take action against almost anything it deems to be a threat to the state, including pro-democracy protestors. The FSB linkage, paired with Russia’s continuing support of and export of arms to the Syrian government, highlights the importance of shutting down this ring’s exports. (HT: Colin Freeze)