[Federal Register Volume 88, Number 114 (Wednesday, June 14, 2023)]
[Notices]
[Pages 38813-38815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12679]



[[Page 38813]]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Boris Livshits, 9V Kuttuzi, Leningrad Oblast, St. Petersburg, 
Russian Federation; Svetlana Skvortsova, Yablochinkova 21, Moscow, 
Russian Federation; Aleksey Ippolitov, Ozernaya 46, Moscow, Russian 
Federation; Advanced Web Services, 417 Brightwater Court, Apt 6f, 
Brooklyn, NY 11235'; Strandway, LLC, 99 Wall St, Ste. 148, New York, NY 
10005; Nikolaos Bogonikolos, Artemidos 36, Palaio Faliro, Attica, 
Greece; Aratos Group, L. Amfitheas 10, Athens, 17564, Greece. and 10 
Amfitheas Avenue, 17564, Palaio Faliro, Greece; Order Renewing 
Temporary Denial of Export Privileges

    Pursuant to Section 766.24 of the Export Administration Regulations 
(the ``Regulations'' or ``EAR''),\1\ I hereby grant the request of the 
Bureau of Industry and Security (``BIS''), U.S. Department of Commerce, 
through its Office of Export Enforcement (``OEE'') to renew the 
temporary denial order (``TDO'') issued in this matter on December 13, 
2022. I find that renewal of this order, along with the additions and 
denial of the export privileges of Nikolaos Bogonikolos 
(``Bogonikolos'') and the Aratos Group (``Aratos''), are necessary in 
the public interest to prevent an imminent violation of the 
Regulations.
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    \1\ The Regulations, currently codified at 15 CFR parts 730-774 
(2021), originally issued pursuant to the Export Administration Act 
(50 U.S.C. 4601-4623 (Supp. III 2015) (``EAA''), which lapsed on 
August 21, 2001. The President, through Executive Order 13222 of 
August 17, 2001 (3 CFR 2001 Comp. 783 (2002)), as extended by 
successive Presidential Notices, continued the Regulations in effect 
under the International Emergency Economic Powers Act (50 U.S.C. 
1701, et seq. (2012)) (``IEEPA''). On August 13, 2018, the President 
signed into law the John S. McCain National Defense Authorization 
Act for Fiscal Year 2019, which includes the Export Control Reform 
Act of 2018, 50 U.S.C. 4801-4852 (``ECRA''). While Section 1766 of 
ECRA repeals the provisions of the EAA (except for three sections 
which are inapplicable here), Section 1768 of ECRA provides, in 
pertinent part, that all orders, rules, regulations, and other forms 
of administrative action that were made or issued under the EAA, 
including as continued in effect pursuant to IEEPA, and were in 
effect as of ECRA's date of enactment (August 13, 2018), shall 
continue in effect according to their terms until modified, 
superseded, set aside, or revoked through action undertaken pursuant 
to the authority provided under ECRA. Moreover, Section 1761(a)(5) 
of ECRA authorizes the issuance of temporary denial orders.
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I. Procedural History

    On December 13, 2022, I signed an order denying the export 
privileges of Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, 
Advanced Web Services, and Strandway, LCC (``Strandway'') (collectively 
``the Respondents'') for a period of 180 days on the ground that 
issuance of the order was necessary in the public interest to prevent 
an imminent violation of the Regulations. The order was issued ex parte 
pursuant to Section 766.24(a) of the Regulations and was effective upon 
issuance.\2\
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    \2\ The TDO was published in the Federal Register on December 
16, 2022 (87 FR 77067).
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    On May 18, 2023, BIS, through OEE, submitted a written request for 
renewal of the TDO that was issued on December 13, 2022. OEE's request 
for renewal also contained evidence related to Bogonikolos and 
Aratos.\3\ The written request was made more than 20 days before the 
TDO's scheduled expiration. A copy of the renewal request was sent to 
Respondents in accordance with Sections 766.5 and 766.24(d) of the 
Regulations. No opposition to the renewal of the TDO has been received.
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    \3\ In the renewal request, OEE also noted that a TDO request 
related to Bogonikolos and the Aratos Group was forthcoming.
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II. Renewal of the TDO

A. Legal Standard

    Pursuant to Section 766.24, BIS may issue an order temporarily 
denying a respondent's export privileges upon a showing that the order 
is necessary in the public interest to prevent an ``imminent 
violation'' of the Regulations. 15 CFR 766.24(b)(1) and 766.24(d). ``A 
violation may be `imminent' either in time or degree of likelihood.'' 
15 CFR 766.24(b)(3). BIS may show ``either that a violation is about to 
occur, or that the general circumstances of the matter under 
investigation or case under criminal or administrative charges 
demonstrate a likelihood of future violations.'' Id. As to the 
likelihood of future violations, BIS may show that the violation under 
investigation or charge ``is significant, deliberate, covert and/or 
likely to occur again, rather than technical or negligent[.]'' Id. A 
``[l]ack of information establishing the precise time a violation may 
occur does not preclude a finding that a violation is imminent, so long 
as there is sufficient reason to believe the likelihood of a 
violation.'' Id.

B. The TDO and BIS's Request for Renewal

    The U.S. Commerce Department, through BIS, responded to the Russian 
Federation's (``Russia's'') further invasion of Ukraine by implementing 
a sweeping series of stringent export controls that severely restrict 
Russia's access to technologies and other items that it needs to 
sustain its aggressive military capabilities. These controls primarily 
target Russia's defense, aerospace, and maritime sectors and are 
intended to cut off Russia's access to vital technological inputs, 
atrophy key sectors of its industrial base, and undercut Russia's 
strategic ambitions to exert influence on the world stage.
    As of February 24, 2022, any item classified under any Export 
Classification Control Number (``ECCN'') in Categories 3 through 9 of 
the Commerce Control List (``CCL'') required a license to be exported 
or reexported to Russia. See 87 FR 12226 (Mar. 3, 2022). As of April 8, 
2022, the license requirements for Russia were expanded to cover all 
items on the CCL. See 87 FR 22130 (Apr. 14, 2022). These rules were 
codified in Title 15 CFR 746.8, which state, ``a license is required, 
excluding deemed exports and deemed reexports, to export, reexport, or 
transfer (in-country) to or within Russia or Belarus any item subject 
to the EAR and specified in any Export Control Classification Number 
(``ECCN'') on the CCL.''
    OEE's request for renewal is based upon the facts underlying the 
issuance of the initial TDO and the evidence developed over the course 
of this investigation, which demonstrate the existence of an extensive 
procurement network conspiring to violate U.S. export control laws by 
unlawfully procuring and shipping military and sensitive dual-use 
technologies from U.S. manufacturers to Russian end users. As detailed 
in its May 18, 2023 request for renewal of the TDO, OEE's 
investigation, which remains ongoing, has revealed evidence that this 
illicit network and its reach are broader in scope and more extensive 
than initially realized. As a result, the renewal of this order, along 
with the issuance of an order temporarily denying the export privileges 
of Nikolaos Bogonikolos and the Aratos Group, are necessary.
1. The Basis for the Initial TDO
    On or about September 12, 2022, and as detailed in the initial TDO 
issued on December 13, 2022, Livshits, Skvortsova, and Ippolitov, along 
with co-conspirators Yevgeniy Grinin,\4\ were each indicted on multiple 
counts in the United States District Court for the Eastern District of 
New York. The

[[Page 38814]]

charges included, but were not limited to, conspiring to violate U.S. 
export control laws in connection with the unlicensed export of 
electronic signal generator and measurement equipment, among other 
items, to BIS-listed entities in Russia, including OOO Serniya 
Engineering (``Serniya''),\5\ a wholesale machinery and equipment 
company located in Moscow, Russia.
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    \4\ Grinin is the owner and operator of Photon Pro, LLP 
(``Photon''), which was placed on the BIS Entity List on March 9, 
2022, with a policy of denial for all items subject to the EAR (87 
FR 13141). Grinin and Photon have also both been identified as 
Specially Designated Nationals (SDNs) by the U.S. Treasury 
Department, Office of Foreign Assets Control (``OFAC'') pursuant to 
Executive Order 14024 (87 FR 20505).
    \5\ On March 3, 2022, Serniya, along with OOO Sertal 
(``Sertal''), another Moscow-based machinery and equipment company 
and part of the Serniya Network, were both placed on the BIS Entity 
List, section 744.11 and Supplement No. 4 to part 744 of the 
Regulations, because they ``have been involved in, contributed to, 
or otherwise supported the Russian security services, military and 
defense sectors, and military and/or defense research and 
development efforts'' (87 FR 13141).
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    As further detailed in the initial TDO, Serniya heads an illicit 
procurement network (collectively, the ``Serniya Network'') operating 
under the direction of Russia's intelligence services to evade U.S. 
sanctions to acquire sensitive military grade and dual-use 
technologies, including advanced semiconductors, for the Russian 
military, defense sector, and research institutions. The initial TDO 
was also based on evidence that Livshits and the other Respondents were 
engaged in unlawfully procuring and shipping military and sensitive 
dual-use technologies from U.S. manufacturers to Russian end users, 
including the Serniya Network. These items included advanced 
electronics and sophisticated testing equipment, some of which can be 
used in military applications. As stated in the initial TDO, the 
procurement activity occurred from at least January 2017 through 
October 2022, and Respondents actively sought to conceal their unlawful 
export-related activities in order to evade detection by law 
enforcement.
2. Basis for Renewal and Additions of Bogonikolos and the Aratos Group
    In its May 18, 2023 request for renewal of the TDO, OEE has 
presented evidence that the scope of the Serniya Network is broader, 
and its conduct more extensive, than initially realized. OEE has 
presented additional evidence demonstrating that the procurement 
network extends to multiple co-conspirators and countries. For 
instance, OEE's investigation has identified other co-conspirators and 
procurement agents for the Serniya Network, including Nikolaos 
Bogonikolos, the founder and president of the Aratos Group, a network 
of defense-related companies in the Netherlands and Greece.
    As noted in OEE's request for renewal, a superseding indictment was 
filed on or about December 5, 2022, charging Livshits, Skvortsova, 
Ippolitov, Grinin and three additional co-conspirators with, among 
other charges, conspiring to violate U.S. export control laws. On or 
about May 2, 2023, in the United States District Court for the Eastern 
District of New York, Bogonikolos was charged by complaint with 
smuggling and other related offenses. As alleged in the complaint, 
Bogonikolos assisted Grinin and Ippolotov in their efforts to procure 
U.S. origin items on behalf of the Serniya Network, including the 
procurement of tactical military antennas, which were classified under 
ECCN 3A611.x, controlled for national security reasons, and required a 
license for export to Russia. Specifically, after Grinin and Ippolotov 
identified U.S. origin items for procurement, Bogonikolos assisted the 
Serniya Network by purchasing the items and concealing the true end 
user by claiming the items would be used by Aratos in the Netherlands.
    On May 22, 2023, a second superseding indictment was filed in the 
United States District Court for the Eastern District of New York 
charging Livshits, Skvortsova, Ippolitov, Grinin, and Bogonikolos, and 
others, with smuggling and conspiracy to violate U.S. export control 
laws, inter alia. As detailed in the second superseding indictment, 
Bogonikolos, a Greek national, is the founder and president of the 
Aratos Group, a defense conglomerate in the Netherlands and Greece. 
Bogonikolos purchased sensitive military and dual-use items from U.S. 
companies on behalf of Serniya and Sertal and routed the shipments 
through the Aratos Group to various transshipment points to conceal the 
true Russian end users.
    As further alleged in the second superseding indictment, 
Bogonikolos, who provided false end use statements to U.S. companies, 
was recruited as a procurement agent by the Serniya Network in 2017. As 
part of the arrangement and at Ippolitov's direction, Bogonikolos 
agreed to work exclusively with Grinin, advising that he understood 
that Ippolitov sought to purchase sensitive items. Bogonikolos also 
advised Grinin about ways to obtain such items in furtherance of the 
conspiracy. For instance, in February 2018, after Grinin advised that 
he was having difficulty obtaining a certain product specification, 
Bogonikolos recommended that he add other items and alter them from 
Grinin's prior order in an attempt to obtain the shipment and evade 
detection. On another occasion, Bogonikolos advised Grinin that he 
signed a false end-use statement, stating that certain items were only 
for use in the Netherlands.
    OEE's investigation also reveals that Bogonikolos and employees of 
the Aratos Group tracked orders for the Serniya Network by excel 
spreadsheet. These orders, which occasionally listed the applicable 
ECCN, included orders with related invoices for either Serniya or 
Photon. Moreover, one such spreadsheet included a column related to 
export controls and information about U.S. and European export control 
restrictions, demonstrating knowledge and familiarity with export 
control laws.
    Since the issuance of the TDO on December 13, 2022, arrest warrants 
have been issued for Respondents Boris Livshits, Svetlana Skvortsova, 
and Aleksey Ippolotov. The parties are presently fugitives from U.S. 
law enforcement and reside in the Russian Federation. Because they have 
not yet been apprehended, OEE has reason to believe that their illicit 
procurement efforts will remain ongoing, given the length and nature of 
the conduct identified to date. Significantly, OEE's investigation has 
revealed that they are familiar with methods of concealment and are 
likely to use increasingly sophisticated methods to avoid detection by 
law enforcement. Additionally, given the size and scope of the Serniya 
procurement network, including newly identified parties and entities, 
such as Bogonikolos \6\ and the Aratos Group, that span multiple 
countries including the Netherlands and Greece, there is substantial 
risk that continued evasion efforts will be successful, absent the 
renewal of the TDO and addition of Bogonikolos and the Aratos Group as 
respondents.
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    \6\ Bogonikolos was arrested in Paris, France in May 2023 based 
on the criminal charges pending in the U.S. District Court for the 
Eastern District of New York.
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III. Findings

    I find that the evidence presented by BIS demonstrates that a 
violation of the Regulations by the above-captioned parties is imminent 
in both time and degree of likelihood. As such, a TDO is needed to give 
notice to persons and companies in the United States and abroad that 
they should cease dealing with Boris Livshits, Svetlana Skvortsova, 
Aleksey Ippolitov, Advanced Web Services, Strandway, LCC, Nikolaos 
Bogonikolos, and the Aratos Group in export or reexport transactions 
involving items subject to the EAR. Such a TDO is consistent with the 
public interest to preclude future violations of the Regulations given 
the deliberate, covert, and determined

[[Page 38815]]

nature of the misconduct and clear disregard for complying with U.S. 
export control laws.
    This Order is being issued on an ex parte basis without a hearing 
based upon BIS's showing of an imminent violation in accordance with 
Section 766.24 and 766.23(b) of the Regulations.
    It is therefore ordered:
    First, that BORIS LIVSHITS, with an address at 9V Kuttuzi, 
Leningrad Oblast, St. Petersburg, Russian Federation; SVETLANA 
SKVORTSOVA, with an address at Yablochinkova 21 Moscow, Russian 
Federation; ALEKSEY IPPOLITOV, with an address at Ozernaya 46 Moscow, 
Russian Federation; ADVANCED WEB SERVICES, with an address at 417 
Brightwater Court, Apt 6f Brooklyn, NY 11235; STRANDWAY, LLC, with an 
address at 99 Wall St, Ste. 148 New York, NY 10005; NIKOLAOS 
BOGONIKOLOS, with an address at Artemidos 36, Palaio Faliro, Attica, 
Greece; and the ARATOS GROUP, with addresses at L. Amfitheas 10, 
Athens, 17564, Greece and 10 Amfitheas Avenue, 17564, Palaio Faliro, 
Greece; and when acting for or on their behalf, any successors or 
assigns, agents, or employees (each a ``Denied Person'' and 
collectively the ``Denied Persons'') may not, directly or indirectly, 
participate in any way in any transaction involving any commodity, 
software or technology (hereinafter collectively referred to as 
``item'') exported or to be exported from the United States that is 
subject to the EAR, or in any other activity subject to the EAR 
including, but not limited to:
    A. Applying for, obtaining, or using any license, License 
Exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
United States that is subject to the EAR, or in any other activity 
subject to the EAR; or
    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the EAR, or in any other activity subject to the EAR.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export, reexport, or transfer (in-country) to or on behalf of a 
Denied Person any item subject to the EAR;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by a Denied Person of the ownership, possession, or control 
of any item subject to the EAR that has been or will be exported from 
the United States, including financing or other support activities 
related to a transaction whereby a Denied Person acquires or attempts 
to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from a Denied Person of any item subject to 
the EAR that has been exported from the United States;
    D. Obtain from a Denied Person in the United States any item 
subject to the EAR with knowledge or reason to know that the item will 
be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the EAR 
that has been or will be exported from the United States and which is 
owned, possessed or controlled by a Denied Person, or service any item, 
of whatever origin, that is owned, possessed or controlled by a Denied 
Person if such service involves the use of any item subject to the EAR 
that has been or will be exported from the United States. For purposes 
of this paragraph, servicing means installation, maintenance, repair, 
modification or testing.
    Third, that, after notice and opportunity for comment as provided 
in section 766.23 of the EAR, any other person, firm, corporation, or 
business organization related to Boris Livshits, Svetlana Skvortsova, 
Aleksey Ippolitov, Advanced Web Services, Strandway, LCC, Nikolaos 
Bogonikolos, and/or the Aratos Group by affiliation, ownership, 
control, or position of responsibility in the conduct of trade or 
related services may also be made subject to the provisions of this 
Order.
    In accordance with the provisions of Section 766.24(e) of the EAR, 
Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web 
Services, Strandway, LCC, Nikolaos Bogonikolos, and the Aratos Group 
may, at any time, appeal this Order by filing a full written statement 
in support of the appeal with the Office of the Administrative Law 
Judge, U.S. Coast Guard ALJ Docketing Center, 40 South Gay Street, 
Baltimore, Maryland 21202-4022.
    In accordance with the provisions of Section 766.24(d) of the EAR, 
BIS may seek renewal of this Order by filing a written request not 
later than 20 days before the expiration date. Respondents Boris 
Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web 
Services, Strandway, LCC, Nikolaos Bogonikolos, and the Aratos Group 
may oppose a request to renew this Order by filing a written submission 
with the Assistant Secretary for Export Enforcement, which must be 
received not later than seven days before the expiration date of the 
Order.
    A copy of this Order shall be served on each denied person and 
shall be published in the Federal Register.
    This Order is effective immediately and shall remain in effect for 
180 days.

Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2023-12679 Filed 6-13-23; 8:45 am]
BILLING CODE 3510-DT-P