[Federal Register Volume 88, Number 172 (Thursday, September 7, 2023)]
[Notices]
[Pages 61499-61503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19332]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Order Temporarily Denying Export Privileges
Arthur Petrov aka Artur Petrov, 36 Leoforos Aigyptou, Larnaca, Cyprus
and Umm Haram 66 Flat 1, Larnaca, Cyprus;
Astrafteros Technokosmos LTD, 36 Leoforos Aigyptou, Larnaca, Cyprus and
Umm Haram 66 Flat 1, Larnaca, Cyprus;
Zhanna Soldatenkova, 3 Leriku Street, Riga, Latvia 1084;
Ultra Trade Service LLC, 3 Leriku Street, Riga, Latvia 1084;
Ruslan Almetov, 734000 UL. B. Gafurov 13, 5, Dushanbe, Tajikistan and
Dushanbe 1, Gafurov Pass 13, Tajikistan;
Juzhoi Electronic LLC, 734000 UL. B. Gafurov 13, 5, Dushanbe,
Tajikistan and Dushanbe 1, Gafurov Pass 13, Tajikistan;
LLC Electrocom VPK VPK/OOO/LLC/SPB, Alias: Electrocom, Proveshcheniya
Prospect 99A, Room 180h, St. Petersburg, Russia
Pursuant to section 766.24 of the Export Administration Regulations
(the ``Regulations'' or ``EAR''),\1\ the Bureau of
[[Page 61500]]
Industry and Security (``BIS''), U.S. Department of Commerce, through
its Office of Export Enforcement (``OEE''), has requested the issuance
of an Order temporarily denying, for a period of 180 days, the export
privileges under the Regulations of: Arthur Petrov, Astrafteros
Technokosmos LTD (``Astrafteros''), Zhanna Soldatenkova, Ultra Trade
Service LLC (``Ultra Trade Service''), Ruslan Almetov, Juzhoi
Electronic (``Juzhoi''), and LLC Electrocom VPK (``Electrocom'')
(collectively, ``Respondents''). OEE's request and related information
indicates that these parties are located in Cyprus, Latvia, Tajikistan,
and Russia, at the respective addresses listed on the caption page of
this order and on page 12-13, infra. OEE's request and related
information further indicates that Petrov, Soldatenkova, and Almetov
are Russian nationals who use Astrafteros, Ultra Trade Service, and
Juzhoi as pass-throughs to supply export-controlled items to
Electrocom, a Russia-based supplier of critical electronics components
to the Russian military, in violation of the Regulations. A criminal
complaint has been filed against Petrov in the United States District
Court for the Southern District of New York alleging, among other
criminal conduct, violations of the Export Control Reform Act,
smuggling goods from the United States, and related conspiracy charges,
in connection with this scheme.
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\1\ The Regulations, currently codified at 15 CFR parts 730-774
(2022), 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. 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, and that it
is appropriate to give notice to companies in the United States and
abroad to cease dealing with the person in U.S.-origin items in order
to reduce the likelihood that a person under investigation or charges
continues to export or acquire abroad such items, risking subsequent
disposition contrary to export control requirements.'' 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.
II. OEE's Request for a Temporary Denial Order
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'') requires a license to be exported or reexported
to, or transferred within, 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 states, ``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.''
In its request, OEE has presented evidence that Arthur Petrov,
Zhanna Soldatenkova, and Ruslan Almetov have conspired to violate and
evade these export controls to procure large amounts of U.S.-
manufactured, export-controlled electronics components on behalf of
Electrocom, using Astrafteros, Ultra Trade Service, and Juzhoi as pass-
throughs to conceal the actual end user and end-destination of the
exports. In particular, OEE's request details three prohibited export
transactions, described in greater detail below. No BIS license was
sought or obtained in connection with these transactions, and at all
times, Respondents concealed the intended use, end user, and
destination of the items from the U.S. distributors. OEE has provided
additional evidence that Astrafteros regularly participates in export
transactions, including more than forty shipments in the past year, and
has attempted to make further exports in recent months.
OEE has further provided evidence that Petrov, Soldatenkova, and
Almetov all have connections to Electrocom: Petrov and Soldatenkova are
Electrocom employees; and Almetov is Electrocom's co-founder and
General Director. Electrocom is a supplier of dual-use electronics to
the Russian military and other Russian military suppliers; the acronym
``VPK'' included in its full legal name is a Russian acronym for
``Military Industrial Complex.'' The types of electronics components
exported in the transactions detailed below have significant military
applications and are of types that have been recovered in Russian
military hardware found on the battlefield in Ukraine.
A. Export Transaction 1
OEE has presented evidence that in or about April 2022,
approximately six weeks after Russia's invasion of Ukraine, Petrov
began communicating with a U.S.-based electronics distributor (U.S.
Distributor-1) to purchase an array of microelectronics, including
microcontrollers that are controlled on the CCL for Anti-Terrorism
reasons under ECCN 3A991.a.2. A BIS license is required to export items
controlled under ECCN 3A991.a.2 to Russia and are subject to a license
policy of denial.
Petrov misrepresented to U.S. Distributor-1 that Astrafteros in
Cyprus was the end user of the items, falsely claiming that Astrafteros
is a ``fabless manufacturer (fire security systems sphere),'' when in
fact Petrov operates Astrafteros as a pass-through freight-forwarder on
behalf of Electrocom. On or about July 16, 2022, following Petrov's
misrepresentations, U.S. Distributor-1 shipped approximately 15 16-bit
flash microcontrollers, controlled under ECCN 3A991.a.2, from the
United States to Petrov at an address in Cyprus, where Petrov operates
the shell company Astrafteros. On the invoice for the order provided to
Petrov, U.S. Distributor-1 expressly noted that the microcontrollers
are controlled under ECCN 3A991.a.2 and stated that the export of the
microcontrollers is controlled by the U.S. Government, authorized
``only to the country of ultimate destination for use by the ultimate
consignee or end user(s) herein identified,'' and that the items are
prohibited from being ``resold, transferred, or otherwise disposed of,
to any other country or to any person other
[[Page 61501]]
than the authorized ultimate consignee or end user(s).'' On or about
July 20, 2022, Petrov received the 15 controlled microcontrollers in
Cyprus.
On or about July 27, 2022, Soldatenkova emailed Petrov requesting a
status update on the microcontrollers. Petrov responded that he would
send her the microcontrollers imminently, along with other
microelectronics procured from U.S. Distributor-1. On or about July 29,
2022, Soldatenkova sent an invoice and contract, which included the 15
controlled microcontrollers, to an employee of a Russia-based logistics
company, who was responsible for coordinating the transportation of the
goods to Russia. The contract explicitly stated that the buyer of the
goods is Electrocom and that the goods will be shipped to Saint
Petersburg, Russia. On or about September 20, 2022, Soldatenkova
emailed a contract to an employee of a Russian Radio Frequency
Identification (``RFID'') company, indicating that Electrocom was
shipping the 15 microcontrollers to the RFID company's Moscow address.
Russia is reliant on western imports for its RFID chips, which have
significant military applications, including for use in tagging
military assets for tracking purposes. The type of microcontrollers
shipped in Export Transaction 1 have been recovered on the battlefield
in Ukraine in Russian guided missiles, drones, and electronic warfare
and communications devices. No BIS license was sought or obtained in
connection with the export of the 15 microcontrollers.
B. Export Transaction 2
OEE's request further shows that in or about July 2022, Petrov
sought controlled electronics from another U.S.-based distributor
(``U.S. Distributor-2''), including integrated circuits that are
controlled on the CCL under ECCN 3A991.b.1.a for Anti-Terrorism
reasons. A BIS license is required to export items controlled under
ECCN 3A991.b.1.a to Russia and are subject to a license policy of
denial.
On or about July 27, 2022, in order to procure the sensitive
controlled items, Petrov misrepresented the nature of Astrafteros's
business to a U.S. Distributor-2 employee in an email, stating that the
function of Astrafteros is ``design and production''--when in fact, as
described above, Petrov operates Astrafteros as a pass-through freight-
forwarder to obtain electronics for Electrocom. On or about August 18,
2022, U.S. Distributor-2 shipped an array of dual-use electronics to
Astrafteros's address in Cyprus. In the shipping, billing, and end-use
records and correspondence, Petrov falsely represented to U.S.
Distributor-2 that the ``ultimate consignee'' of the controlled items
was Latvia-based Ultra Trade Service. U.S. Distributor-2 provided an
invoice to Petrov that noted the ECCN numbers under which the goods
were controlled and explicitly stated that ``re-export[ation]'' or
further ``ship[ment] to another destination'' was prohibited under U.S.
export controls.
On or about August 22, 2022, Petrov emailed Soldatenkova, informing
her that the items in Export Transaction 2 would be sent the following
day. Petrov also emailed Soldatenkova a shipping label and an invoice,
reflecting the controlled microelectronics that had been shipped by
U.S. Distributor-2 to Astrafteros in Cyprus. On or about August 30,
2022, Soldatenkova emailed an employee of the logistics company,
providing the weights for each of the items ordered, including the CCL-
controlled integrated circuits. On or about September 2, 2022,
Soldatenkova sent an invoice and contract for the order to the
logistics company. The contract set forth that the buyer of the goods
was Electrocom and that the goods would be shipped to Saint Petersburg,
Russia.
The type of integrated circuits shipped in Export Transaction 2
have been recovered in Ukraine in Russian guided missiles, which the
Russian military has used to attack Ukrainian military and civilian
targets. No BIS license was sought or obtained in connection with the
export of the integrated circuits.
C. Export Transaction 3
OEE has also presented evidence that on or about July 15, 2022,
Petrov ordered from U.S. Distributor-1, via email, 90 microcontrollers,
specifically, Microchip Technology 16-bit flash digital signal
processors and controllers that are controlled on the CCL under ECCN
3A991.a.2 for Anti-Terrorism reasons. A BIS license is required to
export items controlled under ECCN 3A991.a.2 to Russia and are subject
to a license policy of denial.
In his email communications with U.S. Distributor-1, Petrov again
misrepresented that Astrafteros was the end user of the goods and that
Cyprus was the final destination. On or about January 11, 2023,
following Petrov's misrepresentations, U.S. Distributor-1 shipped the
90 controlled microcontrollers from the United States to Petrov at
Astrafteros's address in Cyprus. On the invoice for the order provided
to Petrov, U.S. Distributor-1 expressly noted that the microcontrollers
are controlled under ECCN 3A991.a.2 and that the export of the
microcontrollers is controlled by the U.S. Government, authorized
``only to the country of ultimate destination for use by the ultimate
consignee or end user(s) herein identified,'' and that the items are
prohibited from being ``resold, transferred, or otherwise disposed of,
to any other country or to any person other than the authorized
ultimate consignee or end user(s).'' On or about January 31, 2023,
Petrov shipped the 90 controlled microcontrollers to Juzhoi in
Tajikistan and updated Almetov, his superior at Electrocom, about the
status of the shipment.
Soldatenkova and Almetov then worked together to ensure that the
shipment reached Russia. Soldatenkova emailed Almetov a contract
between Electrocom and Juzhoi for the microcontrollers. The contract,
which was not provided to U.S. Distributor-1, identified Electrocom
(with its address in Saint Petersburg, Russia) as the consignee. On or
about February 8, 2023, Soldatenkova emailed Almetov the shipping label
for the shipment that included the microcontrollers. A few weeks later,
on or about February 27, 2023, Soldatenkova emailed an employee at the
Russia-based logistics company advising that the relevant shipment was
urgent. That same day, Soldatenkova emailed an employee of a Russian
aerospace company and military supplier to advise that one shipment of
goods had arrived at Russian customs, and a second shipment was on the
border. Soldatenkova wrote, referring to the military applications for
the goods, ``Due to the fact that they are dual-use, we try to make
certificates for them.''
On or about March 1, 2023, Almetov sent a Juzhoi employee two
emails reflecting that Export Transaction 3 involved Cyprus,
Tajikistan, and Russia. He attached ``invoices from Cyprus to Dushanbe,
as well as from Dushanbe to Russia'' (Dushanbe is the city in
Tajikistan where Juzhoi is based). He also attached the Astrafteros
invoice that lists the 90 controlled microcontrollers, and indicated
that Electrocom was buying the goods from Juzhoi. Almetov added, ``They
have items that need to be left in a warehouse in Dushanbe,'' and
stated that ``The remaining positions,'' which Almetov made clear
included the 90 controlled microcontrollers, ``must be shipped to
Russia on the provided invoice.''
In or about early March 2023, the three microcontrollers arrived at
Electrocom's address in Saint Petersburg, Russia. The type of
microcontrollers shipped in Export Transaction 3 have been recovered on
[[Page 61502]]
the battlefield in Ukraine in Russian guided missiles, drones, and
electronic warfare and communications devices. No BIS license was
sought or obtained in connection with the export of the
microcontrollers.
D. Risk of Imminent Violation
As detailed in OEE's request and related information, since April
2022, Petrov, Soldatenkova, and Almetov, have operated an illicit
procurement network using Astrafteros, Ultra Trade Service, and Juzhoi
as pass-throughs to export U.S.-manufactured, export-controlled
electronic components to Electrocom, a supplier of the Russian
military. OEE has detailed three instances of prohibited export
transactions, each of which was conducted by intentionally deceiving a
U.S. distributor as to the end user, intended use, and ultimate
destination of the export. These violations involve significant,
sensitive electronics components of types used by the Russian military
in its invasion of Ukraine and are perpetrated intentionally through
deceptive means. The pattern of repeated, similar violations
demonstrates a likelihood that Respondents will continue to engage in
this course of conduct absent a temporary denial order to give notice
to the public to cease dealing with them. The fact that Astrafteros has
participated in dozens of exports from the United States over the past
year indicates that there is an ongoing need to ``give notice to
companies in the United States and abroad to cease dealing with''
Respondents in order to prevent Respondents from acquiring additional
U.S.-origin items, which would ``risk[ ] subsequent disposition
contrary to export control requirements.'' 15 CFR 766.24(b)(3).
In sum, OEE has shown that the violations are ``significant,
deliberate, covert and/or likely to occur again, rather than technical
or negligent,'' and that a temporary denial order is appropriate to
``give notice to companies in the United States and abroad to cease
dealing with'' Respondents in U.S.-origin items in order to prevent
further violations of U.S. export controls. 15 CFR 766.24(b)(3).
III. Findings
As described above, 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 Respondents 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 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 of the Regulations.
IV. Order
It is Therefore Ordered:
First, that ARTHUR PETROV AKA ARTUR PETROV, with addresses at 36
Leoforos Aigyptou, Larnaca, Cyprus and Umm Haram 66 Flat 1, Larnaca,
Cyprus; ASTRAFTEROS TECHNOKOSMOS LTD, with addresses at 36 Leoforos
Aigyptou, Larnaca, Cyprus and Umm Haram 66 Flat 1, Larnaca, Cyprus;
ZHANNA SOLDATENKOVA, with an address at 3 Leriku Street, Riga, Latvia
1084; ULTRA TRADE SERVICE LLC, with an address at 3 Leriku Street,
Riga, Latvia 1084; RUSLAN ALMATOV, with addresses at 734000 UL. B.
Gafurov 13, 5; Dushanbe, Tajikistan and Dushanbe 1, Gafurov Pass 13,
Tajikistan; JUZHOI ELECTRONIC LLC, with addresses at 734000 UL. B.
Gafurov 13, 5, Dushanbe, Tajikistan and Dushanbe 1, Gafurov Pass 13,
Tajikistan; and LLC ELECTROCOM VPK ALIAS ELECTROCOM, with an address at
Proveshcheniya Prospect 99A, Room 180h, St. Petersburg, Russia; 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 Petrov, Astrafteros, Soldatenkova,
Ultra Trade Service, Almetov, Juzhoi, or Electrocom 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,
Petrov, Astrafteros, Soldatenkova, Ultra Trade Service, Almetov,
Juzhoi, or Electrocom 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
[[Page 61503]]
written request not later than 20 days before the expiration date.
Respondents Petrov, Astrafteros, Soldatenkova, Ultra Trade Service,
Almetov, Juzhoi, or Electrocom 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.
Dated: August 28, 2023.
Kevin J. Kurland,
Deputy Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2023-19332 Filed 9-6-23; 8:45 am]
BILLING CODE 3510-DT-P