Earlier this month, Alexander Brazhnikov Jr., a Moscow-born U.S. citizen, pleaded guilty in the U.S. District Court for the District of New Jersey to conspiracy to violate the International Economic Emergency Powers Act (IEEPA) in connection with his nearly eight-year involvement in a procurement network that smuggled more than $65 million in electronics from the United States to Russia. Brazhnikov Jr., the owner of four microelectronics export companies in New Jersey, was responsible for almost 2,000 illegal shipments of electronic components controlled under the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce Bureau of Industry and Security (BIS).

The procurement network consisted of Brazhnikov Jr.; his companies; his father Alexander Brazhnikov Sr.; and his father’s Moscow-based procurement firm. Father and son worked together to purchase components from U.S. manufacturers and vendors on behalf of their customers in Russia, who were authorized to sell the components to Russia’s Ministry of Defense and Federal Security Service, as well as Russian entities involved in designing weapons. Brazhnikov Jr. repackaged and shipped the components to Moscow, routinely providing false end-user and valuation information and directing that the shipments be sent to shell addresses in Russia controlled by the Moscow-based network.

Brazhnikov Jr. also pleaded guilty to conspiracy to commit money laundering. After his arrest in June 2014, U.S. officials seized more than $4 million in proceeds related to the illegal shipments and more than $600,000 in assets. Funds for the procurement network’s transactions came from customer purchases and were deposited into a Russia-based account. The network ordered disbursements from the Russian account into a U.S.-based account of Brazhnikov Jr. through foreign accounts held by shell corporations in several countries. According to the government, the procurement “network’s creation and use of dozens of bank accounts and shell companies abroad was intended to conceal the true sources of funds in Russia, [and] the identities of the various Russian defense contracting firms receiving U.S. electronics components.”

Brazhnikov Jr. agreed to entry of a $65 million forfeiture money judgment. He will be sentenced in September 2015. He faces possible prison sentences ranging from five to 20 years for the charges and fines ranging from $250,000 to $500,000.

For additional information, see DOJ’s press release and local media coverage.