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Feds: Network Sneaked U.S. Technology To Russian Military

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Newscom / Kyodo/Newscom

An indictment unsealed Wednesday in U.S. District Court for the Eastern District of New York accused 11 people and two companies, one based in Texas and one in Russia, with participating in a scheme in which cutting-edge technology obtained from American companies was exported to Russia, contrary to U.S. government rules. The microelectronics involved in the scheme are subject to government controls because of their potential military uses, including in "radar and surveillance systems, weapons guidance systems, and detonation triggers," according to a news release put out by U.S. Attorney Loretta Lynch's office.

"As alleged in the indictment, the defendants spun an elaborate web of lies to evade the laws that protect our national security," Lynch said in a statement. "The defendants tried to take advantage of America's free markets to steal American technologies for the Russian government."

Alexander Fishenko, an owner and executive of the American and Russian companies charged in the case, is also facing a charge of operating as an unregistered agent of the Russian government inside the U.S.

Fishenko, 46, was born in what was then the Soviet Republic of Kazakhstan, immigrated to the U.S. in 1994, and became a citizen in 2003. In 1998, he founded Arc Electronics, Inc., one of the companies now charged in the case. Between 2002 and 2012, Arc Electronics allegedly shipped about $50 million in microelectronics and other technologies to Russia.

According to the U.S. Attorney's office, the defendants often provided false information about the ultimate recipients of the microelectronics they exported. In one instance, an Arc Electronics employee allegedly told a Russian company to put false information on documents, instructing the company to "make sure that those are fishing boats, and not fishing/antisubmarine ones... Then we'll be able to start working."

The defendants who have been arrested were arraigned on Wednesday. The individual defendants are facing potentially decades-long prison sentences, while the companies are facing millions in fines.