A seven-count indictment was unsealed today in federal court in Brooklyn charging Andrii Derkach, 55, of Ukraine, with conspiracy to violate the International Emergency Economic Powers Act (IEEPA), conspiracy to commit bank fraud, conspiracy to commit money laundering and four counts of money laundering money related to the purchase and maintenance of two apartments in Beverly Hills, California. Derkach allegedly concealed his interest in the transactions and violated sanctions imposed in 2020. Derkach remains on the run. The charges and forfeiture proceedings announced today include the first use of criminal and forfeiture powers aimed at concealing ownership by senior foreign political officials, enacted as part of the National Defense Authorization Act of 2021.
“The conduct of this Kremlin asset, which has been sanctioned for attempting to poison our democracy, has shown that it is ready, willing and able to exploit our banking system to further its illegal goals,” said US Attorney Breon Peace for the Eastern District of New York. “The US will not be a safe haven where criminals, oligarchs or sanctioned entities can hide their ill-gotten gains or influence our elections. This office, along with our law enforcement partners, will use all available tools to prosecute those who evade sanctions and abuse the U.S. financial system, and we will identify, freeze, and seize the proceeds of crime whenever and wherever possible .”
“Kremlin-backed Ukrainian politician and oligarch Andrii Derkach has been sanctioned for his efforts to influence the 2020 US presidential election on behalf of Russian intelligence,” said Assistant Director Michael J. Driscoll of the FBI Field Office- and in New York. “While participating in a scripted Russian disinformation campaign aimed at undermining American institutions, Derkach simultaneously conspired to fraudulently benefit from a Western lifestyle for himself and his family in the United States. The FBI will continue to use all tools at its disposal to identify Russian intelligence operations, disrupt Russian information-laundering networks, and bring to justice those who seek to engage in criminal conspiracies to undermine the integrity of US elections and evade US sanctions.”
“Trying to enjoy the safety, security, and freedoms of an open society while secretly working to undermine that society is the hypocrisy that runs through every charge of sanctions announced by the Task Force,” said KleptoCapture Task Force Director Andrew C. Adams. “The hypocrisy in the case of Andrii Derkach – who was punished for trying to undermine American democracy while corruptly trying to benefit from its protection – is especially outrageous.”
According to an indictment filed in the Eastern District of New York, on or about September 10, 2020, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Derkach for his efforts to influence the 2020 US presidential election. . According to information made public by OFAC, Derkach was “an active Russian agent for more than a decade, maintaining close ties to Russian intelligence services,” which “conducted a covert influence campaign” to undermine the 2020 presidential election. in at least 2013 and continuing after Derkach’s OFAC appointment, Derkach and a co-defendant (CC-1) engineered a scheme to purchase two luxury apartments in Beverly Hills, California (the Subject Apartments) while concealing Derkach’s interest in transactions from US financial institutions. The scheme used a US-based financial services specialist (the Nominee). Appointee assisted Derkach and CC-l in establishing and operating several corporate entities designed to conceal Derkach’s ownership interest in the Subject Condominiums and related financial interests. Nominee understood that Derkach and CC-1 would occupy one of the Subject Condominiums and the other would be occupied by Derkach’s children.
At the direction of Derkach and CC-1, the Nominee established two corporate entities in California. As part of the scheme, Derkach and CC-l misrepresented details of Derkach’s identity to the Nominee. Derkach and CC-l caused Nominee to misrepresent ownership of funds and bank accounts to US financial institutions, thereby deceiving those institutions into processing transactions related to, including on behalf of, Derkach and his blocked assets.
At all times relevant to this indictment, and from the date OFAC was appointed, Derkach was aware of and actively worked to avoid OFAC’s sanctions imposed on him. As reported, on or about September 10, 2020, the day OFAC designated Derkach, Derkach posted a response on Facebook, stating that “the decision was made on a piece of paper by several congressmen [of a US political party] and inspired by representatives of the State Department.”
Moreover, in the years and months leading up to the appointment, the respondent spent considerable time in the United States, including at the subject condominiums. During that trip to and time spent in the United States, Derkach was actively involved in misleading US law enforcement and border authorities even before he was appointed SDN. For example, in December 2019 and February 2020, Derkach was in the United States to meet with US officials and make media appearances. In order to obtain an American visa and to allegedly attend meetings and conferences related to human rights issues in Ukraine, Derkach engaged the services of a US-based consulting firm (Firm-1). The written contract was allegedly between Firm-l and a Ukrainian shipping company and did not refer to Derkach, regardless of Derkach’s direct involvement in the provision of services that the contract purportedly reflected. In or about July 2018 and December 2018, Derkach paid Firm-l approximately $100,000. In a July 2018 email communication with Firm-l, Derkach’s representative expressed concern that, “given the fact that my client [Derkach] is a politically exposed individual, as well as the statements he made regarding Ukraine’s interference in the US and the privileged information in our possession, the visa application process could be potentially complicated for Derkach.
Through the Nominated Agent, Derkach continued to conduct financial transactions in the US in support of his real estate holdings even after September 10, 2020, the date OFAC designated Defendant Derkach and added him to the SDN List. Because Derkach and CC-l withheld details of Derkach’s identity and involvement from the relevant financial institutions, Derkach and CC-1 were able to conduct several hundreds of thousands of dollars worth of financial transactions for a time in violation of OFAC sanctions.
If found guilty, the defendant faces a maximum sentence of 30 years in prison. A federal district court judge will determine each sentence after considering the US Sentencing Guidelines and other statutory factors.
Concurrent with today’s announcement, the U.S. Attorney’s Office for the Eastern District of New York filed and announced a civil forfeiture action naming the Subject Condominiums and two financial accounts as defendants in rem, seeking forfeiture of those assets based on their involvement in, and criminal proceeds status for violations of the federal money laundering laws, the IEEPA, and the federal law criminalizing the concealment of assets of senior foreign political figures.
U.S. Attorney for the Eastern District of New York Breon Peace, KleptoCapture Task Force Director Andrew C. Adams, and Chief Special Agent in Charge Michael J. Driscoll of the FBI’s New York Field Office made the announcement.
Assistant U.S. Attorneys Artie McConnell and Jonathan E. Algor for the Eastern District of New York are prosecuting the case, assisted by Prosecutor Adam Small of the Department of Homeland Security’s Counterintelligence and Export Control Division. Assistant US Attorney Madeline O’Connor for the Eastern District of New York handles asset forfeiture matters. The Office of International Affairs of the Ministry of Justice provided valuable assistance.
The investigation was coordinated through the Justice Department’s KleptoCapture Task Force, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls, and economic countermeasures that the United States, along with its foreign allies and partners, imposed in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2 and under the direction of the Office of the Deputy Attorney General, the task force will continue to use all of the Department’s tools and powers to combat attempts to evade or undermine collective actions taken by the U.S. government in response to Russian military aggression.
An indictment is only an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
