Russian citizen admits to money laundering, smuggling microelectronics

Russian citizen admits to money laundering, smuggling goods

Shell companies were used to funnel microelectronics to Russia
The supplies have multiple military uses including weapons systems
Purchased were funneled through China, Hong Kong and other countries

Updated: Mar 1, 2024 / 04:58 PM CST

FILE – The inside of a computer is seen on Feb 23, 2019, in Jersey City, N.J. A global computer chip shortage has made it harder for consumers to get their hands on cars, computers and other modern-day necessities, so Congress is looking to boost chip manufacturing and research in the United States with billions of dollars from the federal government. (AP Photo/Jenny Kane, File)

(NewsNation) — A Russian citizen living in Hong Kong pleaded guilty to charges of money laundering and smuggling goods from the U.S.

Maxim Marchenko, 51, was arrested in September 2023 and, according to court documents, operated several shell companies based in Hong Kong and operated an illicit procurement network in Russia, Hong Kong and other locations.

The shell companies included Alice Components Co. Ltd., Neway Technologies Limited and RG Solutions Limited. Marchenko and two conspirators used the network to buy large quantities of dual-use, military-grade microelectronics on behalf of Russian users.

Prosecutors say Marchenko used the shell companies to conceal the purposes of buying OLED micro-displays from U.S. government agencies and distributors. The technology has military uses, including rifle scopes, night-vision goggles, thermal optics and weapons systems.

“By his own admission, Mr. Marchenko conspired to smuggle military-grade technology to Russia, using a complex network of front companies to hide his illicit activity,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Today, once again, the Justice Department is holding accountable those who would enable the Kremlin and its unjust war of aggression against Ukraine.”

Those involved in the conspiracy falsely represented themselves to U.S. distributors, who are required by law to report to U.S. agencies, saying the microelectronics were being sent to China, Hong Kong and other countries for use in electron microscopes used for medical research.

After being sent through pass-through countries, the microelectronics were sent to Russia using freight forwarders. The shell companies were also used to hide the fact that payments for the supplies were coming from Russia.

Between May 2022 and August 2023, the shell companies are said to have funneled more than $1.6 million to the U.S. in their efforts to smuggle OLED micro-displays to Russia.

Marchenko pleaded guilty to one count of money laundering and one count of smuggling good from the U.S.. Money laundering carries a maximum penalty of 20 years in prison and smuggling a maximum sentence of 10 years.

Marchenko is scheduled to be sentenced on May 29, 2024 in Manhattan.