Federal authorities arrested and charged two Russian-born American men for attempting to illegally sell snowmachines worth nearly $500,000 to Russia despite sanctions imposed on the country, the U.S. Department of Justice (DOJ) said Wednesday.
Sergey Nefedov, 40, of Anchorage, Alaska, and Mark Shumovich, 35, of Bellevue, Washington operated “a scheme to illegally export nearly half a million dollars’ worth of snowmachines and associated parts from the United States to Russia without the required licenses and approvals, in violation of U.S. export laws,” federal prosecutors alleged, according to the DOJ’s statement.
The pair allegedly attempted to send the luxury items to Russia via an intermediary company in Hong Kong sometime between Mar. 2022 and May 2023. They allegedly did so in apparent violation of the U.S. Executive Order 14068 restricting trade with Russia following the country’s illegal military invasion of Ukraine on Feb. 24, 2022.
A Russian national running a Russia-based snowmachine sales company allegedly contracted with a Hong Kong-based Russian businessman for shipment of nearly $1 million worth of goods from Hong Kong to Russia, according to the indictment. The former also allegedly created invoices for the latter to buy snowmachines and other motorsport vehicles from Nefedov’s company, Absolut Auto Sales LLC.
The Russian company owner told a freight forwarder of his need for goods to “transit in a third country” from the U.S. as deliveries of equipment to Russia “have been stopped”, the prosecutors reportedly alleged. (RELATED: Dual Citizen Admits To Exporting Weapons Parts From US To Warring Nation)
Two Russia-Born U.S. Citizens Arrested for Conspiring to Send $500,000 Worth of Luxury Goods to Russia
United States Will Seek to Forfeit Assets of Criminal Scheme for Transfer to Ukraine
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— National Security Division, U.S. Dept of Justice (@DOJNatSec) June 12, 2024
The Russian company owner approved quotes that Nefedov and Shumovich had received from U.S.-based snowmachine distributors and freight forwarders, according to the indictment. Nefedov and Shumovich then allegedly bought the snowmachines in the U.S. using funds wired from the Russian company owner via the Hong Kong-based Russian businessman to Nefedov’s Absolut Auto Sales LLC.
A freight forwarder following the American duo’s instructions told U.S. authorities that the snowmachines were going to Hong Kong—which required no export license—thus “provid[ing] false information to U.S. authorities by concealing the end user and destination of the snowmachines,” the indictment alleged.
The authorities reportedly impounded the snowmachines.
Nefedov and Shumovich—if found guilty—each faces five years in prison for conspiring to unlawfully export goods from the U.S. and defraud the U.S. Each also faces 10 years in prison for smuggling. Each could spend 20 years in prison for unlawful export without a license in violation of the Export Control Reform Act and another 20 years in prison for conspiracy to commit international money laundering, the DOJ said.
Nefedov also faces charges of “money laundering and making a false statement in violation of the Export Control Reform Act, which both carry maximum penalties of 20 years in prison”, the DOJ added.
“This seizure of snowmachines and the coordinated investigation led to the disruption and identification of a transnational criminal network attempting to circumvent Russian sanctions,” said Special Agent in Charge Robert Hammer of Homeland Security Investigations (HSI)’s operations in the Pacific Northwest, according to the DOJ’s statement.
The DOJ’s Task Force KleptoCapture—which Attorney General Merrick Garland announced Mar. 2, 2022—coordinated the case as part of “enforcing the sweeping sanctions, export controls and economic countermeasures that the United States, along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine,” the DOJ said.
