Alleged Evasion Through a Law Firm Account and High-End Real Estate

On February 7, 2023, the U.S. Attorney’s Office for the Southern District of New York announced the unsealing of an indictment charging Vladimir Voronchenko (“Voronchenko”) with participating in a scheme to make payments in excess of $4 million dollars to maintain four properties located in the United States that were owned by Viktor Vekselberg (“Vekselberg”), a sanctioned Russian oligarch (whose own issues we have blogged on here). Additionally, the indictment also charges Voronchenko, a citizen of the Russian Federation and legal permanent resident of the United States, with contempt of court in connection with his flight from the United States following receipt of a grand jury subpoena on May 13, 2022, which required his personal appearance and testimony. He has not returned to the United States since.

As we discuss, the indictment implicates several issues on which we blog frequently, including evasion of Russia sanctions relating to the Ukraine; the potential exposure of lawyers to money laundering risks; and the potential exposure of real estate professionals to money laundering risks.

The Indictment

Pursuant to three Executive Orders issued in 2014, which are collectively referred to as “the Russia/Crimea Sanctions,” individuals who are determined to be “Specially Designated Nationals” (or “SDNs”) are prohibited from transferring, paying, exporting, withdrawing, or otherwise dealing in property arising in the United States without prior permission from the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”). Additionally, the Russia/Crimea Sanctions prohibit the making of any contributions or provisions of funds, goods, or services by, to, or for the benefit of any person who is an SDN, without prior permission from OFAC.

The indictment alleges that Voronchenko is a long-time friend and associate of Vekselberg. Vekselberg was listed as a SDN by OFAC on April 6, 2018.  Almost immediate thereafter, Voronchenko allegedly began to cause to be made approximately $4 million in payments to maintain four properties belonging to Vekselberg.  These properties were located in either New York or Florida (one of which was Voronchenko’s residence at the time), initially purchased by Vekselberg through Panamanian or Bahamian shell companies, and collectively worth approximately $75 million.  Specifically, between June 2018 and March 2022, approximately 25 payments allegedly were transferred from another Bahamas-based shell company owned by Voronchenko to an IOLTA account of a Washington, D.C. based-attorney.  Voronchenko allegedly changed the source of funds being wired into the IOLTA account from sources linked to Vekselberg to sources linked to Voronchenko, after Vekselberg was listed by OFAC.      

The attorney who ultimately took receipt of the transferred funds, who is not named in the indictment, is alleged to have used those funds under the direction of Voronchenko to make payments to maintain and service the four properties, all without OFAC permission or disclosure.  Additionally, the indictment alleges that Voronchenko attempted to sell two of those properties, all without disclosure or approval by OFAC.  More specifically, one of the Panamanian shell companies controlled by Vekselberg, represented by the attorney, entered into agreements with real estate brokerage firms to sell the properties.  Ultimately, however, both brokerage firms delisted the properties.  During the time of the 25 payments and attempted sales, the attorney and Voronchenko allegedly communicated via the WhatsApp messaging app and openly acknowledged Vekselberg’s SDN status in those messages.    

The indictment charges Voronchenko with conspiracy to violate the International Emergency Economic Powers Act (“IEEPA”), in violation of 50 U.S.C. § 1705, Executive Orders 13660, 13661, and 13662, and 31 C.F.R. § 589.201, and with aiding and abetting a violation of the IEEPA.  The indictment also charges Voronchenko with conspiracy to commit international money laundering, and a substantive count of international money laundering, based on the alleged cross-border wires, performed with the intent to promote the IEEPA violations.

On May 13, 2022, federal agents served Voronchenko with a grand jury subpoena for his personal testimony and the production of documents by May 31, 2022. Instead, on May 22, 2022, Voronchenko allegedly booked and took a flight from Miami to Dubai, from where he later traveled to Moscow. He has not subsequently returned to the United States. For his failure to appear before the grand jury, the indictment also charges Voronchenko with contempt of court. The indictment further seeks the forfeiture of an unspecified sum of money, traceable to the alleged offenses, as well as the forfeiture of the underlying property themselves.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch.  Please click here to find out about Ballard Spahr’s Anti-Money Laundering Team.