Last month we blogged on an indictment in the Southern District of New York (“SDNY”) charging Vladimir Voronchenko (“Voronchenko”) with scheming to make payments to maintain multiple properties in New York and Florida owned by sanctioned Russian oligarch Viktor Vekselberg (“Vekselberg”), whom we had previously blogged about here.
Last Friday, the SDNY U.S. Attorney’s Office filed a follow-on civil forfeiture complaint (the “Forfeiture Complaint”) against the six properties at issue – one address in Southampton, NY; two units at 515 Park Avenue in Manhattan; and two addresses in Miami Beach (the “Subject Properties”). The Forfeiture Complaint seeks forfeiture of the Subject Properties on three bases: (a) as real property derived from proceeds traceable to violations of the International Emergency Economic Powers Act (“IEEPA”), various Executive Orders (13660-662 and 13685), and 31 C.F.R.§ 589.201 (which implemented those Executive Orders as part of a package of regulations promulgated by the Office of Foreign Assets Control of the Treasury Department (“OFAC”)); and (b) as real property involved in international money laundering to promote violations of the IEEPA, and (c) as assets of an entity involved in international money laundering to promote violations of the IEEPA.
The Executive Orders cited were issued in 2014 by President Obama, pursuant to his authorities under the IEEPA, and served to declare, and then expand the scope of, a national emergency with respect to destabilization of the Crimean region of Ukraine (a national emergency most recently continued on March 2, 2022, and likely to be continued again imminently.) The regulations, inter alia, allow OFAC to designate an individual as a “Specially Designated National” (“SDN”), thus blocking the individual’s property and interests, and prohibiting transactions not specifically authorized or exempted that involve dealing in that property or those interests.
The Forfeiture Complaint alleges that OFAC designated Vekselberg as an SDN in April 2018, and re-designated him as such in March 2022. Prior to the 2018 designation, it alleges, Vekselberg purchased the Subject Properties via two shell companies, of which he was the “ultimate beneficial owner”; those purchases were allegedly facilitated by Voronchenko, who retained a New York attorney to represent the shell companies in the acquisitions and who at various times was the resident of several of the Subject Properties. Voronchenko allegedly made ongoing payments to the attorney’s IOLTA account via wire transfers from the shell companies to “maintain and service” the Subject Properties.
Once the April 2018 designation occurred, the direct source of those payments changed to a shell company and a Russian bank account affiliated with Voronchenko – but they continued to “maintain and service” the Subject Properties allegedly beneficially owned by Vekselberg, without a license from OFAC to do so. Voronchenko also allegedly listed two of the Subject Properties for sale – each for $14.6 million – in 2020 and 2022, respectively, again without applying for or receiving a license from OFAC to do so.
As we noted in our previous blog post, Voronchenko was eventually served in May 2022 (at one of the Subject Properties in Florida) with a grand jury subpoena for testimony and documents. Nine days later, he booked and boarded a round-trip flight from Miami to Dubai, with the return flight scheduled for a week later. Instead of returning, however, Voronchenko allegedly flew to Moscow and remained there to date.
The Forfeiture Complaint, as noted by the DOJ’s press release, was “filed on the anniversary of Russia’s full-scale invasion of Ukraine[.]” The investigation was conducted in part by the evocatively named “Task Force KleptoCapture”, an interagency law enforcement task force launched in May 2022 explicitly as a direct response to that invasion, but consistent with (a) prior U.S. government characterization of Russia as a kleptocratic regime (about which we blogged here) and (b) the Biden Administration’s “Strategy on Countering Corruption” (about which we blogged here), which outlined a “whole-of-government approach” for promoting anti-corruption as a “core United States national security interest” (about which we blogged here). Notably, both the U.S. Attorney and the Director of Task Force KleptoCapture made specific mention in the DOJ’s press release of using the value of the forfeited properties to fund aid to Ukraine.