In a significant international development, a Russian man residing in Hong Kong, Maxim Marchenko, has been arrested in the United States on charges of smuggling American-made military-grade microelectronics to Russia.
Furthermore, the US Department of Justice has charged Marchenko, aged 51, along with two unnamed Russian co-conspirators, for their alleged involvement in utilizing shell companies based in Hong Kong to conceal the fraudulent procurement of OLED micro-displays. These micro-displays have applications in various military equipment, including rifle scopes, night-vision goggles, thermal optics, and weapon systems. It is evident that this illegal activity has contributed to Russia’s ongoing invasion of Ukraine.
At the same time, the prosecution revealed that Marchenko’s network went to great lengths to create a cover story, falsely claiming that the micro-displays were intended for use in electron microscopes for medical research in China and other countries, not for Russia.
Additionally, Marchenko used front companies in Hong Kong to obscure the fact that the funds for these OLED micro-displays were originating from Russia. Over the period between May 2022 and August 2023, Marchenko’s front companies funneled more than $1.6 million to the US in support of their illicit efforts to smuggle these goods into Russia.
The case was coordinated by the Justice Department’s Task Force KleptoCapture, specifically established to enforce sanctions, export restrictions, and other measures in response to Russia’s invasion of Ukraine.
Assistant Attorney General Matthew Olsen emphasized that Marchenko had operated a web of shell companies as part of an overseas smuggling ring, shipping dual-use US technology with military applications to Russia, thus violating US law. Damian Williams, the US attorney for the Southern District of New York, underscored the alleged use of shell companies and deceptive tactics by Marchenko and his co-conspirators to acquire US-manufactured microelectronics for military purposes.
Marchenko now faces seven criminal charges, including wire fraud, smuggling, money laundering, and conspiracy, which could result in several decades of imprisonment if he is convicted. Notably, on August 31st, federal prosecutors in Manhattan also charged Arthur Petrov, a dual Russian-German citizen, with smuggling microelectronics technology with military applications to Russia, and he was subsequently detained in Cyprus.