Businessman Arrested for Scheme to Illegally Export Semiconductors and Other Controlled Technology to Russia

BROOKLYN, NY – A complaint was unsealed today in federal court in Brooklyn  charging Ilya Kahn, a citizen of the United States, Israel and Russia, for his alleged involvement in a multi-million dollar scheme to secure and illegally export sensitive technology from the United States for the benefit of a Russian business whose clients include elements of the Russian military and the Federal Security Service (FSB), the main successor agency to the Soviet Union’s KGB.  The Russian business, Joint Stock Company Research and Development Center ELVEES (Elvees), was sanctioned by the U.S. government in 2022 because of its critical role in facilitating Russia’s military and its invasion of Ukraine.  The complaint charges Kahn with conspiracy to violate the Export Control Reform Act.  Kahn was arrested yesterday in Los Angeles, California, and will make his initial appearance today in the Central District of California.

Breon Peace, United States Attorney for the Eastern District of New York, Matthew G. Olsen, Assistant Attorney General for the Justice Department’s National Security Division, James Smith, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan Carson, Special Agent-in-Charge, U.S. Department of Commerce, Office of Export Enforcement, Bureau of Industry and Security, New York Field Office, announced the arrest and charges. 

Mr. Peace extended his appreciation to the U.S. Attorney’s Office for the Central District of California and the FBI’s Los Angeles Field Office for their assistance in this case.

“As alleged, Kahn illegally sent specialized technology from the United States to a Russian semiconductor manufacturer with ties to multiple other sanctioned Russian entities, and did so by circumventing U.S. export laws and regulations,” stated United States Attorney Peace.  “Evading U.S export regulations to send goods to benefit the Russian military complex presents a danger to our national security and our allies and partners abroad.  We will continue to use all of our law enforcement and national security tools to hold these enablers, both individuals and corporations, accountable for flouting the rule of law.”  

“Mr. Kahn stands accused of repeatedly exporting sensitive technology to Russia before, during, and after Russia launched its unprovoked invasion of Ukraine,” stated Assistant Attorney General Olsen.  “Violations of U.S. sanctions and export control laws that aid Russia and other hostile powers endanger our nation’s security and will be met with the full force of the Justice Department.”

“Illegally exporting semiconductors and other sensitive technology to a foreign adversary is not a trivial offense but a serious violation of American national security.  Ilya Kahn’s alleged actions – utilizing a nefarious web of companies to export sensitive controlled technology to the Russian military and intelligence services – directly harmed the interests and security of the United States and our allies.  The FBI, as we work to protect the United States, will continue to ensure that anyone willing to evade sanctions to aid hostile nations faces the consequences in the criminal justice system,” stated FBI Assistant Director-in-Charge Smith.

“Sophisticated illegal schemes such as this that violate our nation’s export control laws in effort to facilitate Russia’s war will not be tolerated. The Office of Export Enforcement will leverage our unique authorities and continue to work with our law enforcement partners to disrupt and arrest the perpetrators of these illicit schemes,” stated Department of Commerce Special Agent-in-Charge Carson.

Kahn is the owner of owner of Senesys Incorporated based in California, and Sensor Design Association with a contact address in Brooklyn, New York.  As alleged in the complaint and other public filings, Kahn operated these two businesses—ostensibly involved in “security software development” and the testing of silicon wafers for military, avionics and space users—through which he engaged in a years’ long conspiracy to acquire and export sensitive and sophisticated electronics from the United States to Elvees in Russia without securing the appropriate licenses.  For example, in 2019, Kahn sent multiple U.S.-origin microcontrollers to Elvees, and in 2022, Kahn sent U.S.-origin network interface controllers and a radio-frequency transmitter to Elvees by way of a Hong Kong-based shipping company.  Each of these items required an export license due to national security and anti-terrorism reasons, which Kahn did not obtain.

Kahn also arranged for Elvees to continue to receive semi-conductors after Russia’s February 2022 invasion of Ukraine increased the difficulty of shipping semi-conductors to Russia.  These semiconductors can be used for, among other things, communications systems, GPS receivers, and equipment for unmanned aerial vehicles, also known as drones.  After a company in Taiwan that manufactured Elvees-designed semiconductors refused to ship those semi-conductors to Russia following the invasion of Ukraine, Kahn arranged for the semi-conductors to be sent to the United States and then re-exported them to Russia often through a shipping company based at John F. Kennedy International Airport in Queens, New York.  Kahn also used Hong Kong and other locations around the world as transshipment points in order to evade U.S. export laws and regulations and conceal the Russian end users. 

Even after Elvees was sanctioned by the U.S. government for its role in developing electronics components for the Russian military, Kahn continued to work with Elvees.  In May 2022, Kahn emailed a Taiwan manufacturer design guidance for an Elvees-branded microchip.  Subsequently, Kahn shipped thousands of units of this microchip to a Hong Kong shipping company, and then to a company located in the mainland of the People’s Republic of China.  Kahn noted in communications with the Hong Kong shipping company that he received a “call from Russia” about the PRC business to which he was directing the goods. 

Kahn’s export activity for the benefit of Elvees dates to at least 2012, and he received more than $50 million from Elvees and related entities between 2012 and 2022.

The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted of the charge, Kahn faces up to 20 years in prison.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Craig R. Heeren, Artie McConnell, and Matthew Skurnik are in charge of the prosecution, along with Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section, with assistance from Litigation Analysts Joseph Levin and Mary Clare McMahon.

Today’s actions were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force and the Justice Department’s Task Force KleptoCapture.  The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.  Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine.

The Defendant:

ILYA KAHN
Age: 66
Israel, Brooklyn, NY; Los Angeles, California

E.D.N.Y. Docket No. 23-MJ-1133