Sanctioned Russian Oligarch And Others Indicted For Sanctions Violations And Money Laundering

Damian Williams, the United States Attorney for the Southern District of New York; Merrick B. Garland, the Attorney General of the United States; Lisa O. Monaco, the Deputy Attorney General of the United States; Christopher A. Wray, the Director of the Federal Bureau of Investigation (“FBI”); and David J. Scott, the Special Agent in Charge of the Washington Field Office (“WFO”) of the FBI, announced the unsealing of an Indictment charging sanctioned Russian oligarch and the President and Chairman of a Russian state-owned bank, ANDREY KOSTIN, with participating in two separate schemes that violated U.S. sanctions.  In one scheme, KOSTIN and others conspired to evade sanctions and launder funds by using a series of shell companies and strawmen in order to access the U.S. financial system to operate, maintain, and improve KOSTIN’s two superyachts, collectively worth over $135 million.  The other scheme charges KOSTIN and two U.S. persons, VADIM WOLFSON and GANNON BOND, for their roles in providing goods, funds, and services to KOSTIN related to a luxury home in Aspen, Colorado, including wiring KOSTIN approximately $12 million after he was sanctioned.  WOLFSON and BOND were arrested this morning in Austin, Texas, and Edgewater, New Jersey, respectively, and will be presented in federal courts in Texas and New York today.  KOSTIN remains at large and is believed to be in Russia.  The case is assigned to U.S. District Judge Gregory H. Woods.

U.S. Attorney Damian Williams said: "As alleged, sanctioned oligarch Andrey Kostin and his co-defendants flouted U.S. sanctions to support his exceptionally lavish lifestyle.  Through complex schemes involving shell companies and illicit transactions, Kostin and his associates allegedly laundered funds and illegally made transactions with U.S. currency for the maintenance and enhancement of Kostin’s superyachts and luxury Aspen home, blatantly disregarding U.S. law.  This investigation highlights the collaborative efforts of this Office and our law enforcement partners around the globe to uphold critical sanctions put in place to support our national security goals and hold accountable those who seek to undermine them."

Attorney General Merrick B. Garland said: “The Justice Department is more committed than ever to cutting off the flow of illegal funds that are fueling Putin’s war and to holding accountable those who continue to enable it.  That is why today we are announcing several additional enforcement actions that the Justice Department has taken to bring prosecutions against and seize assets of sanctioned enablers of the Kremlin and Russian military.”

Deputy Attorney General Lisa O. Monaco said: “Since the onset of Russia’s brutal and unprovoked invasion of Ukraine, the Justice Department has used every tool in our arsenal – including our international partnerships – to target the criminal actors and activity propping up Vladimir Putin, his henchmen, and his illegal war.  Over the last two years, our Task Force KleptoCapture has restrained, seized, and obtained judgments to forfeit nearly $700 million in assets from Russian enablers and charged more than 70 individuals for violating international sanctions and export controls levied against Russia.  The charges we announce today against oligarchs, facilitators, and money launderers are the next chapter: so long as Russia's aggression continues, so too will our resolve to hold its enablers accountable.  We stand firmly with the people of Ukraine.”

FBI Director Christopher A. Wray said: “It has been two years since Russia's unprovoked invasion of Ukraine and the FBI continues to go after the Russian criminals who finance and enable Russia’s war.  To the people of Ukraine fighting for their freedom: The FBI remains steadfast in our efforts to disrupt and hold accountable the criminals supporting the Russian War, and we will continue to stand with you to fend off Russian aggression for as long as it takes.”

FBI WFO Special Agent in Charge David J. Scott said: "As alleged, Kostin conspired with the defendants and others to violate U.S. sanctions.  Today's indictment demonstrates that the FBI will work with our partners to hold sanctioned oligarchs and their co-conspirators responsible for their crimes and ensure that they cannot use U.S. financial institutions to harbor illicit funds and goods."

As alleged in the Indictment:[1]

KOSTIN is a Russian oligarch who was sanctioned and designated a Specially Designated National (“SDN”) by U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) on April 6, 2018, pursuant to the International Emergency Economic Powers Act (“IEEPA”).  From at least on or about April 6, 2018, through at least on or about March 2, 2022, KOSTIN and others, including at times WOLFSON and BOND, participated in schemes to violate IEEPA through the provision of funds, goods, and services, including U.S. financial services and U.S. dollar transactions, to and for KOSTIN’s benefit.  KOSTIN also engaged in a scheme to commit money laundering to promote IEEPA violations.

Before and after OFAC sanctioned KOSTIN, he beneficially owned and controlled, through various shell companies, several assets worth tens of millions of dollars, including two superyachts identified as the Sea Rhapsody and Sea & Us.  The Sea Rhapsody, valued at approximately $65 million, is a 216-foot superyacht and has six staterooms, including two luxurious master cabins identical in size.  This superyacht is equipped with amenities including water toys, gym equipment, an infinity pool, a jacuzzi, a cinema and club area, and customized stationery.  The Sea & Us, valued at approximately $70 million, is a 205-foot superyacht that was custom-built for KOSTIN.

KOSTIN and others violated IEEPA on numerous occasions, including by causing U.S. dollar payments to be made for the maintenance, operation, and/or improvement of the Sea Rhapsody and Sea & Us for the benefit of KOSTIN and without an OFAC license, which is required to transact with an SDN.  In causing these U.S. dollar payments to be made, KOSTIN and others also committed international money laundering.

KOSTIN also owned a luxury home in Aspen, Colorado, that he purchased for $12.5 million in 2010.  From at least on or about April 6, 2018, through at least in or about September 2019, KOSTIN, WOLFSON, BOND, and others participated in a scheme to violate IEEPA by providing funds, goods, and services for the benefit of KOSTIN, whose property and interests in property, including the Aspen home, were blocked as a result of his SDN designation.  Specifically, notwithstanding having been designated an SDN by OFAC, KOSTIN and his conspirators schemed to operate, maintain, and improve KOSTIN’s Aspen residence in a manner designed to conceal KOSTIN’s continued ownership of this luxury asset.  In addition, in or about September 2019, KOSTIN, WOLFSON, BOND, and others committed additional sanctions violations by dealing in and transferring KOSTIN's blocked property.  Specifically, the conspirators arranged to sell the Aspen home and provide KOSTIN with approximately $12 million resulting from the sale.

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KOSTIN, 67, of Russia, is charged with two counts of conspiracy to violate IEEPA, two counts of violating IEEPA, and one count of conspiracy to commit international money laundering, each of which carries a maximum sentence of 20 years in prison.

WOLFSON, 56, of Austin, Texas, a legal permanent resident of the U.S., is charged with one count of conspiracy to violate IEEPA and two counts of violating IEEPA, each of which carries a maximum sentence of 20 years in prison.

BOND, 49, of Edgewater, New Jersey, a U.S. citizen, is charged with one count of conspiracy to violate IEEPA and two counts of violating IEEPA, each of which carries a maximum sentence of 20 years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Williams praised the outstanding work of the FBI and its Washington Field Office.  Mr. Williams further thanked the Department of Justice (“DOJ”)’s National Security Division, Counterintelligence and Export Control Section, and DOJ’s Criminal Division, Money Laundering and Asset Recovery Section for their work on this matter.

Assistant U.S. Attorneys Emily Deininger and David Felton for the Southern District of New York’s Illicit Finance and Money Laundering Unit, and Trial Attorneys Derek Shugert of the National Security Division’s Counterintelligence and Export Control Section and Oleksandra Johnson of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

This case was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to 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. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.