[Federal Register Volume 88, Number 172 (Thursday, September 7, 2023)]
[Notices]
[Pages 61499-61503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19332]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Order Temporarily Denying Export Privileges

Arthur Petrov aka Artur Petrov, 36 Leoforos Aigyptou, Larnaca, Cyprus 
and Umm Haram 66 Flat 1, Larnaca, Cyprus;
Astrafteros Technokosmos LTD, 36 Leoforos Aigyptou, Larnaca, Cyprus and 
Umm Haram 66 Flat 1, Larnaca, Cyprus;
Zhanna Soldatenkova, 3 Leriku Street, Riga, Latvia 1084;
Ultra Trade Service LLC, 3 Leriku Street, Riga, Latvia 1084;
Ruslan Almetov, 734000 UL. B. Gafurov 13, 5, Dushanbe, Tajikistan and 
Dushanbe 1, Gafurov Pass 13, Tajikistan;
Juzhoi Electronic LLC, 734000 UL. B. Gafurov 13, 5, Dushanbe, 
Tajikistan and Dushanbe 1, Gafurov Pass 13, Tajikistan;
LLC Electrocom VPK VPK/OOO/LLC/SPB, Alias: Electrocom, Proveshcheniya 
Prospect 99A, Room 180h, St. Petersburg, Russia

    Pursuant to section 766.24 of the Export Administration Regulations 
(the ``Regulations'' or ``EAR''),\1\ the Bureau of

[[Page 61500]]

Industry and Security (``BIS''), U.S. Department of Commerce, through 
its Office of Export Enforcement (``OEE''), has requested the issuance 
of an Order temporarily denying, for a period of 180 days, the export 
privileges under the Regulations of: Arthur Petrov, Astrafteros 
Technokosmos LTD (``Astrafteros''), Zhanna Soldatenkova, Ultra Trade 
Service LLC (``Ultra Trade Service''), Ruslan Almetov, Juzhoi 
Electronic (``Juzhoi''), and LLC Electrocom VPK (``Electrocom'') 
(collectively, ``Respondents''). OEE's request and related information 
indicates that these parties are located in Cyprus, Latvia, Tajikistan, 
and Russia, at the respective addresses listed on the caption page of 
this order and on page 12-13, infra. OEE's request and related 
information further indicates that Petrov, Soldatenkova, and Almetov 
are Russian nationals who use Astrafteros, Ultra Trade Service, and 
Juzhoi as pass-throughs to supply export-controlled items to 
Electrocom, a Russia-based supplier of critical electronics components 
to the Russian military, in violation of the Regulations. A criminal 
complaint has been filed against Petrov in the United States District 
Court for the Southern District of New York alleging, among other 
criminal conduct, violations of the Export Control Reform Act, 
smuggling goods from the United States, and related conspiracy charges, 
in connection with this scheme.
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    \1\ The Regulations, currently codified at 15 CFR parts 730-774 
(2022), originally issued pursuant to the Export Administration Act 
(50 U.S.C. 4601-4623 (Supp. III 2015) (``EAA''), which lapsed on 
August 21, 2001. The President, through Executive Order 13222 of 
August 17, 2001 (3 CFR 2001 Comp. 783 (2002)), as extended by 
successive Presidential Notices, continued the Regulations in effect 
under the International Emergency Economic Powers Act (50 U.S.C. 
1701, et seq. (2012)) (``IEEPA''). On August 13, 2018, the President 
signed into law the John S. McCain National Defense Authorization 
Act for Fiscal Year 2019, which includes the Export Control Reform 
Act of 2018, 50 U.S.C. 4801-4852 (``ECRA''). While section 1766 of 
ECRA repeals the provisions of the EAA (except for three sections 
which are inapplicable here), section 1768 of ECRA provides, in 
pertinent part, that all orders, rules, regulations, and other forms 
of administrative action that were made or issued under the EAA, 
including as continued in effect pursuant to IEEPA, and were in 
effect as of ECRA's date of enactment (August 13, 2018), shall 
continue in effect according to their terms until modified, 
superseded, set aside, or revoked through action undertaken pursuant 
to the authority provided under ECRA. Moreover, section 1761(a)(5) 
of ECRA authorizes the issuance of temporary denial orders.
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I. Legal Standard

    Pursuant to section 766.24, BIS may issue an order temporarily 
denying a respondent's export privileges upon a showing that the order 
is necessary in the public interest to prevent an ``imminent 
violation'' of the Regulations. 15 CFR 766.24(b)(1) and 766.24(d). ``A 
violation may be `imminent' either in time or degree of likelihood.'' 
15 CFR 766.24(b)(3). BIS may show ``either that a violation is about to 
occur, or that the general circumstances of the matter under 
investigation or case under criminal or administrative charges 
demonstrate a likelihood of future violations.'' Id. As to the 
likelihood of future violations, BIS may show that the violation under 
investigation or charge ``is significant, deliberate, covert and/or 
likely to occur again, rather than technical or negligent, and that it 
is appropriate to give notice to companies in the United States and 
abroad to cease dealing with the person in U.S.-origin items in order 
to reduce the likelihood that a person under investigation or charges 
continues to export or acquire abroad such items, risking subsequent 
disposition contrary to export control requirements.'' Id. A ``[l]ack 
of information establishing the precise time a violation may occur does 
not preclude a finding that a violation is imminent, so long as there 
is sufficient reason to believe the likelihood of a violation.'' Id.

II. OEE's Request for a Temporary Denial Order

    The U.S. Commerce Department, through BIS, responded to the Russian 
Federation's (``Russia's'') further invasion of Ukraine by implementing 
a sweeping series of stringent export controls that severely restrict 
Russia's access to technologies and other items that it needs to 
sustain its aggressive military capabilities. These controls primarily 
target Russia's defense, aerospace, and maritime sectors and are 
intended to cut off Russia's access to vital technological inputs, 
atrophy key sectors of its industrial base, and undercut Russia's 
strategic ambitions to exert influence on the world stage. As of 
February 24, 2022, any item classified under any Export Classification 
Control Number (``ECCN'') in Categories 3 through 9 of the Commerce 
Control List (``CCL'') requires a license to be exported or reexported 
to, or transferred within, Russia. See 87 FR 12226 (Mar. 3, 2022). As 
of April 8, 2022, the license requirements for Russia were expanded to 
cover all items on the CCL. See 87 FR 22130 (Apr. 14, 2022). These 
rules were codified in title 15 CFR 746.8, which states, ``a license is 
required, excluding deemed exports and deemed reexports, to export, 
reexport, or transfer (in-country) to or within Russia or Belarus any 
item subject to the EAR and specified in any Export Control 
Classification Number (ECCN) on the CCL.''
    In its request, OEE has presented evidence that Arthur Petrov, 
Zhanna Soldatenkova, and Ruslan Almetov have conspired to violate and 
evade these export controls to procure large amounts of U.S.-
manufactured, export-controlled electronics components on behalf of 
Electrocom, using Astrafteros, Ultra Trade Service, and Juzhoi as pass-
throughs to conceal the actual end user and end-destination of the 
exports. In particular, OEE's request details three prohibited export 
transactions, described in greater detail below. No BIS license was 
sought or obtained in connection with these transactions, and at all 
times, Respondents concealed the intended use, end user, and 
destination of the items from the U.S. distributors. OEE has provided 
additional evidence that Astrafteros regularly participates in export 
transactions, including more than forty shipments in the past year, and 
has attempted to make further exports in recent months.
    OEE has further provided evidence that Petrov, Soldatenkova, and 
Almetov all have connections to Electrocom: Petrov and Soldatenkova are 
Electrocom employees; and Almetov is Electrocom's co-founder and 
General Director. Electrocom is a supplier of dual-use electronics to 
the Russian military and other Russian military suppliers; the acronym 
``VPK'' included in its full legal name is a Russian acronym for 
``Military Industrial Complex.'' The types of electronics components 
exported in the transactions detailed below have significant military 
applications and are of types that have been recovered in Russian 
military hardware found on the battlefield in Ukraine.

A. Export Transaction 1

    OEE has presented evidence that in or about April 2022, 
approximately six weeks after Russia's invasion of Ukraine, Petrov 
began communicating with a U.S.-based electronics distributor (U.S. 
Distributor-1) to purchase an array of microelectronics, including 
microcontrollers that are controlled on the CCL for Anti-Terrorism 
reasons under ECCN 3A991.a.2. A BIS license is required to export items 
controlled under ECCN 3A991.a.2 to Russia and are subject to a license 
policy of denial.
    Petrov misrepresented to U.S. Distributor-1 that Astrafteros in 
Cyprus was the end user of the items, falsely claiming that Astrafteros 
is a ``fabless manufacturer (fire security systems sphere),'' when in 
fact Petrov operates Astrafteros as a pass-through freight-forwarder on 
behalf of Electrocom. On or about July 16, 2022, following Petrov's 
misrepresentations, U.S. Distributor-1 shipped approximately 15 16-bit 
flash microcontrollers, controlled under ECCN 3A991.a.2, from the 
United States to Petrov at an address in Cyprus, where Petrov operates 
the shell company Astrafteros. On the invoice for the order provided to 
Petrov, U.S. Distributor-1 expressly noted that the microcontrollers 
are controlled under ECCN 3A991.a.2 and stated that the export of the 
microcontrollers is controlled by the U.S. Government, authorized 
``only to the country of ultimate destination for use by the ultimate 
consignee or end user(s) herein identified,'' and that the items are 
prohibited from being ``resold, transferred, or otherwise disposed of, 
to any other country or to any person other

[[Page 61501]]

than the authorized ultimate consignee or end user(s).'' On or about 
July 20, 2022, Petrov received the 15 controlled microcontrollers in 
Cyprus.
    On or about July 27, 2022, Soldatenkova emailed Petrov requesting a 
status update on the microcontrollers. Petrov responded that he would 
send her the microcontrollers imminently, along with other 
microelectronics procured from U.S. Distributor-1. On or about July 29, 
2022, Soldatenkova sent an invoice and contract, which included the 15 
controlled microcontrollers, to an employee of a Russia-based logistics 
company, who was responsible for coordinating the transportation of the 
goods to Russia. The contract explicitly stated that the buyer of the 
goods is Electrocom and that the goods will be shipped to Saint 
Petersburg, Russia. On or about September 20, 2022, Soldatenkova 
emailed a contract to an employee of a Russian Radio Frequency 
Identification (``RFID'') company, indicating that Electrocom was 
shipping the 15 microcontrollers to the RFID company's Moscow address.
    Russia is reliant on western imports for its RFID chips, which have 
significant military applications, including for use in tagging 
military assets for tracking purposes. The type of microcontrollers 
shipped in Export Transaction 1 have been recovered on the battlefield 
in Ukraine in Russian guided missiles, drones, and electronic warfare 
and communications devices. No BIS license was sought or obtained in 
connection with the export of the 15 microcontrollers.

B. Export Transaction 2

    OEE's request further shows that in or about July 2022, Petrov 
sought controlled electronics from another U.S.-based distributor 
(``U.S. Distributor-2''), including integrated circuits that are 
controlled on the CCL under ECCN 3A991.b.1.a for Anti-Terrorism 
reasons. A BIS license is required to export items controlled under 
ECCN 3A991.b.1.a to Russia and are subject to a license policy of 
denial.
    On or about July 27, 2022, in order to procure the sensitive 
controlled items, Petrov misrepresented the nature of Astrafteros's 
business to a U.S. Distributor-2 employee in an email, stating that the 
function of Astrafteros is ``design and production''--when in fact, as 
described above, Petrov operates Astrafteros as a pass-through freight-
forwarder to obtain electronics for Electrocom. On or about August 18, 
2022, U.S. Distributor-2 shipped an array of dual-use electronics to 
Astrafteros's address in Cyprus. In the shipping, billing, and end-use 
records and correspondence, Petrov falsely represented to U.S. 
Distributor-2 that the ``ultimate consignee'' of the controlled items 
was Latvia-based Ultra Trade Service. U.S. Distributor-2 provided an 
invoice to Petrov that noted the ECCN numbers under which the goods 
were controlled and explicitly stated that ``re-export[ation]'' or 
further ``ship[ment] to another destination'' was prohibited under U.S. 
export controls.
    On or about August 22, 2022, Petrov emailed Soldatenkova, informing 
her that the items in Export Transaction 2 would be sent the following 
day. Petrov also emailed Soldatenkova a shipping label and an invoice, 
reflecting the controlled microelectronics that had been shipped by 
U.S. Distributor-2 to Astrafteros in Cyprus. On or about August 30, 
2022, Soldatenkova emailed an employee of the logistics company, 
providing the weights for each of the items ordered, including the CCL-
controlled integrated circuits. On or about September 2, 2022, 
Soldatenkova sent an invoice and contract for the order to the 
logistics company. The contract set forth that the buyer of the goods 
was Electrocom and that the goods would be shipped to Saint Petersburg, 
Russia.
    The type of integrated circuits shipped in Export Transaction 2 
have been recovered in Ukraine in Russian guided missiles, which the 
Russian military has used to attack Ukrainian military and civilian 
targets. No BIS license was sought or obtained in connection with the 
export of the integrated circuits.

C. Export Transaction 3

    OEE has also presented evidence that on or about July 15, 2022, 
Petrov ordered from U.S. Distributor-1, via email, 90 microcontrollers, 
specifically, Microchip Technology 16-bit flash digital signal 
processors and controllers that are controlled on the CCL under ECCN 
3A991.a.2 for Anti-Terrorism reasons. A BIS license is required to 
export items controlled under ECCN 3A991.a.2 to Russia and are subject 
to a license policy of denial.
    In his email communications with U.S. Distributor-1, Petrov again 
misrepresented that Astrafteros was the end user of the goods and that 
Cyprus was the final destination. On or about January 11, 2023, 
following Petrov's misrepresentations, U.S. Distributor-1 shipped the 
90 controlled microcontrollers from the United States to Petrov at 
Astrafteros's address in Cyprus. On the invoice for the order provided 
to Petrov, U.S. Distributor-1 expressly noted that the microcontrollers 
are controlled under ECCN 3A991.a.2 and that the export of the 
microcontrollers is controlled by the U.S. Government, authorized 
``only to the country of ultimate destination for use by the ultimate 
consignee or end user(s) herein identified,'' and that the items are 
prohibited from being ``resold, transferred, or otherwise disposed of, 
to any other country or to any person other than the authorized 
ultimate consignee or end user(s).'' On or about January 31, 2023, 
Petrov shipped the 90 controlled microcontrollers to Juzhoi in 
Tajikistan and updated Almetov, his superior at Electrocom, about the 
status of the shipment.
    Soldatenkova and Almetov then worked together to ensure that the 
shipment reached Russia. Soldatenkova emailed Almetov a contract 
between Electrocom and Juzhoi for the microcontrollers. The contract, 
which was not provided to U.S. Distributor-1, identified Electrocom 
(with its address in Saint Petersburg, Russia) as the consignee. On or 
about February 8, 2023, Soldatenkova emailed Almetov the shipping label 
for the shipment that included the microcontrollers. A few weeks later, 
on or about February 27, 2023, Soldatenkova emailed an employee at the 
Russia-based logistics company advising that the relevant shipment was 
urgent. That same day, Soldatenkova emailed an employee of a Russian 
aerospace company and military supplier to advise that one shipment of 
goods had arrived at Russian customs, and a second shipment was on the 
border. Soldatenkova wrote, referring to the military applications for 
the goods, ``Due to the fact that they are dual-use, we try to make 
certificates for them.''
    On or about March 1, 2023, Almetov sent a Juzhoi employee two 
emails reflecting that Export Transaction 3 involved Cyprus, 
Tajikistan, and Russia. He attached ``invoices from Cyprus to Dushanbe, 
as well as from Dushanbe to Russia'' (Dushanbe is the city in 
Tajikistan where Juzhoi is based). He also attached the Astrafteros 
invoice that lists the 90 controlled microcontrollers, and indicated 
that Electrocom was buying the goods from Juzhoi. Almetov added, ``They 
have items that need to be left in a warehouse in Dushanbe,'' and 
stated that ``The remaining positions,'' which Almetov made clear 
included the 90 controlled microcontrollers, ``must be shipped to 
Russia on the provided invoice.''
    In or about early March 2023, the three microcontrollers arrived at 
Electrocom's address in Saint Petersburg, Russia. The type of 
microcontrollers shipped in Export Transaction 3 have been recovered on

[[Page 61502]]

the battlefield in Ukraine in Russian guided missiles, drones, and 
electronic warfare and communications devices. No BIS license was 
sought or obtained in connection with the export of the 
microcontrollers.

D. Risk of Imminent Violation

    As detailed in OEE's request and related information, since April 
2022, Petrov, Soldatenkova, and Almetov, have operated an illicit 
procurement network using Astrafteros, Ultra Trade Service, and Juzhoi 
as pass-throughs to export U.S.-manufactured, export-controlled 
electronic components to Electrocom, a supplier of the Russian 
military. OEE has detailed three instances of prohibited export 
transactions, each of which was conducted by intentionally deceiving a 
U.S. distributor as to the end user, intended use, and ultimate 
destination of the export. These violations involve significant, 
sensitive electronics components of types used by the Russian military 
in its invasion of Ukraine and are perpetrated intentionally through 
deceptive means. The pattern of repeated, similar violations 
demonstrates a likelihood that Respondents will continue to engage in 
this course of conduct absent a temporary denial order to give notice 
to the public to cease dealing with them. The fact that Astrafteros has 
participated in dozens of exports from the United States over the past 
year indicates that there is an ongoing need to ``give notice to 
companies in the United States and abroad to cease dealing with'' 
Respondents in order to prevent Respondents from acquiring additional 
U.S.-origin items, which would ``risk[ ] subsequent disposition 
contrary to export control requirements.'' 15 CFR 766.24(b)(3).
    In sum, OEE has shown that the violations are ``significant, 
deliberate, covert and/or likely to occur again, rather than technical 
or negligent,'' and that a temporary denial order is appropriate to 
``give notice to companies in the United States and abroad to cease 
dealing with'' Respondents in U.S.-origin items in order to prevent 
further violations of U.S. export controls. 15 CFR 766.24(b)(3).

III. Findings

    As described above, I find that the evidence presented by BIS 
demonstrates that a violation of the Regulations by the above-captioned 
parties is imminent in both time and degree of likelihood. As such, a 
TDO is needed to give notice to persons and companies in the United 
States and abroad that they should cease dealing with Respondents in 
export or reexport transactions involving items subject to the EAR. 
Such a TDO is consistent with the public interest to preclude future 
violations of the Regulations given the deliberate, covert, and 
determined nature of the misconduct and clear disregard for complying 
with U.S. export control laws.
    This Order is being issued on an ex parte basis without a hearing 
based upon BIS's showing of an imminent violation in accordance with 
section 766.24 of the Regulations.

IV. Order

    It is Therefore Ordered:
    First, that ARTHUR PETROV AKA ARTUR PETROV, with addresses at 36 
Leoforos Aigyptou, Larnaca, Cyprus and Umm Haram 66 Flat 1, Larnaca, 
Cyprus; ASTRAFTEROS TECHNOKOSMOS LTD, with addresses at 36 Leoforos 
Aigyptou, Larnaca, Cyprus and Umm Haram 66 Flat 1, Larnaca, Cyprus; 
ZHANNA SOLDATENKOVA, with an address at 3 Leriku Street, Riga, Latvia 
1084; ULTRA TRADE SERVICE LLC, with an address at 3 Leriku Street, 
Riga, Latvia 1084; RUSLAN ALMATOV, with addresses at 734000 UL. B. 
Gafurov 13, 5; Dushanbe, Tajikistan and Dushanbe 1, Gafurov Pass 13, 
Tajikistan; JUZHOI ELECTRONIC LLC, with addresses at 734000 UL. B. 
Gafurov 13, 5, Dushanbe, Tajikistan and Dushanbe 1, Gafurov Pass 13, 
Tajikistan; and LLC ELECTROCOM VPK ALIAS ELECTROCOM, with an address at 
Proveshcheniya Prospect 99A, Room 180h, St. Petersburg, Russia; and 
when acting for or on their behalf, any successors or assigns, agents, 
or employees (each a ``Denied Person'' and collectively the ``Denied 
Persons'') may not, directly or indirectly, participate in any way in 
any transaction involving any commodity, software or technology 
(hereinafter collectively referred to as ``item'') exported or to be 
exported from the United States that is subject to the EAR, or in any 
other activity subject to the EAR including, but not limited to:
    A. Applying for, obtaining, or using any license, license 
exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
United States that is subject to the EAR, or in any other activity 
subject to the EAR; or
    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the EAR, or in any other activity subject to the EAR.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export, reexport, or transfer (in-country) to or on behalf of a 
Denied Person any item subject to the EAR;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by a Denied Person of the ownership, possession, or control 
of any item subject to the EAR that has been or will be exported from 
the United States, including financing or other support activities 
related to a transaction whereby a Denied Person acquires or attempts 
to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from a Denied Person of any item subject to 
the EAR that has been exported from the United States;
    D. Obtain from a Denied Person in the United States any item 
subject to the EAR with knowledge or reason to know that the item will 
be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the EAR 
that has been or will be exported from the United States and which is 
owned, possessed or controlled by a Denied Person, or service any item, 
of whatever origin, that is owned, possessed or controlled by a Denied 
Person if such service involves the use of any item subject to the EAR 
that has been or will be exported from the United States. For purposes 
of this paragraph, servicing means installation, maintenance, repair, 
modification, or testing.
    Third, that, after notice and opportunity for comment as provided 
in section 766.23 of the EAR, any other person, firm, corporation, or 
business organization related to Petrov, Astrafteros, Soldatenkova, 
Ultra Trade Service, Almetov, Juzhoi, or Electrocom by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
this Order.
    In accordance with the provisions of section 766.24(e) of the EAR, 
Petrov, Astrafteros, Soldatenkova, Ultra Trade Service, Almetov, 
Juzhoi, or Electrocom may, at any time, appeal this Order by filing a 
full written statement in support of the appeal with the Office of the 
Administrative Law Judge, U.S. Coast Guard ALJ Docketing Center, 40 
South Gay Street, Baltimore, Maryland 21202-4022.
    In accordance with the provisions of section 766.24(d) of the EAR, 
BIS may seek renewal of this Order by filing a

[[Page 61503]]

written request not later than 20 days before the expiration date. 
Respondents Petrov, Astrafteros, Soldatenkova, Ultra Trade Service, 
Almetov, Juzhoi, or Electrocom may oppose a request to renew this Order 
by filing a written submission with the Assistant Secretary for Export 
Enforcement, which must be received not later than seven days before 
the expiration date of the Order.
    A copy of this Order shall be served on each denied person and 
shall be published in the Federal Register.
    This Order is effective immediately and shall remain in effect for 
180 days.

    Dated: August 28, 2023.
Kevin J. Kurland,
Deputy Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2023-19332 Filed 9-6-23; 8:45 am]
BILLING CODE 3510-DT-P