Order Temporarily Denying Export Privileges, 77067-77070 [2022-27347]

Download as PDF Federal Register / Vol. 87, No. 241 / Friday, December 16, 2022 / Notices have practical utility; (b) Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used; (c) Evaluate ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology. Comments that you submit in response to this notice are a matter of public record. We will include, or summarize, each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. Sheleen Dumas, Department PRA Clearance Officer, Office of the Chief Information Officer, Commerce Department. [FR Doc. 2022–27273 Filed 12–15–22; 8:45 am] BILLING CODE 3510–07–P DEPARTMENT OF COMMERCE Foreign-Trade Zones Board [B–60–2022] lotter on DSK11XQN23PROD with NOTICES1 Foreign-Trade Zone (FTZ) 74— Baltimore, Maryland, Notification of Proposed Production Activity, United Safety Technology Corp. (Medical and Non-medical Disposable Gloves), Sparrows Point, Maryland United Safety Technology Corp submitted a notification of proposed production activity to the FTZ Board (the Board) for its facility in Sparrows Point, Maryland, within Subzone 74D. The notification conforming to the requirements of the Board’s regulations (15 CFR 400.22) was received on December 8, 2022. Pursuant to 15 CFR 400.14(b), FTZ production activity would be limited to the specific foreign-status material(s)/ component(s) and specific finished product(s) described in the submitted notification (summarized below) and subsequently authorized by the Board. The benefits that may stem from conducting production activity under FTZ procedures are explained in the VerDate Sep<11>2014 20:05 Dec 15, 2022 Jkt 259001 background section of the Board’s website—accessible via www.trade.gov/ ftz. The proposed finished products include seamless gloves, surgical gloves and examination gloves (duty rate ranges from duty-free to 3%). The proposed foreign-status materials and components include: Nitrilebutadiene rubber (NBR): Latex; Potassium hydroxide; Calcium Nitrate; Nitric Acid; Zinc Oxide; Chlorine; Sodium Hypochlorite; Hydrochloric Acid; Caustic Soda; Polydimethylsiloxane emulsion; Paraffin Wax; Sulphur Dispersion; Zinc dibuthyl dithiocarbamate (ZDBC) Dispersion; Titanium dioxide (TiO2) Dispersion (60%-70% solid); Sodium dioctyl sulfosuccinate (SDBS); Ferric Chloride; Color Pigments, fluid paste, viscous—copper phthalocyanine blue; Color Pigments, fluid paste, viscous— carbazole violet; Sodium Thiosulphate Pentahydrate; Non-ionic surfactant and wetting agent; Powder coagulant additive—calcium stearate; cardboard boxes for packaging gloves (duty rate ranges from duty-free to 6.5%). The request indicates that carbazole violet pigment 23 is subject to antidumping/ countervailing duty (AD/CVD) orders if imported from certain countries. The Board’s regulations (15 CFR 400.14(e)) require that merchandise subject to AD/ CVD orders, or items which would be otherwise subject to suspension of liquidation under AD/CVD procedures if they entered U.S. customs territory, be admitted to the zone in privileged foreign status (PF) (19 CFR 146.41). The request also indicates that certain materials/components are subject to duties under Section 301 of the Trade Act of 1974 (Section 301), depending on the country of origin. The applicable Section 301 decisions require subject merchandise to be admitted to FTZs in PF status. Public comment is invited from interested parties. Submissions shall be addressed to the Board’s Executive Secretary and sent to: ftz@trade.gov. The closing period for their receipt is January 25, 2023. A copy of the notification will be available for public inspection in the ‘‘Online FTZ Information System’’ section of the Board’s website. For further information, contact Diane Finver at Diane.Finver@trade.gov. Dated: December 12, 2022. Andrew McGilvray, Executive Secretary. [FR Doc. 2022–27275 Filed 12–15–22; 8:45 am] BILLING CODE 3510–DS–P PO 00000 Frm 00011 Fmt 4703 Sfmt 4703 77067 DEPARTMENT OF COMMERCE Bureau of Industry and Security Order Temporarily Denying Export Privileges Boris Livshits, 9V Kuttuzi, Leningrad Oblast, St. Petersburg, Russian Federation; Svetlana Skvortsova, Yablochinkova 21, Moscow, Russian Federation; Aleksey Ippolitov, Ozernaya 46, Moscow, Russian Federation; Advanced Web Services, 417 Brightwater Court, Apt. 6f, Brooklyn, NY 11235; Strandway, LLC, 99 Wall St., Ste. 148, New York, NY 10005. Pursuant to section 766.24 of the Export Administration Regulations (the ‘‘Regulations’’ or ‘‘EAR’’),1 the Bureau of 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: Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web Services, and Strandway, LCC (‘‘Strandway’’). OEE’s request and related information indicates that these parties are located in the Russian Federation and New York, at the respective addresses listed on the caption page of this order and on page 11, infra, and that Livshits, a Russian national, owns or controls Advanced Web Services and Strandway. 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 1 The Regulations, currently codified at 15 CFR parts 730–774 (2021), 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. E:\FR\FM\16DEN1.SGM 16DEN1 77068 Federal Register / Vol. 87, No. 241 / Friday, December 16, 2022 / Notices 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[.]’’ 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. lotter on DSK11XQN23PROD with NOTICES1 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’’) required a license to be exported or reexported to 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 state, ‘‘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 December 2022, Livshits, Skvortsova, Ippolitov, Yevgeniy Grinin,2 2 Grinin is the owner and operator of Photon Pro, LLP (‘‘Photon’’), which was placed on the BIS Entity List on March 9, 2022, with a policy of denial for all items subject to the EAR. See 87 FR 13141. Grinin and Photon have also both been identified as Specially Designated Nationals (SDNs) by the U.S. Treasury Department, Office of Foreign Assets Control (‘‘OFAC’’) pursuant to Executive Order 14024. See 87 FR 20505. VerDate Sep<11>2014 20:05 Dec 15, 2022 Jkt 259001 along with additional co-conspirators, were each indicted on multiple counts in the United States District Court for the Eastern District of New York. The charges include, but are not limited to, conspiring to violate U.S. export control laws in connection with the unlicensed export of electronic signal generator and measurement equipment, among other items, to BIS-listed entities in Russia, including OOO Serniya Engineering (‘‘Serniya’’), a wholesale machinery and equipment company located in Moscow, Russia. Serniya headed an illicit procurement network (collectively, the ‘‘Serniya Network’’) operating under the direction of Russia’s intelligence services to evade U.S. sanctions to acquire sensitive military grade and dual-use technologies, including advanced semiconductors, for the Russian military, defense sector, and research institutions. On March 3, 2022, Serniya, along with OOO Sertal (‘‘Sertal’’), also a Moscow-based machinery and equipment company and part of the Serniya network, were both placed on the BIS Entity List, Section 744.11 and Supplement No. 4 to Part 744 of the Regulations, as a result of their relationships with the Russian government and in response to the Russian invasion of Ukraine beginning in or around February 2022.3 Specifically, Serniya and Sertal were placed on the Entity List because they ‘‘have been involved in, contributed to, or otherwise supported the Russian security services, military and defense sectors, and military and/or defense research and development efforts.’’ 87 FR 13141. As a result of these designations, no item subject to the Regulations may be exported, reexported, or transferred (in-country) to Serniya or Sertal without prior license authorization from BIS and are subject to a policy of denial. Id. In its request, OEE has presented evidence indicating that Livshits and the other above-captioned parties are engaged in unlawfully procuring and shipping military and sensitive dual-use technologies from U.S. manufacturers to Russian end users, including the Serniya Network. These items included advanced electronics and sophisticated testing equipment, some of which can be used in military applications. 3 On or about March 31, 2022, OFAC, added Serniya, Sertal, and other Serniya-affiliated entities to its Specially Designated Nationals and Blocked Persons List. See 87 FR 20505. PO 00000 Frm 00012 Fmt 4703 Sfmt 4703 A. Misconduct Charged in December 2022 Indictment The December 2022 indictment charged Livshits, Skvortsova, Ippolitov, Grinin, and additional co-conspirators, with conspiring to violate ECRA, conspiring to violate IEEPA, smuggling, and failure to file electronic export information, among other offenses.4 The violations charged in the indictment cover conduct occurring between at least January 2017 through October 2022, and it alleges that Livshits, Skvortsova, and Ippolitov were not only aware of U.S. export control laws but also took active steps to conceal their unlawful export-related activities in order to evade detection by law enforcement. As stated in the indictment, Ippolitov acted as a liaison on behalf of Serniya and Sertal by soliciting orders from Russian end users who sought to acquire a particular item or part from the United States. Ippolitov oversaw the purchase and shipping of the items from U.S. companies through the Serniya Network’s front companies and bank accounts by relaying the requests to employees at Sertal and Serniya, including Skortsova, who were tasked with procuring the desired component from U.S. companies. Skvortsova, along with Grinin, decided how to fulfill orders placed by Russian end users, secured funding and shipping for the transactions, and assisted in preparing documents with false and misleading information in furtherance of the scheme. Livshits was then frequently tasked to interface directly with U.S. companies and purchase items requested by Russian end users. Livshits communicated with the U.S. companies, often misrepresenting and omitting material information, including information about how an item would be used, the various parties involved in the transaction, and the identity of the ultimate Russian end user. Livshits used the alias ‘‘David Wetzky,’’ using an email address associated with Advanced Web Services, to communicate in an effort to frustrate due diligence efforts by U.S. companies. On behalf of the Serniya Network, Livshits also created and maintained various shell companies, including Advanced Web Services and Strandway, and associated bank accounts which were used to fund unlawful export activities. For instance, on or about December 12, 2020, Livshits initiated a payment from an account held in his name and the name of Advanced Web Services for an 4 Additional charges include money laundering, wire fraud, bank fraud, and conspiring to defraud the United States. E:\FR\FM\16DEN1.SGM 16DEN1 Federal Register / Vol. 87, No. 241 / Friday, December 16, 2022 / Notices lotter on DSK11XQN23PROD with NOTICES1 oscilloscope, which was controlled under ECCN 3A992.a for anti-terrorism reasons. As also referenced in OEE’s request and the indictment, Livshits, Skortsova, and Ippolitov worked together not only to engage in unlawful export-related activities, but also to evade detection by law enforcement. For example, on September 4, 2019, Ippolitov inquired about obtaining a ‘‘chip set’’ of 45 advanced semiconductors on behalf of the Physics Institute of the Russian Academy of Sciences. The requested items were controlled under ECCN 3A0013a.2.c for national security reasons and required an export license to Russia. Grinin then forwarded the document to Skvortsova and proposed tasking Livshits with helping to fulfill the order. On September 6, 2019, Grinin and Skvortsova contacted Livshits and requested a price quote. Livshits later cautioned that the part required an export license and that ‘‘you need to buy such positions carefully, at 5–10 pieces at a time.’’ In another example, on July 16, 2020, Livshits warned his co-conspirators that ‘‘such a large and expensive order would draw unwanted attention and suspicion . . . break up the order into smaller orders over a time period.’’ Livshits further advised that ‘‘the U.S. Department of Commerce Bureau of Industry and Security can cause problems and deny the shipment,’’ and suggested that he could order the parts from his U.S. companies, as well as entities in Estonia and Finland, over a two- to three-week period. Additional evidence provided by OEE further demonstrates that Livshits, Skortsova, and Ippolitov were knowledgeable about U.S. export control laws. For example, a June 2020 email exchange between Skvortsova and other Serniya and Sertal employees was titled ‘‘URGENT: Important Announcement about US Export Regulation Changes’’ and specifically described the definition of ‘‘military end-users.’’ Similarly, on or about March 15, 2022, after Serniya and Sertal were added to the BIS Entity List, Livshits told Skvortsova, ‘‘When ordering in the USA, the price is significantly more expensive . . . [as well as] difficulties with export from there-[the item] is subject to EAR.’’ B. Conduct Prior to February 2022 Russian Invasion of Ukraine As stated in OEE’s request, on October 22, 2019, Livshits instructed a coconspirator stating—‘‘[T]wo large boxes need to be sent . . . to Germany . . . It is necessary to cut off all old labels and remove all invoices and packing lists VerDate Sep<11>2014 20:05 Dec 15, 2022 Jkt 259001 from the boxes that came with them originally. Leave manuals and other technical documentation.’’ Livshits provided shipping labels for a freight company in Hamburg, Germany, as well as numerous falsified invoices and enduse statements. One invoice documented that a U.S.-based company purportedly sent a ‘‘Low Noise Cesium Frequency Synthesizer,’’ valued at $44,965, to ‘‘Strandway LLC Attn: David Wetzky’’ at a New Hampshire based address. The End-Use Statement listed Strandway, the contact name ‘‘Davide Wetzky,’’ and a contact email address ‘‘david.wetzky[@]awsresearch.net,’’ along with the advisory, ‘‘[e]xport of these products is subject to the United States Government Export Administration Regulation (EAR).’’ On or about July 2020, Livshits provided Skvortsova the price quotes for electronic components from a U.S. company. On September 20, 2020, Skvortsova instructed Livshits to bill the front company Photon Pro LLP for the purchase of the quoted items. Subsequently, packages pertaining to the shipment were sent from the U.S. company to an address utilized by Livshits, and then forwarded to a transshipment point in Germany with a declared value of $2,640. The true value of the purchase, however, exceeded $15,000. On November 10, 2020, Ippolitov received the invoice for the order, along with shipping labels reflecting the package’s transshipment from Germany to Grinin in Russia. On or about December 9, 2020, Skvortsova emailed Grinin and informed him that the items had been received in Russia by the end user, a major Russian university and scientific research facility that collaborated with Russia’s defense sector on research and development projects. C. Conduct Post-Russian Invasion of Ukraine and Imposition of Sanctions Between February 2022 and April 2022, Respondents unlawfully engaged in the purchase of a spectrum analyzer from a Florida-based electronics company. Specifically, on February 18, 2022, Livshits contacted the U.S. company to inquire about an E4440A spectrum analyzer, which was classified under ECCN 3A992.a and required a license for shipment to Russia. He subsequently purchased the spectrum analyzer for $14,065 and had it shipped to Strandway. Subsequently, on or about March 6, 2022, Livshits attempted to have a Hong Kong-based freight forwarder send the spectrum analyzer to Russia, saying, ‘‘I have a logistics task. I need to ship [the spectrum analyzer] with DHL from US PO 00000 Frm 00013 Fmt 4703 Sfmt 4703 77069 to Hong Kong to any company, which can receive it and then ship it via Emirate or Turkish air cargo to Russia— St. Petersburg or Moscow. Can you do this?’’ Although the freight forwarder refused his request, citing the sanctions imposed on Russia after the invasion of Ukraine, Livshits directed another individual to ship the spectrum analyzer from New Hampshire to an address in Hamburg, Germany, identified by OEE as a Serniya transshipment point. Evidence presented by OEE demonstrates that Livshits later acknowledged that the spectrum analyzer was ultimately shipped to Russia. As detailed in OEE’s request, on or about April and May 2022, Livshits again utilized the alias ‘‘David Wetzky’’ and the front companies Advanced Web Services and Strandway to contact an Illinois-based electronics distributor to inquire about purchasing a variety of oscilloscopes. On or about April 2022, the Illinois-based company sold Livshits a MSO54–BW–100 Mixed Signal Generator for approximately $25,000. Livshits requested that the company list the purchaser as Strandway, LLC and David Wetzky. On May 9, 2022, a package was shipped via DHL from Strandway’s New Hampshire location to Hamburg, Germany. The shipment was declared with DHL to be a ‘‘Oscilloscope—Used, No Warr’’ with the declared value of $2,482, an amount under the $2,500 threshold which would have required Respondents to file an EEI submission with the U.S. Government. In July 2022, Livshits attempted to purchase a 3GHz Signal Generator, valued at $15,564, from an Illinoisbased company. Livshits requested that the 3GHz Signal Generator be shipped to Strandway, which was identified as the end user on a BIS–711 End-User/ End-Use Statement. On August 8, 2022, OEE detained a shipment being exported from Strandway and destined for Lithuania. Although the shipment was declared to be a ‘‘Used Signal Generator’’ valued at $2,480, an inspection revealed that the shipment contained the 3GHz Signal Generator procured by Livshits, which was controlled for export under ECCN 3A992.a and required an export license to Russia. Again, OEE has reason believe that Respondents intentionally undervalued the item below $2,500 to avoid the EEI filing requirement set out in Section 758.1 of the Regulations. D. Ongoing Procurement Attempts As detailed in OEE’s request and related information, Livshits continues to engage in attempts at illicit E:\FR\FM\16DEN1.SGM 16DEN1 77070 Federal Register / Vol. 87, No. 241 / Friday, December 16, 2022 / Notices lotter on DSK11XQN23PROD with NOTICES1 procurement, including through the use of Advanced Web Services. OEE’s investigation includes a May 23, 2022 purchase from a Texas-based distributor of semi-conductors and electronic components by Advanced Web Services. Moreover, the products at issue were then shipped to Advanced Web Services at an address in New Hampshire used by the Respondents to divert items to Russia. Additionally, following the August 8, 2022 detention of the Signal Generator discussed supra, Livshits continued his efforts to procure U.S.origin electronic components from U.S.based companies. For instance, in an email exchange between Livshits and an Illinois-based company occurring between on or about August 13, 2022 and August 15, 2022, Livshits inquired about purchasing a signal generator listed for an asking price over $56,000. In another exchange between Livshits and the same company, which occurred between on or about September 5, 2022 and September 14, 2022, Livshits inquired about purchasing an E4440A Spectrum Analyzer and having the item shipped to New Hampshire. On or about September 14, 2022, Livshits informed the company that he required 2 or 3 E4440A units, which are controlled for export under ECCN 3A992.a and would require an export license to Russia. III. Findings 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 Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web Services, and Strandway, LCC 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 and 766.23(b) of the Regulations. It is therefore ordered: First, that BORIS LIVSHITS, with an address at 9V Kuttuzi, Leningrad Oblast St. Petersburg, Russian Federation; SVETLANA SKVORTSOVA, with an address at Yablochinkova 21 Moscow, Russian Federation; ALEKSEY IPPOLITOV, with an address at VerDate Sep<11>2014 20:05 Dec 15, 2022 Jkt 259001 Ozernaya 46 Moscow, Russian Federation; ADVANCED WEB SERVICES, with an address at 417 Brightwater Court, Apt. 6f Brooklyn, NY 11235; and STRANDWAY, LLC, with an address at 99 Wall St., Ste. 148 New York, NY 10005; 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 or reexport 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 PO 00000 Frm 00014 Fmt 4703 Sfmt 9990 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 Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web Services, and Strandway, LCC 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, Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web Services, and Strandway, LCC 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 written request not later than 20 days before the expiration date. Respondents Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web Services, and Strandway, LCC 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. Matthew S. Axelrod, Assistant Secretary of Commerce for Export Enforcement. [FR Doc. 2022–27347 Filed 12–15–22; 8:45 am] BILLING CODE 3510–DT–P E:\FR\FM\16DEN1.SGM 16DEN1

Agencies

[Federal Register Volume 87, Number 241 (Friday, December 16, 2022)]
[Notices]
[Pages 77067-77070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27347]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Order Temporarily Denying Export Privileges

Boris Livshits, 9V Kuttuzi, Leningrad Oblast, St. Petersburg, 
Russian Federation;
Svetlana Skvortsova, Yablochinkova 21, Moscow, Russian Federation;
Aleksey Ippolitov, Ozernaya 46, Moscow, Russian Federation;
Advanced Web Services, 417 Brightwater Court, Apt. 6f, Brooklyn, NY 
11235;
Strandway, LLC, 99 Wall St., Ste. 148, New York, NY 10005.

    Pursuant to section 766.24 of the Export Administration Regulations 
(the ``Regulations'' or ``EAR''),\1\ the Bureau of 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: Boris Livshits, Svetlana Skvortsova, Aleksey 
Ippolitov, Advanced Web Services, and Strandway, LCC (``Strandway''). 
OEE's request and related information indicates that these parties are 
located in the Russian Federation and New York, at the respective 
addresses listed on the caption page of this order and on page 11, 
infra, and that Livshits, a Russian national, owns or controls Advanced 
Web Services and Strandway.
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    \1\ The Regulations, currently codified at 15 CFR parts 730-774 
(2021), 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

[[Page 77068]]

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[.]'' 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'') required a license to be exported 
or reexported to 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 state, ``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 December 2022, Livshits, Skvortsova, Ippolitov, Yevgeniy 
Grinin,\2\ along with additional co-conspirators, were each indicted on 
multiple counts in the United States District Court for the Eastern 
District of New York. The charges include, but are not limited to, 
conspiring to violate U.S. export control laws in connection with the 
unlicensed export of electronic signal generator and measurement 
equipment, among other items, to BIS-listed entities in Russia, 
including OOO Serniya Engineering (``Serniya''), a wholesale machinery 
and equipment company located in Moscow, Russia. Serniya headed an 
illicit procurement network (collectively, the ``Serniya Network'') 
operating under the direction of Russia's intelligence services to 
evade U.S. sanctions to acquire sensitive military grade and dual-use 
technologies, including advanced semiconductors, for the Russian 
military, defense sector, and research institutions.
---------------------------------------------------------------------------

    \2\ Grinin is the owner and operator of Photon Pro, LLP 
(``Photon''), which was placed on the BIS Entity List on March 9, 
2022, with a policy of denial for all items subject to the EAR. See 
87 FR 13141. Grinin and Photon have also both been identified as 
Specially Designated Nationals (SDNs) by the U.S. Treasury 
Department, Office of Foreign Assets Control (``OFAC'') pursuant to 
Executive Order 14024. See 87 FR 20505.
---------------------------------------------------------------------------

    On March 3, 2022, Serniya, along with OOO Sertal (``Sertal''), also 
a Moscow-based machinery and equipment company and part of the Serniya 
network, were both placed on the BIS Entity List, Section 744.11 and 
Supplement No. 4 to Part 744 of the Regulations, as a result of their 
relationships with the Russian government and in response to the 
Russian invasion of Ukraine beginning in or around February 2022.\3\ 
Specifically, Serniya and Sertal were placed on the Entity List because 
they ``have been involved in, contributed to, or otherwise supported 
the Russian security services, military and defense sectors, and 
military and/or defense research and development efforts.'' 87 FR 
13141. As a result of these designations, no item subject to the 
Regulations may be exported, reexported, or transferred (in-country) to 
Serniya or Sertal without prior license authorization from BIS and are 
subject to a policy of denial. Id.
---------------------------------------------------------------------------

    \3\ On or about March 31, 2022, OFAC, added Serniya, Sertal, and 
other Serniya-affiliated entities to its Specially Designated 
Nationals and Blocked Persons List. See 87 FR 20505.
---------------------------------------------------------------------------

    In its request, OEE has presented evidence indicating that Livshits 
and the other above-captioned parties are engaged in unlawfully 
procuring and shipping military and sensitive dual-use technologies 
from U.S. manufacturers to Russian end users, including the Serniya 
Network. These items included advanced electronics and sophisticated 
testing equipment, some of which can be used in military applications.

A. Misconduct Charged in December 2022 Indictment

    The December 2022 indictment charged Livshits, Skvortsova, 
Ippolitov, Grinin, and additional co-conspirators, with conspiring to 
violate ECRA, conspiring to violate IEEPA, smuggling, and failure to 
file electronic export information, among other offenses.\4\ The 
violations charged in the indictment cover conduct occurring between at 
least January 2017 through October 2022, and it alleges that Livshits, 
Skvortsova, and Ippolitov were not only aware of U.S. export control 
laws but also took active steps to conceal their unlawful export-
related activities in order to evade detection by law enforcement.
---------------------------------------------------------------------------

    \4\ Additional charges include money laundering, wire fraud, 
bank fraud, and conspiring to defraud the United States.
---------------------------------------------------------------------------

    As stated in the indictment, Ippolitov acted as a liaison on behalf 
of Serniya and Sertal by soliciting orders from Russian end users who 
sought to acquire a particular item or part from the United States. 
Ippolitov oversaw the purchase and shipping of the items from U.S. 
companies through the Serniya Network's front companies and bank 
accounts by relaying the requests to employees at Sertal and Serniya, 
including Skortsova, who were tasked with procuring the desired 
component from U.S. companies. Skvortsova, along with Grinin, decided 
how to fulfill orders placed by Russian end users, secured funding and 
shipping for the transactions, and assisted in preparing documents with 
false and misleading information in furtherance of the scheme. Livshits 
was then frequently tasked to interface directly with U.S. companies 
and purchase items requested by Russian end users.
    Livshits communicated with the U.S. companies, often 
misrepresenting and omitting material information, including 
information about how an item would be used, the various parties 
involved in the transaction, and the identity of the ultimate Russian 
end user. Livshits used the alias ``David Wetzky,'' using an email 
address associated with Advanced Web Services, to communicate in an 
effort to frustrate due diligence efforts by U.S. companies. On behalf 
of the Serniya Network, Livshits also created and maintained various 
shell companies, including Advanced Web Services and Strandway, and 
associated bank accounts which were used to fund unlawful export 
activities. For instance, on or about December 12, 2020, Livshits 
initiated a payment from an account held in his name and the name of 
Advanced Web Services for an

[[Page 77069]]

oscilloscope, which was controlled under ECCN 3A992.a for anti-
terrorism reasons.
    As also referenced in OEE's request and the indictment, Livshits, 
Skortsova, and Ippolitov worked together not only to engage in unlawful 
export-related activities, but also to evade detection by law 
enforcement. For example, on September 4, 2019, Ippolitov inquired 
about obtaining a ``chip set'' of 45 advanced semiconductors on behalf 
of the Physics Institute of the Russian Academy of Sciences. The 
requested items were controlled under ECCN 3A0013a.2.c for national 
security reasons and required an export license to Russia. Grinin then 
forwarded the document to Skvortsova and proposed tasking Livshits with 
helping to fulfill the order. On September 6, 2019, Grinin and 
Skvortsova contacted Livshits and requested a price quote. Livshits 
later cautioned that the part required an export license and that ``you 
need to buy such positions carefully, at 5-10 pieces at a time.''
    In another example, on July 16, 2020, Livshits warned his co-
conspirators that ``such a large and expensive order would draw 
unwanted attention and suspicion . . . break up the order into smaller 
orders over a time period.'' Livshits further advised that ``the U.S. 
Department of Commerce Bureau of Industry and Security can cause 
problems and deny the shipment,'' and suggested that he could order the 
parts from his U.S. companies, as well as entities in Estonia and 
Finland, over a two- to three-week period.
    Additional evidence provided by OEE further demonstrates that 
Livshits, Skortsova, and Ippolitov were knowledgeable about U.S. export 
control laws. For example, a June 2020 email exchange between 
Skvortsova and other Serniya and Sertal employees was titled ``URGENT: 
Important Announcement about US Export Regulation Changes'' and 
specifically described the definition of ``military end-users.'' 
Similarly, on or about March 15, 2022, after Serniya and Sertal were 
added to the BIS Entity List, Livshits told Skvortsova, ``When ordering 
in the USA, the price is significantly more expensive . . . [as well 
as] difficulties with export from there-[the item] is subject to EAR.''

B. Conduct Prior to February 2022 Russian Invasion of Ukraine

    As stated in OEE's request, on October 22, 2019, Livshits 
instructed a co-conspirator stating--``[T]wo large boxes need to be 
sent . . . to Germany . . . It is necessary to cut off all old labels 
and remove all invoices and packing lists from the boxes that came with 
them originally. Leave manuals and other technical documentation.'' 
Livshits provided shipping labels for a freight company in Hamburg, 
Germany, as well as numerous falsified invoices and end-use statements. 
One invoice documented that a U.S.-based company purportedly sent a 
``Low Noise Cesium Frequency Synthesizer,'' valued at $44,965, to 
``Strandway LLC Attn: David Wetzky'' at a New Hampshire based address. 
The End-Use Statement listed Strandway, the contact name ``Davide 
Wetzky,'' and a contact email address 
``david.wetzky[@]awsresearch.net,'' along with the advisory, ``[e]xport 
of these products is subject to the United States Government Export 
Administration Regulation (EAR).''
    On or about July 2020, Livshits provided Skvortsova the price 
quotes for electronic components from a U.S. company. On September 20, 
2020, Skvortsova instructed Livshits to bill the front company Photon 
Pro LLP for the purchase of the quoted items. Subsequently, packages 
pertaining to the shipment were sent from the U.S. company to an 
address utilized by Livshits, and then forwarded to a transshipment 
point in Germany with a declared value of $2,640. The true value of the 
purchase, however, exceeded $15,000. On November 10, 2020, Ippolitov 
received the invoice for the order, along with shipping labels 
reflecting the package's transshipment from Germany to Grinin in 
Russia. On or about December 9, 2020, Skvortsova emailed Grinin and 
informed him that the items had been received in Russia by the end 
user, a major Russian university and scientific research facility that 
collaborated with Russia's defense sector on research and development 
projects.

C. Conduct Post-Russian Invasion of Ukraine and Imposition of Sanctions

    Between February 2022 and April 2022, Respondents unlawfully 
engaged in the purchase of a spectrum analyzer from a Florida-based 
electronics company. Specifically, on February 18, 2022, Livshits 
contacted the U.S. company to inquire about an E4440A spectrum 
analyzer, which was classified under ECCN 3A992.a and required a 
license for shipment to Russia. He subsequently purchased the spectrum 
analyzer for $14,065 and had it shipped to Strandway.
    Subsequently, on or about March 6, 2022, Livshits attempted to have 
a Hong Kong-based freight forwarder send the spectrum analyzer to 
Russia, saying, ``I have a logistics task. I need to ship [the spectrum 
analyzer] with DHL from US to Hong Kong to any company, which can 
receive it and then ship it via Emirate or Turkish air cargo to 
Russia--St. Petersburg or Moscow. Can you do this?'' Although the 
freight forwarder refused his request, citing the sanctions imposed on 
Russia after the invasion of Ukraine, Livshits directed another 
individual to ship the spectrum analyzer from New Hampshire to an 
address in Hamburg, Germany, identified by OEE as a Serniya 
transshipment point. Evidence presented by OEE demonstrates that 
Livshits later acknowledged that the spectrum analyzer was ultimately 
shipped to Russia.
    As detailed in OEE's request, on or about April and May 2022, 
Livshits again utilized the alias ``David Wetzky'' and the front 
companies Advanced Web Services and Strandway to contact an Illinois-
based electronics distributor to inquire about purchasing a variety of 
oscilloscopes. On or about April 2022, the Illinois-based company sold 
Livshits a MSO54-BW-100 Mixed Signal Generator for approximately 
$25,000. Livshits requested that the company list the purchaser as 
Strandway, LLC and David Wetzky. On May 9, 2022, a package was shipped 
via DHL from Strandway's New Hampshire location to Hamburg, Germany. 
The shipment was declared with DHL to be a ``Oscilloscope--Used, No 
Warr'' with the declared value of $2,482, an amount under the $2,500 
threshold which would have required Respondents to file an EEI 
submission with the U.S. Government.
    In July 2022, Livshits attempted to purchase a 3GHz Signal 
Generator, valued at $15,564, from an Illinois-based company. Livshits 
requested that the 3GHz Signal Generator be shipped to Strandway, which 
was identified as the end user on a BIS-711 End-User/End-Use Statement. 
On August 8, 2022, OEE detained a shipment being exported from 
Strandway and destined for Lithuania. Although the shipment was 
declared to be a ``Used Signal Generator'' valued at $2,480, an 
inspection revealed that the shipment contained the 3GHz Signal 
Generator procured by Livshits, which was controlled for export under 
ECCN 3A992.a and required an export license to Russia. Again, OEE has 
reason believe that Respondents intentionally undervalued the item 
below $2,500 to avoid the EEI filing requirement set out in Section 
758.1 of the Regulations.

D. Ongoing Procurement Attempts

    As detailed in OEE's request and related information, Livshits 
continues to engage in attempts at illicit

[[Page 77070]]

procurement, including through the use of Advanced Web Services. OEE's 
investigation includes a May 23, 2022 purchase from a Texas-based 
distributor of semi-conductors and electronic components by Advanced 
Web Services. Moreover, the products at issue were then shipped to 
Advanced Web Services at an address in New Hampshire used by the 
Respondents to divert items to Russia. Additionally, following the 
August 8, 2022 detention of the Signal Generator discussed supra, 
Livshits continued his efforts to procure U.S.-origin electronic 
components from U.S.-based companies. For instance, in an email 
exchange between Livshits and an Illinois-based company occurring 
between on or about August 13, 2022 and August 15, 2022, Livshits 
inquired about purchasing a signal generator listed for an asking price 
over $56,000. In another exchange between Livshits and the same 
company, which occurred between on or about September 5, 2022 and 
September 14, 2022, Livshits inquired about purchasing an E4440A 
Spectrum Analyzer and having the item shipped to New Hampshire. On or 
about September 14, 2022, Livshits informed the company that he 
required 2 or 3 E4440A units, which are controlled for export under 
ECCN 3A992.a and would require an export license to Russia.

III. Findings

    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 Boris Livshits, Svetlana Skvortsova, 
Aleksey Ippolitov, Advanced Web Services, and Strandway, LCC 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 and 766.23(b) of the Regulations.
    It is therefore ordered:
    First, that BORIS LIVSHITS, with an address at 9V Kuttuzi, 
Leningrad Oblast St. Petersburg, Russian Federation; SVETLANA 
SKVORTSOVA, with an address at Yablochinkova 21 Moscow, Russian 
Federation; ALEKSEY IPPOLITOV, with an address at Ozernaya 46 Moscow, 
Russian Federation; ADVANCED WEB SERVICES, with an address at 417 
Brightwater Court, Apt. 6f Brooklyn, NY 11235; and STRANDWAY, LLC, with 
an address at 99 Wall St., Ste. 148 New York, NY 10005; 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 or reexport 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 Boris Livshits, Svetlana Skvortsova, 
Aleksey Ippolitov, Advanced Web Services, and Strandway, LCC 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, 
Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web 
Services, and Strandway, LCC 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 written request not 
later than 20 days before the expiration date. Respondents Boris 
Livshits, Svetlana Skvortsova, Aleksey Ippolitov, Advanced Web 
Services, and Strandway, LCC 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.

Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2022-27347 Filed 12-15-22; 8:45 am]
BILLING CODE 3510-DT-P

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