Ilya Balakaev,, 58238-58242 [2023-18311]
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Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices
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Dated: August 21, 2023.
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[FR Doc. 2023–18339 Filed 8–24–23; 8:45 am]
BILLING CODE 3510–07–P
DEPARTMENT OF COMMERCE
Foreign-Trade Zones Board
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Approval of Subzone Status; LL
Flooring Services, LLC, Sandston,
Virginia
On June 23, 2023, the Executive
Secretary of the Foreign-Trade Zones
(FTZ) Board docketed an application
submitted by the Virginia Port
Authority, grantee of FTZ 20, requesting
subzone status subject to the existing
activation limit of FTZ 20, on behalf of
LL Flooring Services, LLC, in Sandston,
Virginia.
The application was processed in
accordance with the FTZ Act and
Regulations, including notice in the
Federal Register inviting public
comment (88 FR 41884, June 28, 2023).
The FTZ staff examiner reviewed the
application and determined that it
meets the criteria for approval. Pursuant
to the authority delegated to the FTZ
Board Executive Secretary (15 CFR
400.36(f)), the application to establish
Subzone 20G was approved on August
22, 2023, subject to the FTZ Act and the
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Dated: August 22, 2023.
Elizabeth Whiteman,
Executive Secretary.
[FR Doc. 2023–18388 Filed 8–24–23; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Ilya Balakaev,
Sharikopodshipnikovkaya 20–68,
Moscow, Russian Federation;
Radiotester OOO,
a/k/a Radiotester LLC,
Sharikopodshipnikovskaya 11,
Building 1,
Moscow, 115088, Russian Federation
and
Volgograd Prospect, House 2,
Moscow, 109316, Russian Federation;
Order Renewing Temporary Denial of
Export Privileges
Pursuant to Section 766.24 of the
Export Administration Regulations (the
‘‘Regulations’’ or ‘‘EAR’’),1 I hereby
grant the request of the Bureau of
Industry and Security (‘‘BIS’’), U.S.
Department of Commerce, through its
Office of Export Enforcement (‘‘OEE’’),
to renew the temporary denial order
(‘‘TDO’’) issued in this matter on
February 24, 2023. I find that renewal of
this order is necessary in the public
interest to prevent an imminent
violation of the Regulations.
I. Procedural History
On February 24, 2023, I signed an
order denying the export privileges of
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Board’s regulations, including section
400.13, and further subject to FTZ 20’s
2,000-acre activation limit.
1 The Regulations, currently codified at 15 CFR
parts 730–774 (2020), 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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Ilya Balakaev and Radiotester OOO a/k/
a Radiotester LLC (collectively, ‘‘the
Respondents’’) for a period of 180 days
on the ground that issuance of the order
was necessary in the public interest to
prevent an imminent violation of the
Regulations. The order was issued ex
parte pursuant to Section 766.24(a) of
the Regulations and was effective upon
issuance.2
On July 31, 2023, BIS, through OEE,
submitted a written request for renewal
of the TDO that was issued on February
24, 2023. The written request was made
more than 20 days before the TDO’s
scheduled expiration. A copy of the
renewal request was sent to
Respondents in accordance with
Sections 766.5 and 766.24(d) of the
Regulations. No opposition to the
renewal of the TDO has been received.
II. Renewal of the TDO
A. 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[.]’’ 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.
Pursuant to Sections 766.23 and
766.24, TDO may also be made
applicable to other persons if BIS has
reason to believe that they are related to
a respondent and that applying the
order to them is necessary to prevent its
evasion. 15 CFR 766.23(a)–(b) and
766.24(c). A ‘‘related person’’ is a
person, either at the time of the TDO’s
issuance or thereafter, who is related to
a respondent ‘‘by ownership, control,
position of responsibility, affiliation, or
other connection in the conduct of trade
or business.’’ 15 CFR 766.23(a). Related
persons may be added to a TDO on an
2 The TDO was published in the Federal Register
on March 1, 2023 (88 FR 12912).
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ex-parte basis in accordance with
Section 766.23(b) of the Regulations. 15
CFR 766.23(b).
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B. The TDO and BIS’s Request for
Renewal
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.’’
OEE’s request for renewal is based
upon the facts underlying the issuance
of the initial TDO and the evidence
developed over the course of this
investigation, which demonstrate the
existence of an illicit procurement
network conspiring to violate U.S.
export control laws by unlawfully
procuring and shipping controlled
counterintelligence items to Russia and
North Korea. As detailed in its July 31,
2023 request for renewal of the TDO,
OEE’s investigation, which remains
ongoing, has revealed evidence that this
illicit network and its reach remain
ongoing. As a result, the renewal of this
order is necessary.
1. The Basis for the Initial TDO
As detailed in the initial TDO issued
on February 24, 2023, Balakaev engaged
in conduct prohibited by the
Regulations by unlawfully procuring
and exporting from the United States
electronic devices subject to the EAR to
the Federal Security Service of the
Russian Federation (‘‘FSB’’), a BIS-listed
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entity located in the Russian Federation
(‘‘Russia’’), and to the Democratic
People’s Republic of Korea (‘‘North
Korea’’ or ‘‘DPRK’’) without the required
U.S. government authorization.
‘‘Export’’ is defined in the EAR as an
‘‘actual shipment or transmission out of
the United States, including the sending
or taking of an item out of the United
States, in any manner.’’ 15 CFR
734.13(a)(1).3
The FSB is listed on the Commerce
Department’s Entity List 4 with a policy
of denial for all items subject to the EAR
with certain exceptions for transactions
authorized by the Department of the
Treasury’s Office of Foreign Assets
Control (‘‘OFAC’’) pursuant to General
License No. 1B of March 2, 2021.5 As a
result of this listing, no item subject to
the Regulations may be exported,
reexported, or transferred (in-country) to
the FSB without prior authorization
from BIS, and BIS will review any
license applications for the FSB
pursuant to a policy of denial.6 The FSB
was originally listed on the Entity List
on January 4, 2017,7 with a license
review policy of presumption of denial
for all items subject to the EAR.8 As
such, as of January 4, 2017, a license
was required to export, reexport, or
transfer (in-country) all items subject to
the EAR to the FSB.
As of January 26, 2007, a license is
required for the export or reexport to
North Korea of all items subject to the
EAR other than food or medicine
designated as EAR99.9 This rule was
codified in Title 15 CFR 746.4, which
states ‘‘consistent with United Nations
Security Council Resolution 1718, a
3 ‘‘Item’’ means ‘‘commodities, software, and
technology.’’ 15 CFR 772.1. Further, ‘‘technology’’
may be in any tangible or intangible form, such as
written or oral communications, blueprints,
drawings, photographs, plans, diagrams, models,
formulae, tables, engineering designs and
specifications, computer-aided design files,
manuals or documentation, electronic media or
information revealed through visual inspection. Id.
4 The Entity List (supplement no. 4 to part 744 of
the EAR) identifies entities for which there is
reasonable cause to believe, based on specific and
articulable facts, that the entities have been
involved, are involved, or pose a significant risk of
being or becoming involved in activities contrary to
the national security or foreign policy interests of
the United States.
5 See 87 FR 34131 (Jun. 6, 2022). See also
§§ 734.9(g), 746.8(a)(3), and 744.21(b) of the EAR.
6 Id.
7 See 82 FR 722 (Jan. 4, 2017). See also 82 FR
18219 (Apr. 18, 2017), 86 FR 37903 (Jul. 19, 2021),
87 FR 12240 (Mar. 3, 2022), and 87 FR 34136 (Jun.
6, 2022) for additional listings of FSB-related
entities on the Entity List.
8 On March 2, 2021, the Department of State
designated the FSB pursuant to Executive Order
13382 for its contributions to the proliferation of
weapons of mass destruction. Thus, exports to the
FSB were also prohibited under 15 CFR 744.8.
9 See 52 FR 3722 (Jan. 26, 2007).
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license is required to export or reexport
any item subject to the EAR (see part
734 of the EAR) to the Democratic
People’s Republic of Korea (North
Korea), except food and medicines
classified as EAR99 (definitions in part
772 of the EAR).’’ 10
As referenced in the initial TDO, on
February 21, 2023, Balakaev was
indicted on multiple counts in the
United States District Court for the
Eastern District of New York. The
charges included, but were not limited
to, conspiring to violate U.S. export
control laws in connection with the
unlicensed export of electronic
spectrum analyzers, signal generators,
and gas detection equipment, among
other items, to Balakaev’s company
Radiotester, located in Moscow, Russia,
for ultimate end use by officials of the
FSB and the DPRK. As described in the
indictment and initial TDO, Radiotester
is owned or controlled by Balakaev. The
company is described on its website as
‘‘helping to quickly resolve issues of
supply and repair of foreign-made
measuring equipment’’ and as having
‘‘experience of working with large
federal, city-forming, manufacturing
enterprises’’.
As further detailed in the initial TDO,
Balakaev heads an illicit procurement
network consisting of an individual in
the United States, referred to herein as
‘‘Individual 3’’, who would assist
Balakaev in purchasing the electronic
equipment, as well as two members of
the FSB in Russia, referred to as FSB CoConspirator 1 and FSB Co-Conspirator
2, who worked in FSB Center 8’s
Military Unit 43753 and who would
publish a request for proposal (‘‘RFP’’)
to repair a device on publicly available
Russian websites (collectively, the
‘‘Balakaev Network’’). In particular,
Balakaev would purchase the electronic
devices on the internet or directly
through the United States-based
10 Additionally, BIS implemented broad based
controls for items and activities subject to the EAR
in support of U.S. national security and foreign
policy. 50 U.S.C. 481 l(l)–(2). These controls
included restrictions on exports and reexports to
the DPRK for United Nations (‘‘UN’’) and antiterrorism reasons. 15 CFR 746.4, 742.19. Consistent
with ECRA and UN Security Council Resolutions,
with limited exceptions, a license was required to
export or reexport any item subject to the EAR to
North Korea. 15 CFR 746.4. The DPRK was also
subject to a UN Security Council arms embargo, and
thus, militarily sensitive items were also restricted.
15 CFR746.1(b)(2). Furthermore, the Secretary of
State designated the DPRK a state sponsor of
terrorism and implemented additional restrictions
on it. 15 CFR 742.19(a)(2)–(3). For example,
additional prohibitions applied to certain items
destined for military, police, intelligence or other
sensitive end users or if an item would make a
significant contribution to the military potential of
the DPRK. 15 CFR 742.19(a)(3); Supplement No. 2
to part 742.
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manufacturers and ship them to
Individual 3’s home in Richmond,
Virginia. Then, often traveling through
the Eastern District of New York,
Balakaev flew to the United States to
pick up the devices and bring them back
to Russia or had Individual 3 and others
ship the electronic devices from the
United States to Russia. On occasion,
Balakaev directed others to travel with
the electronic devices from the United
States to Russia. Balakaev subsequently
used parts from the electronic devices to
repair FSB equipment or provided the
equipment directly to a DPRK official.
The electronic devices Balakaev
purchased, repaired, and sold to the
FSB and DPRK are subject to the EAR
and are items commonly used as part of
sensitive foreign counterintelligence
and military operations, including the
transmission of encrypted
communications, the ability to scan a
room to determine if it was bugged, and
the detection of hazardous gases.
As stated in the initial TDO, OEE has
presented evidence indicating that
Balakaev and the other above-captioned
parties were engaged in unlawfully
purchasing and shipping dual-use items
from U.S. manufacturers to the FSB and
DPRK. These items included advanced
electronics and sophisticated testing
equipment, some of which can be used
in sensitive foreign counterintelligence
and military operations.
The February 2023 indictment
charged Balakaev, owner of Radiotester,
with conspiring to defraud, conspiring
to violate IEEPA, conspiring to violate
ECRA, and smuggling goods from the
United States. The violations charged in
the indictment cover conduct occurring
between at least January 2017 through
February 2022, and it alleges that
Balakaev was not only aware of U.S.
export control laws but also took active
steps to evade U.S. export controls by
illicitly procuring items subject to the
EAR without the required BIS export
licenses.
i. Unlicensed Exports of U.S.-Origin
Electronic Devices to the FSB in Russia
As stated in the indictment and in the
initial TDO issued on February 24,
2023, Balakaev and his co-conspirators
in the Balakaev Network unlawfully
sourced, purchased, shipped and
transported spectrum analyzers and
signal generators from vendors and
manufacturers in the United States for
the benefit of the FSB in Russia.
Spectrum analyzers are generally used
to detect the frequency of radio signals
to identify surveillance devices. The
spectrum analyzers that were exported
by Balakaev are classified under ECCN
3A992.a and are controlled for Anti-
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Terrorism (AT) reasons. Signal
generators are generally used to securely
transmit information, often as part of
counterintelligence or other covert
operations. The signal generators that
were exported by Balakaev are classified
under ECCN 3A992.a and are controlled
for AT reasons. A license was required
to export these items to the FSB in
Russia.
As described in the indictment and in
the initial TDO, because many of the
spectrum analyzers and signal
generators used by the FSB were
manufactured in the United States, it is
difficult for the FSB to obtain parts to
repair these items. Pursuant to the
scheme involving the Balakaev
Network, Balakaev conspired with FSB
Co-Conspirator 1 and FSB CoConspirator 2, who worked in FSB
Center 8’s Military Unit 43753. In
particular, FSB Co-Conspirator 1 and
FSB Co-Conspirator 2 would publish a
RFP to repair certain devices on
publicly available Russian websites.
Balakaev, FSB Co-Conspirator 1, and
FSB Co-Conspirator 2 then negotiated a
contract price to repair the devices
before Balakaev submitted a bid in
response to the RFP. To ensure that
Balakaev won the bid, FSB CoConspirator 1 and FSB Co-Conspirator 2
instructed Balakaev to submit two
higher bids under fictious company
names, in addition to the agreed-upon
bid through Balakaev’s company,
Radiotester.
Once the FSB accepted Radiotester’s
bid and the contract was signed,
Balakaev traveled to FSB Center 8 in
Russia to pick up the broken device(s).
Either FSB Co-Conspirator 1 or FSB CoConspirator 2 would meet Balakaev
outside the secure gate of FSB Center 8
to provide Balakaev with the broken
device(s).
As described in the indictment and
the initial TDO, Balakaev then sourced
the necessary repair parts from the
United States. Balakaev either
purchased the devices over the internet
or directly from the U.S. manufacturers,
and had the devices shipped to
Individual 3’s home in Richmond,
Virginia. Once purchased, Balakaev
brought or shipped the devices to Russia
where he then mined the devices for
component parts to use to repair the
FSB devices. After Balakaev repaired
the devices, he returned to FSB Center
8, where he met with either FSB CoConspirator 1 or FSB Co-Conspirator 2
outside the FSB Center 8 gate to provide
the repaired devices. The FSB Military
Unit 43753 then wired payment to
Balakaev’s Sberbank account.
As also referenced in the indictment
and initial TDO, in total, between
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approximately 2017 and February 2022,
Balakaev entered into approximately ten
(10) contracts with FSB Military Unit
43753 to repair approximately forty (40)
spectrum analyzers and signal
generators. In furtherance of those
contracts, Balakaev purchased
approximately forty-three (43) devices
in the United States. Balakaev
frequently traveled between Russia and
the United States during this time to
obtain the devices, often through John F.
Kennedy International Airport (‘‘JFK
Airport’’) in the Eastern District of New
York. In furtherance of the scheme to
unlawfully export controlled items from
the United States to the FSB, on or
about and between February 2017 and
March 2021, Balakaev traveled from
Russia to the United States
approximately fourteen (14) times,
typically staying in the United States
anywhere from two (2) to fourteen (14)
days on each trip. Included below is one
example of the multiple unlawful
exports to the FSB which are described
in further detail in the indictment.
By way of example, on or about
December 19, 2019, Balakaev, acting
through Radiotester, entered into a
contract with the FSB Military Unit
43753. As described in the indictment,
the contract was to repair an Agilent HP
8562EC and two Agilent HP 8560EC
spectrum analyzers. According to
purchase records and shipment
notifications, Balakaev purchased two
Agilent HP 8560E spectrum analyzers
that were delivered to Individual 3’s
home in Richmond, Virginia on or about
January 14, 2020 and January 15, 2020.
Approximately one month later, on or
about February 10, 2020, Balakaev flew
from Russia to the United States, where
he stayed for approximately one week,
in order to obtain the two Agilent HP
8560E spectrum analyzers that he
purchased. While in the United States,
on or about February 17, 2020, Balakaev
emailed FSB Co-Conspirator 1 with the
subject of the email ‘‘Repair Contracts
43753’’ and attached a PDF about
spectrum analyzers. The following
month, in or about March 2020,
Balakaev purchased an Agilent HP
8562EC spectrum analyzer to fulfill the
FSB contract. On or about March 21,
2020, the device was delivered to
Individual 3’s home in Richmond,
Virginia.
In addition to the example described
above, between approximately April 16,
2020 and March 6, 2021, Balakaev
purchased approximately thirty (30)
additional spectrum analyzers,
spectrum analyzer parts, and other radio
parts which were shipped to Individual
3’s home in Richmond, Virginia.
Balakaev also traveled to the United
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States twice in 2021 to obtain the
devices and fulfill his FSB contracts.
Further, in approximately January 2022,
Balakaev, through Radiotester, entered
into a new contract with FSB Military
Unit 43753 to repair six spectrum
analyzers and signal generators,
including the following make and
models: HP8648D; Agilent HP 8562E;
Agilent HP 8562EC; Rohde & Schwarz
FS300; and Rohde & Schwarz SM300. In
approximately February 2022, Balakaev
picked up the devices from FSB CoConspirator 1 at FSB Center 8 to begin
the process of procuring spectrum
analyzers for use in repairing the
devices.
ii. Unlicensed Exports of U.S.-Origin
Gas Detection Equipment to the DPRK
Between approximately 2019 and
2020, Balakaev conspired with DPRK
Government Official 1, the First
Secretary of the Embassy of the DPRK to
the Russian Federation, to provide the
DPRK with U.S.-origin technology that
can detect hazardous gases, in violation
of United States laws.
As described in the indictment and in
the initial TDO, in approximately 2019,
DPRK Government Official 1 contacted
Balakaev to discuss business they could
engage in together. DPRK Government
Official 1 contacted Balakaev
specifically due to connections that
Balakaev had made while working at the
Russian Ministry of Culture and in his
travel to North Korea. Balakaev
subsequently met DPRK Government
Official 1 multiple times at the North
Korean embassy in Moscow, Russia. On
one of those occasions, DPRK
Government Official 1 asked Balakaev to
purchase an Altair 4X gas detector for
the DPRK. The Altair 4X gas detector is
a device manufactured by a company in
the United States that can be used to
detect deadly gases such as combustible
gases, oxygen-deficient atmospheres,
and toxic gases. The Altair 4X gas
detector is subject to the EAR and
designated as EAR99.11
On approximately December 28, 2019,
Balakaev purchased the Altair 4X gas
detector on the internet in the United
States and had it shipped to Individual
3’s home in Richmond, Virginia. On
January 2, 2020, the shipment arrived at
Individual 3’s home. Approximately
two months later, on or about February
9, 2020, DPRK Government Official 1
sent Balakaev a photograph of a broken
CD labeled ‘‘Altair 4XR Multigas
Detector.’’ Balakaev responded, in sum
and substance, that he would send a
11 The Altair 4X gas detector would not fall
within the exception set forth in § 746.4 as it is not
EAR99 food or medicine.
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link for the gas detector software. As
further described in the indictment and
initial TDO, on or about February 10,
2020, Balakaev traveled from Russia to
the United States to obtain the gas
detector that was previously shipped to
Individual 3’s home. Approximately one
week later, on or about February 17,
2020, Balakaev returned to Russia with
the gas detector.
As the indictment and initial TDO
further demonstrate, Balakaev was
aware of the applicable U.S. export
control laws which prohibited him from
purchasing the electronic devices in the
United States for ultimate end use by
the FSB and DPRK. As described in the
indictment, on or about November 5,
2019, Individual 3 emailed Balakaev a
hyperlink to a BIS document titled
‘‘Don’t Let This Happen To You!: Actual
Investigations of Export Control and
Antiboycott Violations.’’ In the email,
Individual 3 wrote to Balakaev to ‘‘Take
a look just in case.’’ The BIS document
provided ‘‘an introduction to the
consequences of violating U.S. export
control law.’’ In addition to explaining
U.S. export control laws, the document
noted specific examples of individuals
who violated U.S. sanctions regulations
by exporting items to Russia without a
BIS license. Balakaev subsequently
downloaded the document and saved
the document to his computer.
2. Basis for Renewal of TDO
i. Recent Procurement Attempts
As noted in OEE’s request for
renewal, OEE’s investigation, which
remains ongoing, has identified
evidence of multiple transactions
involving Balakaev and the Balakaev
Network dating back to 2017. As
described in the indictment, Balakaev
has demonstrated a pattern of conduct
involving the illicit procurement and
unauthorized exports of EAR-controlled
items for end use by the FSB and DPRK.
Further, on October 18, 2022, Balakaev
made statements to law enforcement
that he intended to continue to procure
EAR-controlled items through other
means and is still obtaining contracts
through the FSB.
In addition, Balakaev informed agents
that he had fulfilled FSB contracts he
had obtained in January 2022 for the
repair of six devices, and that he was
currently negotiating with FSB CoConspirators for new contracts in
January or February 2023. According to
Balakaev, the new contracts were not
public yet and the FSB Co-Conspirators
would advise Balakaev to review the
contracts. Accordingly, OEE has reason
to believe that Balakaev and the other
above-captioned parties continue to
PO 00000
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Fmt 4703
Sfmt 4703
58241
engage in unlawfully purchasing and
shipping dual-use items from U.S.
manufacturers to the FSB and DPRK.
These items include advanced
electronics and sophisticated testing
equipment, some of which can be used
in sensitive foreign counterintelligence
and military operations.
ii. Risk of Continued Evasion
Since the issuance of the TDO on
February 24, 2023, an arrest warrant has
been issued for Ilya Balakaev. Ilya
Balakaev is presently a fugitive from
U.S. law enforcement and resides in the
Russian Federation. Because he has not
yet been apprehended, OEE has reason
to believe that his illicit procurement
efforts will remain ongoing, given the
length and nature of the conduct
identified to date. Moreover, because
Balakaev is familiar with methods of
concealment, he is likely to use
increasingly sophisticated methods to
avoid detection by law enforcement,
absent the renewal of the TDO.
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 Ilya Balakaev and Radiotester OOO
a/k/a Radiotester LLC 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 ILYA BALAKAEV, with an
address at Sharikopodshipnikovkaya
20–68 Moscow, Russian Federation;
RADIOTESTER OOO A/K/A
RADIOTESTER LLC, with an address at
Sharikopodshipnikovskaya 11, Building
1, Moscow, 115088, Russian Federation,
and Volgograd Prospect, House 2,
Moscow, 109316, Russian Federation;
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
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58242
Federal Register / Vol. 88, No. 164 / Friday, August 25, 2023 / Notices
(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 (incountry) 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 Ilya Balakaev
and Radiotester OOO a/k/a Radiotester
VerDate Sep<11>2014
18:23 Aug 24, 2023
Jkt 259001
LLC 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, Ilya
Balakaev and Radiotester OOO a/k/a
Radiotester LLC 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
Ilya Balakaev and Radiotester OOO a/k/
a Radiotester LLC 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. 2023–18311 Filed 8–24–23; 8:45 am]
BILLING CODE 3510–DT–P
DEPARTMENT OF COMMERCE
International Trade Administration
[A–570–909]
Certain Steel Nails From the People’s
Republic of China: Preliminary Results
of Antidumping Duty Administrative
Review and Preliminary Determination
of No Shipments; 2021–2022
Enforcement and Compliance,
International Trade Administration,
Department of Commerce.
SUMMARY: The U.S. Department of
Commerce (Commerce) preliminarily
determines that Shanghai Yueda Nails
Co., Ltd., a.k.a. Shanghai Yueda Nails
Industry Co., Ltd. (Shanghai Yueda), an
exporter of certain steel nails from the
People’s Republic of China (China), sold
subject merchandise in the United
States at prices below normal value
(NV) during the period of review (POR)
August 1, 2021, through July 31, 2022.
Interested parties are invited to
comment on these preliminary results.
DATES: Applicable August 25, 2023.
AGENCY:
PO 00000
Frm 00009
Fmt 4703
Sfmt 4703
Bob
Palmer or Bill Horn, AD/CVD
Operations, Office VIII, Enforcement
and Compliance, International Trade
Administration, Department of
Commerce, 1401 Constitution Avenue
NW, Washington, DC 20230; telephone:
(202) 482–9068 or (202) 482–4868,
respectively.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
Background
This administrative review is being
conducted in accordance with section
751(a) of the Tariff Act of 1930, as
amended (the Act). Commerce
published the notice of initiation of this
administrative review on October 11,
2022.1 On March 28, 2023, Commerce
extended the preliminary results
deadline until August 18, 2023.2
Scope of the Order 3
The products covered by the Order
are nails from China. A full description
of the scope of the Order is contained
in the Preliminary Decision
Memorandum.4
Preliminary Determination of No
Shipments
Based on our analysis of U.S. Customs
and Border Protection (CBP)
information, and the no shipment
certifications submitted by eight
companies,5 Commerce preliminarily
determines that these companies had no
shipments of subject merchandise
during the POR.
Consistent with our practice in nonmarket economy (NME) cases, we are
not rescinding this review but instead
intend to complete the review with
respect to these eight companies for
which we have preliminarily found no
shipments and issue appropriate
1 See Initiation of Antidumping and
Countervailing Duty Administrative Reviews, 87 FR
61278 (October 11, 2022).
2 See Memorandum, ‘‘Extension of Deadline for
Preliminary Results of Antidumping Duty
Administrative Review,’’ dated March 29, 2023.
3 See Notice of Antidumping Duty Order: Certain
Steel Nails from the People’s Republic of China, 73
FR 44961 (August 1, 2008) (Order).
4 For a complete description of the scope of the
Order, see Memorandum, ‘‘Decision Memorandum
for the Preliminary Results of Antidumping Duty
Administrative Review: Certain Steel Nails from the
People’s Republic of China; 2021–2022,’’ dated
concurrently with, and hereby adopted by, this
notice (Preliminary Decision Memorandum).
5 The companies that we preliminarily determine
had no shipments during the POR are: (1) Hebei
Minmetals Co., Ltd.; (2) Nanjing Caiqing Hardware
Co., Ltd.; (3) Nanjing Yuechang Hardware Co., Ltd.;
(4) Shandong Qingyun Hongyi Hardware Products
Co., Ltd.; (5) Shanxi Hairui Trade Co., Ltd.; (6)
Suntec Industries Co., Ltd.; (7) Tianjin Jinchi Metal
Products Co., Ltd.; and (8) Xi’an Metals & Minerals
Import & Export Co., Ltd.
E:\FR\FM\25AUN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 164 (Friday, August 25, 2023)]
[Notices]
[Pages 58238-58242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18311]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Ilya Balakaev,
Sharikopodshipnikovkaya 20-68,
Moscow, Russian Federation;
Radiotester OOO,
a/k/a Radiotester LLC,
Sharikopodshipnikovskaya 11, Building 1,
Moscow, 115088, Russian Federation
and
Volgograd Prospect, House 2,
Moscow, 109316, Russian Federation;
Order Renewing Temporary Denial of Export Privileges
Pursuant to Section 766.24 of the Export Administration Regulations
(the ``Regulations'' or ``EAR''),\1\ I hereby grant the request of the
Bureau of Industry and Security (``BIS''), U.S. Department of Commerce,
through its Office of Export Enforcement (``OEE''), to renew the
temporary denial order (``TDO'') issued in this matter on February 24,
2023. I find that renewal of this order is necessary in the public
interest to prevent an imminent violation of the Regulations.
---------------------------------------------------------------------------
\1\ The Regulations, currently codified at 15 CFR parts 730-774
(2020), 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.
---------------------------------------------------------------------------
I. Procedural History
On February 24, 2023, I signed an order denying the export
privileges of Ilya Balakaev and Radiotester OOO a/k/a Radiotester LLC
(collectively, ``the Respondents'') for a period of 180 days on the
ground that issuance of the order was necessary in the public interest
to prevent an imminent violation of the Regulations. The order was
issued ex parte pursuant to Section 766.24(a) of the Regulations and
was effective upon issuance.\2\
---------------------------------------------------------------------------
\2\ The TDO was published in the Federal Register on March 1,
2023 (88 FR 12912).
---------------------------------------------------------------------------
On July 31, 2023, BIS, through OEE, submitted a written request for
renewal of the TDO that was issued on February 24, 2023. The written
request was made more than 20 days before the TDO's scheduled
expiration. A copy of the renewal request was sent to Respondents in
accordance with Sections 766.5 and 766.24(d) of the Regulations. No
opposition to the renewal of the TDO has been received.
II. Renewal of the TDO
A. 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[.]'' 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.
Pursuant to Sections 766.23 and 766.24, TDO may also be made
applicable to other persons if BIS has reason to believe that they are
related to a respondent and that applying the order to them is
necessary to prevent its evasion. 15 CFR 766.23(a)-(b) and 766.24(c). A
``related person'' is a person, either at the time of the TDO's
issuance or thereafter, who is related to a respondent ``by ownership,
control, position of responsibility, affiliation, or other connection
in the conduct of trade or business.'' 15 CFR 766.23(a). Related
persons may be added to a TDO on an
[[Page 58239]]
ex-parte basis in accordance with Section 766.23(b) of the Regulations.
15 CFR 766.23(b).
B. The TDO and BIS's Request for Renewal
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.''
OEE's request for renewal is based upon the facts underlying the
issuance of the initial TDO and the evidence developed over the course
of this investigation, which demonstrate the existence of an illicit
procurement network conspiring to violate U.S. export control laws by
unlawfully procuring and shipping controlled counterintelligence items
to Russia and North Korea. As detailed in its July 31, 2023 request for
renewal of the TDO, OEE's investigation, which remains ongoing, has
revealed evidence that this illicit network and its reach remain
ongoing. As a result, the renewal of this order is necessary.
1. The Basis for the Initial TDO
As detailed in the initial TDO issued on February 24, 2023,
Balakaev engaged in conduct prohibited by the Regulations by unlawfully
procuring and exporting from the United States electronic devices
subject to the EAR to the Federal Security Service of the Russian
Federation (``FSB''), a BIS-listed entity located in the Russian
Federation (``Russia''), and to the Democratic People's Republic of
Korea (``North Korea'' or ``DPRK'') without the required U.S.
government authorization. ``Export'' is defined in the EAR as an
``actual shipment or transmission out of the United States, including
the sending or taking of an item out of the United States, in any
manner.'' 15 CFR 734.13(a)(1).\3\
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\3\ ``Item'' means ``commodities, software, and technology.'' 15
CFR 772.1. Further, ``technology'' may be in any tangible or
intangible form, such as written or oral communications, blueprints,
drawings, photographs, plans, diagrams, models, formulae, tables,
engineering designs and specifications, computer-aided design files,
manuals or documentation, electronic media or information revealed
through visual inspection. Id.
---------------------------------------------------------------------------
The FSB is listed on the Commerce Department's Entity List \4\ with
a policy of denial for all items subject to the EAR with certain
exceptions for transactions authorized by the Department of the
Treasury's Office of Foreign Assets Control (``OFAC'') pursuant to
General License No. 1B of March 2, 2021.\5\ As a result of this
listing, no item subject to the Regulations may be exported,
reexported, or transferred (in-country) to the FSB without prior
authorization from BIS, and BIS will review any license applications
for the FSB pursuant to a policy of denial.\6\ The FSB was originally
listed on the Entity List on January 4, 2017,\7\ with a license review
policy of presumption of denial for all items subject to the EAR.\8\ As
such, as of January 4, 2017, a license was required to export,
reexport, or transfer (in-country) all items subject to the EAR to the
FSB.
---------------------------------------------------------------------------
\4\ The Entity List (supplement no. 4 to part 744 of the EAR)
identifies entities for which there is reasonable cause to believe,
based on specific and articulable facts, that the entities have been
involved, are involved, or pose a significant risk of being or
becoming involved in activities contrary to the national security or
foreign policy interests of the United States.
\5\ See 87 FR 34131 (Jun. 6, 2022). See also Sec. Sec.
734.9(g), 746.8(a)(3), and 744.21(b) of the EAR.
\6\ Id.
\7\ See 82 FR 722 (Jan. 4, 2017). See also 82 FR 18219 (Apr. 18,
2017), 86 FR 37903 (Jul. 19, 2021), 87 FR 12240 (Mar. 3, 2022), and
87 FR 34136 (Jun. 6, 2022) for additional listings of FSB-related
entities on the Entity List.
\8\ On March 2, 2021, the Department of State designated the FSB
pursuant to Executive Order 13382 for its contributions to the
proliferation of weapons of mass destruction. Thus, exports to the
FSB were also prohibited under 15 CFR 744.8.
---------------------------------------------------------------------------
As of January 26, 2007, a license is required for the export or
reexport to North Korea of all items subject to the EAR other than food
or medicine designated as EAR99.\9\ This rule was codified in Title 15
CFR 746.4, which states ``consistent with United Nations Security
Council Resolution 1718, a license is required to export or reexport
any item subject to the EAR (see part 734 of the EAR) to the Democratic
People's Republic of Korea (North Korea), except food and medicines
classified as EAR99 (definitions in part 772 of the EAR).'' \10\
---------------------------------------------------------------------------
\9\ See 52 FR 3722 (Jan. 26, 2007).
\10\ Additionally, BIS implemented broad based controls for
items and activities subject to the EAR in support of U.S. national
security and foreign policy. 50 U.S.C. 481 l(l)-(2). These controls
included restrictions on exports and reexports to the DPRK for
United Nations (``UN'') and anti-terrorism reasons. 15 CFR 746.4,
742.19. Consistent with ECRA and UN Security Council Resolutions,
with limited exceptions, a license was required to export or
reexport any item subject to the EAR to North Korea. 15 CFR 746.4.
The DPRK was also subject to a UN Security Council arms embargo, and
thus, militarily sensitive items were also restricted. 15
CFR746.1(b)(2). Furthermore, the Secretary of State designated the
DPRK a state sponsor of terrorism and implemented additional
restrictions on it. 15 CFR 742.19(a)(2)-(3). For example, additional
prohibitions applied to certain items destined for military, police,
intelligence or other sensitive end users or if an item would make a
significant contribution to the military potential of the DPRK. 15
CFR 742.19(a)(3); Supplement No. 2 to part 742.
---------------------------------------------------------------------------
As referenced in the initial TDO, on February 21, 2023, Balakaev
was indicted on multiple counts in the United States District Court for
the Eastern District of New York. The charges included, but were not
limited to, conspiring to violate U.S. export control laws in
connection with the unlicensed export of electronic spectrum analyzers,
signal generators, and gas detection equipment, among other items, to
Balakaev's company Radiotester, located in Moscow, Russia, for ultimate
end use by officials of the FSB and the DPRK. As described in the
indictment and initial TDO, Radiotester is owned or controlled by
Balakaev. The company is described on its website as ``helping to
quickly resolve issues of supply and repair of foreign-made measuring
equipment'' and as having ``experience of working with large federal,
city-forming, manufacturing enterprises''.
As further detailed in the initial TDO, Balakaev heads an illicit
procurement network consisting of an individual in the United States,
referred to herein as ``Individual 3'', who would assist Balakaev in
purchasing the electronic equipment, as well as two members of the FSB
in Russia, referred to as FSB Co-Conspirator 1 and FSB Co-Conspirator
2, who worked in FSB Center 8's Military Unit 43753 and who would
publish a request for proposal (``RFP'') to repair a device on publicly
available Russian websites (collectively, the ``Balakaev Network''). In
particular, Balakaev would purchase the electronic devices on the
internet or directly through the United States-based
[[Page 58240]]
manufacturers and ship them to Individual 3's home in Richmond,
Virginia. Then, often traveling through the Eastern District of New
York, Balakaev flew to the United States to pick up the devices and
bring them back to Russia or had Individual 3 and others ship the
electronic devices from the United States to Russia. On occasion,
Balakaev directed others to travel with the electronic devices from the
United States to Russia. Balakaev subsequently used parts from the
electronic devices to repair FSB equipment or provided the equipment
directly to a DPRK official. The electronic devices Balakaev purchased,
repaired, and sold to the FSB and DPRK are subject to the EAR and are
items commonly used as part of sensitive foreign counterintelligence
and military operations, including the transmission of encrypted
communications, the ability to scan a room to determine if it was
bugged, and the detection of hazardous gases.
As stated in the initial TDO, OEE has presented evidence indicating
that Balakaev and the other above-captioned parties were engaged in
unlawfully purchasing and shipping dual-use items from U.S.
manufacturers to the FSB and DPRK. These items included advanced
electronics and sophisticated testing equipment, some of which can be
used in sensitive foreign counterintelligence and military operations.
The February 2023 indictment charged Balakaev, owner of
Radiotester, with conspiring to defraud, conspiring to violate IEEPA,
conspiring to violate ECRA, and smuggling goods from the United States.
The violations charged in the indictment cover conduct occurring
between at least January 2017 through February 2022, and it alleges
that Balakaev was not only aware of U.S. export control laws but also
took active steps to evade U.S. export controls by illicitly procuring
items subject to the EAR without the required BIS export licenses.
i. Unlicensed Exports of U.S.-Origin Electronic Devices to the FSB in
Russia
As stated in the indictment and in the initial TDO issued on
February 24, 2023, Balakaev and his co-conspirators in the Balakaev
Network unlawfully sourced, purchased, shipped and transported spectrum
analyzers and signal generators from vendors and manufacturers in the
United States for the benefit of the FSB in Russia. Spectrum analyzers
are generally used to detect the frequency of radio signals to identify
surveillance devices. The spectrum analyzers that were exported by
Balakaev are classified under ECCN 3A992.a and are controlled for Anti-
Terrorism (AT) reasons. Signal generators are generally used to
securely transmit information, often as part of counterintelligence or
other covert operations. The signal generators that were exported by
Balakaev are classified under ECCN 3A992.a and are controlled for AT
reasons. A license was required to export these items to the FSB in
Russia.
As described in the indictment and in the initial TDO, because many
of the spectrum analyzers and signal generators used by the FSB were
manufactured in the United States, it is difficult for the FSB to
obtain parts to repair these items. Pursuant to the scheme involving
the Balakaev Network, Balakaev conspired with FSB Co-Conspirator 1 and
FSB Co-Conspirator 2, who worked in FSB Center 8's Military Unit 43753.
In particular, FSB Co-Conspirator 1 and FSB Co-Conspirator 2 would
publish a RFP to repair certain devices on publicly available Russian
websites. Balakaev, FSB Co-Conspirator 1, and FSB Co-Conspirator 2 then
negotiated a contract price to repair the devices before Balakaev
submitted a bid in response to the RFP. To ensure that Balakaev won the
bid, FSB Co-Conspirator 1 and FSB Co-Conspirator 2 instructed Balakaev
to submit two higher bids under fictious company names, in addition to
the agreed-upon bid through Balakaev's company, Radiotester.
Once the FSB accepted Radiotester's bid and the contract was
signed, Balakaev traveled to FSB Center 8 in Russia to pick up the
broken device(s). Either FSB Co-Conspirator 1 or FSB Co-Conspirator 2
would meet Balakaev outside the secure gate of FSB Center 8 to provide
Balakaev with the broken device(s).
As described in the indictment and the initial TDO, Balakaev then
sourced the necessary repair parts from the United States. Balakaev
either purchased the devices over the internet or directly from the
U.S. manufacturers, and had the devices shipped to Individual 3's home
in Richmond, Virginia. Once purchased, Balakaev brought or shipped the
devices to Russia where he then mined the devices for component parts
to use to repair the FSB devices. After Balakaev repaired the devices,
he returned to FSB Center 8, where he met with either FSB Co-
Conspirator 1 or FSB Co-Conspirator 2 outside the FSB Center 8 gate to
provide the repaired devices. The FSB Military Unit 43753 then wired
payment to Balakaev's Sberbank account.
As also referenced in the indictment and initial TDO, in total,
between approximately 2017 and February 2022, Balakaev entered into
approximately ten (10) contracts with FSB Military Unit 43753 to repair
approximately forty (40) spectrum analyzers and signal generators. In
furtherance of those contracts, Balakaev purchased approximately forty-
three (43) devices in the United States. Balakaev frequently traveled
between Russia and the United States during this time to obtain the
devices, often through John F. Kennedy International Airport (``JFK
Airport'') in the Eastern District of New York. In furtherance of the
scheme to unlawfully export controlled items from the United States to
the FSB, on or about and between February 2017 and March 2021, Balakaev
traveled from Russia to the United States approximately fourteen (14)
times, typically staying in the United States anywhere from two (2) to
fourteen (14) days on each trip. Included below is one example of the
multiple unlawful exports to the FSB which are described in further
detail in the indictment.
By way of example, on or about December 19, 2019, Balakaev, acting
through Radiotester, entered into a contract with the FSB Military Unit
43753. As described in the indictment, the contract was to repair an
Agilent HP 8562EC and two Agilent HP 8560EC spectrum analyzers.
According to purchase records and shipment notifications, Balakaev
purchased two Agilent HP 8560E spectrum analyzers that were delivered
to Individual 3's home in Richmond, Virginia on or about January 14,
2020 and January 15, 2020. Approximately one month later, on or about
February 10, 2020, Balakaev flew from Russia to the United States,
where he stayed for approximately one week, in order to obtain the two
Agilent HP 8560E spectrum analyzers that he purchased. While in the
United States, on or about February 17, 2020, Balakaev emailed FSB Co-
Conspirator 1 with the subject of the email ``Repair Contracts 43753''
and attached a PDF about spectrum analyzers. The following month, in or
about March 2020, Balakaev purchased an Agilent HP 8562EC spectrum
analyzer to fulfill the FSB contract. On or about March 21, 2020, the
device was delivered to Individual 3's home in Richmond, Virginia.
In addition to the example described above, between approximately
April 16, 2020 and March 6, 2021, Balakaev purchased approximately
thirty (30) additional spectrum analyzers, spectrum analyzer parts, and
other radio parts which were shipped to Individual 3's home in
Richmond, Virginia. Balakaev also traveled to the United
[[Page 58241]]
States twice in 2021 to obtain the devices and fulfill his FSB
contracts. Further, in approximately January 2022, Balakaev, through
Radiotester, entered into a new contract with FSB Military Unit 43753
to repair six spectrum analyzers and signal generators, including the
following make and models: HP8648D; Agilent HP 8562E; Agilent HP
8562EC; Rohde & Schwarz FS300; and Rohde & Schwarz SM300. In
approximately February 2022, Balakaev picked up the devices from FSB
Co-Conspirator 1 at FSB Center 8 to begin the process of procuring
spectrum analyzers for use in repairing the devices.
ii. Unlicensed Exports of U.S.-Origin Gas Detection Equipment to the
DPRK
Between approximately 2019 and 2020, Balakaev conspired with DPRK
Government Official 1, the First Secretary of the Embassy of the DPRK
to the Russian Federation, to provide the DPRK with U.S.-origin
technology that can detect hazardous gases, in violation of United
States laws.
As described in the indictment and in the initial TDO, in
approximately 2019, DPRK Government Official 1 contacted Balakaev to
discuss business they could engage in together. DPRK Government
Official 1 contacted Balakaev specifically due to connections that
Balakaev had made while working at the Russian Ministry of Culture and
in his travel to North Korea. Balakaev subsequently met DPRK Government
Official 1 multiple times at the North Korean embassy in Moscow,
Russia. On one of those occasions, DPRK Government Official 1 asked
Balakaev to purchase an Altair 4X gas detector for the DPRK. The Altair
4X gas detector is a device manufactured by a company in the United
States that can be used to detect deadly gases such as combustible
gases, oxygen-deficient atmospheres, and toxic gases. The Altair 4X gas
detector is subject to the EAR and designated as EAR99.\11\
---------------------------------------------------------------------------
\11\ The Altair 4X gas detector would not fall within the
exception set forth in Sec. 746.4 as it is not EAR99 food or
medicine.
---------------------------------------------------------------------------
On approximately December 28, 2019, Balakaev purchased the Altair
4X gas detector on the internet in the United States and had it shipped
to Individual 3's home in Richmond, Virginia. On January 2, 2020, the
shipment arrived at Individual 3's home. Approximately two months
later, on or about February 9, 2020, DPRK Government Official 1 sent
Balakaev a photograph of a broken CD labeled ``Altair 4XR Multigas
Detector.'' Balakaev responded, in sum and substance, that he would
send a link for the gas detector software. As further described in the
indictment and initial TDO, on or about February 10, 2020, Balakaev
traveled from Russia to the United States to obtain the gas detector
that was previously shipped to Individual 3's home. Approximately one
week later, on or about February 17, 2020, Balakaev returned to Russia
with the gas detector.
As the indictment and initial TDO further demonstrate, Balakaev was
aware of the applicable U.S. export control laws which prohibited him
from purchasing the electronic devices in the United States for
ultimate end use by the FSB and DPRK. As described in the indictment,
on or about November 5, 2019, Individual 3 emailed Balakaev a hyperlink
to a BIS document titled ``Don't Let This Happen To You!: Actual
Investigations of Export Control and Antiboycott Violations.'' In the
email, Individual 3 wrote to Balakaev to ``Take a look just in case.''
The BIS document provided ``an introduction to the consequences of
violating U.S. export control law.'' In addition to explaining U.S.
export control laws, the document noted specific examples of
individuals who violated U.S. sanctions regulations by exporting items
to Russia without a BIS license. Balakaev subsequently downloaded the
document and saved the document to his computer.
2. Basis for Renewal of TDO
i. Recent Procurement Attempts
As noted in OEE's request for renewal, OEE's investigation, which
remains ongoing, has identified evidence of multiple transactions
involving Balakaev and the Balakaev Network dating back to 2017. As
described in the indictment, Balakaev has demonstrated a pattern of
conduct involving the illicit procurement and unauthorized exports of
EAR-controlled items for end use by the FSB and DPRK. Further, on
October 18, 2022, Balakaev made statements to law enforcement that he
intended to continue to procure EAR-controlled items through other
means and is still obtaining contracts through the FSB.
In addition, Balakaev informed agents that he had fulfilled FSB
contracts he had obtained in January 2022 for the repair of six
devices, and that he was currently negotiating with FSB Co-Conspirators
for new contracts in January or February 2023. According to Balakaev,
the new contracts were not public yet and the FSB Co-Conspirators would
advise Balakaev to review the contracts. Accordingly, OEE has reason to
believe that Balakaev and the other above-captioned parties continue to
engage in unlawfully purchasing and shipping dual-use items from U.S.
manufacturers to the FSB and DPRK. These items include advanced
electronics and sophisticated testing equipment, some of which can be
used in sensitive foreign counterintelligence and military operations.
ii. Risk of Continued Evasion
Since the issuance of the TDO on February 24, 2023, an arrest
warrant has been issued for Ilya Balakaev. Ilya Balakaev is presently a
fugitive from U.S. law enforcement and resides in the Russian
Federation. Because he has not yet been apprehended, OEE has reason to
believe that his illicit procurement efforts will remain ongoing, given
the length and nature of the conduct identified to date. Moreover,
because Balakaev is familiar with methods of concealment, he is likely
to use increasingly sophisticated methods to avoid detection by law
enforcement, absent the renewal of the TDO.
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 Ilya Balakaev and Radiotester OOO a/k/a
Radiotester LLC 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 ILYA BALAKAEV, with an address at
Sharikopodshipnikovkaya 20-68 Moscow, Russian Federation; RADIOTESTER
OOO A/K/A RADIOTESTER LLC, with an address at Sharikopodshipnikovskaya
11, Building 1, Moscow, 115088, Russian Federation, and Volgograd
Prospect, House 2, Moscow, 109316, Russian Federation; 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
[[Page 58242]]
(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 Ilya Balakaev and Radiotester OOO a/k/
a Radiotester LLC 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,
Ilya Balakaev and Radiotester OOO a/k/a Radiotester LLC 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 Ilya
Balakaev and Radiotester OOO a/k/a Radiotester LLC 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. 2023-18311 Filed 8-24-23; 8:45 am]
BILLING CODE 3510-DT-P
