A Russian businessman has pled guilty to smuggling and money laundering for funneling $1.6 million to a Dutchess County manufacturer to buy sanctioned weapons-grade devices.
Maxim Marchenko, 51, of Hong Kong, admitted in U.S. District Court, White Plains, on Feb. 29 that he bought devices that were banned for sale to Russia after the invasion of Ukraine in February 2022.
“For many years before then,” defense attorney Kerry Lawrence said in an email, “it was entirely permissible for these components to be sent to Russia.” Marchenko, he said, “has a lifetime of honest hard work and is looking forward to getting back to Russia as soon as possible.”
Marchenko sought OLED displays from a Dutchess manufacturer that is not identified in the charging papers. A Samsung Electronics Co. affiliate, e2Magin, makes OLED displays in Hopewell Junction.
The devices are put in several commercial, industrial and military products, including electron microscopes used for medical research and military-grade weapons such as rifle scopes and night-vision goggles.
“Russia is highly dependent on Western-sourced micro-electronics for its military hardware,” an FBI agent stated in an August probable cause affidavit. “Russia’s … rocket systems, drones, ballistic missiles, tactical radios, and electronic warfare devices contain a range of predominantly Western-sourced components and micro-electronics that are critical to their functions.”
One of Marchenko’s Hong Kong companies began buying OLED displays in 2014, according to the affidavit, and shipping them to a Russian, state-owned civil defense organization to be used in rescue kits.
After Russia invaded Ukraine, the U.S. imposed tough export sanctions. The Dutchess company noticed.
“Probably more than obvious at this time,” an executive stated in an email to employees, “but the company and board have decided it is no longer right for us to sell or ship to Russian customers and risk that our displays will be used in devices that could put US or NATO forces in harm’s way, or support Russia’s unlawful invasion of Ukraine and its human rights abuse.”
Then Marchenko and two unidentified Russian co-conspirators set up an illicit procurement network, according to the government.
They used shell companies to procure the OLED displays, conceal payments coming from Russia and disguise shipments to Russia.
For instance, a new company was formed to buy the OLED displays and the manufacturer was told that the devices would be used in electron microscopes in China, Hong Kong, Malaysia, and Europe.
The charging papers do not say how the procurement network was infiltrated, but refer to an undercover FBI agent and an “undercover company.”
Marchenko could be imprisoned for up to 10 years for smuggling and 20 years for money laundering. Sentencing is scheduled for June 6 by U.S. District Judge Nelson S. Román in White Plains.
