Notice2022-27347
Order Temporarily Denying Export Privileges
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 16, 2022
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Full Text
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<title>Federal Register, Volume 87 Issue 241 (Friday, December 16, 2022)</title>
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[Federal Register Volume 87, Number 241 (Friday, December 16, 2022)]
[Notices]
[Pages 77067-77070]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[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.
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\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.
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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.
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\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.
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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.
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\4\ Additional charges include money laundering, wire fraud,
bank fraud, and conspiring to defraud the United States.
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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[@]<a href="http://awsresearch.net">awsresearch.net</a>,'' 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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</html>Indexed from Federal Register on December 16, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.