Notice2023-12679
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; Nikolaos Bogonikolos, Artemidos 36, Palaio Faliro, Attica, Greece; Aratos Group, L. Amfitheas 10, Athens, 17564, Greece. and 10 Amfitheas Avenue, 17564, Palaio Faliro, Greece; Order Renewing Temporary Denial of 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
June 14, 2023
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Full Text
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<title>Federal Register, Volume 88 Issue 114 (Wednesday, June 14, 2023)</title>
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[Federal Register Volume 88, Number 114 (Wednesday, June 14, 2023)]
[Notices]
[Pages 38813-38815]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-12679]
[[Page 38813]]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
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; Nikolaos Bogonikolos, Artemidos 36, Palaio Faliro, Attica,
Greece; Aratos Group, L. Amfitheas 10, Athens, 17564, Greece. and 10
Amfitheas Avenue, 17564, Palaio Faliro, Greece; 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 December 13,
2022. I find that renewal of this order, along with the additions and
denial of the export privileges of Nikolaos Bogonikolos
(``Bogonikolos'') and the Aratos Group (``Aratos''), are necessary in
the public interest to prevent an imminent violation of the
Regulations.
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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. Procedural History
On December 13, 2022, I signed an order denying the export
privileges of Boris Livshits, Svetlana Skvortsova, Aleksey Ippolitov,
Advanced Web Services, and Strandway, LCC (``Strandway'') (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\
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\2\ The TDO was published in the Federal Register on December
16, 2022 (87 FR 77067).
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On May 18, 2023, BIS, through OEE, submitted a written request for
renewal of the TDO that was issued on December 13, 2022. OEE's request
for renewal also contained evidence related to Bogonikolos and
Aratos.\3\ 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.
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\3\ In the renewal request, OEE also noted that a TDO request
related to Bogonikolos and the Aratos Group was forthcoming.
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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.
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 extensive
procurement network conspiring to violate U.S. export control laws by
unlawfully procuring and shipping military and sensitive dual-use
technologies from U.S. manufacturers to Russian end users. As detailed
in its May 18, 2023 request for renewal of the TDO, OEE's
investigation, which remains ongoing, has revealed evidence that this
illicit network and its reach are broader in scope and more extensive
than initially realized. As a result, the renewal of this order, along
with the issuance of an order temporarily denying the export privileges
of Nikolaos Bogonikolos and the Aratos Group, are necessary.
1. The Basis for the Initial TDO
On or about September 12, 2022, and as detailed in the initial TDO
issued on December 13, 2022, Livshits, Skvortsova, and Ippolitov, along
with co-conspirators Yevgeniy Grinin,\4\ were each indicted on multiple
counts in the United States District Court for the Eastern District of
New York. The
[[Page 38814]]
charges included, but were 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''),\5\ a wholesale machinery and equipment
company located in Moscow, Russia.
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\4\ 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 (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 (87 FR 20505).
\5\ On March 3, 2022, Serniya, along with OOO Sertal
(``Sertal''), another 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, 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).
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As further detailed in the initial TDO, Serniya heads 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. The initial TDO
was also based on evidence that Livshits and the other Respondents were
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. As stated in the initial TDO, the
procurement activity occurred from at least January 2017 through
October 2022, and Respondents actively sought to conceal their unlawful
export-related activities in order to evade detection by law
enforcement.
2. Basis for Renewal and Additions of Bogonikolos and the Aratos Group
In its May 18, 2023 request for renewal of the TDO, OEE has
presented evidence that the scope of the Serniya Network is broader,
and its conduct more extensive, than initially realized. OEE has
presented additional evidence demonstrating that the procurement
network extends to multiple co-conspirators and countries. For
instance, OEE's investigation has identified other co-conspirators and
procurement agents for the Serniya Network, including Nikolaos
Bogonikolos, the founder and president of the Aratos Group, a network
of defense-related companies in the Netherlands and Greece.
As noted in OEE's request for renewal, a superseding indictment was
filed on or about December 5, 2022, charging Livshits, Skvortsova,
Ippolitov, Grinin and three additional co-conspirators with, among
other charges, conspiring to violate U.S. export control laws. On or
about May 2, 2023, in the United States District Court for the Eastern
District of New York, Bogonikolos was charged by complaint with
smuggling and other related offenses. As alleged in the complaint,
Bogonikolos assisted Grinin and Ippolotov in their efforts to procure
U.S. origin items on behalf of the Serniya Network, including the
procurement of tactical military antennas, which were classified under
ECCN 3A611.x, controlled for national security reasons, and required a
license for export to Russia. Specifically, after Grinin and Ippolotov
identified U.S. origin items for procurement, Bogonikolos assisted the
Serniya Network by purchasing the items and concealing the true end
user by claiming the items would be used by Aratos in the Netherlands.
On May 22, 2023, a second superseding indictment was filed in the
United States District Court for the Eastern District of New York
charging Livshits, Skvortsova, Ippolitov, Grinin, and Bogonikolos, and
others, with smuggling and conspiracy to violate U.S. export control
laws, inter alia. As detailed in the second superseding indictment,
Bogonikolos, a Greek national, is the founder and president of the
Aratos Group, a defense conglomerate in the Netherlands and Greece.
Bogonikolos purchased sensitive military and dual-use items from U.S.
companies on behalf of Serniya and Sertal and routed the shipments
through the Aratos Group to various transshipment points to conceal the
true Russian end users.
As further alleged in the second superseding indictment,
Bogonikolos, who provided false end use statements to U.S. companies,
was recruited as a procurement agent by the Serniya Network in 2017. As
part of the arrangement and at Ippolitov's direction, Bogonikolos
agreed to work exclusively with Grinin, advising that he understood
that Ippolitov sought to purchase sensitive items. Bogonikolos also
advised Grinin about ways to obtain such items in furtherance of the
conspiracy. For instance, in February 2018, after Grinin advised that
he was having difficulty obtaining a certain product specification,
Bogonikolos recommended that he add other items and alter them from
Grinin's prior order in an attempt to obtain the shipment and evade
detection. On another occasion, Bogonikolos advised Grinin that he
signed a false end-use statement, stating that certain items were only
for use in the Netherlands.
OEE's investigation also reveals that Bogonikolos and employees of
the Aratos Group tracked orders for the Serniya Network by excel
spreadsheet. These orders, which occasionally listed the applicable
ECCN, included orders with related invoices for either Serniya or
Photon. Moreover, one such spreadsheet included a column related to
export controls and information about U.S. and European export control
restrictions, demonstrating knowledge and familiarity with export
control laws.
Since the issuance of the TDO on December 13, 2022, arrest warrants
have been issued for Respondents Boris Livshits, Svetlana Skvortsova,
and Aleksey Ippolotov. The parties are presently fugitives from U.S.
law enforcement and reside in the Russian Federation. Because they have
not yet been apprehended, OEE has reason to believe that their illicit
procurement efforts will remain ongoing, given the length and nature of
the conduct identified to date. Significantly, OEE's investigation has
revealed that they are familiar with methods of concealment and are
likely to use increasingly sophisticated methods to avoid detection by
law enforcement. Additionally, given the size and scope of the Serniya
procurement network, including newly identified parties and entities,
such as Bogonikolos \6\ and the Aratos Group, that span multiple
countries including the Netherlands and Greece, there is substantial
risk that continued evasion efforts will be successful, absent the
renewal of the TDO and addition of Bogonikolos and the Aratos Group as
respondents.
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\6\ Bogonikolos was arrested in Paris, France in May 2023 based
on the criminal charges pending in the U.S. District Court for the
Eastern District of New York.
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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, Strandway, LCC, Nikolaos
Bogonikolos, and the Aratos Group 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
[[Page 38815]]
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; STRANDWAY, LLC, with an
address at 99 Wall St, Ste. 148 New York, NY 10005; NIKOLAOS
BOGONIKOLOS, with an address at Artemidos 36, Palaio Faliro, Attica,
Greece; and the ARATOS GROUP, with addresses at L. Amfitheas 10,
Athens, 17564, Greece and 10 Amfitheas Avenue, 17564, Palaio Faliro,
Greece; and when acting for or on their behalf, any successors or
assigns, agents, or employees (each a ``Denied Person'' and
collectively the ``Denied Persons'') may not, directly or indirectly,
participate in any way in any transaction involving any commodity,
software or technology (hereinafter collectively referred to as
``item'') exported or to be exported from the United States that is
subject to the EAR, or in any other activity subject to the EAR
including, but not limited to:
A. Applying for, obtaining, or using any license, License
Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying,
receiving, using, selling, delivering, storing, disposing of,
forwarding, transporting, financing, or otherwise servicing in any way,
any transaction involving any item exported or to be exported from the
United States that is subject to the EAR, or in any other activity
subject to the EAR; or
C. Benefitting in any way from any transaction involving any item
exported or to be exported from the United States that is subject to
the EAR, or in any other activity subject to the EAR.
Second, that no person may, directly or indirectly, do any of the
following:
A. Export, reexport, or transfer (in-country) to or on behalf of a
Denied Person any item subject to the EAR;
B. Take any action that facilitates the acquisition or attempted
acquisition by a Denied Person of the ownership, possession, or control
of any item subject to the EAR that has been or will be exported from
the United States, including financing or other support activities
related to a transaction whereby a Denied Person acquires or attempts
to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition
or attempted acquisition from a Denied Person of any item subject to
the EAR that has been exported from the United States;
D. Obtain from a Denied Person in the United States any item
subject to the EAR with knowledge or reason to know that the item will
be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the EAR
that has been or will be exported from the United States and which is
owned, possessed or controlled by a Denied Person, or service any item,
of whatever origin, that is owned, possessed or controlled by a Denied
Person if such service involves the use of any item subject to the EAR
that has been or will be exported from the United States. For purposes
of this paragraph, servicing means installation, maintenance, repair,
modification or testing.
Third, that, after notice and opportunity for comment as provided
in section 766.23 of the EAR, any other person, firm, corporation, or
business organization related to Boris Livshits, Svetlana Skvortsova,
Aleksey Ippolitov, Advanced Web Services, Strandway, LCC, Nikolaos
Bogonikolos, and/or the Aratos Group 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, Strandway, LCC, Nikolaos Bogonikolos, and the Aratos Group
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, Strandway, LCC, Nikolaos Bogonikolos, and the Aratos Group
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. 2023-12679 Filed 6-13-23; 8:45 am]
BILLING CODE 3510-DT-P
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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.