Hong Kong -based Russian Guilty in Dual-Use Case

A Russian national based in Hong Kong pleaded guilty to money laundering and smuggling charges for illicitly procuring dual-use, military-grade microelectronics for export to Russia. Marchenko was arrested in September 2023.

Maxim Marchenk and two co-conspirators fraudulently obtained from U.S. distributors large quantities of OLED micro-displays, on behalf of Russia-based end users.  

To carry out this scheme, Marchenko concealed from U.S. government agencies and U.S. distributors that the OLED micro-displays were destined for Russia.  The technology that Marchenko and his co-conspirators fraudulently procured had significant military applications, such as in rifle scopes, night-vision googles, thermal optics, and other weapon systems.

The conspirators acquired the dual-use OLED micro-displays from U.S.-based distributors using  Hong Kong-based shell companies, falsely representing to the U.S. distributors (who, in turn, are required to report to U.S. agencies) that they were sending the shipments to end users located in China, Hong Kong, and other countries outside of Russia for use in electron microscopes for medical research.  In reality, the OLED micro-displays were destined for end users in Russia. 

To conceal the fact that these OLED micro-displays were destined for Russia, Marchenko and other members of the conspiracy worked together to transship the illicitly procured OLED micro-displays by using pass-through entities in third countries, such as Hong Kong.

 Marchenko then caused the OLED micro-displays to be shipped to the ultimate destination in Russia using, among other entities, a freight forwarder known to provide freight forwarding services to Russia.  In addition, members of the conspiracy used Hong Kong-based shell companies, principally operated by Marchenko, to conceal the fact that payments for the OLED micro-displays were coming from Russia. 

Marchenko, 51, a Russian citizen who resided in Hong Kong, pled guilty to one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of smuggling goods from the U.S., which carries a maximum sentence of 10 years in prison.  Marchenko is scheduled to be sentenced on June 6, 2024.