Ilias Sabirov, a Moscow businessman, allegedly provided Russia’s military with US-made computer chips for years.
In 2014, Russia captured the Ukrainian peninsula of Crimea, and the U.S. imposed fresh sanctions and export controls on Russia, including prohibiting shipments of these chips.
U.S. authorities and Reuters’ study of Russian customs records say Sabirov got more.
According to Russian customs records and a U.S. federal indictment, a parcel containing more than 100 memory chips toughened to resist radiation and severe temperatures arrived at Sabirov’s Moscow business address in the spring of 2015. American prosecutors say the “rad-hard”chips were supplied to Russia via a Bulgarian corporation to avoid U.S. export rules.
After Russia invaded Ukraine in February, the US and 30 other nations imposed unprecedented sanctions and export restrictions. The 2015 story of how American chips ended up in Russia despite tight U.S. export controls highlights how sensitive Western technology can still wind up in Russia.
This narrative of the criminal case against Sabirov and two Bulgarian businessmen incorporates new data from U.S. officials and numerous of the principal characters, including two fugitives. It highlights the problems of enforcing a strict export-control regime, especially on dual-use components that might serve civilian and military functions.
The Texas scheme and other U.S. criminal cases involving sensitive technology that ended up in Russia expose a chain of willing suppliers, front and shell businesses, and false assertions on export forms indicating Western components were intended for civilian use. Russian military parts include microelectronics and precise tooling.
During conflict, rad-hard chips are critical for communications, intelligence, and surveillance, said DoD spokesperson Sue Gough.
“Nuclear-capable belligerent regimes like Russia could be emboldened by radiation-hardening technology,” warned Gough. National security depends on protecting these chips.
According to Homeland Security Investigations, Russia is increasing its efforts to evade U.S. limitations on military and other critical equipment. In late February, 25 U.S. counter-proliferation analysts transferred their emphasis from China to Russia, HSI officials said.
“China doesn’t dominate our focus like they used to, and Russia has seen the most rise,” said Greg Slavens, a retired HSI counter-proliferation supervisor. Russian efforts to obtain missile and space chips have accelerated.
The Kremlin didn’t respond to U.S. claims that it utilizes fraudulent techniques to dodge sanctions and trade restrictions. Russia has called Western sanctions unfriendly.
Gina Raimondo, who met with Ukrainian Prime Minister Denys Shmyhal in Washington on April 21, said her department is “laser focused on depriving Russia of its war machine’s materials and technologies.”
Russia no longer allows U.S. export-control inspectors to perform on-the-ground checks to ensure sensitive items are used for their declared objectives.
Even when individuals are found, investigations and trials can take years, and accused Russian nationals remain outside U.S. law. In Texas, U.S. officials took five years to establish criminal charges and impose a penalty.
Sabirov was indicted in 2020 for unlawfully selling rad-hard chips to Russia and money laundering. In a separate enforcement action, SST, which changed its name to Vorago Technologies in 2015, was fined $497,000. The bureau manages civilian and military export licenses.
The Texas corporation, whose lawyers cautioned it not to ship rad-hard chips to Russia without a license, confessed conspiring with the three individuals to do so from 2014 to 2019. Reuters couldn’t tell if the chips were military-grade. The western Texas U.S. attorney’s office declined to comment.
Vorago claimed it is “dedicated to zero tolerance compliance with all U.S. regulations, including export controls.” It has “completely cooperated” with U.S. inquiries and “introduced stronger compliance procedures and training” \
The business said “Misled into thinking supplies were heading to Bulgaria for Europe, a lawful export. These consumers gave Vorago a supposedly valid end-user certificate stating that Vorago’s products weren’t used in Russia.”
Sabirov denied any involvement and said the rad-hard chips never travelled from Bulgaria to Moscow, contradicting U.S. authorities and Reuters customs data. He never broke U.S. export restrictions or laundered money, he said. “They applied harsh, fraudulent, and erroneous punishments to me, my companies, and my friends,” he claimed.
Dimitrov denied wrongdoing. He told Reuters that export prohibitions are “nonsense.” “It’s a misunderstanding.” Dimitar Dimitrov, his father, couldn’t comment.
Sabirov, in Russia, and the two Bulgarians are fugitives.
COLDBEAT
Reuters’ study of federal court records reveals the Texas case isn’t exceptional.
A father-and-son pair trafficked $65 million in sensitive microchips from New Jersey to Moscow-area enterprises, according to U.S. investigators.
Alexander Brazhnikov Jr. of New Jersey, a naturalized U.S. citizen born in Russia, pleaded guilty in 2015 to buying microelectronics in the U.S., repackaging and relabeling them, and sending them to Moscow homes and vacant businesses linked to his father, a Russian national. The son admitted laundering money from Russia through 50 overseas shell firms in the Marshall Islands, Panama, and Belize, court records say.
“We suspect the microchips were all going to the military-industrial complex,” said Peter Gaeta, a prosecutor on the open case.
According to court records, the son studied “nuclear physics” and was freed in December 2018. Alexander Brazhnikov Sr., proprietor of a Moscow microelectronics import-export enterprise, is a fugitive. The business allegedly sold U.S.-bought components to Russian defense contractors and nuclear weapons designers.
Gaeta told Reuters, “This case is massive.” “This wasn’t a solo job. Russia does this everywhere.”
Brazhnikov Jr. declined to comment. His dad was unreachable.
Alexander Fishenko, a U.S.-Russian dual citizen, conducted a years-long plan to smuggle sensitive microelectronics to Russian military and espionage services.
Federal prosecutors say Fishenko controlled a Houston export company and ran a Moscow procurement firm. His export company supplied commodities through New York to Finland, Canada, and Germany between 2002 and 2012. Electronics for radar, surveillance, weapons navigation, and explosion triggers were included.
Fishenko was indicted in 2012 for conspiring to sell restricted technology to Russia without authorization. Later, he pleaded guilty to being a Russian agent. Seven were convicted by plea or trial. Fishenko was imprisoned for seven years.
Fishenko’s attorney, Richard Levitt, declined to comment, and he couldn’t be reached.
Former Brooklyn federal prosecutor Daniel Silver, who handled the Fishenko case, said it’s customary for illicit exports of regulated technology to go through middlemen overseas to mask the exact destination of the products. “Global networks can protect U.S. exporters by making it tougher to draw the dots.”
In recent years, Russia has tried to circumvent Western export prohibitions by producing additional parts at home or switching to Chinese suppliers. Still, Russian industries rely on the West for high-precision machinery and some high-performance semiconductors like Sabirov’s.
“If a Russian satellite orbits the Earth without a glitch, it contains Western electronics,” a U.S. semiconductor executive remarked. The insider added Russia doesn’t create such chips and China, despite huge investment, hasn’t caught up.
Russia’s military is supplied by U.S. and other Western high-tech companies. Almaz-Antey, a state-owned maker of Russian air-defense missile systems, bypassed German export limits between 2015 and 2018, according to a person familiar with the situation and a Hamburg court report. According to a person acquainted with the incident and the case summary, the machinery was really shipped to a nearby Almaz-Antey business. Almaz-Antey didn’t comment.
Suzette Grillot, an international studies professor at the University of Oklahoma, said Cold War trade restrictions worked because the West dominated world trade. In the early 1990s, Russia lagged behind in communications and other technology compared to the U.S.
Replicating Cold War restrictions to pinch the Russian economy and military industry today looks elusive, Grillot said, because Russia has practically unrestricted access to Western technology and can now rely on China and India. She said, “A bell can’t be unrung.”
PRIVACY
Wesley Morris devised ways to harden semiconductors against heat and radiation. In 2004, he formed SST (now Vorago Technologies) to commercialize his patents. Morris told Reuters that his tactics drew the attention of the U.S. military, and SST won millions of dollars in research funding, including from top-secret missile programs.
In early 2014, SST was still looking for its first major commercial order. Morris, the company’s CEO, learnt via a newly hired salesman that Sabirov was interested in SST’s rad-hard chips. Sabirov planned to buy them for Russia’s space program, making him an intriguing customer potential because Russia imports practically all of its rad-hard needs.
Roscosmos claimed it has no information about Sabirov buying electronics for Russia.
Sabirov and Dimitar Dimitrov met at SST’s Austin headquarters in May 2014. Morris and others who knew them called them a strange couple. The Russian spoke English fluently and portrayed the confidence of a man with bureaucratic ties. The Bulgarian appeared to be a great scientist with scuffed shoes. Both have technological backgrounds.
Sabirov told Morris that one of his Russian companies, Kosmos Komplekt, had been buying rad-hard chips from SST’s U.S. rival Aeroflex since 2011 and was interested in switching.
Morris: “I wanted the business.”
A Cobham Group representative stated Aeroflex stopped shipping rad-hard chips to Sabirov in Russia before the acquisition.
A week after Morris’s May 2014 meeting with Sabirov in Austin, SST’s outside lawyer dampened his contract hopes. The lawyer warned Morris and other executives, “Anything that requires a license to Russia is now presumed denied.”
Morris told Reuters he wasn’t ready to quit a contract that may change SST. Morris was confident Sabirov would order $10 million in items after their conversation. He indicated the chips will go in satellites, not missiles.
Morris said he and Sabirov discussed their possibilities in Paris in July 2014. Morris said he needed one of the few export licenses the U.S. still grants as part of its cooperation with Russia on space initiatives.
Morris lost hope after Paris. A Malaysian airplane was shot down by a Russian-made missile over Ukrainian airspace, killing 298 passengers. Even though Moscow denied involvement in the disaster, Morris decided that obtaining an export license to Russia was nearly impossible.
The CEO told Sabirov, “We can’t send you anything.”
Sabirov suggested utilizing Bulgaria as a transit location because it doesn’t require an export license. Chips might be installed on electronic boards in Sofia, changing the product’s designation in export documentation before being delivered to Moscow.
Morris consulted SST’s lawyer in August 2014, who stated the scheme wouldn’t work. According to Commerce Department records, unless Sabirov could establish he was “creating substantial value in Bulgaria,” he would need a license to export to Russia. No counsel is listed.
Sabirov told SST that he had set up a Bulgarian company to target civilian markets in Europe because of sanctions, according to former SST workers and Commerce Department papers. The idea was to create chip-based modules for automotive engines and exhaust systems. Cost prevents automakers from using rad-hard chips.
Sabirov’s Bulgarian company, MTIG, was founded by a business partner’s cousin in Sofia. The following month, September 2014, MTIG ordered a silicon wafer of rad-hard memory chips from SST for $125,000. According to interviews and Commerce Department papers, Sabirov promised SST MTIG would test the chips and place future orders.
Former SST employees say the wafer was delivered to MTIG at the end of January 2015 after being hardened at a Texas Instruments foundry. After four months, the eight-inch wafer was split into 115 memory chips and transported to one of Sabirov’s enterprises in Moscow, Sovtest Comp, where a 4.6-pound shipment arrived on May 25.
TI claimed “comply with local laws and regulations. We don’t sell to Russia or Belarus.”
SST sent the wafer to MTIG after the U.S. company’s management transition. Morris lost ownership of the company to its principal investor, New Scientific Ventures, in January 2015. NSV was silent. According to Commerce Department data, Bernd Lienhard heard about the shipment to Bulgaria in March 2015. Vorago declined to comment on Lienhard’s involvement.
Vorago Technologies relaunched in August, but Sabirov’s success persisted. The Russian planned to order five more wafers in the fall of 2015. According to Commerce Department documents, Lienhard emailed Sabirov that it was “our most important business opportunity this year”
They exchanged additional emails in November 2015. Lienhard promised Sabirov a discount if he ordered additional wafers by year’s end.
“What do you think of this? If you acquire 3 wafers this quarter, we’ll lower the price from $125,000 to $100,000.” Lienhard messaged Sabirov. You’d be helpful.
Five days later, Sabirov asked about “direct shipment to Moscow.” According to Commerce Department documents, Lienhard said the wafers must be delivered to Bulgaria to comply with export restrictions.
Anne Joubert, a new Vorago sales officer, met with Sabirov and Dimitar Dimitrov in Munich in December 2015 to discuss wafer acquisitions. MTIG later ordered five more wafers from Vorago. Federal filings show Vorago transported two in December 2015.
Joubert met Sabirov and the Dimitrovs in Bulgaria in July 2016. According to interviews and court papers, Joubert questioned if MTIG was delivering Vorago’s rad-hard chips to Russia. Sabirov answered “maybe.” Dimitar Dimitrov told Joubert that all of the Texas company’s chips previously sent to MTIG remained in Bulgaria.
According to the federal indictment, some chips were transferred to Russia. Indictment: “Ship to” address on MTIG invoice was Sovtest in Moscow. Joubert was silent.
According to Commerce Department papers, Sabirov discussed ordering more wafers with Lienhard in August 2018.
In December, a Commerce Department export control officer visited Sofia to confirm MTIG’s usage of Vorago chips. According to the federal charge, the officer talked with Milan Dimitrov, who denied sending the semiconductors to Russia.
By then, the FBI and Commerce Department were investigating Vorago, Sabirov, and the Dimitrovs for export violations, according to interviews.
Early in 2016, the company’s founder, Morris, told the FBI about apparent irregularities at the firm, including Sabirov’s sales.
In April 2016, weeks after the tip-off, FBI investigators searched Vorago’s Austin headquarters, searching as personnel were forced to stay in one room. Former employee: “It was a disruptive day.”
Federal inquiries moved slowly, according to sources. The FBI raided Vorago’s Austin office in July 2019. Sabirov and the Dimitrovs were arrested that month.
In 2020, the U.S. Justice Department indicted the three men for illegally obtaining rad-hard chips and money laundering.
The Commerce Department revealed last September a settlement in which Vorago agreed to pay a penalty: $497,000, the revenues of its sales. Vorago and its executives weren’t charged.
