DOJ Charges Russian National Malofeyev With Financing Ukraine Separatist
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, announced yesterday the unsealing of a criminal indictment charging Konstantin Malofeyeye with conspiracy to violate United States sanctions and violations of United States sanctions in connection with his hiring of an American citizen, Jack Hanick, to work for him in operating television networks in Russia and Greece and attempting to acquire a television network in Bulgaria. Malofeyey also conspired with Hanick and others to illegally transfer a $10 million investment that Malofeyey had made in a United States bank to a business associate in Greece, in violation of the sanctions blocking Malofeyey’s assets from being transferred. Along with the Indictment, the United States Attorney announced the seizure of Malofeyey’s United States investment.
According to the Indictment unsealed today in Manhattan federal court:
On December 19, 2014, the Department of Treasury’s Office of Foreign Assets Control (“OFAC”) designated Konstantin Malofeyev as a Specially Designated National (“SDN”), one of the main sources of financing for Russians promoting separatism in Crimea, and has materially assisted, sponsored, and provided financial, material, or technological support for, or goods and services to or in support of the so-called Donetsk People’s Republic, a separatist organization in the Ukrainian region of Donetsk, Malofeyev hired a United States citizen named Jack Hanick in 2013 to work on a new Russian cable television news network (the “Russian TV Network”) that Malofeyev was creating. Malofeyev negotiated directly with Hanick regarding Hanick’s salary, payment for Hanick’s housing in Moscow, and Hanick’s Russian work visa, and Malofeyev paid Hanick through two separate Russian entities through the end of 2018.
After OFAC designated Malofeyev as a SDN in December 2014, Malofeyev continued to employ Hanick on the Russian TV Network, dispatched Hanick to work on a project to establish and run a Greek television network and on efforts to acquire a Bulgarian television network. At Malofeyev’s direction, Hanick traveled to Greece and to Bulgaria on multiple occasions in 2015 and 2016 to work on these initiatives, and reported directly back to Malofeyev on his work.
Malofeyev also employed Hanick to assist him in transferring a $10 million investment in a Texas-based bank holding company (the “Texas Bank”) to the Greek Business. In 2014, Malofeyev had used a shell company to make the investment, and beginning in or about March 2015, he began making plans to transfer ownership of the shell company to the Greek Business Associate as a means to transfer the investment in the Texas Bank. In or about May 2015, Malofeyev ’s attorney drafted a Sale and Purchase Agreement that purported to transfer the shell company to the Greek Business Associate in exchange for one U.S. dollar. In June 2015 Malofeyev had Hanick physically transport a copy of Malofeyev ’s certificate of shares in the Texas Bank from Moscow to Athens to be given to the Greek Business Associate. Malofeyev signed the Sale and Purchase Agreement in June 2015, but the agreement was fraudulently backdated to July 2014 to make it appear that the transfer had taken place prior to the imposition of United States sanctions. Malofeyev V’s attorney then falsely represented to the Texas Bank that the transfer had taken place in July 2014, even though Malofeyev and his attorney well knew that the transfer of the shell company was executed in June 2015.
Along with the unsealed Indictment, the United States Attorney announced the issuance of a seizure warrant for Malofeyev ’s Texas Bank investment, which had been converted by the Texas Bank in 2016 to cash held in a blocked United States bank account. The United States recovered those funds pursuant to the warrant and will seek forfeiture of those funds as property that constitutes or is derived from proceeds traceable to the commission of the offenses alleged in the Indictment.