Justice Department Files Civil Forfeiture Complaint Against Sanctioned Oligarch’s U.S. Music Studio Sale Proceeds

Damian Williams, the United States Attorney for the Southern District of New York, Michael Khoo, the Co-Director of Task Force KleptoCapture, and James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation ("FBI"), announced today the filing of a civil forfeiture Complaint against over $3.4 million in proceeds from the sale of a music studio in Burbank California. The Complaint alleges that the proceeds, which are beneficially owned by Russian oligarch Oleg Deripaska, are the proceeds of sanctions violations. An Indictment charging Deripaska with sanctions violations had been unsealed on September 29, 2022, and Deripaska remains at large.

U.S. Attorney Damian Williams said: "Today's filing of a civil forfeiture complaint against over $3 million in illicit proceeds of Oleg Deripaska exemplifies this Office's commitment to utilizing all available legal remedies to enforce our critical sanctions program. We remain committed to piercing the opaque financial networks utilized by sanctioned oligarchs attempting to illegally transact business in U.S. dollars."

Task Force KleptoCapture Co-Director Michael Khoo said: "As the allegations in the complaint once again demonstrate, those who have illicitly accumulated great wealth in support of lawlessness and international chaos invariably turn to the safety and stability of the United States' rule of law principles in order to preserve their ill-gotten gains. It is predictable, hypocritical, and illegal. We are nearly three years into Russia's unprovoked further invasion of Ukraine, but today's actions show that Task Force KleptoCapture remains vigilant and fully engaged in its mission to protect the American financial system against the abuses of criminal actors."

FBI Acting Special Agent in Charge James E. Dennehy said: "As alleged, Oleg Deripaska, an OFAC Specially Designated National, through a series of companies and associates attempted to earn over $3 million in proceeds from the sale of a California-based music studio. Today's forfeiture filing shows the FBI's commitment to stopping individuals from obfuscating their activities to violate sanctions. The FBI will continue to enforce the national security laws of the United States and will ensure any violation of these laws and sanctions is punished accordingly."

According to the allegations in the Complaint filed in Manhattan federal court today and other court filings:[1]

On April 6, 2018 (the "Designation Date"), the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") designated Oleg Deripaska as a Specially Designated National ("SDN") in connection with its finding that the actions of the Government of the Russian Federation in Ukraine constitute an unusual and extraordinary threat to the national security and foreign policy of the U.S. Deripaska was sanctioned for his support of the Russian government and for his activity in the Russian energy sector. On or about the same date, OFAC also designated Basic Element Limited, EN+ Group and other entities for being owned or controlled by, directly or indirectly, Deripaska.

On September 29, 2022, an indictment returned by a grand jury sitting in the Southern District of New York was unsealed, charging Deripaska and his associates Olga Shriki and Natalia Mikhaylovna Bardakova with, inter alia, a conspiracy to violate sanctions in violation of 50 U.S.C. § 1705 and the Ukraine-Related Sanctions Regulations (the "Deripaska Indictment").

As alleged in the Deripaska Indictment, for over four years after Deripaska was sanctioned in 2018, and in violation of those sanctions, Deripaska paid Shriki to provide various services for his benefit in the U.S. These services included the sale of a music studio in Burbank, California (the "Music Studio") in 2019, as well as hundreds of thousands of dollars' worth of other services to aid in Deripaska's efforts to have two of his children be born in the U.S. in 2020 and 2022, and to purchase goods for Deripaska from the U.S.

Prior to his designation by OFAC, in or about 2008, Deripaska, through a series of shell companies, acquired the Music Studio for over $3 million. The direct owner of the studio was an entity named Ocean Studios California LLC, which held a bank account at Wells Fargo Bank (the "Ocean Studios Account").

Between in or about 2013 and in or about 2018, Olga Shriki lived in the U.S. and worked for Deripaska's entity Basic Element in its Manhattan office. Before and after the Designation Date, Shriki and Deripaska's cousin Pavel Ezubov, among others, helped to operate and fund the Music Studio on behalf of Deripaska, and made clear that Deripaska was the ultimate decisionmaker with regard to the Music Studio.

In or about July 2018, approximately three months after OFAC designated Deripaska as an SDN, Shriki created a consulting business named Global Consulting Services LLC ("GCS"). Through GCS, Shriki coordinated with associates of Deripaska, including Ezubov and Bardakova, to continue providing services to and for the benefit of Deripaska and to continue receiving funds from Deripaska or entities controlled by Deripaska. GCS opened a bank account (the "GCS Account") at a bank in Manhattan. Between August 2018 and September 2019, the GCS Account received wires totaling over $500,000 from two entities associated with Deripaska, one of which entered into a separate agreement with an indicted co-conspirator to manage other Deripaska properties abroad after the Designation Date.

Beginning in July 2019, the Ocean Studios Account received approximately $69,000 of transfers from Shriki's GCS Account, which in turn was funded by overseas accounts tied to Deripaska, as noted above.

In or about June 2019, Shriki effectuated a sale of the contents of the Music Studio in the for more than $500,000. In December 2019, more than a year after the Designation Date, while employed by Deripaska, Shriki assisted with the sale of the Music Studio by Ocean Studios California LLC in various ways, such as preparing the property for sale, coordinating with the accounting firm for the Music Studio, communicating with the real estate broker to approve the sale, facilitating the payment of outstanding taxes and bills for the Music Studio, signing over the property deed, and liquidating the other assets in the Music Studio. The Music Studio sale resulted in net proceeds of over $3 million, which were deposited in the Ocean Studios Account.

During the year 2020, while Shriki was employed by Deripaska and continued to perform services for Deripaska, Shriki requested that an accounting firm transfer the proceeds from the sale of the Music Studio to a bank account in Russia in the name of a company that funded the Music Studio's accounts after the Designation Date-or, in the alternative, requested that the accounting firm add Shriki as a signatory on the bank account for the Music Studio so that Shriki could effectuate the transfer of funds on behalf of the owner. The firm declined to effectuate the wire transfer itself.

In or about March 2021, Wells Fargo Bank made the determination to block the Ocean Studios Account and the funds on deposit due to Ocean Studios Account's relationship with Deripaska. The blocked funds subject to the Complaint amount to approximately $3,435,676 plus accruing interest.

* * *

Mr. Williams praised the outstanding work of the FBI. Mr. Williams further thanked the Department of Justice's Office of International Affairs for its assistance and cooperation in this investigation.

This case is being handled by the Office's Illicit Finance & Money Laundering Unit. Assistant U.S. Attorney Vladislav Vainberg is in charge of this action.

This case was coordinated through the Justice Department's Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls and economic countermeasures that the U.S., along with its foreign allies and partners, has imposed in response to Russia's unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the department's tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.

Public link

Please use the above public link if you want to share this noodl on another website.