Russian network accused of illegal tech exports
Federal agents carry boxes out of Arc Electronics Inc. Oct. 3, 2012, in Houston. / AP Photo
NEW YORK An American success story of an immigrant from Kazakhstan who made millions off his Texas export firm took a Cold War-era turn on Wednesday when U.S. authorities accused him of being a secret agent who's been stealing military technology for the Russian military.
Alexander Fishenko was among 11 defendants named in a federal indictment filed in Brooklyn charging them with conspiring to purposely evade strict export controls for cutting-edge microelectronics. It also charges Fishenko with money laundering and operating inside the United States as an unregistered agent of the Russian government.
Fishenko, a naturalized U.S. citizen and owner of Houston-based Arc Electronics Inc., and seven others were awaiting arraignment in Houston following raids there by the FBI.
The name of Fishenko's attorney was not immediately available. His wife, Viktoria, who was identified as a co-owner of her husband's business but not charged, declined to comment Wednesday.
"I will speak when I know what's going on," she said.
The indictment alleges that since October 2008, the 46-year-old Fishenko and his co-defendants "engaged in a surreptitious and systematic conspiracy" to obtain the highly regulated technology from U.S. makers and export them to Russia.
Much of the case has to do with forgeries of documents and changing of information, CBS News senior correspondent John Miller reports. The indictment quotes messages between the Russians saying, about the documents, to "make it up pretty, correctly" and "make sure it looks good, make sure that these are listed as things that can be used on fishing boats and not anti-submarine craft."
U.S. authorities say the microelectronics could have a wide range of military uses, including radar and surveillance systems, weapons guidance systems and detonation triggers. They also say the charges come amid a modernization campaign by Russian military officials hungry for the restricted, American-made components.
"The defendants tried to take advantage of America's free markets to steal American technologies for the Russian government," Loretta Lynch, U.S. Attorney in Brooklyn, said in a statement.
Stephen L. Morris, head of the FBI office in Houston, called the charges an example of how some countries have sought to bypass export safeguards "to improve their defense capabilities and to modernize weapons systems at the expense of U.S. taxpayers."
According to court papers, Fishenko was born in the former Soviet Republic of Kazakhstan and graduated from a technical institute in St. Petersburg before coming to America in 1994. He holds U.S. and Russian passports and has frequently traveled overseas to do business, making tens of millions of dollars on exports, authorities said.
An analysis of Arc's accounting records showed a "striking similarity between fluctuations in Arc's gross revenues and the Russian Federation's defense spending over the last several years," the court papers say. Investigators also recovered a letter to Arc from a Russian domestic intelligence agency lab complaining that microchips supplied by the company were defective, the papers add.
Phone calls and emails intercepted by U.S. investigators also "constitute devastating evidence of Fishenko's illegal procurement for the Russian government," the court papers say.
Prosecutors said the evidence revealed repeated attempts by Fishenko to cover his tracks. In one instance in March, he "directed an employee of a Russian procurement firm to 'make sure that our guys don't discuss extra information, such as this is for our military client,"' the papers say.
In an earlier conversation, Fishenko favorably referred to a business associate using "a Russian colloquialism for 'spy' or 'secret agent,'" the papers add.
About a dozen FBI agents in Houston executed a search warrant on Wednesday at Fishenko's firm, an unmarked business located in an industrial area in southwest Houston. They took at least 18 cardboard boxes of materials from inside the business to a large truck parked in an alley in the back of the business.
Under sentencing guidelines, Fishenko faces more than 12 years in prison if convicted on all charges.
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They are like a gigantic spitting spider, they spit the web at you and then reel you in.
Incremental erosion of national security in the name of "promoting business" is the standard-issue cover story for American arms manufacturers.
Our military-industrial complex makes more profit than any other in the world, yet is not satisfied with arming for only national defense with the largest armaments budget in the world. No, that is not enough-- its members want to sell the same systems to (almost) everybody else.
In any case, Russian intelligence would admit to only opportunism, and is extremely pleased to have many willing partners from American business willing to sell off anything, even national security, by looking the other way for the sake of greater profits.
As these Russian agencies would be the first to insist, it's The American Way.
Sure they are. Buy all that you want and promise not to take them out of the country, is that the deal? Maybe they got detoured to Russia right after they came out of the Chinese factories and that is why the Russians claimed that some of them were defective!
Yet, under both Clinton and Bush2 (and for decades before), oversight of defense contractors has been very uneven. Despite a military and black operations budget well over $1 trillion, the "due diligence" required to administer that budget with appropriate internal security is missing.
To this day, for example, DOD cannot account for billions allegedly spent in Iraq, and literally has given up the effort. If this suggests a national security operation out of control, the conclusion is absolutely correct. The mistake is to presume Congress wishes to correct the problem.
While Bush2 spent billions to create the Department of Homeland Security, that agency remains something of a monstrous joke on taxpayers. Homeland Security continues a heavy budget drain but despite its extensive authority and powers, but is apparently unable to detect and stop activity like Arc Electronics in a timely fashion. Ironically, Fishenko operated for years under the nose of Bush2 as Arc Electronics became a major Russian asset.
To those who suspect federal authorities knew about Arc Electronics, but allowed the activity to continue for the sake of "evidence and intelligence gathering", all that is reasonable. However, as with the Bush2 program of "Fast and Furious", judgment and oversight appears to have been left at the door long ago. Fishenko's Russian clients became a very large partner before finally gathering the attention they richly deserved.