Feeds

Feds charge US firm with smuggling illegal military tech to Russia

'Traffic light' firm actually supplied KGB-successor with hi-tech gear, say officials

Seven Steps to Software Security

Key personnel in a Texas-based electronics firm are among 11 people arrested over an alleged conspiracy to smuggle advanced microelectronics from the US to Russia.

Arc Electronics Inc allegedly acted as a conduit for the smuggling of high-tech components potentially useful in radar, weapons guidance, surveillance and other applications to Russia. The Feds said that evidence against Alexander Fishenko, 46, the Kazakh-born founder of Arc Electronics, and other suspects includes intercepted phone calls and emails. The evidence also includes a letter to Arc Electronics from a Russian lab affiliated to Russia's Federal Security Service (FSB) – the successor to the KGB – complaining about defective microchips and demanding replacements.

The Feds allege that starting in October 2008, Fishenko (a US citizen since 2003) and his firm allegedly supplied "analog-to-digital converters, static random access memory chips, micro-controllers, and microprocessors" and hi-tech components to Apex System, a Moscow-based procurement firm, allegedly part-owned by Fishenko.

According to an FBI indictment, unsealed this week, Arc posed as a supplier of traffic light control kit while actually acting as an important supplier to the Russian military and intelligence agencies.

The defendants allegedly exported many of these high-tech goods, frequently through intermediary procurement firms, to Russian end users, including Russian military and intelligence agencies. To induce manufacturers and suppliers to sell them these high-tech goods and to evade applicable export controls, the defendants often provided false end-user information in connection with the purchase of the goods, concealed the fact that they were exporters, and falsely classified the goods they exported on export records submitted to the Department of Commerce.

For example, in order to obtain microelectronics containing controlled, sensitive technologies, Arc claimed to American suppliers that, rather than exporting goods to Russia, it merely manufactured benign products such as traffic lights. Arc also falsely claimed to be a traffic light manufacturer on its website. In fact, Arc manufactured no goods and operated exclusively as an exporter.

The suspects were arrested Tuesday and Wednesday. Feds executed search warrants at seven residences and business locations associated with the suspects, and seizure warrants were executed on five bank accounts held by Fishenko and Arc Electronics.

Arc has shipped approximately $50m worth of microelectronics and other technologies to Russia since it was established. According to the Feds, much of this inventory should never have been allowed to leave the US.

"The defendants spun an elaborate web of lies to evade the laws that protect our national security," said US Attorney Loretta E Lynch in a DoJ statement on the case. "The defendants tried to take advantage of America’s free markets to steal American technologies for the Russian government. But US law enforcement detected, disrupted, and dismantled the defendants’ network." ®

Mobile application security vulnerability report

More from The Register

next story
Yorkshire cops fail to grasp principle behind BT Fon Wi-Fi network
'Prevent people that are passing by to hook up to your network', pleads plod
HIDDEN packet sniffer spy tech in MILLIONS of iPhones, iPads – expert
Don't panic though – Apple's backdoor is not wide open to all, guru tells us
Mozilla fixes CRITICAL security holes in Firefox, urges v31 upgrade
Misc memory hazards 'could be exploited' - and guess what, one's a Javascript vuln
NEW, SINISTER web tracking tech fingerprints your computer by making it draw
Have you been on YouPorn lately, perhaps? White House website?
BMW's ConnectedDrive falls over, bosses blame upgrade snafu
Traffic flows up 20% as motorway middle lanes miraculously unclog
LibreSSL RNG bug fix: What's all the forking fuss about, ask devs
Blow to bit-spitter 'tis but a flesh wound, claim team
Attackers raid SWISS BANKS with DNS and malware bombs
'Retefe' trojan uses clever spin on old attacks to grant total control of bank accounts
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.