The Department of Justice’s (DOJ) announcement of charges against a U.K. businessman and his Russian partner for evading U.S. sanctions against a Russian oligarch provides insight into how the use of shell companies, third parties, and other methods can thwart the compliance efforts of financial institutions.
Richard Masters, of the United Kingdom, and Vladislav Osipov, of Russia, tried to hide the true ownership of the Tango, a 255-foot luxury yacht owned by Russian oligarch Viktor Vekselberg, the DOJ said in a press release Friday. Vekselberg was sanctioned by the United States in April 2018.
The efforts of Masters and Osipov allowed the Tango to be outfitted with equipment purchased from U.S. companies through the U.S. financial system, the DOJ alleged in its indictments, each filed in U.S. District Court for the District of Columbia.
After Vekselberg was sanctioned, Osipov, an employee of Vekselberg who managed the Tango, arranged for Masters’ yacht management company in Spain to take over management. The yacht was given the false name “Fanta,” which fooled U.S. financial institutions into processing hundreds of thousands of dollars of transactions for it without reporting to the Treasury Department. The yacht’s computer systems, internet access and teleconferencing equipment, weather forecasting equipment, satellite television, and luxury goods were all supplied by U.S. companies, the DOJ stated.
The men used layers of shell companies, intermediaries, and bank accounts in multiple countries to disguise Vekselberg’s position as the ultimate beneficial owner of the yacht, according to the DOJ. They conducted transactions in other currencies and through third parties as a further means to hide a sanctioned individual was involved.
“The efforts of these facilitators permitted Tango to continue to operate as a luxury yacht with the full array of services and luxury goods available to it” for the benefit of Vekselberg, the DOJ said.
The United States issued a seizure warrant for the yacht in March 2022, and Spanish authorities froze it in April 2022, the DOJ said.
Masters was arrested in Spain for extradition to the United States. Osipov is still at large.
The defendants were charged with conspiracy to defraud the United States and commit offenses against the United States, violating the International Emergency Economic Powers Act (IEEPA), and money laundering.
“Corporations and executives have a choice: They can participate in the global effort to uproot corruption, sanctions violations, and money laundering and enjoy the benefits of prompt and fulsome cooperation; or they can, as Osipov and Masters are alleged to have done, attempt to shield themselves and their clients behind a veil of fraud,” said Andrew Adams, director of the DOJ-led Task Force KleptoCapture.
Separately, the DOJ announced Monday it arrested a former special agent in charge of the Federal Bureau of Investigation’s (FBI) New York Counterintelligence Division, Charles McGonigal, and a former Soviet and Russian diplomat, Sergey Shestakov, and charged them in U.S. District Court for the Southern District of New York with conspiring to commit money laundering and violate the IEEPA regarding sanctioned Russian Oleg Deripaska.
Deripaska was designated by the United States in April 2018 for acting on behalf of the government of the Russian Federation. McGonigal, who retired from the FBI in 2018, allegedly conspired in 2021 to provide services to Deripaska through shell companies and forged documents.