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Alleged Russian agent violated US sanctions by concealing purchase of luxury condos, US says

Andriy Derkach (InformNapalm/Twitter)

This article was originally published by Radio Free Europe/Radio Liberty and is reprinted with permission.

A Ukrainian lawmaker who has been sanctioned by the U.S. government has now been charged with violating the sanctions when he purchased two luxury properties in California.

The seven-count indictment against Andriy Derkach, unsealed on December 7 in New York City, also charges him with money laundering and bank fraud conspiracy in the purchase and maintenance of the two properties in upscale Beverly Hills, the U.S. Justice Department said.

Derkach purchased the properties in violation of U.S. sanctions and concealed his interest in the transactions from U.S. banks, prosecutors said.

Derkach, 55, was sanctioned for his efforts to influence the 2020 U.S. presidential election on behalf of the Russian intelligence services. The U.S. Treasury Department alleged at the time that Derkach — a member of the Ukrainian parliament who studied at the KGB school in Moscow — had been “an active Russian agent for over a decade.”

U.S. Attorney Breon Peace said in the Justice Department’s statement on December 7 that Derkach’s conduct has shown that “he is ready, willing, and capable of exploiting [the] banking system in order to advance his illicit goals.”

The indictment alleges that, beginning in 2013, Derkach and a co-conspirator devised a scheme to purchase and maintain the two luxury condominiums while concealing his ownership and participation in the purchase. Derkach used the services of a corporate nominee, a multitiered structure of California-based shell companies, and numerous bank and brokerage accounts to purchase the properties, the Justice Department said.

Derkach used the network to wire approximately $3.92 million to the corporate nominee from overseas accounts in Latvia and Switzerland belonging to companies registered in the British Virgin Islands, the Justice Department said. The money was then used to pay $3.2 million in cash in the name of a corporate entity set up by the nominee, with Derkach having no visible affiliation with the purchase.

The remaining $800,000 was invested in a brokerage account and used to pay expenses on the condominiums, including taxes, homeowners’ fees, and utilities.

A parallel civil forfeiture action has been initiated to seize the condominiums and the remaining funds in the U.S. accounts, the department said. If convicted, Derkach, whose whereabouts are unknown, faces a maximum of 30 years in prison.

Ukrainian authorities in June said they had uncovered a Russian spy network involving Derkach. The State Security Service (SBU) on June 24 alleged that Derkach set up a network of private security firms to help facilitate the entry of Russian units into cities during Moscow’s February 24 invasion.

Derkach has previously denied wrongdoing, claiming he was being targeted for exposing corruption.