The grand jury indictment was unsealed Wednesday in federal court in Brooklyn, N.Y., but many of the defendants were arrested in Texas. One, Alexander Posobilov, appeared before a U.S. magistrate in Houston as prosecutors began seeking defendants' transfer to Brooklyn for trial.
Federal prosecutors identified the ringleader as Alexander Fishenko, 46, owner of U.S. and Russian companies who immigrated to this country in 1994 and became a U.S. citizen nine years later. As an unregistered agent acting "on behalf of the Russian government," he allegedly oversaw shipments to Russia of radar and surveillance systems, weapons guidance systems and detonation triggers.
"These microelectronics had applications in a wide range of military systems, including radar and surveillance systems, weapons targeting systems and detonation triggers," the indictment says. Prosecutors say the equipment wound up with Russia's domestic intelligence agency, the Federal Security Service.
Much of the equipment is unavailable in Russia, and it is illegal to ship it out of this country. The crime can draw more than 20 years in prison.
"The defendants spun an elaborate web of lies to evade the laws that protect our national security," said U.S. Attorney Loretta E. Lynch in Brooklyn. "The defendants tried to take advantage of America's free markets to steal American technologies for the Russian government."
The indictment said Fishenko ran Arc Electronics Inc. in Houston that sent the equipment to Russia. There was "a striking similarity" between Arc's gross revenues and Russia's defense spending over the last several years, prosecutors said.
Arc often gave false information to obtain the equipment from U.S. manufacturers and suppliers, the indictment said, and claimed that it "merely manufactured benign products such as traffic lights."
In other instances, the defendants allegedly labeled some equipment as material for "fishing boats" rather than "anti-submarine" devices.
Prosecutors told Houston Magistrate George C. Hanks that three defendants - Fishenko, Posobilov and Viktoria Klebanova - should be held without bond. They said they had recovered hundreds of Fishenko emails that "constitute devastating evidence" of his work for Russia.
Prosecutors said Posobilov, 58, entered the U.S. in 2001 and became a U.S. citizen in 2008. He was arrested Tuesday as he was about to fly to Russia.
He was the first to appear in federal court, where he sat handcuffed, chained at the waist and ankles. Looking sleepy, Posobilov occasionally closed his eyes and leaned back in his chair as he listened to the proceedings on headphones connected to a nearby Russian translator.
The judge set Posobilov's detention hearing for Friday morning in Houston.
His Houston-based attorney, Richard Kuniansky, said he expects more information to be released at the hearing.
"You're going to find out all about the case then," he said.
Prosecutors said Klebanova, 37, travels extensively to Russia, despite her naturalized U.S. citizenship. She allegedly exchanged emails with Fishenko and Posobilov about how to evade U.S. export laws.
More defendants are scheduled to appear in court Thursday.
FBI agents and Houston police cordoned off the Arc offices, stringing yellow police tape around the strip mall that also houses a storefront church and an orthopedic supply company.
Lance Carter, 33, who works across the street at Showcase Cable, watched in disbelief as agents removed boxes of evidence from the building. "This is something you would see on an episode of '24,' not real life," he said as he snapped photos.
Dan Brown, 25, an orthopedic sales rep, said he had seen an older Russian man outside the building, smoking, but had never really talked to him. The business received a lot of deliveries, he said. Now he wonders what was in all the packages.
"It's crazy to think there's some kind of espionage and treason thing going on with Russia. None of us had an inkling," he said. "It's unnerving."
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