FBI raids suspected hi-tech front company run by 'Russian agent'

Members of alleged network face trial after claims that components were sent to military

Prosecutors in New York revealed last night that investigators had uncovered claims of a multi-million-dollar scheme by a front-company in Houston, Texas, which allegedly exported sensitive microelectronics components to Russia for use by the Russian military and intelligence services.

In dawn raids conducted on the premises of the company, Arc Electronics Inc, and elsewhere, FBI agents seized evidence while federal indictments were unsealed against 11 people the US government says were involved in the clandestine Russian procurement network. In a statement describing the charges, the FBI claims that in some cases Arc had duped US suppliers by pretending it was purchasing the components to make innocuous items like traffic lights.

The head of Arc, a naturalised American born in Kazakhstan, Alexander Fishenko, was among those charged. He and seven others named in the conspiracy are expected to be flown to New York where they will face trial. Mr Fishenko was also accused of being an unregistered agent for the Russian government working inside the United States.

While the arrests and charges represent an important success for the FBI, they may also cause some embarrassment. The men had allegedly been shipping the goods under the nose of the US and without interference for four years. The affair also threatens significantly to sour relations between Washington and Moscow at a sensitive juncture just one month before the US presidential elections.

"The ability of foreign countries to illegally acquire sensitive and sophisticated US technology poses a significant threat to both the economic and national security of our nation," FBI special agent Stephen Morris said. "While some countries may leverage our technology for financial gain, many countries hostile to the United States seek to improve their defense capabilities and to modernise their weapons systems at the expense of US taxpayers."

The US alleges that between October 2008 and today Arc has been obtaining cutting edge microelectronics from US manufacturers and suppliers and sending them to a partner procurement company in Moscow named Apex System LLC, where Mr Fishenko, 46, is also a part-owner.

Those goods, the FBI said, were suited for installation in a variety of military items, including radar and surveillance systems, weapons guidance systems and detonation triggers.

The impact of Mr Fishenko's alleged activities and those of his co-defendants may not have been small. An analysis of 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," court papers released in New York asserted.

The courts papers stated that prosecutors will present at trial calls and emails that "constitute devastating evidence of Fishenko's illegal procurement for the Russian government". Those communications include Mr Fishenko apparently urging his partners in Moscow always to cover their tracks. In March this year, for instance, he alleged "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.

Arc claimed on its company website that it was a manufacturer of a variety of goods for use in the US and those included traffic lights. But prosecutors allege it makes nothing, however, and was solely in the business of acquiring the microelectronics and sending them to Russia and covering up what they really were to avoid having to apply for sensitive-item exports licenses.

Spy games: The enemy within

The Cold War is over, but judging by the regularity with which Russian and US spies are caught behind enemy lines, the old rivalry is not.

In 2010, 10 alleged Russian spies – among them 'femme fatale' Anna Chapman, left – were accused of trying to infiltrate US policymaking circles. The incident prompted a "spy swap" with Russia, in which a number of prisoners convicted of spying for the US were released, including Igor Sutyagin, a nuclear scientist jailed in 2004, and Alexander Zaporozhsky, a former foreign intelligence service agent.

Many of the scandals in the past two decades involved the arrest of Russian spies in the US, but the culprits are not always Russian. In 2000, US Navy codebreaker Daniel King was caught selling data to Moscow. Two years later, an FBI agent, Robert Hanssen, was found to have been selling secrets to Moscow for 15 years, and jailed for life.

Richard Hall

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Ed Miliband, Nick Clegg and David Cameron appeal to the audience during the Question Time special
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
Tiger Woods and Lindsey Vonn are breaking up after nearly three years together
peopleFormer couple announce separation in posts on their websites
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Arts and Entertainment
Haunted looks: Matthew Macfadyen and Timothy Spall star in ‘The Enfield Haunting’
tvThe Enfield Haunting, TV review
The Mattehorn stands reflected in Leisee lake near Sunnegga station on June 30, 2013 near Zermatt, Switzerland
Michelle Dockery plays Lady Mary in Downton Abbey
peopleBut who comes top of the wish list?
Miriam Gonzalez Durantez, right, with Lib Dem candidate Jane Dodds in Newtown, Powys, as part of her tour in support of the party’s female candidates
general electionNick Clegg's wife has impressed during the campaign
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living