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Published on November 07, 2024
Businessman Ilya Kahn Pleads Guilty to Export and Tax Violation Charges Linked to Russian Military Tech SchemeSource: Unsplash/ Vishnu Mohanan

In a significant legal development reported earlier today, businessman Ilya Kahn has pled guilty to charges of conspiracy to violate the Export Control Reform Act and attempted tax evasion, as per an announcement made by federal prosecutors in Brooklyn. Kahn, a tri-national of the United States, Israel, and Russia, admitted to his role in a scheme that illegally exported dual-use semiconductors and other sensitive technology to Joint Stock Company Research and Development Center ELVEES, a Russian entity previously sanctioned by the U.S. government.

During the district court proceedings before Judge Ann M. Donnelly, Kahn confessed to transporting critical technologies to Russia, material instrumental for military and defense applications. United States Attorney Breon Peace highlighted the gravity of Kahn's crimes, stating, "Semiconductors and other advanced electronics are the lifeblood of Russia’s war machine, and Kahn’s circumvention of U.S. export controls was critical to Russia’s chip design and manufacturing capacity," as obtained by the U.S. Attorney's Office. Kahn's activities sustained Russian technological capabilities post the 2022 sanctions, directly contributing to national security concerns.

Assistant Attorney General Matthew G. Olsen of the National Security Division concurred, emphasizing the government's ongoing efforts to disrupt such illicit activity. The guilty plea represents a concerted effort by various agencies, including the Federal Bureau of Investigation, the Department of Commerce’s Bureau of Industry and Security, and the Internal Revenue Service-Criminal Investigation, to hold individuals accountable for undermining U.S. sanctions against Russia. Notably, Kahn is now facing up to 20 years behind bars.

The tech entrepreneur's illicit enterprise operated under the guise of legitimate businesses, with Kahn owning both Senesys Incorporated and Sensor Design Association. These companies advanced their illegal exports by leveraging a network of front companies, while Kahn also failed to declare nearly $5 million of personal gains to the IRS. Kahn has agreed to a forfeiture of over $4.9 million in proceeds and will also pay approximately $1.9 million to the IRS in restitution. Special Agent in Charge Thomas M. Fattorusso of the IRS-CI New York pointed out, "Khan aided Russian military and intelligence agencies by conspiring to unlawfully transfer sensitive technology to Russia, even after the 2022 invasion of Ukraine," adding a parallel to notorious criminals of the past who evaded taxes on illegal earnings.