Justice Dept. Cracks Down on Firms Doing Business with Russian Partners

WASHINGTON — The U.S. Justice Department started organizing a task force this week to enforce the sanctions against Russia announced in recent days by President Joe Biden.

More than a dozen U.S. attorneys are hunting down violators of export controls and trying to seize U.S.-based assets of Russian oligarchs.

The U.S. attorney general said he is trying to ensure Russia is isolated from global markets and suffers “serious costs for this unjustified act of war” against Ukraine.

Effects of the sanctions already trickled down to Capitol Hill after lobbying firms announced they are severing their contracts with Russian banks. They had been trying to win lawmakers’ support for the Nord Stream 2 natural gas pipeline and other trade issues with the Russians.

U.S. Attorney General Merrick Garland said Task Force KleptoCapture will allow no grace period before it starts its enforcement action.

“We will leave no stone unturned in our efforts to investigate, arrest and prosecute those whose criminal acts enable the Russian government to continue this unjust war,” Garland said.

The KleptoCapture team is “fully empowered to use the most cutting-edge investigative techniques,” such as data analytics, cryptocurrency tracing and intelligence reports, a Justice Department statement said.

Suspects who are not arrested immediately still could have their real estate or financial assets seized, the Justice Department said. The effort is being coordinated with prosecutors in other countries participating in the sanctions.

In one of the first enforcement actions, the Justice Department announced Thursday it plans to prosecute an American television industry executive who allegedly helped a Russian media mogul develop networks that favored Russia politically.

Although prosecutors are invoking sanctions announced years ago under the Obama administration, the charges against former Fox News Channel director John Hanick are part of the new crackdown on Russian business contacts.

Hanick is accused in an indictment of helping businessman Konstantin Malofeyev to establish television networks in Russia, Bulgaria and Greece. The Russian network is called Tsargrad TV.

Malofeyev is a supporter of Russian separatists in Crimea and part of the Donetsk region in the Ukraine, according to the indictment.

Hanick is free on bond in London. No date is set for his extradition to face charges in federal court in New York.

Many of Washington’s law and lobbying firms saw a backlash coming for them if they did not pull out quickly from their Russian business arrangements.

Until now, they have earned millions of dollars from Russian banks and financial firms to lobby for them. At least six firms report cutting their ties with Russian banks.

One of the sanctioned banks is VTB, which has paid lobbying and law firm Sidley Austin more than $2 million since 2015, according to the firm’s Foreign Agents Registration Act disclosure forms.

A second sanctioned bank is a U.S. subsidiary of Sberbank, Russia’s biggest bank. It has paid more than $800,000 to lobbyists for Venable LLP since 2017, according to Senate records.

Venable reported in its required filings that it monitored U.S. government legislative and administrative actions for the bank.

The firms’ lobbyists have included former members of Congress and officials from federal agencies. One of them is Geoge Madison, a former U.S. Treasury attorney and now a Sidley Austin partner.

Other lobbyists for Russian banks have included David Vitter, a former Republican U.S. senator from Louisiana, and Toby Moffett, a former Democratic congressman from Connecticut. They both lobbied for Russia’s Sovcombank until it was named in Biden administration sanctions. 

They have little choice on ending the contracts. The president ordered “full blocking” sanctions, which freeze an organization’s U.S. assets and bans American companies from doing business with the sanctioned firms.

The case against Hanick is USA v. Hanick in the U.S. District Court for the Southern District of New York.

Tom can be reached at [email protected].