Goodbye, yellow brick road. Hello, prison?

“Toto, I have a feeling we’re not in Kansas anymore.” 

Sorry, Dorothy, but we aren’t over the rainbow, either.  Specifically, we’re across the ocean … in a place called Russia.  Talking about a Kansas-based company named (wait for it) … KanRus Trading.  Here’s what transpired in this not-so-fairytale ending.

Two Americans stand accused of violating U.S. sanctions intentionally and continuously.  Cyril Buyanovsky and Douglas Robertson, of KanRus Trading in Kansas, are accused of smuggling avionics equipment to Russia in direct violation of U.S. export regulations.  Avionics includes communications, navigation, flight control and threat detection systems installed in aircraft.

Russia invaded Ukraine in the winter of 2022 and despite immediate sanctions implemented to prevent U.S. technology from reaching Russia, KanRus Trading continued to sell and export to customers that operate Russian-built aircraft without prior approval from the U.S. Government.  Specifically, KanRus failed to obtain export licenses issued from the U.S. Department of Commerce, Bureau of Industry and Security (BIS).

According to the government, KanRus would repair and ship their technology from Kansas while creating and submitting fraudulent documentation at the time of export.  In one instance, KanRus shipped using invoices showing Germany as the ultimate end destination despite the equipment itself having a sticker label for Russia’s Federal Security Services (FSB) – the principal intelligence and security agency of the Russian government.  (It has been reported that FSB had been tasked with taking down the Ukrainian government and overseeing the appointment of a pro-Russian regime.)

Robertson addressed the sticker with exasperation to the foreign intermediary responsible for negotiating and processing orders for the Russian end user, who responded, ““Interesting about sticker, you can remove and after stick on back?”  (NOTE:  This is the logistics equivalent of clicking your heels together three times to make the sticker magically disappear.)

To make matters worse, the government found evidence that Buyanovsky and Robertson were aware of the sanctions and restrictions.  Rather than applying for the required export licenses, they instead attempted to continue to evade the sanctions by hiding their illegal activity from law enforcement.  Their brazen acts included lying to U.S. suppliers about the true end users and shipping their products to intermediary consignees in Armenia, the UAE and Cyprus.  KanRus even used their own coded language in their email communications to conceal their illegal conduct.  They also filed false export forms (exporting goods without the required export licenses, falsifying and failing to file EEI’s) and used banks that were not in Russia, specifically financial institutions in Armenia, Kazakhstan, Kyrgyzstan, Cyprus and the UAE; all in an effort to evade the sanctions.

In February 2022, the U.S. Government detained a KanRus shipment right after the Russian invasion of Ukraine.  KanRus was advised that their shipment required an export license and, to further emphasize this point, the shipment was seized.  Despite having this clear guidance for future shipments, KanRus instead decided to continue to illegally ship through Armenia and Cyprus from May through July; knowingly evading the law as the shipments were destined for Russian end users.

Buyanovsky has pled guilty and admitted that between 2020 and his arrest in March of 2023, KanRus illegally exported U.S.-origin avionics equipment to end users in Russia, as well as Russian end users in other countries.  Buyanovsky has agreed to forfeit over $450,000 worth of equipment and a $50,000 personal forfeiture judgement while facing up to 25 years in prison. The US Attorney for Kansas, Kate Brubacher, was quoted as saying:  “As long as there are people who value greed and profit over freedom and justice, the U.S. Department of Justice will remain vigilant and investigate and prosecute these crimes.”

As a result of the findings, many of the entities and individuals that KanRus used to circumvent U.S. export controls and sanctions have since been added to the Commerce Department’s Entity List.

It is important to note that the interagency law enforcement task force dedicated to enforcing sanctions since the invasion of Ukraine is the Justice Department’s Task Force KleptoCapture.  They have been tasked with targeting Russian oligarchs aligned with the Kremlin and have seized more than $500 million of luxurious items such as yachts and lavish homes.

Some key takeaways for U.S. suppliers and companies:

• Even domestic sales and shipments can result in your product ending up in sanctioned territories. Always KYC!  (Know Your Customer!)
• Be aware of Red Flags and if something does not seem right, follow up.
• Profiting through illegal activities and evading prohibitions results in negative publicity, penalties and fines.

When you follow the Yellow Brick Road of greed, lies and deception, turns out it doesn’t lead you to the Emerald City.  Instead, you find yourself facing fines, penalties and jail time.  Giving all new meaning to the phrase:  “There’s no place like home.”

You can read the full indictment against KanRus here.