Houston businessman accused of being Russian agent

FBI agents at Arc Electronics Inc. Wednesday, Oct. 3, 2012, during a raid in Houston. (Brett Coomer / Houston Chronicle) FBI agents at Arc Electronics Inc. Wednesday, Oct. 3, 2012, during a raid in Houston. (Brett Coomer / Houston Chronicle) Photo: . Photo: . Image 1 of / 11 Caption Close Houston businessman accused of being Russian agent 1 / 11 Back to Gallery

A reputed Houston-based agent for the Russian government is accused of leading an operation that clandestinely shipped sensitive cutting-edge microelectronics from the United States to Russia's military and intelligence agencies.

Alexander Fishenko, who owns Arc Electronics and other companies linked to the charges, was among 11 people accused in an indictment unsealed Wednesday for their alleged roles in a "Russian military procurement network."

The microelectronics involved are subject to U.S.-government controls, as they could be enlisted for a wide range of military applications, including surveillance, missile guidance and detonation triggers, according to U.S. authorities.

Eight people were arrested in Houston. Three are fugitives believed to be abroad. The ring operated from 2008 until it was derailed by U.S. federal agents making arrests, and searching homes, businesses and bank accounts.

"In this day and time, the ability of foreign countries to illegally acquire sensitive and sophisticated U.S. technology poses a significant threat to both the economic and national security of our nation," said Stephen L. Morris, head of the FBI's Houston Division, which led the two-year investigation.

"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 modernize their weapons systems at the expense of U.S. taxpayers," Morris said.

Those charged with conspiring to illegally export technology include company executives and managers as well as salespersons. Other charges include money laundering and obstruction of justice.

Profits and patriotism

The scheme unfolds as the Russian military is undergoing a large-scale modernization effort, and many of the sophisticated electronics needed for weapons systems can only be purchased from the United States, prosecutors told U.S. Magistrate Judge George C. Hanks Jr., who will preside over hearings for the eight arrested in Houston.

The key was sneaking around U.S. laws and avoiding the attention of authorities by lying about where the equipment was headed, according to the indictment.

Fishenko, who was born in the Soviet Republic of Kazakhstan, became a U.S. citizen in 2003.

Authorities contend that when Fishenko applied to live in the United States he said he had no prior military service, but that he's since been known to say he served in a Soviet military intelligence unit in Berlin in the 1980s.

In 1998, he founded Arc Electronics.

Over a 10-year period, Arc Electronics shipped about $50 million worth of microelectronics and other technology to Russia. He co-owns the company with his wife, who is not charged.

If convicted, prosecutors intend to pursue proceeds of the conspiracy that were pushed through Wells Fargo, Frost National Bank and Compass Savings Bank, according to the indictment. No one at the banks has been accused of wrongdoing.

Larry Karson, a criminal justice assistant professor at the University of Houston-Downtown, said the case shows the complexities of making arrests for violating U.S. export laws and the need for government regulation of microelectronics and other technology that could be used in everything from toys to combat fighters and the guidance of intercontinental ballistic missiles.

"Profits in the sale of these kinds of goods should never trump patriotism," said Karson, a retired U.S. Customs Service agent.

Ties allegedly hidden

Prosecutors contend that the Arc company went to great lengths to hide its ties to the Russian military. The company also filed false records with the U.S. government and lied to manufacturers by saying, for example, that items were to be used for traffic lights or fishing boats rather than anti-submarine warfare.

Among the alleged evidence gathered by U.S. investigators are recorded conversations; email communications and a Russian Ministry of Defense document designating a Fishenko-owned company as "certified" to provide military equipment and electronics.

The FBI also obtained a letter supposedly sent by Russia's Federal Security Service, the nation's domestic intelligence agency, complaining that microchips were faulty and needed to be replaced.

The Naval Criminal Investigative Service and the U.S. Department of Commerce also investigated the case.

Those charged and in custody include Alexander Fishenko, Shavat "Stan" Abdullaev, Lyudmila "Mila" Bagdikian, Anastasia "Anna" Diatlova, Viktoria Klebanova,; Alexander "Sasha" Posobilov, Sevinj "Seva" Taghiyeva and Svetalina "Alina" Zagon.

Those who remain on the run are: Sergey Klinov, Yuri Savin and Dmitriy Shegurov.

dane.schiller@chron.com twitter.com/daneschiller