Texas business owner accused of being Russian agent and selling $50MILLION in sensitive military technology

  • Alexander Fishenko is accused of using his Houston company, Arc Electronics, to circumvent export rules
  • Allegedly sent radar and surveillance systems, weapons guidance systems and detonation triggers s to Russia
  • Ten others who worked for Fishenko have also been indicted

A Texas businessman is accused of working as a Russian agent and selling $50million in sensitive military technology to the Russian government.

Alexander Fishenko and ten of his employees were indicted by federal prosecutors on Wednesday on charges they used a Houston-based company to funnel cutting-edge microelectronics out of the country.

Fishenko 46, is a Cold War-era story -- an immigrant from the former Soviet republic of Kazakhstan who worked for Soviet military intelligence in the 1980s.

Raid: Federal agents carried boxes out of Arc Electronics Inc in Houston on Wednesday as part of an investigation into the sale of sensitive military technology

Raid: Federal agents carried boxes out of Arc Electronics Inc in Houston on Wednesday as part of an investigation into the sale of sensitive military technology

He emigrated to the United States in 1994 and became a naturalized citizen in 2003.

For the last decade, prosecutors claim, he was operating his company, Arc Electronics Inc, as front to move radar and surveillance systems, weapons guidance systems, detonation triggers and other heavily-regulated technologies to Russia. 

He and ten others are accused of purposely evading strict export controls for cutting-edge microelectronics.

Fishenko is also charged with money laundering and operating inside the United States as an unregistered agent of the Russian government.

The name of Fishenko's attorney was not immediately available. His wife, Viktoria, who was identified as a co-owner of her husband's business but not charged, declined to comment Wednesday.

'I will speak when I know what's going on,' she said.

Hiding in plain sight: Arc Electronics, run by Kazakh-born Alexander Fishenko, hid in sight in an unmarked warehouse in Houston

Hiding in plain sight: Arc Electronics, run by Kazakh-born Alexander Fishenko, hid in sight in an unmarked warehouse in Houston

The indictment alleges that since October 2008, Fishenko and his co-defendants 'engaged in a surreptitious and systematic conspiracy' to obtain the highly regulated technology from U.S. makers and export them to Russia.

U.S. authorities say the microelectronics could have a wide range of military uses, including radar and surveillance systems, weapons guidance systems and detonation triggers.

They also say the charges come amid a modernization campaign by Russian military officials hungry for the restricted, American-made components.

'The defendants tried to take advantage of America's free markets to steal American technologies for the Russian government,' Loretta Lynch, U.S. Attorney in Brooklyn, said in a statement.

Stephen L Morris, head of the FBI office in Houston, called the charges an example of how some countries have sought to bypass export safeguards 'to improve their defense capabilities and to modernize weapons systems at the expense of U.S. taxpayers.'

According to court papers, Fishenko was born in the former Soviet Republic of Kazakhstan and graduated from a technical institute in St. Petersburg before coming to America in 1994.

Indictment: Fishenko was one of 11 people charged by federal prosecutors

Indictment: Fishenko was one of 11 people charged by federal prosecutors for allegedly evading US export rules

He holds U.S. and Russian passports and has frequently traveled overseas to do business, making tens of millions of dollars on exports, authorities said.

An analysis of Arc's 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,' the court papers say.

Investigators also recovered a letter to Arc from a Russian domestic intelligence agency lab complaining that microchips supplied by the company were defective, the papers add.

Phone calls and emails intercepted by U.S. investigators also 'constitute devastating evidence of Fishenko's illegal procurement for the Russian government,' the court papers say.

Prosecutors said the evidence revealed repeated attempts by Fishenko to cover his tracks. In one instance in March, he '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.

In an earlier conversation, Fishenko favorably referred to a business associate using 'a Russian colloquialism for "spy" or "secret agent,"' the papers add.

About a dozen FBI agents in Houston executed a search warrant on Wednesday at Fishenko's firm, an unmarked business located in an industrial area in southwest Houston.

They took at least 18 cardboard boxes of materials from inside the business to a large truck parked in an alley in the back of the business.

Under sentencing guidelines, Fishenko faces more than 12 years in prison if convicted on all charges.