Earlier in the month, Florida Steel Company President John Can Unsalan, the president of a steel manufacturing company linked to Russian oligarchs, admitted guilt to a charge of conspiring to engage in money laundering. The charge was related to financial transactions carried out with the purported intention of facilitating violations of U.S. sanctions.
Metalhouse LLC, founded by Unsalan in Florida in 2014, engaged in transactions with entities overseen by Russian Oligarch Kurchenko, included in the OFAC’s Specially Designated Nationals and Blocked Persons (“SDN”) List since 2015, as outlined in the plea agreement covering the period from 2018 to 2021. Russian Oligarch Kurchenko had initially been added to the SDN List for alleged misappropriation of state funds from Ukraine. Generally, it is against the law for U.S. individuals to engage, either directly or indirectly, in business with parties listed on the SDN List, unless specific exceptions are granted by the U.S. government on a case-by-case basis.
Based on the factual foundation supporting the plea agreement, Unsalan willfully engaged in a collaboration with Russian Oligarch Kurchenko to circumvent sanctions through Metalhouse transactions, amounting to approximately $157 million over the relevant three-year period. The operation encompassed two dummy corporations—one established in Hong Kong and another in Cyprus—under Kurchenko’s control.
Unsalan and his Metalhouse colleague held face-to-face meetings with Kurchenko and subsequently entered into contracts with Kurchenko’s enterprises to procure steel and other raw materials, settling the payments through offshore bank accounts. In the end, Unsalan and Metalhouse garnered a total exceeding $160 million by reselling these materials to external parties. Many of the funds were given to Kurchenko so that he could buy more raw materials, but the facts supporting the plea deal say that Unsalan kept millions of dollars in profits for himself.
The government’s claimed evidence primarily revolved around demonstrating Unsalan’s involvement in this scheme. They alleged that he was aware that Russian Oligarch Kurchenko and his entities were on the SDN List, knew it was illegal to engage in business with a sanctioned individual, and did not seek an exception from the U.S. government.
Notably, a substantial portion of this evidence stemmed from disputes within their contracts. For instance, it seems that Kurchenko frequently failed to deliver the goods Unsalan had paid for, leading to Unsalan and his associate’s efforts to recover their money. These disagreements, often communicated through coded text messages or encrypted emails, not only established the existence of business transactions but also indicated Unsalan’s awareness of the unlawful aspects of these dealings.
This plea agreement stems from Unsalan’s indictment in April 2023, where he faced charges related to numerous money laundering offenses. The charges included one count of conspiring to breach U.S. sanctions, violating the International Emergency Economic Powers Act (IEEPA), 10 counts of IEEPA violations, one count of conspiring to engage in international money laundering, and ten counts of international money laundering. By accepting the plea deal, Unsalan’s charges were narrowed down to a single count, specifically the conspiracy to commit money laundering.
The crime for which the defendant was found guilty carries a maximum penalty of 20 years in prison. Though Unsalan has admitted guilt and agreed to give up the $160 million he got illegally, the Department of Justice has agreed to lower his offense level under the U.S. Sentencing Guidelines (“U.S.S.G.”). This is because he has agreed to forfeit the money and accepted responsibility. Conversely, both parties have concurred on “enhancements” to Unsalan’s U.S.S.G. offense level, citing the inclusion of a money laundering charge. This enhancement is made even stronger because “sophisticated laundering” is said to have been involved, and Unsalan is said to have played a part in the crime as an organizer, leader, manager, or supervisor.
Calculating Unsalan’s U.S.S.G. “total adjusted offense level” and assuming no prior criminal history, the expected advisory sentence falls within the range of 87 to 108 months of imprisonment. This is without factoring in any downward departures or variances to the advisory sentence based on other considerations.
This inquiry was carried out by the Justice Department’s “Task Force KleptoCapture,” an interagency law enforcement task force initiated in May 2022 in direct reaction to the Russian invasion of Ukraine. As mentioned in our previous blog posts, Task Force KleptoCapture has played a pivotal role in uncovering various schemes linked to Russian oligarchs attempting to evade sanctions. Additionally, the Financial Crimes Enforcement Network has recently issued multiple analyses and alerts to financial institutions concerning violations of sanctions and associated illicit transactions, with a specific focus on those involving Russia.
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