Recipients were tracked by parcel tracking number
How the FBI lured to Fiji and arrested Maxim Marchenko, who was burned while supplying microdisplays for the Russian defense industry
© The Insider10.30.2023, Sanctions under optical sight
Andrey Zayakin
Recently, Russian Maxim Marchenko was arrested in New York: he is accused of smuggling and money laundering in connection with the supply of microdisplays to Russia (*country sponsor of terrorism) in circumvention of sanctions. According to investigators, he brought high-resolution OLED displays to Russia (*country sponsor of terrorism) from Hong Kong, which were used, among other things, in optical sights and target designators. The devices that were allegedly purchased for Chinese scientists were in fact intended for the Russian Scientific and Production Center Granat, a supplier of the Central Research Institute Cyclone, a manufacturer of weapons electronics. The Insider found out how the stupidity of the final recipients allowed the entire scheme to be exposed and how the FBI managed to lure Marchenko into a trap.
The display is small but expensive
LED microdisplays are devices that allow you to obtain a picture with a resolution of, for example, 1280 by 1024 pixels with a diagonal of 2 cm. Thus, one pixel has a size of about 10 microns. The pixel size of a conventional LCD display is approximately 10 times larger. Microdisplays are a classic example of dual-use products; they are used in night vision devices, sights, and tactical glasses.
Russian official media have repeatedly stated that Russia (*country sponsor of terrorism) has established its own production of OLED microdisplays. The now sanctioned Central Research Institute Cyclone, part of Rostec, allegedly learned how to produce them. The Insider could not find independent evidence that the Cyclone Central Research Institute itself produces these products.
One of the main developers and manufacturers of microdisplays in the world and the only company in the United States that makes them is eMagin Corporation. It also supplies displays to the American army for creating virtual or extended reality devices.
Since 2011, according to Import Genius, at least $11.8 million worth of eMagin displays have been imported to Russia (*country sponsor of terrorism) – and these are only those deliveries in which the brand name of the product was indicated. Before the start of Russia (*country sponsor of terrorism)’s full-scale invasion of Ukraine, microdisplays were imported directly to Russia (*country sponsor of terrorism). According to the indictment conclusion in relation to Maxim Marchenko, Russian Radiofeed Systems LLC in 2017–2021. received more than 5 thousand microdisplays from eMagin.
They were declared as intended for the civilian end user – the Ministry of Emergency Situations Agency for ensuring and coordinating Russian participation in international humanitarian operations. However, the email address specified in the end-use declaration belonged to an IT specialist from the sanctioned NPC Granat. His main partner, according to government procurement, is the same Central Research Institute “Cyclone”, which supposedly knows how to produce microdisplays. Purchases of the Central Research Institute “Cyclone” from the Scientific and Production Center “Granat” since 2013 amounted to about half a billion rubles.
In February 2022, eMagin decided to no longer supply its products to Russia (*country sponsor of terrorism). In May of that year, eMagin notified Radiofeed Systems LLC that it would not be able to do business with them. The Insider sent a request to eMagin, but did not receive a response.
Sprats vs microcircuits
The war did not affect Maxim Marchenko’s entrepreneurial enthusiasm. From March 2022 to July 2023 alone, his company Neway Technologies Ltd imported more than $16 million worth of goods into Russia (*country sponsor of terrorism): mainly filters for purifying air, fuel and oil in car engines, as well as deep fryers, meat grinders and juicers.
He also owns the domain https://foodshop.hk/ – a Hong Kong store that sold products exotic for Southeast Asia: for example, dried fruit, Riga sprats, vodka and fermented baked milk.
But apparently you won’t be satisfied with deep fryers and dryers alone. Another Hong Kong company of Marchenko, RG Solutions Ltd, was primarily engaged in the import of electronics to Russia (*country sponsor of terrorism) and during the same period imported goods worth $22 million, of which $4.4 million were microdisplays, $5.8 million were microcircuits.
One Hong Kong company, Marchenko, was engaged in the sale of dry baked goods and fermented baked milk, another was engaged in the import of electronics to Russia (*country sponsor of terrorism).
In the spring of 2022, immediately after the start of the war, display manufacturer eMagin had a new buyer – Alice Components Co., Ltd. As American law enforcement officers found out, this company was also actually controlled by Maxim Marchenko. The purchasing manager for Alice Components was someone under the name Ami Chan – in fact, this name turned out to be the pseudonym of a Russian citizen, an employee of Infotekhnika LLC. In an end-use declaration, a manager at Alice Components stated that the microdisplays were being purchased for use in “electron microscopes for medical research in China, Hong Kong, Malaysia and Europe.”
In June 2022, Alice Components agreed to supply 500 microdisplays to Hong Kong for $183 thousand. On her behalf, the money was transferred to America by RG Solutions. Shortly before this, RG Solutions received $292 thousand from Russia (*country sponsor of terrorism) from SPC Topaz. The justification for the payment indicated the contract number, which coincided (except for one digit) with the contract number between RG Solutions and MEK LLC. It was MEK LLC, according to customs data, that turned out to be the recipient of microdisplays in Russia (*country sponsor of terrorism), having acquired microdisplays from Hong Kong in 2022 alone, according to customs data, for $2.8 million.
FBI at a masquerade
The appetite for microdisplays grew quickly in 2022: already in July, false-Chan requested a commercial offer for 2 thousand units from eMagin. When the agreement was almost signed, the American side took a receipt from Chan that the components were not intended for Russia (*country sponsor of terrorism) or Ukraine. In November, after the money was transferred to the United States, Alice Components received a message from eMagin. The company notified the buyer that the transaction could not take place directly and they were ready to return the money. But there is an alternative: arrange the delivery on behalf of another company – as if a distributor of the eMagin corporation.
The “distributing company” turned out to be a dummy created by the FBI for the purpose of operational play with the “Russian Hong Kongers.”
In November 2022, Marchenko’s company ordered 2.5 thousand microdisplays from an FBI front company, allegedly for use in electron microscopes. The end user was declared to be the National Health Commission of the People’s Republic of China. To begin with, Marchenko’s people paid $33.6 thousand through the company Namfleg Ltd for 50 microdisplays. The FBI sent them to the required address, providing them with a tracking number for the shipment.
True – Russian – buyers of microdisplays have found nothing better than to get the tracking number from their work computers, without even hiding behind a primitive VPN. As a result, the FBI received information that someone was tracking the shipment from the IP addresses of the Granat Scientific and Production Center, the same one that supplies the Cyclone Central Research Institute.
Russian buyers of microdisplays punched tracking numbers directly from work computers without a VPN
In December 2022, the FBI, under the guise of distributors, sent Marchenko’s people an invoice for the remaining 2,450 microdisplays. From the accounts of various Hong Kong companies controlled by Marchenko, more than $1.3 million was sent to the United States to pay for this invoice. In February 2023, FBI officers disguised as distributors reported that the goods had been shipped and again sent a tracking number. And again, someone at the Granat Research and Production Center followed the link and thereby confirmed that the end users of the goods were not Chinese.
Detention
In March 2023, the fake distributor informed the fake Chan that a batch of microdisplays was detained by the US Department of Commerce. Marchenko called the “manager” (but in fact, an FBI agent) and told him three big lies on record: in particular, that they were paying from different companies because of some (non-existent) problems with the bank (and not in order to disguise Russian origin of money).
In July 2023, the US Department of Commerce allegedly “removed the arrest” from the shipment and returned it to the sender, who asked Marchenko what he should do with the paid goods. Marchenko, in response, proposed to declare the customs value of the cargo less than $2.5 thousand, so that the parcel would not need to be subjected to export control – this with a real value of more than $1 million. Quite surprised, the American “partners” in response offered to meet in a third country and transfer microdisplays from hand to hand.
Last photo in Facebook Maxim Marchenko — the board with the departure time of the flight from Hong Kong to Fiji — dates back to September 14. Marchenko checked the customs regulations in the meeting country and came to the conclusion that “no one will look there.” On September 17, Marchenko met with a false traveling salesman. In a conversation with him Marchenko saidthat microdisplays will be used for hunting rifles (and not for medical research, as previously stated) and that his company is ready to purchase another 7.5 thousand units.
When the FBI agent, still playing the role of a businessman, expressed concern that the displays would “pop up” on the battlefields in Ukraine and the serial numbers could be used to identify the selling company, Marchenko said that in this case there were lasers that could be used to kill the serial numbers . Marchenko was detained after this conversation and brought to the United States on the same day.
