Ilya Khan, 66, a national of the United States, Israel, and Russia, has pleaded guilty to conspiracy to violate the Export Control Reform Act for his role in a transnational, multimillion-dollar scheme to secure and illegally export dual-use semiconductors and other sensitive technology to Joint Stock Company Research and Development Center ELVEES (Elvees) and other entities in Russia.
Elvees, one of the leading Russian developers of microchips, was sanctioned by the U.S. government in 2022 for contributing to Russia’s security services, military, and defence sectors.
Kahn also pleaded guilty to attempted tax evasion for failing to pay taxes on the illicit income he earned from the scheme.
“Kahn’s multimillion-dollar business threatened the national and financial security of our country,” said Chief Guy Ficco of IRS Criminal Investigation (IRS-CI).
Kahn is the owner of Senesys Incorporated and Sensor Design Association, which operated in California and Brooklyn, New York.
Kahn operated these businesses — ostensibly involved in “security software development” and the testing of silicon wafers for military, avionics and space users — as fronts for a years’ long conspiracy to acquire and export sensitive and sophisticated, dual-use electronics from the United States to Elvees in Russia.
Many of these items required an export license due to national security and anti-terrorism reasons, which Kahn did not obtain.
Kahn also arranged for Elvees to continue to fabricate and import semiconductors after Russia’s February 2022 invasion of Ukraine. These semiconductors can be used for, among other things, communications systems, GPS receivers, and equipment for military unmanned aerial vehicles, also known as drones.
In doing so, Kahn utilized a transnational network of front companies and bank accounts to ship those semiconductors to Russia following the invasion of Ukraine, often arranging for the semiconductors to be sent to the U.S. and then re-exported to Russia via China and other locations around the world.
In March 2022, the Commerce Department added Elvees to the Entity List, imposing a license requirement to export any item subject to the Export Administration Regulations to Elvees, and stating that it would review license applications under a policy of denial. Despite these sanctions, Kahn continued to work with Elvees.
For example, in May 2022, Kahn emailed a Taiwanese manufacturer design guidance for an Elvees-branded microchip.
Subsequently, Kahn shipped thousands of units of this microchip to a Hong Kong-based shipping company and then to a company located in the mainland of the People’s Republic of China.
Kahn noted in communications with the Hong Kong shipping company that he received a “call from Russia” about the PRC business to which he was directing the goods.
Kahn’s export activity for the benefit of Elvees dates to at least 2012, and accounts under his control received more than $50 million from Elvees and related entities between 2012 and 2022.
Kahn channelled nearly $5 million of that money for his personal use, which he did not report to the IRS and did not pay income taxes. As part of his plea, Kahn agreed to forfeit $4,923,548.94 in ill-gotten gains and to pay an additional $1,892,816.00 in restitution to the IRS.
Khan faces a maximum penalty of 20 years in prison.
