Here’s how the Hungarian arrested in the U.S. planned to dodge the sanctions against Russia

The 46-year-old Hungarian citizen who was arrested in the United States on 23 August had planned to deliver Motorola handheld radio transmitters and other commercially available equipment to Russia, Telex has learned. Bence H. and his associates were trying to get the devices from the United States to Russia via various shell companies.

Bence H., a Hungarian citizen, is accused of violating the U.S. Export Control Reform Act of 2018 ("ECRA"). Among others, he is accused of conspiring with others to illegally export radio communications technology of U.S.-origin to Russian government end-users.

H. was arrested on 23 August when he arrived at San Francisco International Airport in California.

According to Assistant Attorney General for National Security Matthew G. Olsen, he is accused of attempting to purchase military-grade radios for Russian entities through a multinational procurement chain to evade law enforcement. "The Justice Department remains committed to disrupting and holding accountable criminal networks that continue to fuel Russian aggression abroad and threaten our collective security,” Olsen said.

“Targeting illicit global procurement networks that operate in the shadows to equip the Russian government is of the highest priority to BIS,” Assistant Secretary for Export Enforcement Matthew S. Axelrod said. “As Horváth’s arrest demonstrates, it doesn’t matter where in the world you operate – when the United States believes your conduct violates our export laws, we take action.”

As Telex understands, H.'s case was investigated by the US Homeland Security Investigations (HSI) bureau. This is a key federal law enforcement agency of the Department of Homeland Security (DHS). "We shield our nation from global threats to ensure Americans are safe and secure" – the organization's website reads. The HSI conducts intelligence operations on a global scale, so not only in the United States, but also abroad.

According to our information, back in January last year, Bence H., a business associate and a Latvian shipping company started negotiations with the head of a small US company. The small US company distributes Motorola radio transceivers and their related equipment. According to investigators, H. and his team were planning to ship the products from the United States to Russia via third countries (including Latvia and the United Arab Emirates), as the sanctions which are in place make exporting directly to Russia illegal.

To be able to do this, they needed shell companies. According to our information, when speaking to the head of the American company, H. initially floated the option that once the goods were in the free trade zone in Dubai, they would be purchased by a Serbian company, which would then sell them on to Russia.

In the spring, the head of the US company indicated to H. that for the sale to take place, they would have to fill in a form indicating the country in which the product would eventually end up being sold. H. then told the American that the apparatus would be taken to Moscow to be used by the police. He also wrote that, to his knowledge, although Motorola had left the Russian market, its products were not subject to embargo. At the same time he asked the US vendor if this was the case, to which the US party replied that there was no chance of these products being exported to Russia.

H. later informed his US partner that the radios would instead be shipped to Spain, specifically to Madrid. According to our information, H. and his partners ordered Motorola DP4401e, 4400e and 4600e radios. Although these are commercially available, in certain specifications they meet military standards – for example, they are also waterproof and shockproof to a certain degree.

H. and his team requested that the invoice for the radios issued by the US side be made out to a Spanish company. The Spanish company paid the US seller nearly $100,000 last April. In total, H. and his team bought 200 radios.

At the same time, they asked for the goods to be delivered to an address in Riga, which caught the eye of the authorities at Miami International Airport. According to the paperwork, a Turkish airline was supposed to fly the goods to Europe, but the Homeland Security Investigations Bureau withheld the shipment at the behest of customs officials. In June last year, US agents travelled to Riga, where the head of the Latvian freight forwarder admitted to them that Latvia was not the intended final destination of the shipment.

The US investigation was able to uncover Bence H.'s network of contacts, and we understand that they also tapped the phones of the people involved to obtain information. According to this information, the Hungarian national – due to his family ties – has a very close relationship with some Russian companies, including one where he is the deputy director. The plan was for the Spanish company to sell the radios to a Hungarian telecommunications company, which would then sell them on to a Serbian partner. As an organiser, H. played a key role in the whole process.

The Russians wanted the goods to appear to come from a Hungarian company when they reached Serbia, because eventually, the radios would have been shipped from Serbia to Moscow.

One of the Russian companies involved in the case is directly linked to a Russian government agency and has a contract with it. This means that the employees of the Russian company involved were in contact or had contracts with several Russian government entities, including the Russian Ministry of the Interior, in connection with the purchase of the Motorola radios from the United States. The Russian company was allegedly also interested in building an operational radio communication system in the Kursk region, which is located along the Russian-Ukrainian border.

One of the documents obtained during the investigation included a satellite image of the Kursk region along the Ukrainian border, with various geographical locations highlighted on it. The document also indicated the types of radio transmitting antennas to be placed in the area, as well as the transmitting and monitoring stations to be manned by temporary personnel.