First Payment of Russian Oligarch Confiscated Cash for Ukraine’s Rebuild

On May 10, US Attorney General Merrick Garland authorized the first transfer of confiscated Russian assets to Ukraine for reconstruction purposes.

 After the US Justice Department accused Konstantin Malofeyev of violating sanctions stemming from his backing of Russian occupiers in eastern Ukraine and Crimea, it will now transfer $5.4 million of the Russian oligarch’s money to Ukraine, Reuters reported.

“While this represents the United States’ first transfer of forfeited Russian funds for the rebuilding of Ukraine, it will not be the last,” Garland said in a statement. 

The funds in question were confiscated by a US court from Malofeyev, who was charged with evading sanctions.

US authorities have long maintained that Malofeyev is one of the main sources of financing for Russians promoting separatism in Eastern Ukraine and Crimea, which Russia illegally annexed in 2014.

Malofeyev also owns a media empire whose Christian orthodox Tsargrad television station has become a propaganda arm of Vladimir Putin’s regime.

Known as the ‘Orthodox oligarch’ because of his support for the Russian Orthodox Church, Malofeyev has described the current invasion of Ukraine as a “holy war.”

Malofeev is closely linked to Russian occupation authorities in eastern Ukraine and Crimea. He was the former employer of Alexander Borodai, the Prime Minister of the self-proclaimed Donetsk People’s Republic.

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While the amount might seem colossal at first glance, it is far from enough compared to the $486 billion needed to fully restore what’s been ravaged by Russia’s invasion.

Malofeev was also the former employer of Igor Girkin, a former Russian FSB colonel who provided security services to Malofeev's visits to Kyiv and Crimea in the weeks before the annexation of the latter by Russia.

Since 2014, Malofeev and his companies have been designated to the lists of individuals sanctioned during the 2014 pro-Russian unrest in Ukraine maintained by the European Union, United States, and Canada.

Subsequently, Malofeyev tried to evade American sanctions by using American and other co-conspirators to secretly acquire media organizations across Europe, according to US authorities.

Following Russia’s full-scale invasion of Ukraine, Attorney General Garland in March 2022 announced a new task force, called KleptoCapture, that specifically targeted Russian oligarchs who sought to evade US sanctions imposed against Russian entities.

Among the assets seized thereafter by Washington was a fleet of superyachts, including a 106-meter vessel owned by Suleiman Kerimov valued at over $300 million, which had been docked in Fiji.

In April 2022, the US Justice Department indicted Malofeyev on the charge of evading sanctions under the International Emergency Economic Powers Act (IEEPA). IEEPA is US federal law that authorizes the President to regulate international commerce in response to any unusual or extraordinary threat to the US.

“Kremlin-linked Russian oligarch Konstantin Malofeyev played a leading role in supporting Russia’s 2014 invasion of eastern Ukraine, continues to run a pro-Putin propaganda network, and recently described Russia’s 2022 military invasion of Ukraine as a ‘holy war,’” said Assistant Director Michael J. Driscoll of the FBI’s New York Field Office on presenting the April indictment.

Around the same time as the indictment, Attorney General Garland also announced “the seizure of millions of dollars from an account at a US financial institution traceable to Malofeyev’s sanctions violations.”

At the end of 2022, prosecutors told the Manhattan Federal Court that they had the right to confiscate money in Malofeyev's account at Sunflower Bank in Denver because he had attempted to transfer it to a business partner in defiance of US sanctions.

In February 2023, the District Judge of the Manhattan Federal Court authorized the prosecutor's office to confiscate $5.4 million USD belonging to Malofeyev, and that process has now been completed.

That ruling marked the first forfeiture order for a Russian oligarch's assets since the launch of the KleptoCapture task force aimed at squeezing Putin’s allies.

Malofeyev himself appears to be in Russia at present.

On March 6, 2023, Russia's Federal Security Service (FSB) said that it prevented Malofeyev’s assassination by an alleged group of Ukrainian saboteurs, the so-called Russian Volunteer Corps, under the command of Denis Nikitin (aka, ‘Kapustin’). It said that the so-called Russian Volunteer Corps had crossed into the western region of Bryansk and fired on civilians. Kyiv denied any involvement and suggested that Moscow was staging a ‘false flag’ event as a pretext for further attacks on Ukraine.