Why the U.S. crackdown on oligarchs could fail – Grid News

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Why the U.S. crackdown on oligarchs could fail

Since Russia invaded Ukraine last month, the United States has been part of an international effort to sanction and seize the assets of two dozen Russian oligarchs believed to be influential with Russian President Vladimir Putin.

But U.S. sanctions have tried and failed to accomplish similar outcomes in the past. Just ask Yevgeny Prigozhin.

Within Putin’s inner circle, few are closer to the Russian president than the man known as “Putin’s chef.” Prigozhin has enriched himself by catering to the unique demands of the Russian leader, from meals to mercenaries and military construction. Nearly a decade of U.S. sanctions appears to have done little to restrict his activities or dampen his enthusiasm for supporting Putin’s designs.

The strategy behind U.S. sanctions targeting Russian oligarchs is simple: Frustrate the men’s ability to make, spend and move their wealth, and leverage that frustration to encourage them to press for change in Russia’s foreign policy.

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It’s easier said than done. In the case of Prigozhin, there is evidence the U.S. effort could flop.

From hot dogs to mercenaries

Prigozhin ascended from prison inmate to hot dog vendor to gourmet restaurateur in the post-Soviet era. For the past several years, he has played a key role in Putin’s revanchist efforts to expand Russia’s worldwide influence, according to U.S. government reports and investigative records.

Daniel Treisman, a professor of political science at the University of California, Los Angeles, who studies Russian politics, said Prigozhin’s work for Putin has been “all very unofficial and deniable,” consistent with Putin’s pattern of relying on a circle of trusted outside operators to avoid accountability.

“I believe he spent a lot of time close to Putin in that capacity as chef,” Treisman said. “And that frequent interaction really created some kind of bond which produced this trust that has led to Putin giving him these totally unrelated opportunities and assignments.”

Prigozhin accomplished much of his work in support of Putin’s efforts while under U.S. sanctions.

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Over the past decade, reporting and federal investigations show, Prigozhin and his companies have built Russian military bases on the Ukrainian border. They have facilitated Russia’s efforts to meddle in the 2016 and 2018 U.S. elections. They have helped protect oil fields for Russian ally and Syrian leader Bashar al-Assad, and reportedly provided “paramilitary support for Russian military operations” from South America to Africa.

One of Prigozhin’s companies even produced pro-Russian propaganda that justified the country’s invasion of Ukraine.

Prigozhin and his companies accomplished virtually all of this while operating under a steadily growing pile of U.S. sanctions that variously targeted Prigozhin himself, his businesses, assets, associates and relatives.

On March 3, the United States expanded its sanctions against Prigozhin for a sixth time, as part of a larger package of sanctions against Russia and Russian figures triggered by Putin’s decision to invade Ukraine.

“We’re joining with European Allies to find and seize their yachts, their luxury apartments, their private jets,” President Joe Biden said in his State of the Union address, announcing the measures. “We’re coming for your ill-begotten gains.”

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But a look back at the recent example of Prigozhin suggests a different reality. Despite the sanctions against him, Prigozhin has continued to enrich himself by serving Putin.

“The more Prigozhin pleases Putin, the more he gets,” State Department Russia Analyst Nathaniel Reynolds wrote in 2019. “At the same time, Putin always looms above Prigozhin, presiding over the broader system of control.”

If at first you don’t succeed

The Treasury Department originally sanctioned Prigozhin in December 2016, citing his ties to a company that held a contract to build a military base near the Russia-Ukraine border.

As we now know from investigations into Russian efforts to influence the 2016 election, in the months before he was sanctioned, Prigozhin was using his company, the Internet Research Agency (IRA), to lead Russian efforts to tip the outcome of the 2016 election to Donald Trump. Internet Research Agency employees compiled detailed weekly reports on their Facebook and Twitter operations intended to influence U.S. elections, which were “collected by IRA management and presented during meetings with Prigozhin at Concord’s offices.”

In December 2016 — at the same time the Treasury Department was implementing sanctions against him — employees of Prigozhin’s Internet Research Agency “convinced a U.S. activist from Charlotte, North Carolina, to pose with a sign that read, “Happy New Year, Brother Eugene!” — an apparent reference to the English version of Prigozhin’s first name, according to a newly unredacted portion of the Mueller Report.


In 2017, the United States expanded its sanctions against Prigozhin, naming two of his companies: Concord Management and Consulting and Concord Catering. The following year, the Treasury Department sanctioned another Prigozhin-linked company, Evro Polis Ltd., which contracted with the government of Syria to protect oil fields.

In February 2018, prosecutors in Robert Mueller’s Office of Special Counsel charged Prigozhin and companies he controlled — Concord Management and Consulting LLC, Concord Catering and the Internet Research Agency LLC — in an eight-count indictment alleging they engaged in “a systematic effort to sow political discord and influence the outcome of the 2016 U.S. presidential election.”

Nevertheless, he persisted

With sanctions hanging over him and his businesses and with Mueller’s case ongoing, Prigozhin and his associates opted to meddle again in U.S. elections, this time targeting the 2018 midterms, according to U.S. officials.

In September 2019, the U.S. government took aim at Prigozhin’s personal assets, adding to its sanctions list a yacht named “St. Vitamin” and three private planes registered in the Seychelles, the Cayman Islands and the Isle of Man, all of which officials believed were controlled by Prigozhin.

Prigozhin’s planes apparently kept flying. A video posted to YouTube in February 2020 appears to show a jet with a tail number matching one of the Prigozhin-linked airplanes in Vilnius, Lithuania. A jet connected to Prigozhin with a separate registration number landed in Berlin in October 2020, the German newspaper Die Zeit reported in January, and remained there as of early this year.

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The Treasury Department again took aim at Prigozhin’s operations in September 2020, adding three individuals and two companies linked to Prigozhin — including a mining operation in the Central African Republic — to its sanctions list.

While the Treasury Department escalated its efforts to sanction Prigozhin, the Justice Department’s prosecution of Prigozhin and his companies for alleged election meddling fell apart. Prosecutors in March 2020 dropped all charges against Prigozhin’s companies.

“The government has concluded that further proceedings as to Concord, a Russian company with no presence in the United States and no exposure to meaningful punishment in the event of a conviction, promotes neither the interests of justice nor the nation’s security,” Department of Justice lawyers said in a motion to dismiss the charges. The Justice Department did not respond to a request for comment.

Although Justice did not drop charges against Prigozhin himself, Interpol dropped its extradition notice for Prigozhin in August 2020. The oligarch was free once again to travel to Europe and other Western countries. He was placed on the FBI’s “Most Wanted” list in February 2021 for alleged “conspiracy to defraud the United States.” The FBI declined to comment.

The Treasury Department issued yet another round of sanctions in April 2021 targeting Prigozhin’s companies and business associates. Perhaps with a note of frustration, officials said in their announcement that Prigozhin “uses a complex network of shell and front companies to evade U.S. sanctions and to obscure his ownership in property.” Those assets included two Russian companies that obfuscated ownership of airplanes and aircraft parts.

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Four months later, a film company co-owned by Prigozhin reportedly released “Blazing Sun,” a pro-Russian propaganda flick which “lays out the ‘denazification’ narrative that would later be used to justify Russia’s invasion of Ukraine,” as BuzzFeed described it.

This month, the United States issued its sixth round of sanctions against Prigozhin and assets, companies and people in his network.

“They’ve got to be looking over their shoulder”

Dennis Lormel, former chief of the FBI’s financial crimes program, said the amount of public attention directed toward oligarchs at this moment is “something we haven’t seen before.” He acknowledged the United States wasn’t able to easily enforce the measures.

“Regardless of how limited our potential is to hurt them, we have to take every step we possibly can to go after them,” Lormel said. “These folks, they’ve got to be looking over their shoulder.”

Indeed, many of the sanctions the United States issued against Russian oligarchs this month go further than previous efforts, naming people and entities in the oligarchs’ extended network of assets and relations. In Prigozhin’s case, U.S. sanctions issued earlier this month for the first time include his wife, two children and three companies: Lakhta Park Premium OOO, Lakhta Park OOO and Lakhta Plaza OOO.

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Yet the sanctions year after year have been ineffective at stopping Prigozhin and companies linked to him from aiding Russian military efforts around the world. Treasury Department officials did not respond to a request for comment.

John Yaros, the former associate director of the Treasury Department’s Financial Crimes Enforcement Network or FinCEN, said oligarchs and others targeted by sanctions typically set up networks of shell companies that make it difficult to identify their assets.

“It’s not that you can’t uncover these things,” he said, “it’s just the amount of resources and time that you need to do it is a lot more than people think.”

In addition to the latest round of sanctions, the Biden administration has also created the KleptoCapture Task Force, an interagency effort led by the Justice Department to pursue illicit assets that are the subject of sanctions.

The $13.6 billion spending package Congress approved this month related to the Ukraine crisis includes $25 million for the Treasury Department’s sanctions efforts and $19 million for FinCEN’s efforts related to the crisis.

For his part, Yaros thinks the U.S. efforts are already starting to show some impact: “I think they’re feeling the pinch much more — any time you start seeing yachts move into the Maldives.”

  • Steve Reilly
    Steve Reilly

    Investigative Reporter

    Steve Reilly is an investigative reporter for Grid focusing on threats to democracy.