OFAC imposes $4.7 million penalty on real estate investor for dealing in blocked Russian’s property
Baku, November 25, AZERTAC
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed a $4,677,552 penalty on an individual (“U.S. Person-1”) for violating OFAC sanctions on Russia and failing to comply with an OFAC subpoena. This action—which imposes the statutory maximum penalty—highlights the obligation of all U.S. persons, including individual investors and others in the real estate sector, to comply with OFAC’s sanctions regulations and orders. It results from OFAC’s proactive efforts to identify and prevent dealings in the blocked property of sanctioned individuals.
“Under President Trump’s leadership, the United States has put in place strong sanctions against Russia,” said Treasury Under Secretary for Terrorism and Financial Intelligence John K. Hurley. “Today’s action makes clear that Treasury will continue to actively investigate and hold accountable those who violate U.S. sanctions.”
Between April 2023 and March 2024, U.S. Person-1—acting through and on behalf of the Atlanta, Georgia-based real estate investment company King Holdings LLC—willfully mortgaged, renovated, and sold to an unwitting third party real estate property owned by a person blocked under OFAC’s Russia sanctions. The sale, which U.S. Person-1 concealed from OFAC, also violated the terms of a cease-and-desist order.
In March 2022, OFAC added a family member of a Russian oligarch to its sanctions list pursuant to Executive Order 14024, “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation.” The family member owned residential real property in the Atlanta area directly and in their own name. At that time, all dealings in the property became prohibited, including its transfer, sale, or foreclosure, and any unauthorized transfer of the property would be null and void under OFAC’s regulations.
At OFAC’s request, Fulton County, Georgia authorities recorded a document detailing the restrictions on dealings with the property and made it available to the public. Nevertheless, the property went into foreclosure around this time, and King Holdings purchased it at public auction in January 2023. The property remained blocked, however, pursuant to OFAC’s regulations. U.S. Person-1 had planned, through King Holdings, to renovate and sell the property, which they apparently did not realize was blocked at this time.
After OFAC discovered the foreclosure in April 2023, it immediately contacted U.S. Person-1 and explained that the property remained blocked and could not be dealt in without authorization. OFAC also informed U.S. Person-1 that they could apply for a license from OFAC. Instead of applying for a license, U.S. Person-1 willfully continued with their plan to renovate and sell the property through King Holdings without notifying or seeking approval from OFAC.
OFAC issued a cease-and-desist order to King Holdings instructing it to stop violating the applicable sanctions prohibitions, as well as a subpoena inquiring about its conduct, while the sale was pending. In replying, U.S. Person-1 certified the completeness of the subpoena response, which failed to mention the sale, and they soon thereafter closed on the sale in violation of the cease-and-desist order.
Other news in this section
