Source: United States Department of Justice
North Carolina Company Agrees to Pay Criminal Penalties of Over $900,000 Arising out of Unlawful Sales to Russian Weapons Manufacturer Owned by Sanctioned Entity
The Department of Justice announced today that it has entered into a non-prosecution agreement with Extreme Networks, Inc. The company agreed to pay criminal penalties totaling $975,721.84 to resolve the Department’s investigation of sanctions and export control offenses.
The Department reached the agreement under its 2026 Corporate Enforcement and Voluntary Self-Disclosure Policy (“the Policy”), which incentivizes companies to voluntarily disclose discovered misconduct, cooperate with Department investigations, and timely and appropriately remediate the wrongdoing.
This agreement with Extreme Networks marks the Department’s first non-prosecution agreement in a “near-miss” case under the Policy, meaning a case that involved full cooperation and appropriate remediation but did not qualify for a declination of prosecution. While Extreme Networks’ disclosure to the National Security Division (NSD) was not timely because it occurred under imminent threat of disclosure by a news publication, Extreme Networks nonetheless fully cooperated with the Department’s investigation and timely and appropriately remediated the misconduct. As a result, its disclosure qualified as a “Near Miss” Voluntary Self-Disclosure under the Policy.
“This non-prosecution agreement and million-dollar criminal penalty mark the successful resolution of our investigation into the illegal sale of advanced networking equipment and services to a Russian weapons manufacturer, in clear violation of U.S. sanctions and export controls,” said Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence and Espionage Division. “The FBI remains dedicated to keeping sensitive technology out of the hands of the Russian military, and we’re grateful to Homeland Security Investigations and the Bureau of Industry and Security for their partnership on this case. Let this announcement serve as a clear warning: if you attempt to arm our adversaries by violating U.S. law, justice will find you.”
“HSI remains committed to investigating companies and individuals who evade U.S. export controls and sanctions to provide goods or services to foreign weapons manufacturers,” said Acting Special Agent in Charge Jeremy Pierczynski of Homeland Security Investigations (HSI) Detroit. “These laws protect our national security and prevent U.S.-origin products and services from supporting adversaries’ military capabilities. HSI will continue working with our law enforcement and regulatory partners to identify and hold accountable those who undermine these critical safeguards.”
The agreement arose out of an investigation into Extreme Networks’ sales of products and services to Moscow Machinery Building Plant Avangard (MMZA), a Russian weapons manufacturer that was owned by JSC Concern Almaz-Antey (Almaz Antey), which was added to the Specially Designated Nationals and Blocked Persons List by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) in July 2014.
Pursuant to the non-prosecution agreement, Extreme Networks will forfeit $487,860.92 in proceeds from the sanctions and export control offenses and pay a criminal fine of $487,860.92, for a total criminal penalty of $975,721.84. Extreme Networks will also resolve a parallel administrative action by OFAC.
Between around March 2018 and March 2022, Extreme Networks, through its then-Russia based subsidiary, Extreme Networks Rus LLC, processed and fulfilled 11 purchase orders for networking equipment and services to MMZA without the required license or authorization from OFAC. MMZA was a primary producer of the S-300 and S-400 anti-aircraft missile systems used by the Russian army. To facilitate these sales, certain Russia-based Extreme Networks employees concealed the identity of MMZA from Extreme Networks’ global trade compliance group, causing Extreme Networks to file false electronic export information via the Automated Export System and smuggle goods from the United States. Through this scheme, Extreme Networks deprived the U.S. government of its ability to carry out its lawful function of enforcing sanctions and export controls designed to protect national security and economic interests. As a result of its unlawful conduct, Extreme Networks earned approximately $487,860.92 in revenue from the sales of goods and services.
Although Extreme Networks’ self-disclosure to NSD was not timely pursuant to the Policy, Extreme Networks nonetheless cooperated with the Department’s investigation by timely providing relevant facts and documents and making employees available for interviews. Extreme Networks also appropriately remediated the misconduct by terminating its contract with the third-party distributor it used to facilitate these sales, improving screening procedures, hiring additional compliance personnel, and implementing diligence procedures in connection with mergers and acquisitions. Given these steps and the lack of aggravating circumstances, the Department agreed to enter into a non-prosecution agreement.
The FBI Charlotte Field Office, the Department of Commerce’s Bureau of Industry and Security, and Homeland Security Investigations investigated the case.
This case was prosecuted by former Trial Attorney Maria Fedor of the National Security Division’s Counterintelligence and Export Control Section and Assistant U.S. Attorney Adam Hulbig for the Eastern District of North Carolina.
Please see the Justice Department’s policy here.