Feds probe in­cen­tives to maker of Rus­sian as­sault ri­fles

South Florida Times - - FRONT PAGE - By DAN CHRIS­TENSEN Flori­daBull­dog.org

MI­AMI - A Mi­ami fed­eral grand jury has sub­poe­naed records from Gov. Rick Scott’s ad­min­is­tra­tion and Pom­pano Beach about an aborted eco­nomic in­cen­tives deal with a U.S. man­u­fac­turer of Rus­sian-style Kalash­nikov as­sault ri­fles.

The sub­poe­nas, served last week, were ac­com­pa­nied by a let­ter signed by As­sis­tant U.S. At­tor­ney Michael R. Sher­win an­nounc­ing the ex­is­tence of “an of­fi­cial in­ves­ti­ga­tion of a sus­pected fed­eral of­fense.” The sus­pected of­fense was not spec­i­fied. But Florida Bull­dog has re­ported that the com­pany, RWC Group LLC, whose brand name is Kalash­nikov USA, may be op­er­at­ing in vi­o­la­tion of U.S. eco­nomic sanc­tions im­posed on Rus­sian-made mil­i­tary as­sault weapons.

Bloomberg Busi­ness later re­ported that “a com­pli­cated web of shell com­pa­nies con­nects Kalash­nikov USA to al­lies of Rus­sian President Vladimir Putin and ap­pears de­signed to avoid U.S. sanc­tions.”

The sub­poena to the state was served on the Florida Depart­ment of Eco­nomic Op­por­tu­nity (DEO) in Tal­la­has­see, which over­sees the state’s Qual­i­fied Tar­get In­dus­try tax-re­fund pro­gram. It de­manded copies of all doc­u­ments, ma­te­ri­als and cor­re­spon­dence sub­mit­ted by or per­tain­ing to RWC, which stands for Rus­sian Weapon Com­pany.

DEO is Gov. Scott’s gov­ern­ment agency for eco­nomic de­vel­op­ment. He ap­points its ex­ec­u­tive direc­tor, who serves at his plea­sure. Project 762

The sub­poena to Pom­pano Beach seeks sim­i­lar copies per­tain­ing to “Project 762” and the “Project 762 In­cen­tive Pack­age.” Project 762 was the code name used by the city, Broward County and the pro-busi­ness Greater Fort Lauderdale Al­liance to re­fer to RWC/Kalash­nikov in var­i­ous public records.

Like Pom­pano Beach, Broward County was a lo­cal gov­ern­ment spon­sor of RWC/Kalash­nikov. Un­like Pom­pano Beach, how­ever, Broward has not re­ceived a sub­poena in the mat­ter.

Greater Fort Lauderdale Al­liance spokesman Ron Drew de­clined to say whether his or­ga­ni­za­tion had been sub­poe­naed. “Our pol­icy is to not dis­cuss po­ten­tial lit­i­ga­tion,” he said.

Pros­e­cu­tor Michael Sher­win did not re­spond to a re­quest for com­ment.

Florida’s use of tax­payer funds to im­port to Broward an as­sault-ri­fle maker tied to Rus­sia’s most rec­og­niz­able weapons brand has come un­der scru­tiny since the Valen­tine’s Day shoot­ing at Park­land’s Mar­jory Stone­man Dou­glas High School that left 17 stu­dents and fac­ulty dead. The shooter used an as­sault weapon. President Barack Obama im­posed the U.S. sanc­tions on a num­ber of Rus­sian arms mak­ers in July 2014 af­ter Rus­sia did not end the Ukraine con­flict. One of those com­pa­nies was Con­cern Kalash­nikov, maker of the no­to­ri­ous AK-47 as­sault ri­fle, whose U.S. as­sets were frozen and trans­ac­tions with it were gen­er­ally pro­hib­ited. At the time, RWC Group was Con­cern Kalash­nikov’s ex­clu­sive U.S. dealer. Af­ter the sanc­tions, the U.S. com­pany said it had sev­ered all ties with Con­cern Kalash­nikov. Tax breaks for jobs

It was against that back­drop that Gov. Scott’s ad­min­is­tra­tion of­fered RWC Group $162,000 in state tax breaks in 2015 to bring the com­pany, and its jobs, to South Florida from Penn­syl­va­nia.

The DEO re­leased a copy of the fed­eral sub­poena Mon­day. To date, how­ever, it has made only a lim­ited re­lease of in­for­ma­tion about the RWC deal, which was ter­mi­nated in 2016 with­out any money be­ing paid be­cause the com­pany failed to cre­ate the promised jobs. The still-hid­den records might show whether the state in­ves­ti­gated to de­ter­mine if RWC Group had in fact sev­ered all ties to its Moscow-based part­ner.

Scott’s of­fice has de­nied that Florida skirted the sanc­tions to make the in­cen­tives of­fer to Kalash­nikov USA. A spokesman said all el­i­gi­ble Amer­i­can com­pa­nies that qual­ify for state tax in­cen­tives get of­fered them.

Broward court fil­ings sug­gest the com­pany did not cut all its ties. In De­cem­ber 2016 an at­tor­ney rep­re­sent­ing the com­pany in a busi­ness dis­pute said Kalash­nikov USA held the U.S. li­cense to man­u­fac­ture and sell Kalash­nikov firearms.

“Un­der U.S. sanc­tions law, if a com­pany is en­gag­ing in any trans­ac­tion with a black­listed en­tity like Kalash­nikov, in­clud­ing li­cens­ing its name, tech­nol­ogy or ser­vices for use in the U.S. or oth­er­wise deal­ing in its prop­erty, that’s a com­pli­ance prob­lem,” Wash­ing­ton, D.C. lawyer Robert L. Meltzer, who spe­cial­izes in eco­nom­ics sanc­tions law, told Florida Bull­dog this month.

PHOTO COUR­TESY OF CLERK, US COURTS

Mi­ami fed­eral grand jury sub­poena served on florida’s depart­ment of eco­nomic op­por­tu­nity.

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