Sun Sentinel Palm Beach Edition
Has gun maker violated U.S. sanctions?
A South Florida congressman wants to hear what a federal agency knows about reports a Pompano Beach arms maker may have violated U.S. sanctions through a relationship with the Russian gun manufacturer Kalashnikov Concern.
In a letter dated Wednesday, U.S. Rep. Ted Deutch cited recent published reports that a federal grand jury in Miami is investigating possible sanctions violations by Kalashnikov USA. Federal prosecutors have reportedly subpoenaed state and local economic development records about incentives offered to Kalashnikov USA to locate to South Florida from Pennsylvania.
In 2014, in response to Russia’s involvement in the military conflict in Ukraine, the Obama administration imposed sanctions against Kalashnikov Concern, maker of the AK-47 rifle, and froze its assets in the United States.
Deutch’s letter to the Treasury Department’s Office of Foreign Assets Control specifically asked:
Would the importation of parts and components from a sanctioned company violate the executive order imposing sanctions on Russia?
Has Kalashnikov USA imported parts and components from Kalashnikov Russia?
Has the Office of Foreign Assets Control started to investigate the nature of the business relationship between Kalashnikov USA and Kalashnikov Russia, “including any connections between the executives, directors, and employees of Kalashnikov USA and its parent, RWC Group, LLC, and Kalashnikov Russia?”
Deutch said he viewed the issue as a “serious national security matter” and requested ”a prompt response.”
Deutch, D-West Boca, represents a district that includes Pompano Beach, where Kalashnikov USA occupies warehouse space in a local industrial park.
The 22nd District also includes Parkland, scene of the shooting in February that killed 17 students and staff members at Marjory Stoneman Douglas High School. Shooter Nikolas Cruz did not use any Kalashnikov weapons. He used an AR-15, which he purchased from a gun shop in Coral Springs.
Deutch’s letter focused on a state-driven offer of economic incentives for Kalashnikov USA to put its business in Pompano Beach, as well as the possibility that it maintains a continuing relationship with Kalashnikov Russia.
Kalashnikov USA has denied it maintains any ties with the Russian gun maker and did so again Wednesday.
Through a spokeswoman, Brian Skinner, CEO of Kalashnikov USA, said in a statement that the company “is a privately held US company that operates in accordance with all applicable US laws, including, but not limited to, the International Traffic in Arms Regulations and US economic sanctions programs.
“Accordingly, as a ‘US Person’ under such laws, Kalashnikov USA does not conduct business with the Russian company, Kalashnikov Concern, which has been designated as a Specifically Designated National by the US Department of the Treasury.”
The statement did not address the reports of a grand jury investigation or answer specific questions posed by the South Florida Sun Sentinel.
Deutch asserted the case “deserves a full investigation to determine whether federal laws were broken to protect Kalashnikov’s profits.
“Recent media reports have raised questions as to whether Kalashnikov USA, or its parent company RWC Group LLC, may have violated federal sanctions law through illicit business relations with the Russian-owned Kalashnikov Concern JSC (“Kalashnikov Russia”),” he wrote.
“According to Kalashnikov USA’s own 2015 application for $162,000 in tax incentives ... the company planned to assemble its weapons with parts and components imported from Kalashnikov Russia’s factory located in Russia,” Deutch wrote.
Although the company ultimately relocated to South Florida from Pennsylvania, it never received any money or tax breaks.
Deutch also raised concerns about reported distribution connections between Kalashnikov USA and Kalashnikov Concern that allegedly date to 2012.
“Reports detail that in 2012, RWC Group LLC, which owns Kalashnikov USA, became the sole distributor of Kalashnikov Russian weapons in the United States with the intention to pump 200,000 assault weapons into the market each year,” Deutch wrote. “These reports further indicate that Kalashnikov USA may have used shell companies to hide its continued relationship with Kalashnikov Russia, a company partly owned by the Russian government.”