U.S. Treasury Department in Washington, D.C. Credit: Mike Scarcella / ALM

An American physicist represented by a team from Norton Rose Fulbright on Monday challenged his identification as a Russian oligarch by the U.S. Treasury Department, arguing Secretary Steven Mnuchin failed to take up a “serious inquiry” before including his name on a list of purported cronies of President Vladimir Putin.

“Instead, the secretary effectively republished the list of Russian billionaires from the March 28, 2017, issue of Forbes Magazine,” lawyers for Dr. Valentin Gapontsev, a Russian-born businessman and U.S. citizen, wrote in their complaint in the U.S. District Court for the District of Columbia. Forbes itself reported in January that the names of Russians appearing on the U.S. Treasury’s list appeared in a 2017 Forbes report on the world’s billionaires.

Gapontsev and his Massachusetts-headquartered company IPG Photonics, a manufacturer of specialized lasers, are represented by Washington-based Norton Rose partners Michael Edney, chairman of the firm’s white-collar defense team, and Stephen McNabb, head of the firm’s international trade practice.

While Gapontsev has not been formally sanctioned, his lawyers alleged his listing as a Russian oligarch has come with reputational harm and complicated dealings with financial institutions and customers of his company.

“At least one [customer] stated they assumed that IPG Photonics, due to its founder, CEO, and substantial owner’s designation as a Russian oligarch by the secretary, is effectively disqualified from doing business with U.S. persons and corporations,” Edney and McNabb wrote in the complaint.

Gapontsev’s lawyers said at least one third-party trade compliance system, Visual Compliance, “flagged Dr. Gapontsev in its system as posing a problem after the secretary submitted his List of Oligarchs to Congress.”

A Treasury Department spokesperson did not immediately comment on Gapontsev’s lawsuit.

“There is not a statutory or regulatory definition of oligarch, so Treasury included the $1 billion threshold as a reasonable number, which is similar to criteria contained in the U.S. Forbes list,” a Treasury spokesperson told Forbes in January.

Gapontsev’s lawsuit comes almost a year after Mnuchin included the U.S. citizen on a list of Russian oligarchs believed to be closely tied to Putin’s regime. The list was required under the Countering America’s Adversaries Through Sanctions, a sanctions law against Russia, Iran and North Korea that President Donald Trump signed in August 2017 but said was “seriously flawed.”

Gapontsev’s lawyers disputed the notion that Gapontsev has any affiliation with Putin and argued there was no evidence that the Treasury Department had conducted a full analysis before including his name on the oligarchs list. They contend the Treasury Department has “failed to provide any mechanism by which an individual included on the Secretary’s List of Oligarchs can seek to be removed from the list.”

The suit said Gapontsev’s wealth comes from his invention of market-leading industrial laser technologies, not from any corrupt parceling out of public assets to cronies of President Putin.”

“The secretary’s public report does not include an examination of Dr. Gapontsev’s connection to the Russian regime; if it had, it would be evident to all that Dr. Gapontsev has no such connection,” Gapontsev’s lawyers wrote.


Read the complaint below:

 


Read more:

What New Russia Trade Sanctions Mean for US Companies and Investors

Ex-OFAC Director Jumps to Morrison & Foerster

Reed Smith’s Russia Work in Mueller Case Gets Closeup in Court

US Ban on Russian Anti-Virus Firm’s Software Survives Court Challenge

Hogan Lovells Lobbying Team Went to Bat for ZTE in Sanctions Row