How Russia stole the night: Inside the illegal market for American night-vision technology
On Feb. 10, 2008, Joseph Fradel, an American citizen, was stopped and searched at Moscow’s Sheremetyevo International Airport while en route back to the United States. Russian airport security officials found in Fradel’s possession a second U.S. passport under a different name.
Fradel’s response was unexpected: He immediately attempted to eat the second passport. When security officers grabbed the partially ingested passport, they saw the picture on the second document was the same as in Fradel’s passport, but the name wasn’t Joseph Fradel. It was Naum Morgovsky. Russian authorities let the man leave the country, but alerted their U.S. counterparts about the potential identity theft.
When Fradel landed in San Francisco, he was confronted by U.S. officials, and was found carrying credit cards in Morgovsky’s name, as well as business cards for Hitek, a night-vision company owned by Morgovsky.
A Joseph Fradel had died in Maryland in 1969. The real name of the traveler, who was arrested on the spot for passport fraud, was indeed Naum Morgovsky.
Then, for nearly a decade, the court case describing the passport-eating incident disappeared, sealed by a federal judge. This summer, Naum Morgovsky, an immigrant from Soviet-era Ukraine, and his wife, Irina Morgovsky, pleaded guilty in San Francisco federal court to breaking U.S. laws on exporting military equipment.
At its core, the case against the Morgovskys, which prosecutors have described as “a dizzying panoply of criminal activity,” revolved around allegations that the couple masterminded a scheme to export hundreds of military-grade night-vision device parts and other image-intensifier technologies to Russia, in violation of U.S. export control laws. Many of these devices were smuggled to a Moscow-based night-vision company that is a supplier to the Russian military and the FSB, the main successor agency to the KGB.
The Morgovskys’ tale, however, is not an isolated one. Former intelligence officials say it’s part of a larger story of Russia’s appetite for Western cutting-edge technologies with military applications. The Department of Justice has prosecuted at least five cases involving the illegal export of night-vision equipment to Russia in the past five years. All five cases involved the latest generation of night-vision devices that Russia in recent years has had trouble producing domestically.
Much of the public focus on Russia’s covert activities in the United States has focused on salacious cases, like Maria Butina, the Russian gun-rights supporter who is accused of acting as an unregistered foreign agent in the United States, or attempts to interfere in U.S. elections. But old-fashioned theft of military technology — once a staple of the Cold War — is still alive and thriving.
It is technology with life-and-death implications: The Pentagon has been sending thousands of advanced night-vision devices to Ukraine at a time when Russia, which is backing separatists in the country’s east, has been struggling to produce comparable devices. Russian soldiers in Syria fighting to prop up President Bashar Assad rely on night-vision devices, and there have been reports that Russia is supplying night-vision technology to the Taliban in Afghanistan.
“The Russians have been after night-vision technology forever,” says one former senior intelligence community official. “For whatever reason, it seems to have eluded them.” And, as a series of other court cases and leaked emails show, Russia’s appetite appears to be intensifying.
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Night-vision technology, which allows the wearer to see in almost total darkness, dates to World War II. The devices intensify images through collecting ambient light, like that from the moon and stars; other, newer related technologies track thermal, or heat-based, emissions, which are invisible to the naked eye. After the Vietnam War, where night-vision devices were first used widely, the United States invested heavily in the technology, believing it would allow the U.S. military to “own the night,” that is, to possess an overwhelming tactical edge in darkness.
The United States maintained a solid lead for many years, but the Soviets worked hard to develop their own technology. “It was just a matter of time before Russians knew they had a problem, and started to catch up,” said James Tegnelia, a former Pentagon official who helped field U.S. night-vision technology during the Vietnam War. “They did it through their own development, but also by getting our stuff and copying what we did,” he added.
During the Cold War, however, night-vision technology was regarded primarily as something for the military — high prices, if nothing else, kept such devices out of the hands of consumers. But when the Soviet Union collapsed in 1991, surplus Eastern Bloc night-vision technology began making its way to the U.S. market. With older-generation devices costing in the hundreds of dollars, everyone from hunters to boaters began using night-vision goggles.
In 1993, Naum and Irina Morgovsky rode that wave of growing consumer demand, combined with their Soviet-era connections, and established a company, Hitek, at their Bay Area home. Irina Morgovsky’s son, then known as Marc Morgovsky, worked for a few years as president of the company, but in 1995, he struck out on his own, founding American Technologies Network (ATN), a night-vision manufacturer and distributor still based in South San Francisco.
The Morgovskys’ first brushes with the law appear to date to at least 2001, when Naum Morgovsky was detained by U.S. officials at San Francisco International Airport for illegally importing night-vision equipment, which was seized by U.S. officials there. He was never charged, however.
Yet the Morgovsky family’s problems didn’t end there. In the mid-2000s, ATN, run by Irina Morgovsky’s son, was the subject of an Immigration and Customs Enforcement (ICE) investigation into possible export-control violations. In 2006, ICE agents executed a search warrant at ATN’s South San Francisco headquarters, but again, no one was charged. (Marc Morgovsky legally changed his last name to Vayn in 2005.)
The Justice Department now alleges that at least from 2012 — and likely for many years before that — the Morgovskys used Hitek and other associated companies as shells for purchasing and exporting American night-vision technology from ATN, the company founded by Irina’s son, as well as from other U.S.-based suppliers. Though Hitek and ATN were separate, in a single year, the Morgovskys would sometimes purchase hundreds of thousands of night-vision gear from ATN, prosecutors said.
Much of equipment purchased by the Morgovskys was, in turn, exported to Russia, and specifically to Infratech, a certified supplier to the Russian military, whose website lists the FSB, the main successor agency to the KGB; the army; and other Russian security agencies as its customers. In fact, Naum Morgovsky secretly controlled Infratech too, prosecutors alleged. He used an official Infratech email address, ordering night-vision equipment on the company’s behalf. Infratech employees in Russia asked for Morgovsky’s “direction” on finances, product pricing and advertising strategy, say prosecutors.
The connections between the Morgovskys’ American company, Hitek, the Russian firm Infratech and Marc Vayn’s ATN were complex, and their business often intertwined, according to court documents. In 2015, for example, Morgovsky instructed an alleged key co-conspirator based in Germany to ship an Infratech package to a London-based ATN employee.
Over the years, using a complex web of shell companies, the Morgovskys exported nearly 1,000 export-controlled night-vision parts to Russia, say prosecutors. This required extensive subterfuge. Naum Morgovsky employed no fewer than three separate stolen identities, and two assumed names, to carry out this business. Irina Morgovsky also used a passport under a stolen name, “Victoria Ferrara,” to travel to Russia at least three times in 2007. When FBI investigators searched the Morgovskys’ home, they found Ferrara’s New York State birth certificate hidden behind the picture frame holding their daughter’s high school diploma.
If the Morgovskys’ U.S.-based activities were cloaked in figurative darkness, Infratech’s dealings in Russia were carried out in broad daylight. The company’s Instagram features Russian soldiers using Infratech devices. In one 2018 photo, three members of the Spetsnaz, Russia’s special forces — which are controlled by the GRU, Russia’s military intelligence agency — are shown carrying weapons equipped with Infratech night-vision gear “in one of the sunny regions of the world.”
The question, however, is where their night-vision technology came from.
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Since the early days of the Cold War, Russia has tried to blunt the U.S. military’s edge through the theft or illegal procurement of sensitive technologies. “The Soviets and Russians seemed to always have thermal imagery or advanced night-vision systems on their shopping list” says Christopher Burgess, a 30-year CIA veteran. “In the mid-1970s, according to public reports, the KGB ran an asset in California, code-named ‘Sprinter,’ who provided intelligence specific to thermal and infrared technologies.”
The breakup of the Soviet Union offered a temporary respite in this sort of espionage. In the past few years, however, intelligence officials have noticed a major uptick in Russian activities, linked to Moscow’s race to modernize its military capabilities. Russian operations in Syria and Ukraine, as well as its scrutiny of U.S. military actions in Afghanistan and Iraq, have made it more aware of its own deficiencies, says a second former senior intelligence community official. “What we saw was more Russian interest in our next-generation night-vision technologies and weapons systems connected to our activities in the war zone,” recalls this official.
Even now, the United States is a world leader in advanced night-vision technologies, whereas Russia’s effort to mass produce the latest generation of devices has foundered. Indeed, leaked 2013 emails between senior Russian officials show just how concerned Moscow was by the military’s deficiencies in night-vision technology. “At present, the Russian Army only has a few hundred individual imagers and no sighting systems and machine vision systems with advanced performance,” wrote Dmitry Rogozin, the deputy prime minister for defense, to the chairman of the Russian Bank for Development and Foreign Economic Affairs. “On the other hand, our potential enemy troops — NATO, are equipped with hundreds of thousands of thermal imaging sights, sighting and vision systems.”
The reason Russia has fallen behind the United States has to do with the way night-vision technology has evolved. The newest generation of devices relies on two classes of thermal imagers: a cryogenically cooled version that uses photosensitive crystals to convert photons to electrons, and an uncooled version that uses what’s known as bolometric focal plane array technology, which measure heat or radiation. That’s where the problems for Russia come in: bolometric arrays use advanced silicon lithography, the same basic technology used in computer chips. “If they’re not into silicon lithography, the way China or Japan or Taiwan, or the United States is, they will have trouble making uncooled focal plane arrays in particular,” says Jasper Lupo, a physicist who has worked extensively on military night vision technology for the U.S. military. “Russia to my knowledge does not have a silicon industry to speak of.”
Russia had tried to close the gap in technology through co-production with France, but that was cut off after Western sanctions were imposed on Moscow for invading Crimea. In 2013, Russian investors set up a new company designed to help produce the photoelectric devices needed for advanced night-vision equipment (interestingly, one investor in the project was Konstantin Nikolayev, who has also been identified as a funder of Butina). It’s unclear how far those efforts have gotten.
However, a series of court cases in the United States appear to show that Russia’s solution has been, in part, to illegally buy the technology it needs. In 2012, eleven employees of Houston-based Arc Electronics were indicted for aiding a decade-long scheme to illegally export over $50 million in controlled microelectronics to companies affiliated with Russian intelligence and military agencies. Alexander Fishenko, the president of Arc, pleaded guilty in 2016 to being an unregistered agent of a foreign power in addition to other export-related and financial crimes.
The Arc Electronics case was one prong in a multifaceted counterintelligence investigation, said the first former senior intelligence community official. Around the same time, senior FBI officials had initiated a major probe into roughly half a dozen suspected U.S.-based front companies with links to the GRU, Russia’s military intelligence agency, said this official. These companies were focused on procuring targeted technologies, including night vision.
Some cases were small, like that of Roman Kvinikadze, a Russian citizen who was deported after he tried in 2013 to buy five thermal-imaging devices produced by ATN. Others, however, were far bigger. (Other than Arc Electronics, Yahoo News could not establish whether these publicly adjudicated cases were those linked by U.S. intelligence officials to the GRU.)
In 2014, Moscow resident Dmitry Ustinov, whom U.S. officials successfully extradited from Lithuania, pleaded guilty in a Delaware federal court to illegally exporting tens of thousands of dollars worth of military-grade night-vision technology from the United States to his home country. More recently, in March 2018, Vladimir Nevidomy, a Russian national living in Miami, pleaded guilty to similar charges involving night-vision gear in a Florida federal court.
Today, the theft of such technologies forms a core part of covert spy wars, say former U.S. intelligence community officials, and Russia is a prime offender in this area. “Russia has become louder and noisier in the realm of tech transfers,” says the second former senior intelligence official, citing a notable “evolution in Russian tradecraft.” Russia has opted for a more aggressive approach, employing cutouts, in order to provide the government in Moscow plausible deniability. Redundant suppliers ensure that Russia acquires the technology it desires, even if a particular operation is disrupted, says this official.
Although the Justice Department has stated that the Morgovsky investigation was led by FBI counterintelligence, a spokesperson declined to comment on any related intelligence operations. “However, it may help to note that Infratech was seeking to do business with the Russian government and military,” said the DOJ spokesperson.
Both Naum and Irina Morgovsky pleaded guilty in a San Francisco federal court in June to violating arms export laws; Naum Morgovsky also pleaded guilty to money laundering and faces additional charges of bank fraud. Their sentencing is scheduled for October 2018.
A lingering question in the Morgovsky case is why it took so long for the U.S. government to put a stop to their activities. The long delay between arresting Naum Morgovsky in 2008 for identity fraud, and ultimately convicting him for illegally exporting technology in 2018, could be about balancing a counterintelligence investigation with a criminal prosecution, says a third former intelligence community official. “You can still continue your foreign counterintelligence investigation into an individual, but at some point you’ve got to decide: Are we going to be able to do something with the case criminally? Is it worth prosecuting? And do we want to send a message that we know what they’re doing?”
In the meantime, ATN, the business operated by Irina Morgovky’s son, Marc Vayn, continues as a brick-and-mortar company in San Francisco, and its products can still be bought online through major U.S. retailers. The official Russian distributor for ATN, which maintains a Russian-language website for its products, shares the same Moscow business address as Infratech, the Russian company controlled by Naum Morgovsky, according to these companies’ websites, Facebook pages, and corporate registries. Over the years, ATN has received $6 million in prime contract awards from various U.S agencies, including the Defense Department; the latest was in May 2018, according to a government website.
Reached by phone, Steve Lemenov, ATN’s director of marketing, said he didn’t know any individual named Naum Morgovsky or anything about Morgovsky’s relationship to Vayn, ATN’s founder and chairman. Lemenov denied that the Morgovskys’ case had any pertinence to ATN (though Vayn was listed as a witness in the case) and declined to respond to further queries on the subject. He described information contained in court documents on the Morgovskys’ case as “irrelevant, one-sided and subjective.”
Multiple attempts to reach Vayn, through his business and publicly listed numbers, and the Morgovskys, through their lawyers, were unsuccessful.
In a written statement to Yahoo News following publication, however, Vayn said that he and his company had no role in the Morgovskys’ criminal scheme, and that he and Naum Morgovsky had a falling out more than two decades ago. Though they briefly reconciled in 2011, and ATN sold him products, none were export controlled, according to Vayn. After Naum Morgovsky’s arrest, Vayn said he and ATN cut off all contact and cooperated with the investigation.
“At no time was ATN or myself implicated in any wrong doings of export control,” Vayn wrote. “No products in the indictment of Naum Morgovsky that were involved in the Export Violations came from or were made by ATN. Nor was ATN ever treated by the government as anything but a witness in this case. Naum Morgovsky has been nothing more then (sic) an estranged relative to myself for the majority [of the] past 25 years.”
The Morgovsky case now belongs to a growing list of prosecutions surrounding the illegal exports of American technology to Russia, which largely fly under the public radar. Yet the issue is a bigger problem than commonly acknowledged, according to Michael Carpenter, a former deputy assistant secretary of defense for Russia, Ukraine and Eurasia during the Obama administration.
“The number of cases we’ve exposed are a tiny fraction of what’s going on in terms of Russian covert activities regarding the theft of sensitive technologies,” says Carpenter, who argues that the government needs to get “lot tougher” on breaking up the networks.
“My view is that law enforcement has only seen the tip of iceberg,” he says.
Sharon Weinberger contributed reporting to this article
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