A case about ownership that changed hands a few weeks before a designation.
What happened
Gracetown was set up in 2006 to manage three luxury properties in New York and Washington, D.C. that Oleg Deripaska bought through various vehicles. OFAC says Deripaska was Gracetown’s ultimate beneficial owner from 2006 to 2018, and that shortly before his designation a relative and known associate of his became the ultimate beneficial owner. The company relied on funds and direction from Russia-based stakeholders, and a New York property manager ran its bank accounts on their instructions.
In 2013, a British Virgin Islands company also owned by Deripaska settled a loan dispute with a US person. The settlement had monthly payments go to Gracetown, which booked them as a loan from the BVI company and used them for property costs.
After the designation
OFAC designated Deripaska on 6 April 2018 and sent Gracetown a notification of blocking, received on 10 April 2018, that said dealings with him and his property were unlawful and that it had to block and report property in which he had an interest. Gracetown kept taking the monthly payments until May 2020: 24 more payments, totalling $31,250, on top of $72,500 already received and spent. It first reported the blocked debt of $103,750 on 11 January 2022, more than 45 months after the notice, and by then OFAC or another agency already knew of the conduct.
The penalty
OFAC found the violations egregious and not voluntarily self-disclosed, so the base was the statutory maximum, $8,906,358. The penalty was $7,139,305. It found Gracetown willfully or at least recklessly violated sanctions, and noted that the same property manager had handled every payment from 2013 to 2020 on the new owner’s instructions. It credited a tolling agreement and no earlier penalty, but said no further reduction was warranted.
What the record shows
- A change of owner did not end the exposure. OFAC’s compliance point: entities formerly owned by a blocked person, or that continue to work closely within the network of one, “are taking substantial risk”.
- An explicit notice changes the analysis. The release stresses that Gracetown had been told in writing.
See ownership threshold structuring, the same pattern in another case, and the 50 percent rule.