DOJ Doesn't Deny Treasury's Russian 'Oligarch' List Was Copied From Forbes

U.S. Capitol. Credit: Mike Scarcella/ NLJ

A U.S. Justice Department attorney did not dispute Tuesday that the Treasury Department based its list of designated Russian oligarchs on a lineup of billionaires that Forbes magazine published in 2017, as a federal judge heard arguments from a Moscow-born American businessman who says he should be removed from the roster of purported cronies of Vladimir Putin.

Lawyers for the businessman, Valentin Gapontsev, argued the Treasury Department included him on a list of Russian oligarchs without taking up a serious inquiry of whether he was, in fact, connected to Putin’s regime. Instead, Gapontsev's attorneys said, the Treasury Department had effectively copied a Forbes list of wealthy Russians and tagged them as "oligarchs."

Appearing before U.S. Judge Rudolph Contreras on Tuesday, Justice Department attorney Kevin Snell was asked whether it was true that the Treasury Department had simply republished a Forbes list titled "Billionaires: The Richest People in the World."

“We’re not challenging that assertion,” Snell responded. “For the purposes of today, it is accurate.”

Gapontsev and his company, IPG Photonics, a Massachusetts-based manufacturer of specialized lasers, filed a lawsuit in December challenging his identification as a Russian oligarch.

Gapontsev’s team at Norton Rose Fulbright contends the designation, while not a formal sanction, has carried reputational consequences that complicate relationships with financial institutions and customers. At least one customer assumed his company was effectively disqualified from doing business in the United States, the lawsuit said.

On Tuesday, Norton Rose Fulbright partner Michael Edney touted Gapontsev’s ties to the United States, describing him as a longtime U.S. citizen and Massachusetts resident whose wealth was derived from IPG Photonics and not from the Russian government. Gapontsev, he said, had only met Putin once.

Edney said the company was suffering a “profound injury” and that Gapontsev’s labeling as a Russian oligarch was “no less injurious than being associated with the Soviet government in the 1950s.”

“This was a judgment outsourced to Forbes,” Edney said. “It wasn’t made by the secretary.”

U.S. District Judge Rudolph Contreras. Credit: Diego M. Radzinschi/ NLJ

Contreras appeared to nudge Gapontsev and Treasury Department to reach a resolution out of court, asking both sides about the progress of their negotiations. Edney, declining to detail their discussions, said he was “optimistic.”

Contreras said he found it “mystifying” that President Donald Trump had not stepped in, noting his affinity for picking up the phone to save manufacturing jobs.

Congress ordered the Treasury Department to draft the oligarchs list under the Countering America’s Adversaries Through Sanctions, a law against Russia, Iran and North Korea that Trump signed in August 2017 but criticized as “seriously flawed.” The law required the Treasury Department to identify individuals as “oligarchs in the Russian Federation, as determined by their closeness to the Russian regime.”

On Tuesday, Snell made a variety of arguments in defense of the Treasury Department’s list. He stressed that the Treasury Department had not sanctioned Gapontsev but rather included him in an informational report to Congress. It was “up to Congress,” he said, to decide whether the Treasury Department adhered to the law in compiling the list of Russian oligarchs.

A Treasury representative told Forbes last year: “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.”

Snell added that the term “oligarch” was not defined under the statute and that the Gapontsev’s claim of irreparable harm was based on “supposition and speculation.”

“You have a number of good legal arguments,” Contreras said. “I don’t know where the equities fall though.” The judge said he would rule in a “few weeks” on Gapontsev’s request that he be removed from the oligarchs list.


Judge Contreras

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