Late last year, agents of the FBI and NCIS raided a Houston-based company (Arc Electronics) that sold millions of dollars worth of sensitive, export controlled microelectronics to the Russian government including an unidentified research laboratory that’s part of Russia’s Federal Security Service (the FSB, which took over domestic intelligence operations from the KGB). Here’s a quick synopsis from the Houston FBI field office press release:

As alleged in the indictment, between approximately October 2008 and the present, Fishenko and the other defendants engaged in a surreptitious and systematic conspiracy to obtain advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and to export those high-tech goods to Russia, while carefully evading the government licensing system set up to control such exports. The microelectronics shipped to Russia included analog-to-digital converters, static random access memory chips, microcontrollers, and microprocessors. These commodities have applications and are frequently used in a wide range of military systems, including radar and surveillance systems, missile guidance systems, and detonation triggers. Russia does not produce many of these sophisticated goods domestically.

According to the above release, the FBI recovered a letter sent to Arc Electronics from a “specialized electronics laboratory” of the FSB which demanded a replacement for certain malfunctioning parts. No other identifying information was provided in the press release or in the unsealed indictment.

Cyber security consultancy Taia Global‘s Russia experts have identified the FSB lab which illegally ordered U.S. export-controlled microelectronics from Arc: Military Unit (Vch) 35533. Military unit designators are used as cover devices so as not to reveal the actual name of the institution in documents or other forms of communication. After an extensive investigation, Taia Global has identified Vch 35533 as Scientific Research Institute Number 1 of the Federal Security Service (FSB), Russia.

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Scientific Research Center-1 is one of three research centers comprising the FSB Research Center located in the 3rd Directorate, the Directorate of Scientific and Technical Services.  Posted FSB regulations state that Scientific Research Center-2 is qualified for forensic research across a range of technical subjects from chemistry to secret writing.  Scientific Research Center-2 supports FSB criminal investigations.  Scientific Research Center-3 focuses on information security issues and works with the FSB Information Security Center located in the counterintelligence directorate.

Vch 35533 tenders list a general address in the Zheleznodorozhny district roughly 25 kilometers east of Moscow.  Russian social media posts listing from either current or former Vch 35533 employees place the unit in either the 1000 to 10,000 category or the greater than 10,000 category.  Vch 35533 is also a secure facility.  Zheleznodorozhny consists primarily of high rise residential building with limited locations for a large research center.  Correlating the available information, Taia Global analysts identified the probable location for Vch 35533.

Vch 35533 location

Vch 35533’s current commander, Major-General Alexei A. Reznev, is a noted scientist. According to Reznev’s biography published by Saint Petersburg Electrotechnical University—Reznev’s alma mater—Reznev is Head of Research of the FSB of Russia, Professor, Honored Worker of Russia, laureate of the State Prize of Russia, and laureate of the Russian Government. Reznev is a specialist in the field of special microwave radio transmission, the author of over 80 publications, and holds 11 patents. Reznev teaches at Saint Petersburg Electrotechnical University and at the FSB Academy.

The FSB Scientific and Technical Services Directorate, and subordinate units, maintain a low public profile. In a 2004 Russian press interview, FSB Director Nikolai Patrushev described the 3rd Directorate’s role as supplying the FSB with the latest types of arms and special equipment. Patrushev stated that the directorate’s research subunits developed new “intellectual” armament systems to address problems facing the security services. Former Research Center Director Nikolai Klimashin highlighted threats to Russia’s information infrastructure during his tenure and now works on cyber security issues at the Russian Federation Security Council. Klimashin frequently heads the Russian delegation at international conferences on cyber security.

Vch 35533’s specific responsibilities for information technology related hardware and software are reflected in the unit’s public tenders. A list from 2010 included tenders for digital signal processing systems, research on wireless networking equipment, and research on text cipher technology. Customer information on Vch 35533 posted on business database web sites states the customer is also interested in production of electronic equipment and circuit boards. Recent Russian press articles flagged Vch 35533’s role in developing internet surveillance technology. In July 2011, Russian news site flagged a Vch 35533 tender for research on “anthropomorphic methods for analyzing and processing of speech.” A recently posted dissertation shows Vch 35533 conducting tests on techniques of improving speech quality despite internet packet loss. One Vch 35533 tender provides indirect evidence of the unit’s role in exploiting foreign technology.

In 2010, Vch 35533 posted a tender requesting translation services for technical documents. The contract specified that all work must be kept confidential with any breech subject to legal penalty. The tender included a list of the foreign technical documents requiring translation. The list included German equipment for testing and production of printed circuit boards. German firms do extensive business in Russia and, in Taia Global’s view; a contract normally includes translation of technical documentation into the customer’s language.

The FSB role in information security makes Vch 35533 an important player supporting other FSB components such as the Information Security Center.  However, in Taia Global’s view, Vch 35533’s visible portion represents only the tip of the iceberg that is the Russian government’s commitment to industrial espionage.

Main photo courtesy: LA Times