Fine Amount: $215,988,868
Date: 12 June 2025
Primary Violations: Sanction Violations - Violating Ukraine/Russia-Related Sanctions and Reporting Obligations
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) imposed a $215,988,868 penalty on GVA Capital Ltd., a San Francisco-based venture capital firm, for violations of Ukraine/Russia-related sanctions and failure to comply with an OFAC subpoena.
The firm knowingly managed investments for sanctioned Russian oligarch Suleiman Kerimov from April 2018 to May 2021, using his nephew as a proxy, and delayed full response to a subpoena for over two years. This action represents the statutory maximum penalty and emphasises the role of financial gatekeepers in preventing sanctions evasion.
GVA Capital Ltd. focuses on early-stage investments in sectors like artificial intelligence and autonomous vehicles. In 2016, the firm solicited funds from Suleiman Kerimov, a Russian oligarch, for an investment in a U.S. company. Senior management met Kerimov at his estate in France on two occasions to secure his approval, leading to a $20,000,000 investment via Prosperity Investments, L.P., an entity in which Kerimov held an interest. Communications were handled through Kerimov's nephew, Nariman Gadzhiev, whom GVA Capital recognised as Kerimov's proxy.
OFAC designated Kerimov on April 6, 2018, blocking his U.S. property interests and prohibiting transactions involving them without authorisation. Despite obtaining legal advice in May 2018 warning against any direct or indirect involvement with Kerimov in asset sales or transfers, GVA Capital continued to manage the investment. This included dealing in blocked property and providing prohibited services to Kerimov through four specific incidents between 2018 and 2021.
Additionally, during OFAC's investigation, GVA Capital violated reporting regulations by failing to fully respond to an administrative subpoena on 2-Jun-21. The firm initially produced 173 documents by Oct-21 but later disclosed and provided approximately 1,300 more records in 2023-2024, resulting in 28 months of non-compliance.
OFAC determined these actions violated the Ukraine/Russia-Related Sanctions Regulations (URSR) and the Reporting, Procedures, and Penalties Regulations (RPPR). The case highlights risks for venture capital firms in dealing with sanctioned individuals, especially when relying on nominal ownership structures that obscure beneficial interests.
GVA Capital signed an agreement transferring Prosperity's interest in a subsidiary to another entity owned by the same trust structure, constituting prohibited dealing in blocked property and provision of services.
GVA Capital tried to sell the investment for $20,000, communicating with Gadzhiev as Kerimov's representative to solicit feedback and assistance, representing an attempt to deal in blocked property.
Similar to 2019, the firm sought to sell interests in three investments for $50,000,000, again involving Gadzhiev, violating attempt prohibitions.
GVA Capital planned to distribute shares post-lock-up, which would have benefited Kerimov economically by at least $18,500,000, halted by an attempt amid disputes.
The total penalty imposed is $215,988,868, the statutory maximum. This breaks down as: