Truphone to pay $600K fine, divest Russian ownership

A U.S. subsidiary of global mobile virtual network operator and eSIM development company Truphone is paying a $600,000 penalty and divesting ownership by three Russian billionaires as part of a settlement with the Federal Communications Commission over inaccurate disclosures of its ownership and transfer of a U.S. spectrum license.

The FCC says that the U.K.-based company violated U.S rules about percentages of foreign ownership and transfers of spectrum licenses. Though Truphone is based in the U.K., its Truphone’s U.S. operating unit is incorporated in Delaware and owns Smartcall, LLC, which owns another LLC called iSmart Mobile, which holds a single PCS broadband license in Butte, Montana.

The move appears to be part of a broader crackdown on assets associated with Russian oligarchs who have been sanctioned by multiple countries, including the U.S., in the wake of Russia’s invasion of Ukraine.

“Since 2011, Truphone’s ownership and reports regarding its foreign ownership have
changed over time without accurate and requisite reporting to the Commission,” the FCC said in its consent decree. In a release, the agency said that “because of [those] inaccuracies, control of the company’s FCC licenses were transferred repeatedly to unvetted foreign individuals and entities without accurate disclosure to and review by the Commission and Executive Branch agencies for national security, law enforcement, foreign policy, or trade policy concerns as required by law,” the FCC said, adding that in addition to paying a fine of $600,000, Truphone agreed to a “robust compliance plan.”

Specifically, the FCC is requiring that the company divest ownership by Russian businessmen Alexander Abramov, Alexander Frolov and Roman Abramovich. The agency said in its enforcement order that there is a tangled track of entities that tie Truphone to the men, including investment company Minden, which counts Abramovich as its main source of funds. The FCC noted in its order that Truphone did inform it of ownership changes in its parent entities that took place in the spring of this year (shortly after the invasion of Ukraine in February), which included shifting ownership to foreign trusts and holding companies in Cyprus and the British Virgin Islands benefitting those three men and/or their immediate families.

The three men are billionaire owners of Russia’s largest steel manufacturer, Evraz. Abramov was the target of tailored sanctions by New Zealand announced earlier this month, as reported by RNZ. Abramovich has had his assets, including the Chelsea soccer club, frozen, and has had sanctions levied against him by multiple countries as well, including the seizure of the Chelsea soccer club; the U.S. Commerce Department reportedly also recently charged Abramovich with violating sanctions.

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