UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

X

UNITED STATES OF AMERICA SEALED INDICTMENT

-v.- 22 Cr.

GAL LUFT,

Defendant.

BACKGROUND

1. For years, GAL LUFT, the defendant, a dual U.S.-

Israeli citizen, and others known and unknown, engaged in

multiple international criminal schemes, including a scheme to

act within the United States to advance the interests of the

People's. Republic of China ("China") as a-gents of China-based

principals, without registering as foreign agents as required

under U.S. law. Specifically, LUFT agreed with others to and

did: (1) covertly recruit and pay, on behalf of principals based

in China, a former high-ranking U.S. Government official,

including while the former official was an adviser to the then-

President-elect, to publicly support certain policies with

respect to China without LUFT or the former official filing a

registration statement as an agent of a foreign principal with

the Attorney General of the United States, in violation of the

Foreign Agents Registration Act; (2) broker and attempt to

broker multiple illicit weapons deals, in violation of the Arms

Export Control Act, and subsequently lied to U.S. law

enforcement agents about that conduct; and (3) broker and

attempt to broker deals for Iranian oil, without authoriz on,

in violation of U.S. sanctions against Iran and the

International Emergency Economic Powers Act, and subsequently

lied to U.S. law enforcement agents about that conduct.

SUMMARY OF CERTAIN RELEVANT INDIVIDUALS AND ENTITIES

GAL LUFT and the Think Tank

2. GAL LUFT, the defendant, was born in Israel and became

a naturalized United States citizen'in' or about 2004. At all

times relevant to this Indictment, LUFT, .who has a PhD in

strategic studies from a u.-s. university in Maryland, served as

the co-director of a Maryland-based non-pro think tank (the

"Think Tank"), which described global energy security as its

focus. From approximately 1998 until in or about Novernber_2017,

LUFT principally resided in Maryland, and traveled

internationally, including to China, for speeches, conferences,

and meetings. Since the arrest of an associate ("CC-1") on

di U.S. charges in mid-November 2017, LUFT has remained

outside the United States.

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 Individua1-1 and the Energy Group

3. At all times relevant to this Indictment, the Think

Tank organized and managed what referred to as "projects,"

including a project involving a group of individuals who formed

what the Think Tank described as a "cabinet level extra-

governmental advisory committee" focused on diminishing the

strategic importance of oil to the United States (the "Energy

Group") .

4. A former senior U.S. government official ("Individual-

1") co-founded the Energy Group, of which GAL LUFT, the

defendant, served as a senior adviser during all times relevant

to this Indictment.

CC-1 and China Energy Fund Committee

5. At all times relevant to this Indictment, CC-1, a

Chinese national who formerly served as the Secretary for Home

Affairs of Hong Kong, was the head of China Energy Fund

Committee ("CEFC"), a non-governmental organization based in

Hong Kong and Virginia which had "special consultative status"

with the United Nations. CEFC was funded by a Chinese oil and

gas conglomerate, CEFC China Energy Company Limited ("CEFC

China"). CC-1 was, at all relevant times, principally based in

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Hong Kong, though traveled frequently to the United States,

particularly to New York, New York, and Washington, DC.

6. In or about summer 2015, CC-1 offered GAL LUFT, the

defendant, annual payments of $350,000 from CEFC to the Think

Tank. In return for this annual payment, CC-1 and LUFT agreed

that (1) the Think Tank and CEFC would jointly host an

international meeting in a major United States city on energy

security issues; (2) the then-chairman of CEFC China would get

an honorary position with the Energy Group, and (3) a member of

the Energy Group would become a senior advisor to CEFC.

7. In or about December 2015, CEFC sent the Think Tank

$350,000.

8. Just over a year later, in or about January 2017, CEFC

China sent the Think Tank $350,000.

9. Starting in or about 2015, and continuing into in or

about November 2017, Think Tank and CEFC co-sponsored or

jointly held multiple conferences, including one in June 2017 in

Beijing, China, at which both GAL LUFT, the defendant, and CC-1

spoke. In or about the same t period, LUFT described himself

in publications he wrote as a senior adviser to CEFC.

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 CC-2 and the Chinese Defense CoZ¥>any

10. At all times relevant to this Indictment, a certain

individual ("CC-2") served as the president of a Hong Kong

company ("CC-2's Company") that was described as being "in the

fields of infrastructure, energy, defense and logistics 1 " and

worked as an agent or representative of a particular Chinese

defense company (the "Chinese Defense Company"), for which CC-2

formerly served as an executive. GAL LUFT, the defendant, told

CC-2 in an April 2015 email that "I really enjoyed meeting you.

I'm sure we can have a lot of fun while making$$."

OVERVIEW OF THE SCHEMES

11. As described in more detail below, GAL LUFT, the

defendant, agreed with CC-1 to act on behalf of foreign

principals, including CC-1 and CEFC, while CC 1 and CEFC

provided or arranged for funds to be provided to or for the

bene of LUFT. Among other ,things, LUFT agreed to work on

behalf of CC-1, CEFC, and CEFC China, persons and ent s

outside of the United States, to recruit and "educate"

Individual-1 so that Individual-1 would make public statements,

at the request of LUFT and CC-1, which were in the interest of

China, such as through a written "interview" between CC-1 and

Individual 1 in which LUFT drafted Individual-l's responses and

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included information that was favorable to China, which

"interview" CC-1 then transmitted to multiple persons in the

United States.

12. Furthermore, as described in more detail below, GAL

LUFT, the defendant, agreed and attempted to broker arms

transactions with CC-1, other Chinese individuals and entities,

and others, including illicit weapons deals involving Libya, the

United Arab Emirates, and Kenya. In his role as a broker or

middleman, LUFT worked to find both buyers and sellers of

weapons and other materials constituting "defense articles" on

the United States Munitions st, without a license to do so, in

violation of the Arms Export Control Act. Among other things,

LUFT traveled to meetings and received and passed on

documentation (such as an end-user agreement) needed to secure

the deals. In this role as a broker for illicit arms deals, -

LUFT worked on a commission basis.

13. Additionally, as described in more detai'l below, GAL

LUFT, the defendant, agreed and attempted to broker deals for

Iranian oil--which he directed an associate to refer to as

"Brazilian" oil instead. In his role as a broker or middleman,

LUFT sol ed buyers and passed on pricing and other

information. He also assisted in setting up meetings between

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Iranian representatives and CEFC China for the purpose of

discussing oil deals, 1 in violation of U.S. sanctions against

Iran and the International Emergency Economic Powers Act.

COUNT ONE

(Conspiracy to Act as an Unregistered Agent of a Foreign

Principal)

The Grand Jury charges:

14. The legations set forth paragraphs One through

Thirteen are incorporated by reference as if set forth fully

herein.

Statutory Background: Foreign Agents Registration Act

15. The Foreign Agents Registration Act ("FARA"), 22

U.S.C. § 611 et seq., is a registration and di ure statute

that requires any person acting in the United States as "an

agent of a foreign principal" to register with the Attorney

General he or she is engaging, directly or through another

person, in certain types of conduct, such as political

s, political consulting, public relations, .or publicity

activities, for or in the interest of the foreign principal .

.
Such registrations are made to the National Security Division's

Foreign Agents Registration Act Unit ("FARA Unit") within the

U.S. Department of Justice. It is a crime to knowingly and

7
willfully fail to register, or to make false and misleading

statements or material omissions in documents submitted to the

FARA Unit under the law's provisions.

16. The purpose of FARA is to prevent covert influence by

foreign principals. Proper registration under the statute

allows the United States Government and the American people to

evaluate the statements and activities of individuals who are

serving as agents of foreign principals in light of their status

as foreign agents. Among other things, a FARA registration

reveals the identity of the foreign principal on whose behalf a

registrant performs services, the type of services the

registrant provides the foreign principal, the source and amount

of compensation the registrant receives from the foreign

principal, and any political campaign contributions made by the

registrant while the strant was acting as an agent of the

foreign principal.

LUFT's Scheme to Violate FARA

17. As described in more detail below, among other things,

GAL LUFT, the defendant, agreed to and did engage in political

activities in the United States on behalf of CEFC, CEFC China,

and CC-1, in an effort to seek to influence United States

foreign policy toward and the public perception of China, and

8
concealed these efforts by creating the false appearance that

they were simply the sharing of sincere opinions of an

independent expert on national security and international

relations.

18. Starting in or about October 2015, GAL LUFT, the

defendant, began sending information to Individual-1 concerning,

among other things, "One Belt, One Road," later known as the

"Belt and Road Initiative," a foreign_policy initiative of the

Chinese government. LUFT, while in the United States, also

invited Individual-1 to what LUFT described in an email as a

"private meeting 1' in Washington, D. C., with the then-chairman of

CEFC China, who LUFT wrote "has very close relations with

President Xi Jinping [i.e., the President of China]. " 1

19. On or about September 12, 2016, GAL LUFT, the

defendant, sent CC-1 an email with the subject line, "We nailed

it!" that included a link to an article announcing that

Individual-1 was advising a then-candidate for President of the

United States, who was cted President two months later. CC-1

1 The statements and communications described in this Indictment

are set forth in substance and in part, unless otherwise
indicated. Typographical other errors in quotations are
reproduced as they appear.in the original communications, unless
otherwise indicated.

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responded by asking if he could attend a dinner that Individual-

1 was hosting in New York, New York, and LUFT confirmed by

informing CC-1 that he had "rsvpd" for CC-1.

20. Later the same month, on or about September 29, 2016,

using a code name for Individual-1, GAL LUFT, the defendant,

while in the United States, sent CC~l an email advising that he

had successfully recruited Individual-1, for a fee: "All set.

We agreed on 60 for phase I and he [i.e., Individual-1] won't be

taking a position w others. He is eager to launch channel.

s lock yours and see when they want to bring him in or

meet sewhere."

21. The same day, CC-1, who was staying in-New York, New

York, responded, "I can assure you that there is no problem

absolutely from our side. Our side is more than happy to have

someone we know to be the channel with [ letter of then-

presidential candidate's last name][.] As things develop, the

engagement will evolve into more established and fluent

structure." GAL LUFT, the defendant, responded that "he [i.e.;

Individual-1) needs to be better educated and versed in our

narrative so the other side doesn't shape his views."

22. A few days later, on or about October 3, 2016, CC-1

informed GAL LUFT, defendant, via email that the then-

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chairman of CEFC China "agrees with the propos for"

Individual-1 (referred to by code name), and that the "[p]lan is

for me to deal with [Individual-1) After November 8

[i.e., the United States presidential election], if it all pans

out, [Individual-1] will be invited to China undercover." In a

later email in the same email chain, CC-1 told LUFT that "the

plan" for Individual-1 was to publish one article per week in

the four weeks before the election as a "dialog with

[Individual-1)," and if Individual-1 could write "some notes" on

certain topics, "we shall build stories around them."

23. The next -day, CC-1 wrote to GAL LUFT, the defendant,

suggesting certain topics "on various Sino-US issues" for the

Individual 1 articles. In response, LUFT stated, "I will

probably have to ghost [write] this for him [i.e., author the

content for publication under Individual-l's name]." LUFT also

informed CC-1 that LUFT had been told that Individual 1 was

going "to lead the international security/china/iran.policies

for the actual [presidential) transition team!" CC-1 responded:

"Impressed! In these articles, we do not want to spill all.the

beans yet, just enough to let 'people' know he [i.e.,

Individual-1) is in the corridor of power to be. Just broad

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stroke policy consideration that leaves plenty of room for

interpretation and imagination to be lled in later."

24. Several days later, GAL LUFT, the defendant, sent CC-1

a draft of the answers LUFT had written for Individual l's side

of the purported "dialogue," and wrote to CC-1, "note the scoop

in q3 [i.e., question three]." LUFT's drafted response to

question 3 included a reference to "the emergence of a grand

bargain in which the U.S. accepts China's political and social

structure and commits not to disrupt in any way in exchange

China's commitment not to challenge the status quo in Asia."

25. At or about the same time, GAL LUFT, the defendant,

emailed the then-spouse of Individual-1 ("Individual-2"), and

stated, "we can begin to immediately provide you with a monthly

stipend of 6k to help cover for lost revenues." LUFT further

proposed a series of articles to be published in mainland China

and Hong Kong newspapers--\'one article per week for 4 weeks in a

row up until the [U.S.] elections"--that would be structured as

a purported "dialogue" with Individual-1 "on aspects of China-US

relationship." LUFT added, in the same email, that he was "glad

to ghost [write] for [Individual-1] needed or he can send

notes and we can mesh this into the dialogue. The idea is to

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project a sense of hope and opt sm for a pos US-China

relations."

26. On or about October 13, 2016, GAL LUFT, the defendant,

emailed Individual-2 a link to the of the purported

"dialogue" articles in China Daily, an English-language daily

newspaper distributed worldwide, including in the United States.

China Daily's New York-based distributor, China Daily

Distribution Corporation, has been recognized by the United

States Department of State as a foreign mission under the

Foreign Missions Act, meaning it is "substantially owned or

effectively controlled" by a foreign government (here, China),

and has registered under FARA for engaging in registerable

activities for a foreign principal (China Daily). The same day,

CC-1 emailed a link to the same article to a number of

individuals, including a professor at a university in New York,

New York, a professor at a university in Washington, DC, and an

official at the United Nations, with the subject l : "A

conver with [Individual-1] (Part I): World Policeman

Fatigue? China Focus."

27. On or about October 18, 2016, Individual-2 sent GAL

LUFT, the defendant, a one-page "Consulting Services Agreement"

signed by Individual-1, with an unsigned signature line for the

13
individual who was LUFT's Co-Director of the Think Tank, which

stated that Individual-1 would receive "an annual sum of $72,000

. . . , payable in monthly payments of $6,000" exchange for

Individual-l's provision of "advice on energy and global

security" and service as "Co-Chairman of the [Energy Group], a

project of [the Think Tank]." No mention was made of CC-1,

CEFC, CEFC China, the publication of articles in China Daily or

other papers, the dissemination of those articles the United

States, or the public support of certain policies concerning

China.

28. On or about October 25, 2016, CC-1 emailed links to

the second and third articles of the purported "dialogue" in

China Daily to a number of individuals,· including the same

professor at the Washington, DC university to whom CC-1 had sent

his October 13, 2016 email, as well as another professor at the

same university, two officials at the United Nations, and the

former president of the U.S. arm of a multinational oil comp~ny

who was a member of the Energy Group. The third article

included, word for word, the same statement.

.- .
regarding the

emergence of a "grand bargain" referenced in para~raph 24 above

that GAL LUFT, the defendant, had written for Individual-1 to

appear to say and to support.

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 29. On or about November 9, 2016, CC-1 attached the four

completed articles of the purported "dialogue" in China Daily to

an 1 sent to a number of individuals, including professors

at the New York, New York university and the Washington, DC

university, officials at the United Nations, a senior associate

at a non-profit policy research organization in Washington, DC,

a vice sident at a New York-based investment bank, and an

employee of a U.S.-based Chinese news organization, with the

subject line, "Dialogue between [CC-1] and [Individual-1], [the

President-elect's] Advisor on China." GAL LUFT, the defendant,

while in the United States, forwarded the email and attached

articles to Individual-2. The articles, which were accompanied

with photographs of Individual-1 and CC-1, each began with an

"editor's note" that stated: "China Energy Fund Committee (CEFC)

hosted 10th Sino-O.S. Colloquium in Washington DC on

September 26, seeking to identify a 'U.S.-China Policy for the

Next Administration.' After that, [CC-1], deputy chairman and

secretary general of CEFC, has a conversation with [Individual-

1], who is currently serving as a senior adviser to [the

U.S. political party] presidential nominee . , on the

pressing issues of China-US relations. The. conversation has been

edited into 4 pieces and will be posted once a week." The note

15
did not disclose, among other things, that (a) the so-called

"conversation" was both pre-written and substantially drafted by

or at the direction of CC-1 and LUFT, not Individual-1;

(b) CEFC, CC-1, and the Think Tank had an ongoing relationship,

including that CC-1 had arranged to pay the Think Tank hundreds

of thousands of dollars per year; or (c) Individual-1 was being

paid by the Think Tank, as agreed upon between CC-1 and LUFT.

30. In response to CC-l's email containing links to the

four articles, GAL LUFT, the defendant, while in the United

States, emailed CC-1 that "tucked between the lines is a call

for a 'grand bargain' which can set the tone for new power

relations. We should explore this."

31. On or about November. 12, 2016, CC-1 emailed GAL LUFT,

the defendant, that "[e]ver since the publication of the

art s of my 'dialogue' with [Individual-1] in Hong Kong and

in the mainland, [he] is now a household name among the USA

watchers in HK and in China. But I should think that he should

hide for now, come to China on a silent trip first, then surface

to speak out on [the President-elect's] foreign policies just

before his inauguration or thereafter.~ LUFT responded that

"[w]e are debating about his role in the new·actmin. There are

kinds of considerations . . We should talk ftf [i.e.,

16
face-to-face] as there can be a supremely unique opportunity for

china."

32. On or about November 13, 2016, GAL LUFT, the

defendant, and CC-1 exchanged emails about the potential role of

Individual-1 in the new presidential administration. LUFT

reported that "[o]ur friend is now on the shortlist of the

following: Sec Def[,] Sec homeland security[, and] Dir nat

intel." CC-1 replied that "[t]his side would like to see him

assuming something with a 'China' profile. Of the three, S of D

[i.e., Secretary of Defense] or DNI [i.e., Director of National

Intelligence] would be good, esp the former." LUFT wrote to ee-

l that "DNI is most likely," and CC-1 responded later in the

email chain that "may be you could reserve his 'direct' China

link as the weapon of last resort."

33. On or about October 31, 2016, an invoice "[f]or

professional consulting se ces contract," without

elaboration, was sent on behalf of Individual-1 to the

individual who was Co-Director with GAL LUFT, the defendant, of

the Think Tank for the period October 15 to November 14, 2016,

i.e., the period during which LUFT and CC-1 orchestrated and

disseminated the purported "dialogue" promoting Chinese

interests described above.

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 34. On or about November 16, 2016, the Think Tank

transmitted $6,000 to an account of Individual-1 in the United

States, the rst of monthly such payments which continued into

in or about October 2017.

35. On or about November 26, 2016, Individual 1 emailed

GAL LUFT, the defendant, a draft email Individual-1 planned to

send to a recently-announced advisor to the then-President-elect

offering Individual-l's assistance and describing his experience

in government and cybersecurity; Individual-1 did not mention

China in his draft email. Several hours later, LUFT emailed

back an edited version, writing to Individual-1 that LUFT had

"flagged a few other areas where he [the advisor] might need

help and its good that he knows you have capabilities that might

come handy." LUFT's included the following new language:

~

"I would also li to offer my support in dealing with some of

the countries with which I have gathered unique access to top

leadership, especially China (including re ons that can also

be handy in addressing North Korea) and Libya which I believe

should be a top priority after years of neglect by the [prior

presidential] administration." Individual-1 sent LUFT's version

of the email, including the language quoted abo~e, to the

advisor.

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 36. On or about December 1, 2016, CEFC, the Think Tank,

the Development Research Center of the State Council of China,

and another organization held "The Belt & Road Forum" in

Washington, DC, during which both CC-1 and Individual-1, who was

ident ed as a senior adviser to the President-elect, spoke.

Individual-1 stated: "We want to joyfully participate with China

in international trade operations anq economic growth. I think

we have no reason why China and the US cannot close and

friendly nations."

37. In or about 2017, CC-1 and Individual-1 both appeared

together and spoke at additional events, including at an event

in Hong Kong hosted by CEFC in February 2017 and an event in

Washington, DC in June 2017. In reference to the February 2017

event and in response to an email from GAL LUFT, the defendant,

about two Chinese individuals who were interested in meeting

with Individual-1 during his trip, CC-1 emailed LUFT that

Individual-1 and Individual-2 (both referred to by code name in

CC-l's email) "are being brought to HK [i.e., Hong Kong} and BJ

[i.e., Beijing} by us, CEFC and 'friends.' They are our guests.

Anybody wishing access to the guests should go through the

host."

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 38. At least in or about April 2017, during the period of

his work for CEFC and CC-1 described above, GAL LUFT, the

defendant, was aware of FARA, and indeed, he told two different

individuals about the U.S. requirement of registering as a

foreign agent in order to undertake certain actions (actions

unrelated to his work related to China). In an April 6, 2017

email to a foreign government official who had requested "an

official invitation from the U.S.A. government" for another

foreign government official to visit the United States, LUFT

wrote that "I may have to for foreign agent registration

before l can advocate for such a meeting with the USG." And in

an April 18, 2017 email to Individual-2, LUFT mentioned a

possible lobbying job for a foreign official or government that

Individual-2 may be able to get, but noted that "this will

entail working outs the Government and under FARA

registration."

39. In or about November 2017, CEFC invited Individual-1

to speak at the upcoming "Sino-US Colloquium (XII): Toward a

broader US-China agenda" in Washington, DC (the "Colloquium").

On or about November 2, 2017, CC-1 sent an invitation to

Individual that described the Colloquium as "aim[ing] to

improve the understanding of North American policymakers of

20
Sino-US relations and to seek constructive ways for the U.S. and

China to work together to maintain regional stability and

advance economic dynamism in Asia Pacific." On or about

November 20, 2017, Individual-1 spoke at the Colloquium.

40. According to checks of its database by the U.S.

Department of Justice's FARA Unit in or about November 2022,

none of GAL LUFT, the defendant, CC-1, Individual-1, ur

Individual-2 has ever registered under FARA for work related to

Chinese foreign principals.

STATUTORY ALLEGATIONS

41. From at least in or about October 2015 through at

least in or about November 2017, in the Southern District of New

York~ China, and elsewhere outside of the jurisdiction of any

particular State or di ct of the United States, GAL LUFT, the

defendant, and others known and unknown, at least one of whom is

expected to be t brought to and arrested in the Southern

District of New York, willfully and knowingly did combine,

conspire, confederate, and agree together and with each other to

commit an offense against the United States, to wit, to

knowingly and willfully act as an agent of a foreign principal,

namely, CEFC, CEFC China, and CC-1, without registering with the

21
Attorney General, in violation of FARA, 22 U.S.C. §§ 612 and

618.

OVERT ACTS

42. In furtherance of the conspiracy and to effect the

illegal object thereof, the following overt acts, among others,

were committed and caused to be committed in the Southern

District of New York and elsewhere:

a. On or about September 21, 2016, several days

after GAL LUFT, the defendant, sent CC-1 an email with the

subject line, "We nailed it!" that included a link to an art e

announcing that Individual-1 was advising a then-candidate for

President of the United States, LUFT and CC-1 attended a party

for Individual-1 in New York, New York, which Individual-2 told

LUFT other advisers to the candidate were also expected to be

present at.

b. On or about September 29, 2016, using a code name

for Individual-1, GAL LUFT, the defendant, sent CC-1 an email

that stated: "All set. We agreed on 60 for phase I and he won't

be taking a position w others. He is eager to launch the

channel. Pls lock your side and see when they want to bring him

or meet elsewhere."

22
 c. On or about November 9, 2016, CC-1 emailed four

completed cles of a purported "dialogue" China Daily to a

number of individuals, including professors at universities in

New York, New York and Washington, DC, officials at the United

Nations, a senior associate at a non-profit policy research

organization in Washington, DC, a president at a New York-

based investment bank, and an employee of a US-based Chinese

news organization, with the subject line, "Dialogue between [CC-

1] and [Individual-1], [the President-Elect's] Advisor on

China."

d. On or about November 2, 2017, CC-1 invited

Individual-1 to speak at the "Sino-US Colloquium (XII): Toward a

broader US-China agenda" in Washington, DC.

(Title 18, United States Code, Sections 371 and 3238.)

COUNT TWO

(Conspiracy to Violate the Arms Export Control Act)

The Grand Jury further charges:

43. The allegations set forth in paragraphs One through

Thirteen and Sixteen through Forty are incorporated by reference

as if set forth fully herein.

23
 Statutory Background: Arms Export Control Act

44. At all times relevant to this Indictment, the Arms

Export Control Act ("AECA") has authorized the President to

control the export of defense articles deemed critical to the

national security and foreign policy interests of the United

States. Among other things, the AECA authorizes the President

to designate i terns as ''defense articles" by listing them on the

United States Munitions List ("USML"). In addition, the AECA

imposes a registration requirement on certain individuals,

including U.S. citizens wherever located, who engage in

brokering activities with respect to the manufacture, export,

import, or transfer of any. defense articles or services.

Section 2778(c) of the AECA establishes criminal penalties for

any violation of Section 2778 or any rule or regulation

promulgated thereunder.

45. The United States Department of State, Directorate of

Defense Trade Controls ("DDTC") implemented the statutory

provisions of the AECA by adopting the International Traffic in

Arms Regulations ("ITAR"), Title 22, Code of Federal

Regulations, Parts 120 to 130. These regulations, promulgated

pursuant to Title 22, United States Code, Section 2778,

established the USML, define a "defense article" as any item on

24
the USML, and require a license from the DDTC for certain

persons engaged in the business of brokering activities of items

listed on the USML.

46. The USML is set forth at Title 22, Code of Federal

Regulations, Part 121.1. Category II of the USML, titled "Guns

and Armament," includes "(a) (2) Mortars" and "(a) (4) Grenade

launchers." Category III of the USML, titled "Ammunition and

Ordnance," includes "(a) (9) Ammunition . . . for the guns and

armaments controlled Category II." Category IV of the USML,

titled "Launch Vehicles, Guided Mis les, Ballist Missiles,

Rockets, Torpedoes, Bombs and Mines," includes "(a) (4) Anti-tank

missiles and rockets" and "(a) ( 6) Bombs." Category VIII of

USML, titled "Aircraft and Related Articles," includes "(a) (5)

Unmanned aerial vehicles (UAVs) specially designed to

incorporate a defense article."

LUFT's Illicit Arms Trafficking Activity

47. As described in greater detail below, GAL LUFT, the

defendant, worked to broker mult to citly sell and

deliver defense articles between foreign count s without

having received a license or approval from the DDTC. Among

other things, LUFT worked to broker a deal for Chinese companies

to sell cert weapons to Libya, including anti-tank launchers,

25
grenade launchers, and mortar rounds, all of which are on the

USML. See 22 C.F.R. § 121.1, Category II(a}, III(a) & IV(a) (4).

LUFT also worked to broker deals for certain weapons to be sold

to the United Arab Emirates, including arial bombs and rockets,

both of which are on the USML. See 22 C.F.R. § 121.1, Category

IV(a}. LUFT also worked to broker deals for certain weapons to

be sold by a Chinese company to Kenya, including unmanned aerial

vehi es ("UAVs")--and specifically "strike" UAVs, which LUFT

acknowledged "[t]he US doesn't want to sell[, . . . ] hence the

opportunity"--which are on the USML. See 22 C.F.R. § 121.1,

Category VIII(a).

Libya

48. At least in or about March and April 2015, GAL LUFT,

the defendant, engaged in communications with CC-1 regarding

LUFT serving as an intermediary for illicit trafficking in arms,

which LUFT and CC-1 generally referred to in code as "toys,"

with respect to Libya as well as Qatar, including while CC-1 was

in New York, New York. Among other things:

a. On or about March 10, 2015, CC-1, who was staying

in New York, New York, emailed LUFT, stating, "through a close

end of mine in BJ [i.e., Beijing], I can get you the toys

needed in Libya, 's strictly a business deal and someone has

26
to foot the bill. Let me know if an order is being placed.ll

LUFT replied, "Great. Will meet them in the island and see

what's s about.ll

b. On or about March 18, 2015, LUFT advised CC-1

that LUFT had just returned from the island of Cyprus.

c. Also on or about March 18, 2015, CC-1 wrote to

LUFT, "yes, through our channel, we can sell you the toys for

Lybia.ll LUFT replied a few minutes later, "good. I will deal

with this next week. when do we meet on other mischiefs?"

d. On or about ·March 25, 2015, LUFT emailed CC-1, "I

have the list and end user agreement. Pls advise next step.ll On

the same day, CC-1 replied, stating in pertinent part, "Find a

way to pass them onto me and we can execute that right away,

BTW, who is footing the $.ll

e. On or about March 28, 2015, LUFT replied,

"Attached. we have the funding and processing mechanisms in

place. If it works nice there will be much more. Also for S.

Sudan.ll The attachment to LUFT's March 28, 2015 email to CC-1

was a document dated November 18, 2014, which was headed "End

User Certificate," had a "Ministry of Defense" logo on the top

with an image similar to the star and crescent of the Libyan

flag, and was saved with the e name "LY032015.pdf,"

27
certifying that the user of the goods in question would be the

Ministry of Defense of the Republ of Libya. The supplier of

the goods was listed as a company with an address in Amman,

Jordan. The items listed on the document included anti-tank

launchers, grenade launchers, and mortar rounds.

f. On or about April 19, 2015, CC-1--who was staying

in New York, New York--sent an email to LUFT with the subject

header "Shopping lists." The body of the stated: "It so

turns out that Qatar also needs urgently a list of toys from us.

But the same reason that we had for Libya, we cannot sell

directly to them. Is there a way you could act as an

intermediary in both cases? Could you ask your man to see if he

is willing?"

g. On or about the same day, LUFT replied: "Qatar

good chance be there is no embargo. Libya is another case be

going against an embargo is t ky." Also on or about the same

day, CC-1 responded to LUFT, stating: "Qatar needs toys

quite urgently. Their chief is coming to China and.we hope to

give them a piece of good news. Please confirm soonest."

h. On or about April 21, 2015, CC-1--who was staying

in New York, New York, and wrote that he had attended a CEFC

event at the United Nations that day--asked LUFT for quick

28
response from your PM about being the middle man for

QaTar. We need an answer soon." LUFT replied that "isl [i.e.,

Israel] is not a good Same problem the [] Q [i.e.,

Qataris] have w uncle [i.e., the United States]. Need a third

party. Best a or east europe. I will activate. The

question is: can the Q be on the end user agreement or we need

two separate end users?"

i. On or about April 26, 2015, LUFT wrote to CC-1,

"Looks like we have a middleman for Q. can. I will get

final approval tomorrow. Need the name of the supplier and the

list so we can issue an end user agreement. The shipment can go

direct from China to Q preferably via sea. Pls advise." CC-1

replied on or about the same day, "Good, let me know if final

approval be given. . Oh, one thing, who is paying, I.e.

From whom are we getting payments. What are the commissions and

who gets them? What does the middleman ct?" In a response

the same day, LUFT stated, "the commission is 20pct including

the share of the third party." CC-1 asked "[w]ho is the

middleman, not L [i.e., Libya] inn. ca under embargo I

hope." LUFT replied, "no. a totally kosher one. they will

tell me f2f [i.e., face to face] shortly."

29
 j. On or about April 28, 2015, LUFT emailed CC-1

with the subject line "Q": "Its going to be Romania. pls send

me the 1 for the end user."

49. GAL LUFT, the defendant, and CC-1 continued to try to

broker illicit arms deals involving Libya into 2016, including

while in New York, New York. Among other things:

a. On or about April" 3, 2016, LUFT emailed CC-1

about a meeting to be scheduled with certain Libyans who "[w]ill

also get us to [a particular Libyan individual] (who will

probably be number one or two or minister of defense) as there

will be great need for toys after the sanctions are fted. I

will begin to assemble a task force for all of their needs

(toys, energy, infrastructure, banking) so we are ready to roll

when the curtain is raised." In subsequent emails on the

subject, LUFT told CC-1 that they should "discuss w [CC-2] that

he should talk w [the Chinese Defense Company] to represent them

there [i.e., in Libya] as currently they have no rep there.

This way everything goes through us." As noted above, LUFT had

told CC-2 in an April 2015 email that "I really enjoyed meeting

you. I'm sure we can a lot of fun while making$$."

b. LUFT traveled to Paris in or about September 2016

to meet with a group of Libyans whom LUFT had described in prior

30
emails as "quite high level people coming to see us headed by a

dep PM [i.e., deputy Prime Minister]." Prior to the meeting, on

or about September 5, 2016, CC-1 (copying LUFT) asked CC-2's

assistant to forward an email to CC-2 describing plans for the

meeting with the Libyans and stating that the Libyans "need

structures, banking services, internet and tele-

communication set ups, and 'toys.'" After the meeting, LUFT

told the Libyan cial, "I thought the meeting was excellent.

We will . . . the MOU [i.e., Memorandum of Understanding].

We are leaving for US and after that [CC-1] will meet with [the

then-chairman of CEFC China] to discuss next steps."

c. CC-1 had a second meeting with the Libyans that

LUFT did not attend, and reported to LUFT afterwards that "[t]he

key, I concluded, of his second meeting with me, was that after

he had reported of our first encounter back to L [i.e., Libya],

he was asked to make a clear first request for a 'test run',

TOYS! He further suggested that they will be asking the C

[i.e., Chinese] to help them building a 'simple' TOY factory in

Lin the near future, but he understand that many other steps

will have to be successful before we will ever come to that !"

LUFT responded to CC-1 that "[i]t's a big project which requires

patience but we are good at that and will sooner or later yield

31
fruit. The key is to maintain our exclusivity over the channel

to C."

d. On or about September 22, 2016--a day on which

CC-1 and LUFT were staying in New York, New York--CC-2 emailed

LUFT that he was asking a different Chinese defense company (the

"Chinese Defense Exporter") to issue CC-2's Company "a rep

letter for Libya business," and included a draft letter stating

that the Chinese Defense Exporter, "authorized by the Chinese

government," was "looking forward to have business and

cooperation with Libya, in trade and project contacting, through

appropriate ways." LUFT forwarded the email to CC-1 and

responded to CC-2, ''May I assume that the commission of [CC-1]

and me will be taken care of by [CC-2's Company]?"

e. On or about October 28, 2016, CC-1, who was

staying in New York, New York, emailed LUFT to suggest a

convenient time for a Libyan delegation to visit China. CC-1

wrote that the "[b]est time is the second of December.

Perfect working condition in China around Christmas time, no

western interference. Both BJ [i.e., Beijing] (Toys) and SH

[i.e., Shanghai] ([ rst initial of the name of the then-

chairman of CEFC China])."

32
 The United Arab Emirates

50. GAL LUFT, the defendant, also worked to broker icit

deals in arms with respect to other count s, both with CC-1

and others, including individuals affiliated with CEFC and/or

CEFC China. One such country with respect to which LUFT worked

to broker such deals, between approximately August 2015 and

November 2015 and including while in the United States, was the

United Arab Emirates ("UAE 11 ) . Among other things:

a. On or about August 13, 2015, LUFT received an

email from an individual affiliated with the Chinese Defense

Company. The email stated, "Mr. Luft: Good day! Please kindly

find attached quotation and technical specification for your

reference. For the Automatic rifle, we are glad to inform that

20ll's stock can be ready for shipment in very short time. But

fur the aerial bombs, I am afraid the prices are very different

from your expectation. 11 The email attached technical

speci ions for "5. 5 6mm Automatic Rifle Type CQ, 11

"250KG Low

Drag Arial HE Bomb Type 3, 11

and "500KG Arial HE Bomb Type 3" and

a price quotation for these items.

b. On or about the same day, LUFT sent two emails to

the Chief Executive Officer ("CC-3") of a company with an

address in Bulgaria. One email attached the quotation

33
referenced above and the other attached technical fications

for the referenced weapons. Based on a Hebrew

translation, one email stated, "Update me that you received and

we wi talk. Pickup at Dar a Salam. Thanks. Gal."

c. The next month, on or about September 22, 2015,

LUFT received an email with the subject "Rockets 107 mm" signed

by CC-3. CC-3 wrote: "Dear Gal, Kindly find attached the

inquiry from" a particular defense company in Montenegro (the

"Montenegrin Defense Company") "and quote a.s.a.p., incl.

delivery time, time of production, the price of ex-stock and

new." The email attached a letter (the "Montenegrin Defense

Company Letter") from the executive director of the Montenegrin

Defense Company, addressed to CC-3, stating "We kindly ask you

to check poss ty to deliver up to 40.000 pcs.of rockets 107

mm from the stock or new production."

d. On or about the same date, LUFT sent an email

addressed to CC-2, whom LUFT referred to by his first name,

stating: "Please see the attached request for 40,000 107mm

rockets. Please advise terms. We need it to go to Dar a Salam by

ship and from there by air to UAE. Would be better to have from

stock but new is also fine. Best Gal."

34
 e. Three days later, on or about September 25, 2015,

LUFT sent an email to the same ema account and asked, "Can

[the Chinese Defense Company] supply this product?" On or about

the same date, CC-2 responded, "Sorry, [the Chinese Defense

Company] don't think they can do this deal."

f. On or about the same day, after CC 2 stated that

the Chinese Defense Company could not do the deal regarding

107mm rockets, LUFT sent an email to an individual with CEFC

China ("CC-4"}. The email stated in pertinent part: "Hope your

trip home went well. I have a request for 40,000 107 rockets for

UAE. Might you be able to find me a seller preferably from

stock? This is quite urgent. Thanks Gal.n

g. On or about September 28, 2015, CC-4 responded,

"As you know do you have the document from UAE?" On or about

September 28, 2015, LUFT responded, "Not yet. They want to know

if there is stock before they hand

,h. On or about October 8, 2015, after the foregoing

exchange regarding 107mm rockets for the UAE, CC-4 sent an email

to LUFT, who was in the United States, stating: "I asked the

related side.there no stocks this ½ime.and they already summit

the offer for them." LUFT responded: "Thank you for the update.

We will try other opportunities."

35
 i. On or about November 2, 2015, LUFT sent an email

to CC-4, with the subject "Fwd: Rockets 107 mm," and attaching

the Montenegrin Defense Company Letter.

j. On or about November 18, 2015, CC-4 replied to

LUFT, who was in the United States: "Mr Gal Luft, as you know

the the capacity to produce the products is limited.so I suggest

that you can order in advance to prepay so you can get a good

price and you can get the products. other thing for the cash

exchange I find away to discuss with you when we meet together."

Kenya

51. Another country with respect to which GAL LUFT, the

defendant, worked to broker illicit arms deals was Kenya at

least in or about March 2016. Among other things:

'
a. On or about March 22, 2016, LUFT sent an email to

a particular person who was then a lawful permanent resident of

the United States ("CC-5") with the subject line "Kenya," and

wrote that the Chinese Defense Exporter is "a leading Chinese

exporter of de and aerospace systems" that "is now

competing over a contract to 1 2-3 drones to Kenya." LUFT

wrote that "[t]he scope of the initial contract is over $20

million but this is only a reference for potential larger

projects in Kenya and writ large." LUFT also noted that

36
"[the Chinese Defense Exporter]'s sole competitor in this deal

is another Chinese company. [The Chinese Defense Exporter]

doesn't have high level contacts in Kenya and looking for

ones. The CEO is willing to travel to Kenya next.month to

introduce the products to local officials provided we can find

the right person to plug him in." LUFT asked CC-5 to "[p]lease

advise."

b. On or about March 25, 2016, LUFT sent an email to

CC-5: "Please see the attached letter explaining the background

and the request for meeting in April. [The Chinese Defense

Exporter] will provide 10 percent commission to us for all

business conducted in the country. Best Gal." The attached

letter was a letter to the Ministry of Defense of Kenya from the

Chinese Defense Exporter, which described self in the letter

as a "state-owned international defense company authorized by

the Chinese government." The letter referenced previous

discussions between Chinese Defense Exporter officials and

Kenyan Ministry of Defense officials about the "CH-4B UAV

system," i.e., an unmanned aerial vehicle system, and requested

a meeting to further discuss this and the Chinese Defense

Exporter's other products.

37
 c. On or about March 28, 2016, CC-5 received an

email from an individual stating that was "too late" because

the "MOD [i.e., Ministry of Defense of Kenya]" had already

purchased six units from another source. On or about the same

date, CC-5 forwarded this email to LUFT, who ied, "The six

units are just for surveillance while what [the Chinese Defense

Exporter] is offering are strike UAVs which is a different

project. The US doesn't want to sell them strike UAV hence the

opportunity."

52. GAL LUFT, the defendant, continued to work to broker

cit arms deals into at least in or about mid-2017. On or

about June 18, 2017, LUFT sent himself an email attaching a "PSO

Equipment st," which included a description, quantity,

picture, and comments for a variety of military gear, ranging

from clothing and night vision goggles to armored vehicles and

mobile hospital trai The "comments" column included notes

about the order being placed, such as quantity needed of each

size, and answers to questions that appears the customer had

posed (e.g., for a "British Army Soldier" combat suit, "We need

same pattern as the pictures? Ans= Yes") or about details of

the order being placed (e.g., for an armored vehicle, "Level of

armoring? Ans= 4 inches"; "Do you want equipment integrated

38
( communication, grenade launchers, gunshot detection system, ... and

more) in the vehicle? Ans= Yes").

53. At all relevant times, GAL LUFT, the defendant, did

not ster with the State Department as a person engaged in

brokering activities with respect to foreign defense articles or

defense services, nor did he obtain a license from DDTC to

engage in any export, re-export, or brokering activit s.

STATUTORY ALLEGATIONS

54. From at least in or about March 2015 through at least

in or about mid-2017, in the Southern District of New York,

China, France, Cyprus, and elsewhere outside of the jurisdiction

of any particular State or district of the United States, GAL

LUFT, the defendant, and others known and unknown, at least one

of whom is expected to be first brought to and arrested in the

Southern District of New York, willfully and knowingly did

combine, conspire, confederate, and agree together and with each

other to commit an offense against the United States, to wit, to

violate Title 22, United States Code, Section 2778.

55. It was a part and an object of the conspiracy that GAL

LUFT, the defendant, and others known and unknown, would and did

willfully engage in the business of brokering activities with

respect to the manufacture, export, import, and transfer of an

39
article listed on the USML and of a foreign defense article and

defense service of a nature described on the USML, including

anti-tank launchers, grenade launchers, mortar rounds, 5.56mm

automatic ri s, arial bombs, rockets, and "strike" UAVs,

without the required license or written approval of the DDTC, in

violation of 22, United States Code, Sections 2778 (b) (2)

and 2778(c), and regulations promulgated thereunder.

OVERT ACTS

56. In furtherance of the conspiracy and to effect the

legal object thereof, the following overt acts, among others,

were committed and caused to be committed in the Southern

Dist ct of New York and elsewhere:

a. On or about March 28, 2015, GAL LUFT, the

defendant, wrote to CC-1 that "we have the funding and

processing mechanisms in place," and attached an end-user

certificate needed by CC-1 to execute the deal which certi ed

that the user of the goods would be the Ministry of Defense of

the Republic of Libya and listed, among other items, anti-tank

launchers, grenade launchers, and mortar rounds.

b. On or about September 25, 2015, LUFT contacted

two individuals to try to obtain a source of 107mm rockets for a

purchaser.

40
 c. On or about March 28, 2016, after being told that

a potential buyer had already purchased unmanned 1 vehicle

systems from another source, LUFT replied that the articles he

was able to offer through the Chinese Defense Exporter were

"strike UAVs which is a different project. The US doesn't want

to sell them ke UAV hence the opportunity."

d. On or about September 22, 2016, while both LUFT

and CC-1 were staying in New York, New York, LUFT received an

email from CC-2 regarding CC-2's Company obtaining from the

Chinese Defense Exporter "a rep letter for Libya bus ss, fl

which LUFT forwarded to CC-1. CC-1 responded on or about the

same day, "Please ask [CC-2] to clarify if we, you and I, are

included in [CC-2's Company]," and on or about the next day,

September 23, 2016, LUFT emailed CC-2, "May I assume that the

commission of [CC-1] and me will be taken care of by [CC-2's

Company]?"

(Title 18, United States Code, ons 371 and 3238.)

COUNT THREE

{Violation of the Arms Export Cont Act -- Libya)

The Grand Jury further charges:

57. The allegations set forth in paragraphs One through

Thirteen, Sixteen through Forty, and Forty-Four through Fifty-

41
Three are incorporated by reference as if set forth fully

herein.

58. From at least in or about March 2015, up to and

including at least in or about September 2016, in the Southern

District of New York, China, France, Cyprus, and elsewhere

outside of the jurisdiction of any particular State or di

of the United States and for which one of two or more joint

offenders is expected to be t brought to and arrested the

Southern District of New York, GAL LUFT, the defendant,

willfully engaged in the business of brokering activities with

respect to the manufacture, export, import, and transfer of an

article listed on the USML and of a foreign defense article and

defense service of a nature described on the USML, to wit, anti-

tank launchers, grenade launchers, and mortar rounds, without

having obtained a license or other written authorization

from the DDTC.

(Title 22, United States Code, Sections 2778(b) and (c);

Title 22, Code of Federal Regulations, Sections 129.3, 129.4,
129.8, and 129.10; Title 18, United States Code, Sections 2 and
3238.)

42
 COUNT FOUR

(Violation of the Arms Export Control Act -- United Arab

Emirates)

The Grand Jury r charges:

59. The allegations set forth in One through Thirteen,

Sixteen through Forty, and Forty-Four through Fifty-Three are

incorporated by reference as if set forth fully herein.

60. From at least in or about August 2015, up to a,nd

including at least in or about November 2015, in the Southern

District of New York, China, and elsewhere outside of the

jurisdiction of any particular State or district of the United

States and for which one of two or more joint offenders is

expe-cted to be brought to and arrested in the Southern

District of New York, GAL LUFT, the defendant, willfully engaged

the business of brokering activities with respect to the

manufacture, export, import, and transfer of an article listed

on the USML and of a foreign defense art and defense service

of a nature described on the USML, to wit, 5.56mm automatic

es, arial bombs, and rockets, without having rst obtained

a license or other written authorization from the DDTC.

(Title 22, United States Code, Sections 2778(b) and (c);

Title 22, Code of Federal Regulations, Sections 129.3, 129.4,
129.8, and 129.10; Tit 18, United States Code, Sections 2 and
3238.)

43
 COUNT FIVE

(Violation of the Arms Export Control Act -- Kenya)

Grand Jury further charges:

61. The allegations set forth in paragraphs One through

Thirteen, Sixteen through Forty, and Forty-Four through Fifty-

Three are incorporated by reference as if set forth fully

herein.

62. In at least in or about March 2016, in the Southern

District of New York, and elsewhere outside of the jurisdiction

of any particular State or district of the United States and for

which one of two or more j offenders is expected to be first

brought to and arrested in the Southern District of New York,

GAL LUFT, the defendant, willfully engaged in the business of

brokering activities with respect to the manufacture, export,

import, and transfer of an article listed on the USML and of a

foreign defense article and defense ce of a nature

described on the USML, to wit, unmanned aerial vehicles (UAVs)

specially designed to incorporate a defense , without

having obtained a license or other written authorization

from the DDTC.

(T 22, United States Code 1 Sections 2778(b) and (c);

44
 le 22, Code of Federal Regulations, Sections 129.3, 129.4,
129.8, and 129.10; Title 18, United States Code, Sections 2 and
32 3 8 . )

COUNT SIX

(Making False Statements to Federal Agents Regarding Arms

Tra eking)

The Grand Jury further charges:

63. The allegations set forth in paragraphs One through

Thirteen, Sixteen through Forty, and Forty-Four through fty-

Three are incorporated by reference as if set forth fully

herein.

64. On or about March 28, 2019, in the Southern District

of New York, Belgium, and elsewhere outside of the jurisdiction

of any particular State or district of the United States, GAL

LUFT, the defendant, who is expected to be first brought to and

arrested in the Southern District of New York, a matter

within the jurisdiction of the executive branch of the

Government of the United States, knowingly and willfully made a

materially false, fictitious, and fraudulent statement and

representation, to wit, LUFT falsely stated during an interview

at the United States Embassy in Brus s, Belgium with federal

law enforcement officers and prosecutors, in connection with an

investigation being conducted in the Southern District of New

45
York, that LUFT had not sought to engage in or profit from arms

deals, and instead merely had been asked by an Is i friend

who dealt in arms to check arms prices so that the friend could

use this information in bidding on deals, a request that LUFT

said he fulfilled by having CC-1 check ces with CC-2 and then

relay this information to LUFT--when in fact LUFT had actively

worked to broker numerous i arms deals for profit

involving multiple different countries, both in concert with ee-

l and directly himself, including as described in paragraphs

Forty-Four through Fifty-Three above.

(Title 18, United States Code, Sections 1001 and 3238.)

COUNT SEVEN

(Conspiracy to Violate the International Emergency Economic

Powers Act)

The Grand Jury further charges:

65. The allegations set forth in paragraphs One through

Thirteen, Sixteen through Forty, and Forty-Four through Fifty-

Three are incorporated by reference as if set forth fully

herein.

Statutory Background: The Sanctions Regime and the International

Emergency Economic Powers Act

66. The International Emergency Economic Powers Act

("IEEPA"), codified at Title 50, United States Code, Sections

46
1701 to 1708, confers upon the President authority to deal with

unusual and extraordinary threats to the national security and

foreign policy of the United-States. Section 1705 provides, in

part, that "[i]t shall be unlawful for a person to violate,

attempt to violate, conspire to violate, or cause a violation of

any license, order, regulation, or prohibition issued under this

title." 50 U.S.C. § 1705(a).

67. Beginning with Execut Order No. 12170, issued on

November 14, 1979, the President has found that "the situation

in Iran constitutes an unusual and extraordinary threat to the

national security, gn policy and economy of the United

States" and declared "a national emergency to deal with that

threat." Since that time, the President has continuously

extended the national emergency with respect to Iran, which

remains in effect.

68. On March 15 and May 6, 1995, the President issued

Executive Orders Nos. 12957 and 12959, prohibiting, among other

things, "any transaction, including . . . brokering

transactions, by a United States person relating to goods or

services of Iranian origin or owned or controlled by the

Government of Iran," and on August 19, 1997, issued Executive

Order No. 13059 clarifying the previous orders (collectively,

47
the "Executive Orders"). The Executive Orders authorized the

U.S. Secretary of the Treasury to promulgate rules and

regulations necessary to carry out the Executive Orders.

Pursuant to this authority, the Secretary of the Treasury

promulgated the Iranian Transactions Regulations (renamed in

2013 the Iranian Transactions and Sanctions Regulations, or

"ITSR"), implementing the sanctions imposed by the Executive

Orders.

69. Title 31, Code of Federal Regulations, Section 560.206

of the ITSR prohibits, among other things, any transaction or

dealing by a United States person in or related to goods or

services of Iranian origin or owned or controlled by the

Government of Iran, without a license from the U.S. Treasury

Department's Office of Foreign Assets Control ("OFAC").

70. The ITSR further prohibit transactions that evade or

avoid, have the purpose of evading or avoiding, cause a

violation of, or attempt to violate the ITSR. See 31 C.F.R.

§ 560.203.

71. The National Iranian Oil Company ("NIOC") is the

Iranian government-owned oil and natural gas producer and

distributor under the direction of the Ministry of Petroleum of·

Iran. In 2010, OFAC identified NIOC as an entity meeting the

48
de ion of "Government of Iran" under the ITSR, see 31 C.F.R.

§ 560.304, and added NIOC to the Specially Designated Nationals

and Blocked Persons List. See 75 Fed. Reg. 34,630 (June 18,

2010). Engaging in transactions with NIOC is therefore

prohibited under the ITSR. 31 C.F.R. § 560.211.

LUFT's Scheme to Evade Iranian Sanctions

72. As described below, GAL LUFT, the defendant, worked to

broker deals involving Iranian oil, which he directed an

associate to refer to as coming from "Brazil" instead of Iran,

in an effort to conceal the activity and evade sanctions.

73. Beginning at least in or about April 2015, GAL LUFT,

the defendant, and multiple individuals from CEFC and/or CEFC

China, including CC-1, exchanged emails about an energy security

conference scheduled to occur in June 2015 in Beijing, China,

which was sponsored by the Think Tank, the Energy Group, CEFC,

and a Chinese think tank.

74. On or about May 17, 2015, CC-1 sent an email to GAL

LUFT, the defendant, with the subject "VIPs June in BJ," i.e.,

in Beijing, which asked LUFT to "go through the list of invited

speakers coming to the BJ meeting in June and pick out a few

VVIPs whom you think [the then-chairman of CEFC China] might be

interested in meeting in person on the sideline. And perhaps

49
also those VIPs who might help the CEFC Company [i.e., CEFC

China] with its businesses so that our people in BJ in the trade

can focus on meeting." The next day, LUFT replied to CC-1,

listing a number of foreign officials with whom the then-

chairman of CEFC China might wish to meet, and then added: "Also

remember the Iranians I told you, which should be done in

privacy." On or about the same date, CC-1 replied to LUFT, "Can

you send me more info on the Iranians?" In subsequent emails,

LUFT provided additional information to CC-1 about the "Iranian

team" that was attending the conference and attached a

PowerPoint "Presentation to Potential Partners: Iran Petroleum

Investmentsn by a particular oil company (the "Oil Company").

CC-1 (who was staying at a hotel in New York, New York on this

date) forwarded the information and PowerPoint to an assistant

for the purpose of writing a report to the then-chairman of CEFC

China.

75. The following year, on or about February 13, 2016, GAL

LUFT, the defendant, was forwarded an email from an individual

("Individual-3") that asked "whether there could be any interest

from our Chinese buyers (CEFC, HUOC etc al)u in "volumes of

Iranian Light Crude{/ oil, and that included a link to the

website for NIOC. LUFT replied to Individual-3, "Will check.

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The Iranians came to cefc w quite high level - sent even the

niece of the energy min - but left bad impression. They don't

seem to know how to play the game. Were borderline rude. I was

in the room. The price was not great either. Its all about

customer relations."

76. On or about February 17, 2016, GAL LUFT, the

defendant, informed Individual-3 that "i have positive interest

$2.50[.J will develop further[.] pls refer to as brazil."

On the same date, LUFT emailed another individual with the

subject line "Brazil Light direct from NOC," and quoted

substantially similar terms as the transact in Iranian oil--

not oil from Brazil--that LUFT had discussed with Individual-3.

In other words, LUFT sought to conceal the Iranian source of the

oil by to it as "Brazil Light" instead of "Iranian

Light" (as the subject line of Individual 3's init email had

referenced) and by describing its source as "NOC" (a national

oil company) rather than NIOC (the National Iranian Oil

Company) .

77. On or about May 15, 2016, Individual 3 sent GAL LUFT,

the defendant, an offer for NIOC crude oil from a petroleum

company addressed to CEFC China. The offer letter listed the

51
"origin" of the oil as \\Iranian / It can be presented as UAE

origin without Iranian papers."

78. In or about April and May 2016, GAL LUFT, the

defendant, exchanged a series of emails with a "Principal

Partner and Commercial Director" for the Oil Company

(\'Individual-4") about an upcoming energy security forum in

China. LUFT told Individual-4 that "CEFC want to meet you in BJ

[i.e., Beijing] to discuss you know what. We will set up the

business meetings the day after the forum."

79. On or about June 22, 2016, GAL LUFT, the defendant,

sent an email to CC-1, stating that Individual-4, who was "a

good link to Iran deals," would be attend·ing an upcoming forum

and could be "potentially useful" for ,CEFC China. The next day,

CC-1 told LUFT that he would help arrange certain meetings "in

BJ" between certain individuals, including a meeting between two

CEFC China o als and Individual-4. CC-1 also told LUFT that

LUFT could start organizing the meetings. CC-1 added, "Please

contact [one of the CEFC China cials] for the Iraq lift.

Other matters ftf [i.e., face-to-face]."

80. Several months later, on or about October 10, 2016,

CC-2 emailed GAL LUFT, the defendant, that CC-2 had a Chinese

client who needed Russian oil, which LUFT confirmed he could

52
help provide: "I just got off the phone with Russia. They

this." Forwarding this email exchange to CC-1, LUFT wrote: "If

[CC-2] really has this cl we need to grab it. This is

exactly what we need. . . I can get any source on the planet."

STATUTORY ALLEGATIONS

81. From at least in or about April 2015, up to and

including at least in or about June 2016, in the Southern

District of New York, China, and elsewhere outside of the

jurisdiction of any particular State or district of the United

States, GAL LUFT, the fendant, and others known and unknown,

at least one of whom is expected to first brought to and

arrested in the Southern District of New York, knowingly and

willfully did combine, conspire, conf·ederate, and agree together

and with each other to violate, and to cause a violation of,

licenses, orders, regulations, and prohibitions and issued

under the IEEPA, codified at Title 50, United States Code,

Sections 1701-1708.

82. It was a part and an object of the conspiracy that GAL

LUFT, the defendant, and others known and unknown, would and did

engage in and cause others to engage in a transaction and

dealing by a U.S. person in and related to goods ands ces of

Iranian origin and owned and controlled by the Government of

53
Iran, without first obtaining the required approval of OFAC, and

to evade the requirements of U.S. law with to

transactions and dealings by a U.S. person in and related to

goods and services of Iranian origin and owned or controlled by

the Government of Iran, in violation of 50 U.S.C. § 1705(c), 31

C.F.R. §§ 560.203, 560.206, and 560.211, and Execut Orders

12957, 12959, and 13059.

le 50, United States Code, Section 1705; Executive Orders

12957, 12959, and 13059; Title 31, Code of Federal Regulations,
Sections 560.203, 560.206, and 560.211; Title 18, United States
Code, Section 3238.)

COUNT EIGHT

(Making False Statements to Federal Agents Regarding Iranian Oil

Deals)

The Grand Jury further charges:

83. The allegations set forth in paragraphs One through

Thirteen, Sixteen through Forty, Forty-Four through Fifty-Three,

and Sixty-Six through Eighty are incorporated by reference as if

set forth fully herein.

84. On or about March 29, 2019, in the Southern District

of New York, Belgium, and elsewhere outside of the jurisdiction

of any particular State or district of the United States, GAL

LUFT, defendant, who is expected to be first brought to and

arrested in the Southern District of New York, in a matter

54
within the jurisdiction of the execut branch the

Government of the United States, knowingly and willfully made a

materially false, fictitious, and fraudulent statement and

representation, to wit, LUFT sely stated during an interview

at the United States Embassy in Brussels, gium with federal

law enforcement officers and prosecutors, in connection with an

investigation being conducted in the Southern District of New

York, that LUFT had to prevent CEFC China from doing an

oil deal with Iran, that LUFT had been excluded from CEFC China

meetings with Iranians, and that LUFT did not know of any CEFC

China dealings with Iran while he was affiliated with the

company--when in fact, including as described above

paragraphs Sixty-Six through Eighty, LUFT personally attended at

one meeting between CEFC and Iranians and assisted

in setting up additional such meetings for the purpose of

arranging deals for Iranian oil, and also worked to find a buyer

of Iranian oil while concealing its origin.

(Title 18, United States Code, Sections 1001 and 3238.)

FORFEITURE ALLEGATIONS

85. As a result of committing the offenses alleged in

Counts One, Two, Three, Four, Five, and Seven of this

Indictment, GAL LUFT, the defendant, shall to the United

55
States, pursuant to le 18, United States Code, Section

98l(a) (1) (C) and Title 28, United States Code, Section 246l(c),

all property, real and personal, that constitutes or is derived

from proceeds traceable to the commission of said offenses,

including but not limited to a sum of money in United States

currency representing the amount of proceeds traceable to the

commission of said offenses.

Substitute Assets Provision

86. If any of the above-described forfeitable property, as

a result of any act or omission of GAL LUFT, the defendant:

a. cannot be located upon the exercise of due

diligence;

b. has been transferred or sold to, or

deposited with, a third person;

c. has been placed beyond the jurisdiction of

the Court;

d. has been substantially diminished in value;

or

e. has been commingled with other property

which cannot be subdivided without di culty; it is the intent

of the United States, pursuant to Title 21, United States Code,

Section 853(p) and Title 28, United States Code, Section

56
2461 (c) , to see k forfeiture of any other property of the

defendant up to t h e value of the above forfeitable property .

(Tit le 18 , United States Code , Se ction 981 ;

Tit le 2 1 , United States Code , Sect ion 853 ;
Title 28, United States Code , Section 24 6 1 . )

FOREP WILLIAMS
UN ITED STATES ATTORNEY

57
 Form No . USA-33s-274 (Ed . 9- 25-58)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA

v.

GAL LUFT,

Defendant.

SEALED INDICTMENT

22 Cr .

(18 U. S . C. §§ 37 1 , 1001, 3238 , and 2 ;

22 U. S . C. §§ 2778(b) & (c) ; 50 U. S . C.
§ 1705 ; 22 C. F. R. §§ 129 . 3 , 129 . 4,
i29 . 8 , & i 2~ . lO ; 31 C. F: R. §§ 560 . 2ij3,
560 . 206 & 560 . 211 ; Executive Orders
12957 , 12959 , & 13059 . )

DAMIAN WILLIAMS
United States Attorney