ALEXANDRIA, VA – An American tech CEO is among a group of people accused by the U.S. government of hiding the foreign ownership of an Alexandria-based software company.
On Wednesday, the U.S. Justice Department announced that a Boise man and a Russian national have been charged in connection with what the DOJ calls a scheme to hide the fact that their Virginia-based software company was not American-owned but rather owned by five Russians and sold products developed in Russia.
Lee Reiber, 55, of Boise, Idaho, and Oleg Sergeyevich Davydov, 52, of Moscow, Russia, are charged with conspiracy to commit wire fraud, a charge that carries a maximum sentence of 20 years in prison.
According to a DOJ release, the Alexandria-based digital forensics company Oxygen Forensics Inc. sought contracts with U.S. government agencies from March 2022 to 2026. The agencies included the Department of War and branches within the Department of Homeland Security: the U.S. Secret Service and its National Computer Forensics Institute (NCFI), Homeland Security Investigations and the DHS Office of Inspector General.
The release notes that "digital forensic software is used to recover, preserve, and analyze electronic data from digital devices while keeping the original files unchanged."
The DOJ says that Oxygen Forensics, established by Davydov in 2013, presented itself as being owned by Reiber, an American, when, in fact, it was owned and controlled by Davydov and four other Russian nationals through a holding company in Cyprus.
According to the DOJ, Oxygen Forensics was preceded by a Russia-based company owned by the same five Russian individuals. That company, co-founded by Davydov in 2000, was called Oxygen Software LLC until 2022, when it was renamed MKO Systems LLC. Oxygen Software/MKO sold software developed in Russia to a variety of Russian customers, including the Russian Federal Security Service, the Russian Investigative Committee and the Russian Ministry of Internal Affairs, the release says.
Citing a court affidavit, the DOJ said that Reiber joined Oxygen Forensics in 2015. After the U.S. expanded sanctions on Russia in 2022, Reiber and the company's true owners conspired to conceal its foreign ownership. Prosecutors allege that Reiber was installed as the company's CEO, president and chairman of the board in March of that year and the Russian owners were removed from the company's public corporate filings.
However, the DOJ alleges the Russian owners continued to make major decisions, had the power to overrule Reiber's decisions, ran the company's bank accounts and controlled Reiber's compensation.
The DOJ alleges that Reiber falsely certified to the U.S. government, on more than one occasion, that no foreign person had power over Oxygen Forensics. They allege that Reiber told U.S. government personnel that no Russians were involved in developing the software he sold or had access to where it was built and made similar attestations on the company's website.
They also say Reiber warned the company's Russian owners after a reporter asked him about Oxygen Forensics' connection to Russia.
The complaint does not allege that the software was malicious or was used to gain unauthorized access to any systems or data.
Reiber was arrested in Idaho on Sunday and appeared in U.S. District Court in Idaho, the DOJ says. He was released on bond and is expected to be arraigned in Los Angeles federal court.
Davydov was arrested on Sunday at London Heathrow Airport in the United Kingdom before boarding a flight to Istanbul, the DOJ says. The U.S. expects to seek his extradition.
Corporate bank accounts, domains and other cyberinfrastructure connected to the alleged crimes have been seized, the DOJ says.
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