The U.S. Office of Foreign Assets Control (OFAC) has fined San Francisco-based venture capital firm GVA Capital $215 million for violating Russia-related sanctions. From 2018 to 2021, GVA Capital knowingly managed investments for sanctioned Russian oligarch Suleiman Kerimov, despite being aware of his blocked status. Kerimov, who amassed his fortune primarily through investments in Russian gold producer Polyus, funneled millions into the Bay Area tech scene through GVA Capital.
The firm, founded in 2011 as the U.S. investment arm of Moscow-based Global Venture Alliance, was cofounded by Magomed Musaev and Pavel Cherkashin. In 2016, Musaev and Cherkashin sought Kerimov’s approval for investments during a trip to France on his private jet. Kerimov’s investments included a self-driving car technology company and a Russian Hill church converted into an incubator, dubbed the “Startup Temple.”
The United States sanctioned Kerimov in 2018 in response to Kremlin actions, freezing his U.S.-based assets and prohibiting transactions with them.
ofac penalizes venture capital firm
However, GVA Capital allegedly continued managing Kerimov’s investments through his nephew, who acted as a proxy. Following Russia’s invasion of Ukraine in 2022, U.S. authorities blocked Kerimov’s access to Heritage Trust, a Delaware trust fund valued at over $1 billion, which held his investments.
GVA Capital has diminished in size since the late 2010s, with cofounder Musaev no longer listed on the firm’s website and several former employees having left the company. Attempts to reach Cherkashin for comments were unsuccessful. This significant penalty highlights the stringent enforcement of U.S. sanctions and the legal repercussions of non-compliance.
The case serves as a critical reminder to venture capital funds and other financial entities to rigorously vet their transactions and ensure compliance with all applicable legal requirements.