Client Alert: Penalties Imposed on Atlanta Real Estate Investor Who Sold Property Owned by Sanctioned Russian Elite
On November 24, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) imposed a penalty of $4,677,552 on an individual in the real estate sector for knowingly renovating and selling property in Atlanta owned by a blocked individual. The investor, “U.S. Person-1,” not only violated OFAC’s Russia sanctions program, but failed to comply with an OFAC subpoena and violated the terms of an OFAC cease-and-desist letter.
Facts:
In March 2022, OFAC added a number of Russian elites to its Specially Designated Nationals and Blocked Persons List (“SDN List”) for providing support to the Russian government in connection with its ongoing invasion of Ukraine. Among those designated was a family member of a Russian oligarch, listed pursuant to Executive Order 14024 (“Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation”). The designation blocked all of the SDN’s U.S. property, including the Atlanta property, and prohibited any related transactions, including transfer, sale, or foreclosure.
Although OFAC had notified Fulton County of the property’s blocked status in September 2022, it still went into foreclosure around that time. A real estate investment company, King Holdings LLC, purchased the property at a public auction in January 2023, though it remained blocked by OFAC. “U.S. Person-1,” acting through and on behalf of King Holdings LLC, intended to renovate and sell the property when it was purchased. In April 2023, OFAC learned of the foreclosure and attempted transfer of the blocked property, and immediately contacted U.S. Person-1, advising that the property remained blocked and explaining that no dealings with the property were permitted absent OFAC authorization. Without seeking a license from OFAC, U.S. Person-1 proceeded to mortgage, renovate and sell the property. In December 2023, U.S. Person-1 executed a sales agreement with an unwitting third-party buyer, without informing the buyer or any other party of OFAC’s restrictions on the property.
On February 1, 2024, OFAC issued a cease-and-desist order and administrative subpoena to King Holdings, reiterating the applicable sanctions prohibitions and demanding immediate compliance. The subpoena required information on all dealings involving the property since January 2023, and U.S. Person-1 certified the accuracy of a response that disclosed renovation work but omitted the property’s listing and pending sale. In March 2024, U.S. Person-1, acting on behalf of King Holdings, closed the $1.4 million sale of the blocked property to the third-party buyer, violating OFAC’s regulations and the cease-and-desist order.
Penalty Calculations and Mitigating/Aggravating Factors
This conduct resulted in two violations by U.S. Person-1 of prohibitions in § 587.201(a) of the Russian Harmful Foreign Activities Sanctions Regulations, and one violation of § 501.602(a) of the Reporting, Procedures and Penalties Regulations.
These violations were deemed egregious under OFAC’s Enforcement Guidelines and U.S. Person-1 failed to voluntarily disclose them. As a result, OFAC imposed the statutory maximum of $4,677,552. Aggravating factors include U.S. Person-1’s willful conduct despite clear notice from OFAC of the violation, and the certification of an inaccurate and incomplete subpoena response. U.S. Person-1 also knowingly exposed third parties to economic harm and legal risk.
Key Takeaways
It is critical that all parties in real estate transactions (brokers, agents, insurers, attorneys, etc.) exercise due diligence, screen against the SDN List, and properly block and report property interests subject to sanctions. At the time of foreclosure, the SDN’s name appeared on the property title, and after the foreclosure the blocked person’s name would have come up in a search of previous owners. Failure to conduct these simple searches can result in civil penalties or criminal prosecution, even if no additional sanctions violation occurs, and proactive compliance is essential to avoid nullified transfers and other legal complications. Given the warnings sent by OFAC and the egregiousness of the conduct, this case could easily have resulted in a criminal prosecution with penalties of up to 20 years imprisonment.
The foregoing is for informational purposes only. It is not intended as legal advice and no attorney-client relationship is formed by the provision of this information.
Related: