On December 2, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with IPI Partners, LLC (“IPI”), a Chicago-based private equity firm specializing in data centers, for apparent violations of the Ukraine-/Russia-Related Sanctions Regulations. IPI agreed to pay $11,485,352 to resolve 51 apparent violations stemming from its dealings in the property or interests in property of Suleiman Kerimov, a designated Russian oligarch.
IPI Solicits and Maintains Investments Linked to Sanctioned Russian Oligarch Suleiman Kerimov
IPI manages billions in capital and focuses on acquiring, developing, and operating data centers. In 2017 and 2018, prior to Kerimov’s designation, IPI solicited and received $50 million in investments from entities known to be associated with Kerimov. Specifically, IPI met directly with a senior banker who identified themselves as a representative for Kerimov, as well as with Nariman Gadzhiev, who was Kerimov’s nephew and primary representative in all of Kerimov’s investments. IPI ultimately entered into a transaction with Definition Services, Inc. (“Definition”), a British Virgin Islands entity ultimately owned by the Heritage Trust—a Delaware-based trust associated with Kerimov’s family.
OFAC subsequently designated Kerimov on April 6, 2018, under Executive Order 13661 for being an official of the Government of the Russian Federation. IPI identified that this relationship could now be problematic and solicited advice from external counsel. That counsel’s review focused primarily on materials from Definition and the Heritage Trust, which noted that while the initial source of funds stemmed from Kerimov, he otherwise did not have any other role with the company or trust. Further, the materials indicated that Kerimov did not maintain 50-percent ownership in either entity. Based on this review, counsel determined that IPI could continue its relationship. As such, IPI ultimately continued to maintain and manage these investments for four years, from July 2018 to June 2022. This involved 18 capital calls, 20 profit distributions, and 13 management fee payments to Definition, totaling 51 transactions.
That review by outside counsel ultimately lacked some key information that IPI was certainly aware of. IPI knew that the senior banker was Kerimov’s “gatekeeper” and that Gadzhiev was Kerimov’s nephew and representative on most investment matters. Definition also provided an inaccurate attestation, ultimately asserting that Kerimov would not receive any benefits, whether directly or indirectly, from Definition’s operations. Definition made these assertions, despite the fact that the Heritage Trust had received a Notification of Blocked Property from OFAC. OFAC had conducted an investigation and ultimately determined that Heritage Trust was formed for the purpose of holding Kerimov’s U.S.-based assets.
On the one hand, it appears that this external counsel did not have all material facts that were known to IPI. This highlights the importance of sharing all relevant facts and information with counsel in order to receive proper guidance. Many sanctions issues are highly fact specific, as sanctions law is not always black and white. Furthermore, counsel’s review failed to outline the potential risks of dealing “indirectly” with sanctioned parties. Sanctions violations can occur when transactions involve property interests of a sanctioned party or otherwise provide indirect benefits. OFAC has even provided guidance and warnings that highlight the various evasion tactics employed by Russian oligarchs, including the use of corporate and legal vehicles such as trusts.
It’s worth noting that the enforcement release does not include any discussion regarding “control.” Even where direct ownership interests do not exist, sanctions violations can occur when dealing with entities that a sanctioned party effectively controls. For the sake of discussion, that “control” element would be an important detail to investigate in a situation like this. It is especially common for Russian oligarchs to transfer ownership of their assets, whether trusts, businesses, or real estate, to friends or family (even sometimes mistresses!) in an attempt to circumvent sanctions. OFAC did not address this issue, so it’s very possible control did not exist; however, it is something that I would have absolutely raised with a client that came to me with a similar fact pattern.
OFAC’s Findings
OFAC determined that these actions constituted apparent violations of § 589.201 of the Ukraine-/Russia-Related Sanctions Regulations, which prohibits U.S. persons from dealing in the property or interests in property of blocked persons. The statutory maximum civil monetary penalty was $17,907,978, but OFAC calculated a base penalty of $14,356,690, classifying the violations as non-egregious and not voluntarily self-disclosed.
In assessing the penalty, OFAC considered various aggravating and mitigating factors under its Economic Sanctions Enforcement Guidelines.
Aggravating Factors:
- IPI employees, including senior executives, knew or had reason to know that Kerimov was the source of funds and made investment decisions post-designation.
- The conduct harmed U.S. foreign policy by facilitating Kerimov’s access to the U.S. financial system, allowing him to grow his wealth after being sanctioned.
- IPI is a sophisticated private equity firm managing billions in assets, which heightened expectations for robust compliance.
Mitigating Factors:
- IPI had no prior OFAC penalties or findings of violations in the five years preceding the earliest apparent violation.
- While initial cooperation with OFAC was unsatisfactory, IPI later improved by retaining new counsel, waiving privilege, and providing detailed records, though the delay limited the credit received.
Lessons Learned from IPI’s OFAC Enforcement Action
This enforcement action underscores the risks in the private equity and capital markets sectors, where complex structures can obscure sanctioned individuals’ interests. Key takeaways include:
- Broad Interpretation of “Property Interests”: OFAC looks beyond formal ownership thresholds like the 50% rule. If there’s reason to believe a blocked person has an interest—through proxies, family members, or control—transactions may still violate sanctions. Firms must conduct exhaustive due diligence on opaque structures.
- Red Flags Demand Action: Awareness of a sanctioned individual’s involvement, even indirectly, raises risks significantly. Violations can occur even absent specific ownership thresholds or direct involvement.
- Ensure Counsel has All Pertinent Information: Relying on incomplete legal advice or inaccurate attestations won’t shield from liability; ensure counsel has all facts. Sanctions compliance is often incredibly fact-specific.
- Sophistication Increases Scrutiny: Large firms like IPI face higher penalties for failures, as OFAC expects advanced compliance programs. Integrate sanctions screening into investment processes, including ongoing monitoring post-investment.
By adhering to these principles, firms can avoid the pitfalls that led to IPI’s substantial penalty and strengthen their sanctions compliance posture.