On December 2, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control announced that it reached a $11.4 million settlement with Chicago-based private equity firm IPI Partners, LLC to settle its apparent civil liability for 51 violations of Russia sanctions, between approximately July 2018 and June 2022. On April 6, 2018, Russian oligarch Suleiman Kerimov was designated pursuant to Executive Order 13661 for being an official of the Russian government – an action that effectively blocked all of Kerimov’s property and interest in property in the United States and prohibited U.S. persons from directly or indirectly engaging in transactions with or funded by Kerimov. According to OFAC, IPI maintained investments made on behalf of Kerimov for four years after his designation in April 2018. According the OFAC, the settlement amount reflects OFAC determination that the apparent violations were non-egregious in nature and were not voluntarily self-disclosed. In reaching a settlement in this case, OFAC also considered certain aggravating factors, including that IPI’s actions were found to be contrary to U.S. foreign policy concerning Russia, and certain mitigating factors, including IPI’s ultimate cooperation with OFAC instigators following a “substantial delay” in cooperation while the company was represented by previously retained counsel.
OFAC reported that an unnamed senior member of IPI’s investment committee met with a representative of Kerimov’s in January 2017, and met with Kerimov’s nephew Nariman Gadzhiev in August 2017, to discuss possible investment opportunities for Kerimov and his family. Following these meetings, in September 2017, Definition Services, Inc., a company owned by a Delaware-based Kerimov family trust, signed a subscription agreement committing to invest $25 million in an IPI fund. In March 2018, approximately four months after the IPI senior member met with Kerimov in person, the same company signed a second subscription agreement committing to invest another $25 million in the same fund.
Following Kerimov’s designation in April 2018, IPI sought legal counsel regarding IPI’s obligation to block Definition’s account. According to OFAC, the outside counsel concluded that IPI was under no obligation to block the account because the company was not owned 50 percent or more by Kerimov. The outside counsel also reportedly advised IPI that it was not necessary to further inquire about the source of Definition’s funds. However, according to OFAC, IPI failed to inform the outside counsel about the IPI senior manager’s meetings with Kerimov and his representatives prior to receiving each of the investment commitments. Following Kerimov’s designation, IPI also used a third-party screening platform to screen for other individuals and entities named in OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List and found no positive matches. In addition, Definition provided IPI with written confirmation that it was not affiliated with Kerimov. At the suggestion of outside counsel, Definition also allegedly reaffirmed its subscription agreement with IPI in a document that contained an attestation in which Definition stated that it was not affiliated with any person on the SDN list or person subject to a OFAC-administered sanctions program – an attestation that, according to OFAC, IPI had reason to know was inaccurate in light of the IPI senior member’s meetings with Kerimov and his representatives.
According to OFAC, IPI handled a total of 51 transactions after Kerimov’s designation in violation of Ukraine-/Russia-Related Sanctions Regulations (URSR). The apparent violations included wire transfers made to or from Definition that corresponded with 18 capital calls, 20 distributions, and 13 management fee payments resulting from the two subscription agreements.
According to OFAC, this case demonstrates how important it is for private equity and investment firms to have a clear understanding of their sanctions risks and compliance obligations and have internal controls in place to prevent sanctions violations. OFAC also indicated that companies should be mindful of instances where equity ownership analysis should go beyond compliance with OFAC’s 50 Percent Rule. OFAC also indicated that this action highlights the importance of obtaining legal and compliance advice from outside counsel that is “based upon a full and complete understanding of all relevant facts and circumstances,” while reminding companies that withholding information from counsel does not absolve them from liability if sanctions are subsequently violated.