1016-00009 · Dunmore Energy Holdings · Subpoena Response & DOJ Correspondence

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PRIVILEGED & CONFIDENTIAL SUBJECT TO FEDERAL RULE OF CRIMINAL PROCEDURE 6(e)

CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006

Telephone: (202) 551-7400 Facsimile: (202) 551-7401 www.calderwoodharkness.com

April 1, 2024

VIA HAND DELIVERY AND ELECTRONIC MAIL

Meredith Calloway, Esq. Assistant United States Attorney National Security Division Counterintelligence and Export Control Section U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, DC 20530

Re: Dunmore Energy Holdings Ltd. — Request for Declination of Prosecution Grand Jury Subpoena GJ No. 22-418 (U.S. District Court for the District of Columbia, Grand Jury 22-2) Calderwood & Harkness Matter No. 1016-00009

Dear Ms. Calloway:

On behalf of our client, Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH"), a Cayman Islands–domiciled exempted company with limited liability and operational headquarters at 1200 McKinney Street, Suite 3400, Houston, Texas 77010, Calderwood & Harkness LLP respectfully requests that the U.S. Department of Justice ("DOJ" or the "Department") issue a formal declination of prosecution in the above-referenced matter. This letter addresses the investigation opened by the Department on or about April 19, 2022, and the grand jury subpoena bearing reference GJ No. 22-418, issued by the U.S. District Court for the District of Columbia sitting as Grand Jury 22-2 on that same date.

Calderwood & Harkness has served as defense counsel to Dunmore in this matter since April 14, 2022 — five days before the Department issued the grand jury subpoena and at a time when the company was already independently mobilizing its internal investigation. Over the course of the past nearly two years, Dunmore has demonstrated each of the hallmarks that the DOJ Corporate Enforcement Policy (as updated in September 2022) identifies as warranting a declination of prosecution: voluntary self-disclosure, full and proactive cooperation with the government, timely and thorough remediation of the underlying compliance failures, and voluntary disgorgement of all profits attributable to the misconduct at issue. Moreover, the Office of Foreign Assets Control ("OFAC") has concluded its own parallel review and, on April 15, 2024, issued a Cautionary Letter — the most favorable enforcement outcome available in matters involving apparent violations — without imposing any civil monetary penalty.

This letter sets forth in detail the factual and legal bases supporting our request. We respectfully submit that the totality of Dunmore's conduct since the discovery of this matter compels the conclusion that a declination is both appropriate and consistent with the Department's stated enforcement priorities and policies.

I. EXECUTIVE SUMMARY OF DUNMORE'S CONDUCT AND THE INVESTIGATION

A. Background on Dunmore Energy Holdings Ltd.

Dunmore Energy Holdings Ltd. is an exempted company incorporated with limited liability under the laws of the Cayman Islands, bearing Registration No. MC-334821. While domiciled in the Cayman Islands for corporate organizational purposes, Dunmore maintains its operational headquarters in Houston, Texas, where the company's senior management team, including its General Counsel and Chief Compliance Officer, are based.

Dunmore is engaged in oil and gas exploration, production, and trading, as well as renewable energy development. For the fiscal year ended December 31, 2021, Dunmore reported consolidated revenues of approximately $4.87 billion. The company employs approximately 3,200 individuals across its global operations, including personnel in the United States, the United Arab Emirates, Germany, Nigeria, the United Kingdom, and several other jurisdictions.

Dunmore conducts its operations through several key subsidiaries, including:

• Dunmore Trading International Ltd. ("DTI") — Dubai, United Arab Emirates (Dubai International Financial Centre License No. CL-4827). DTI is Dunmore's principal commodities trading arm and is the entity through which the transactions at issue in this investigation were conducted.

• Dunmore upstream Americas LLC — Houston, Texas (organized under the laws of the State of Delaware; EIN 84-2937561). This subsidiary manages Dunmore's upstream exploration and production assets in the Western Hemisphere.

• Dunmore Renewables GmbH — Hamburg, Germany. This subsidiary oversees Dunmore's growing portfolio of renewable energy development projects across the European Union.

• Dunmore Exploration West Africa Ltd. — Lagos, Nigeria. This subsidiary manages Dunmore's upstream exploration and production operations in West Africa.

Dunmore's equity is privately held. The majority shareholder is Greystone Capital Partners Fund IV, L.P., which holds approximately 62.5% of the company's outstanding equity. Dunmore's management team holds approximately 22.5%, and Thornbury Infrastructure Fund II, L.P. holds the remaining approximately 15%.

B. The Conduct at Issue

Between approximately March 2020 and April 2022, Dunmore's Dubai-based subsidiary, DTI, engaged in a series of commodities trading transactions and related commercial activities that are the subject of the Department's investigation. The conduct was principally directed by Derek Hargrave, who served as President of DTI during the relevant period, and Natasha Sorokin, who served as a Senior Trader on DTI's crude oil trading desk. Based on the findings of Dunmore's comprehensive internal investigation, the relevant conduct falls into three distinct but interrelated categories.

Volkhov Industrial Group JSC ("Volkhov"), a Russian energy conglomerate headquartered in Moscow, was designated by OFAC under Directive 2 of the sectoral sanctions program established pursuant to Executive Order 13662 on November 15, 2019. Subsequently, on April 6, 2022, Volkhov was added to the Specially Designated Nationals and blocked Persons List ("SDN List") under Executive Order 14024. Throughout the period at issue, Volkhov was subject to escalating sanctions restrictions that prohibited various categories of dealings by U.S. persons and, in certain respects, by non-U.S. persons where a sufficient U.S. nexus existed.

The three categories of conduct identified through the internal investigation are as follows:

1. Crude Oil Swap Transactions. Between March 2020 and March 2022, DTI executed fourteen (14) crude oil swap transactions with aggregate notional values totaling approximately $218.7 million. These transactions were executed with two Dubai-based counterparties: Petronova Trading FZE and Zenith Petroleum DMCC. Forensic analysis conducted by Ridgeline Advisory Group LLC, retained by Calderwood & Harkness for this purpose, determined that nine (9) of the fourteen (14) transactions — representing approximately $156.3 million in aggregate notional value — involved entities with undisclosed beneficial ownership connections to Volkhov. These nine transactions constituted potential violations of OFAC Directive 2 under Executive Order 13662, which imposed restrictions on certain dealings with designated persons in the Russian energy sector. Messrs. Hargrave and Sorokin were the primary decision-makers for these transactions, and documentary evidence gathered during the investigation indicates that both individuals were aware, or should have been aware, of the Volkhov-connected ownership structures underlying Petronova Trading FZE and Zenith Petroleum DMCC.

2. Oilfield Equipment Exports. During the same period, DTI facilitated the export of approximately $12.4 million in oilfield drilling equipment and components classified under Export Control Classification Numbers ("ECCNs") 2B350 and 2B999 to end users located in Russia. These shipments were routed through Caspian Logistik GmbH, a Hamburg-based freight forwarding company. The internal investigation identified evidence suggesting that false end-user certifications may have been provided in connection with certain of these shipments to conceal the ultimate Russian destination of the equipment. These exports potentially violated Section 746.5 of the Export Administration Regulations ("EAR"), 15 C.F.R. § 746.5, as well as applicable OFAC prohibitions. The exports were arranged by Hargrave and processed through DTI's commercial operations team with the knowledge and involvement of Sorokin.

3. Payment Structuring. Between March 2020 and March 2022, approximately $34.2 million was routed through 127 intermediary transactions at Crescent Commercial Bank PJSC in Dubai. The forensic accounting analysis revealed that these transactions were structured in a manner designed to obscure the beneficial ownership interest of Volkhov in the funds flowing through the trading relationships described above. The layering of payments through multiple intermediary accounts at Crescent Commercial Bank served to make it more difficult for compliance screening systems to detect the connection between DTI's counterparties and Volkhov. The structuring pattern was consistent across the relevant period and was orchestrated primarily by Sorokin, with Hargrave's knowledge and approval.

C. How the Matter Came to the DOJ's Attention

The sequence of events that brought this matter to light is directly relevant to the Department's assessment of Dunmore's conduct and, in particular, its entitlement to credit for voluntary self-disclosure.

On April 6, 2022, OFAC added Volkhov Industrial Group JSC to the SDN List pursuant to Executive Order 14024, significantly escalating the sanctions restrictions applicable to Volkhov beyond the Directive 2 sectoral sanctions that had been in effect since November 2019.

On April 11, 2022 — just five days after the SDN designation — Dunmore's then-Chief Compliance Officer, Gerald Fisk, conducted a routine OFAC screening refresh of the company's counterparty database in response to the new SDN designations. During this screening refresh, Mr. Fisk identified potential historical exposure through Petronova Trading FZE, one of DTI's Dubai-based trading counterparties. Mr. Fisk immediately notified Dunmore's General Counsel, Marcus Wellbourne, of the potential issue.

On April 14, 2022, Dunmore retained Calderwood & Harkness LLP to conduct a comprehensive internal investigation and to serve as defense counsel in connection with any resulting government inquiries. This retention occurred three days after the internal discovery and five days before any government contact.

On April 19, 2022, the Department of Justice issued grand jury subpoena GJ No. 22-418 through the U.S. District Court for the District of Columbia, Grand Jury 22-2. By that date, Dunmore had already retained outside counsel and commenced the initial phases of its internal investigation.

The critical point for purposes of the Corporate Enforcement Policy analysis is that Dunmore's internal discovery and engagement of counsel preceded the government's subpoena. While the temporal proximity between the two events is close, the record is clear that Dunmore acted independently and proactively upon identifying the potential exposure, and did not wait for government compulsion before taking action.

II. APPLICATION OF THE DOJ CORPORATE ENFORCEMENT POLICY

The Department's Corporate Enforcement Policy, as updated in September 2022, establishes a clear framework for evaluating corporate conduct in the wake of potential criminal violations. The Policy provides that a company may receive a declination of prosecution where it has: (1) voluntarily self-disclosed the misconduct to the Department; (2) fully cooperated with the Department's investigation; (3) timely and appropriately remediated the underlying compliance failures; and (4) agreed to disgorge any profits resulting from the misconduct.

The DOJ Evaluation of Corporate Compliance Programs, as updated in March 2023, provides additional guidance regarding the factors the Department considers in assessing the adequacy and effectiveness of a company's remediation efforts.

As set forth in detail below, Dunmore's conduct over the past two years satisfies — indeed, exceeds — each of the criteria identified in the Corporate Enforcement Policy as warranting a declination. We address each pillar in turn: (A) voluntary self-disclosure and proactive engagement; (B) full and proactive cooperation; and (C) timely and appropriate remediation. We separately address Dunmore's voluntary disgorgement of profits, which constitutes the fourth element of the Policy's framework.

III. VOLUNTARY SELF-DISCLOSURE AND PROACTIVE ENGAGEMENT

A. Internal discovery and Immediate Retention of Counsel

As described above, Dunmore's path to disclosure began within days of the catalyst event. When OFAC designated Volkhov to the SDN List on April 6, 2022, Dunmore's then-CCO Gerald Fisk conducted a routine screening refresh and, on April 11, 2022, identified potential historical exposure through Petronova Trading FZE. Mr. Fisk immediately escalated the issue to General Counsel Marcus Wellbourne, triggering an emergency review by senior management.

Within three days of that internal identification — on April 14, 2022 — Dunmore retained Calderwood & Harkness LLP and authorized the firm to commence a comprehensive internal investigation. Importantly, this action was taken before the Department issued grand jury subpoena GJ No. 22-418 on April 19, 2022. Dunmore did not wait for the DOJ subpoena to begin its investigation or to engage qualified outside counsel. The company was already mobilizing its response when the subpoena arrived, and the subpoena served only to confirm the seriousness of the inquiry — not to initiate Dunmore's own investigative efforts.

The Department has recognized in prior declination letters and policy guidance that early and independent action by a company upon discovering potential violations is a significant factor favoring a declination. Dunmore's conduct exemplifies precisely the type of prompt, good-faith response that the Corporate Enforcement Policy is designed to incentivize.

B. OFAC Voluntary Self-Disclosure

On June 1, 2023, following the completion of the principal phases of the internal investigation and the forensic accounting analysis, Dunmore filed a comprehensive voluntary self-disclosure ("VSD") with OFAC's Compliance & Enforcement Division. The VSD disclosed the apparent violations of OFAC-administered sanctions programs arising from the nine crude oil swap transactions involving Volkhov-connected entities, the oilfield equipment exports, and the structured payment activity through Crescent Commercial Bank PJSC.

The VSD was a detailed submission that provided OFAC with a full accounting of the relevant transactions, the internal investigation's findings regarding the involvement of Volkhov-connected entities, and a comprehensive description of the remedial measures Dunmore had already implemented and those that were in progress.

On April 15, 2024, OFAC concluded its review and issued a Cautionary Letter bearing reference number OCA-2024-11587. A Cautionary Letter represents the most favorable enforcement outcome available to OFAC in matters involving apparent violations. Critically, OFAC did not impose any civil monetary penalty. In reaching this disposition, OFAC cited Dunmore's voluntary self-disclosure, its substantial cooperation with both OFAC and the DOJ, its comprehensive remediation efforts, and its voluntary disgorgement of profits as mitigating factors that weighed against the imposition of a penalty.

The OFAC outcome is significant for several reasons. First, it confirms that the expert regulatory agency most directly responsible for administering the sanctions programs at issue has concluded that Dunmore's response to the underlying misconduct was sufficient to warrant the most favorable available outcome. Second, it underscores the genuineness and completeness of Dunmore's self-reporting, as OFAC was able to reach its determination based substantially on the information Dunmore itself provided. Third, it demonstrates a consistent pattern of favorable regulatory disposition that supports a parallel declination by the Department.

A copy of the OFAC Cautionary Letter is enclosed as Enclosure 1.

C. Proactive Engagement with the Department of Justice

From the earliest stages of this matter, Dunmore has engaged proactively and substantively with the Department, consistently providing information and analysis beyond what was required by the grand jury subpoena.

• July 15, 2022 — Initial Proffer. Calderwood & Harkness provided an initial proffer to AUSA Calloway and Trial Attorney Kovacs, presenting the preliminary findings of the internal investigation. This proffer included the initial identification of the fourteen crude oil swap transactions with Petronova Trading FZE and Zenith Petroleum DMCC, as well as preliminary information regarding the potential Volkhov connection. The proffer was provided voluntarily and before the internal investigation had been completed, reflecting Dunmore's commitment to real-time transparency with the Department.

• November 20, 2022 — Supplemental Proffer. Calderwood & Harkness provided a supplemental proffer incorporating the forensic accounting findings of Ridgeline Advisory Group LLC. This proffer refined the analysis of the fourteen crude oil swap transactions, identified the nine transactions with the strongest evidentiary connection to Volkhov-linked entities, and provided detailed financial flows and counterparty analysis.

• March 1, 2023 — White Paper on Corporate Enforcement Policy. Calderwood & Harkness submitted a white paper to the Department setting forth the legal and factual basis for the application of the Corporate Enforcement Policy to Dunmore's matter. This submission was intended to frame the ongoing dialogue and to ensure that the Department had a clear understanding of the company's position regarding its eligibility for a declination.

• May 15, 2023 — Comprehensive Internal Investigation Report. Calderwood & Harkness submitted a comprehensive 176-page internal investigation report to the Department. This report represented the culmination of more than a year of investigative work and included detailed findings regarding each of the three categories of conduct at issue, the roles and responsibilities of the individuals involved, the failures in compliance controls that permitted the conduct to occur, and the remedial measures undertaken and planned. The report was accompanied by supporting exhibits and appendices, including key transactional documents, organizational charts, and financial analyses.

• January 15, 2024 — Supplemental Remediation Report. Calderwood & Harkness submitted a detailed supplemental remediation report documenting the full implementation of the Enhanced Sanctions & Export Controls Compliance Program, the operational effectiveness of the new controls, and the results of initial testing and monitoring activities. This report confirmed that the remediation efforts described in prior submissions had been brought to completion and were functioning as designed.

At every stage of this process, Dunmore provided information to the Department that went beyond the scope of the grand jury subpoena. The company's approach was not merely responsive but affirmatively proactive, reflecting a genuine commitment to transparency and to assisting the Department in understanding the full scope and nature of the conduct at issue.

IV. FULL AND PROACTIVE COOPERATION

A. Scope of the Internal Investigation

Calderwood & Harkness conducted a comprehensive internal investigation on behalf of Dunmore spanning from April 2022 through early 2024. The investigation was designed to identify the full scope of the potentially problematic transactions, to determine the individuals responsible for the conduct, to assess the compliance failures that allowed the conduct to occur, and to develop a factual record sufficient to support both the company's voluntary disclosures to the government and its remediation efforts.

To ensure the rigor and credibility of the investigation, Calderwood & Harkness retained two specialized consulting firms to assist with critical workstreams:

Forensic Accounting. Calderwood & Harkness retained Ridgeline Advisory Group LLC, under Engagement No. RAG-2022-0319, to conduct a comprehensive forensic accounting analysis of the transactions at issue. The engagement was led by Dr. Margaret Liu, CPA, CFE, a nationally recognized expert in financial forensics with extensive experience in sanctions-related matters. Ridgeline's team analyzed transactional data across multiple financial institutions, performed beneficial ownership tracing through complex multi-jurisdictional corporate structures, and prepared detailed financial flow analyses documenting the movement of funds through intermediary accounts. Ridgeline delivered its final forensic accounting report on April 1, 2023. The findings of that report formed the basis for the supplemental proffer provided to the Department on November 20, 2022, and for the financial analysis contained in the comprehensive investigation report submitted on May 15, 2023.

E-discovery. Calderwood & Harkness retained Nexagen Analytics Inc., under Project No. NX-DEH-2204, to manage the collection, processing, and review of electronically stored information relevant to the investigation. The project was managed by Brian Cavanaugh, a senior project manager with significant experience in cross-border e-discovery matters. Nexagen collected a total of 2,347,812 documents from custodians and data sources across six jurisdictions: the Cayman Islands, the United Arab Emirates, the United States, Germany, Nigeria, and the United Kingdom. Following processing, de-duplication, and technology-assisted review ("TAR") using predictive coding methodologies validated through statistical sampling, 438,916 documents were deemed responsive to the investigation. The collection and initial processing of documents was completed by October 15, 2022, enabling the timely commencement of document productions to the Department.

The scope and depth of this internal investigation reflect Dunmore's commitment to understanding the full dimensions of the conduct at issue and to providing the Department with a complete and accurate factual record.

B. Witness Interviews

Calderwood & Harkness conducted interviews of forty-seven (47) current and former Dunmore employees over the course of the investigation. The interviews were conducted in three rounds, designed to progressively deepen the investigative team's understanding of the facts and to address issues identified through document review and forensic analysis:

Round 1 (May 18 – June 30, 2022): Twenty-two (22) interviews were conducted in Houston, Dubai, and London. These initial interviews focused on identifying the key fact witnesses, understanding the organizational structure and decision-making processes of DTI's trading desk, and establishing the basic factual framework for the investigation.

Round 2 (August 5 – September 30, 2022): Fifteen (15) interviews were conducted, focusing on specific transactional details identified through the initial document review and the early forensic accounting findings. These interviews included deeper dives with witnesses who had direct knowledge of the counterparty relationships with Petronova Trading FZE and Zenith Petroleum DMCC.

Round 3 (February 15 – March 15, 2023): Ten (10) interviews were conducted, including re-interviews of certain key witnesses in light of new information developed through the forensic accounting analysis and the complete document review, as well as interviews of newly identified witnesses whose relevance became apparent as the investigation progressed.

Of particular significance to the Department's assessment of Dunmore's cooperation is the role of Omar Al-Rashidi, who served as Head of Middle East Operations for DTI during the relevant period. Mr. Al-Rashidi emerged as a key cooperating witness during the internal investigation, providing substantial and detailed information regarding the operations of DTI's trading desk, the relationships with Petronova Trading FZE and Zenith Petroleum DMCC, and the roles played by Hargrave and Sorokin in directing the transactions at issue.

At Dunmore's initiative, Mr. Al-Rashidi was made available for a follow-up interview with the Department on July 12, 2023. That interview was conducted at Calderwood & Harkness's Washington, D.C. office, with AUSA Calloway and Trial Attorney Kovacs present. Mr. Al-Rashidi answered the Department's questions fully and without reservation, and Dunmore did not seek to limit the scope of the Department's inquiry or to condition Mr. Al-Rashidi's participation in any respect.

C. Document Productions

Dunmore produced a total of 438,916 responsive documents to the Department over the course of two principal productions, pursuant to a rolling production protocol agreed upon with the Department on July 10, 2022:

First Production (November 1, 2022): 287,412 documents, bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412. This production included the bulk of the transactional documents, trading records, email communications, and financial records identified through the document collection and review process.

Second Production (January 30, 2023): 151,504 documents, bearing Bates numbers DEH-DOJ-287413 through DEH-DOJ-438916. This production included additional documents identified through subsequent collection sweeps, documents from custodians interviewed in Round 2 of the witness interviews, and documents responsive to supplemental requests from the Department.

All productions were completed on time and in accordance with the rolling production protocol. The documents were produced in industry-standard load file format, with metadata preserved, and were accompanied by detailed production indices to facilitate the Department's review.

Only 12,847 documents were withheld from production on the basis of attorney-client privilege or attorney work product protection. Detailed privilege logs were provided with each production, and Dunmore responded promptly to any challenges or questions from the Department regarding individual privilege designations. The privilege withholding rate — approximately 2.8% of responsive documents — reflects the narrow and good-faith manner in which Dunmore asserted its privilege rights throughout this process.

D. Non-Interference and Transparency

Dunmore has not sought to impede the Department's investigation in any respect. To the contrary, the company has taken affirmative steps to preserve evidence, facilitate witness access, and ensure that the investigation could proceed without obstruction.

Comprehensive litigation hold notices were issued to all relevant custodians globally on April 20, 2022, the day after the grand jury subpoena was received, and a reminder notice was circulated on July 15, 2022. These notices covered all categories of potentially responsive documents and data, including electronic communications, hard-copy files, and data stored on personal devices.

Dunmore made key witnesses available for Department interviews without seeking to impose limitations on the scope or nature of the questioning. As noted above, the company affirmatively facilitated the Department's interview of Mr. Al-Rashidi and did not condition his participation on any terms.

Where the interests of individual employees diverged from those of the company, Dunmore respected those employees' rights to retain separate counsel and did not seek to interfere with their ability to do so. The following individuals retained separate counsel during the course of the investigation:

• Gerald Fisk (former Chief Compliance Officer; departed Dunmore on June 10, 2022): Represented by Catherine Blackthorn, Esq., Blackthorn & Associates LLP, Houston, Texas.

• Derek Hargrave (former President, DTI; placed on administrative leave on July 1, 2022; formally separated from the company on October 1, 2022): Represented by James Overstreet, Esq., Overstreet & McClain PLLC, Dallas, Texas.

• Natasha Sorokin (former Senior Trader, DTI; placed on administrative leave on May 16, 2022; formally separated from the company on September 15, 2022): Represented by Philip Keane, Esq., Wexford Keane LLP, Washington, D.C.

Dunmore advanced defense costs for these three individuals totaling approximately $3.4 million, pursuant to its indemnification obligations under applicable corporate governance documents and employment agreements. Critically, the company did not condition the advancement of defense costs on cooperation with any particular narrative or on the adoption of any particular position vis-à-vis the company or the Department. Each individual was free to provide information to the Department independently and to assert or waive his or her own rights as he or she saw fit.

The company's approach to individual interests underscores its commitment to a fair and transparent process. Dunmore has not sought to shield culpable individuals from accountability, nor has it attempted to coordinate or constrain the positions taken by separately represented former employees.

V. TIMELY AND APPROPRIATE REMEDIATION

A. Personnel Actions

Dunmore acted swiftly and decisively to remove from the organization the individuals primarily responsible for the conduct under investigation.

• Natasha Sorokin was placed on administrative leave on May 16, 2022, within approximately five weeks of the commencement of the internal investigation, as the early findings implicated her direct involvement in the crude oil swap transactions and payment structuring. She was formally separated from the company on September 15, 2022, following the conclusion of Round 1 of the witness interviews, which confirmed her central role in the misconduct.

• Derek Hargrave was placed on administrative leave on July 1, 2022, as the investigation developed additional evidence regarding his supervisory role and direct knowledge of the Volkhov-connected counterparty relationships. He was formally separated from the company on October 1, 2022.

• Gerald Fisk, the then-Chief Compliance Officer, departed Dunmore on June 10, 2022. While Mr. Fisk was the individual who initially identified the potential exposure during the OFAC screening refresh on April 11, 2022 — and deserves credit for that identification — the internal investigation subsequently revealed significant supervisory failures in the compliance function during his tenure, including inadequate counterparty due diligence procedures, insufficient beneficial ownership verification protocols, and a failure to implement effective escalation mechanisms within the compliance department. Mr. Fisk's departure was made under internal pressure in light of these findings.

To fill the critical leadership vacancy in the compliance function, Dunmore appointed Priya Nayar as the company's new Chief Compliance Officer, effective August 1, 2022. Ms. Nayar is a highly experienced sanctions compliance professional who previously served as Vice President of Global Sanctions Compliance at a major international financial institution, where she oversaw a team of more than sixty compliance professionals and was responsible for the institution's compliance with OFAC, EU, and UN sanctions programs. Ms. Nayar holds a J.D. from Georgetown University Law Center and is a Certified Anti-Money Laundering Specialist (CAMS). Her appointment reflected Dunmore's commitment to installing senior compliance leadership with the expertise and authority necessary to drive meaningful reform.

B. Engagement of Compliance Consultant

Recognizing that the remediation effort required external expertise and an independent perspective, Dunmore retained Pemberton Investors Solutions LLC, a Washington, D.C.–based consulting firm specializing in sanctions, export controls, and anti-money laundering compliance. The engagement commenced on December 15, 2022, and was led by Dr. Anton Bremer, a former senior official in OFAC's Compliance & Enforcement Division with more than twenty years of experience in sanctions compliance program design and implementation.

Marlowe Asset Management was tasked with conducting a comprehensive assessment of Dunmore's existing compliance infrastructure, identifying gaps and deficiencies, and designing an enhanced compliance program tailored to the company's risk profile and operational complexity. Pemberton Investors an extensive review that included on-site assessments at Dunmore's offices in Houston, Dubai, and Hamburg; interviews with compliance, legal, trading, and operations personnel; analysis of existing policies, procedures, and internal controls; and benchmarking against industry best practices and regulatory expectations.

Marlowe Asset Management delivered its remediation report and enhanced compliance program framework on September 15, 2023. The report contained detailed findings regarding the deficiencies in Dunmore's prior compliance program and set forth a comprehensive blueprint for the Enhanced Sanctions & Export Controls Compliance Program that Dunmore subsequently adopted.

C. Enhanced Sanctions & Export Controls Compliance Program

On October 1, 2023, the Dunmore Board of Directors formally adopted the Enhanced Sanctions & Export Controls Compliance Program (the "Enhanced Program"), based on the framework developed by Pemberton Investors Solutions and refined through collaboration with Dunmore's new Chief Compliance Officer, Priya Nayar, and Calderwood & Harkness.

The Enhanced Program includes the following key elements, each designed to address specific deficiencies identified through the internal investigation and the Marlowe Asset Management assessment:

1. Strengthened OFAC Screening Protocols. Dunmore has implemented a real-time, automated screening system that continuously screens all counterparties, transaction parties, and intermediaries against the OFAC SDN List, the Sectoral Sanctions Identifications List, the Consolidated Screening List maintained by the U.S. Department of Commerce Bureau of Industry and Security, the EU Consolidated List of Sanctions, and the UN Security Council Consolidated List. The system generates automatic alerts for potential matches, which are reviewed by trained compliance analysts and escalated through a defined protocol. The prior screening methodology — which relied on periodic batch screening — has been permanently retired.

2. Enhanced Counterparty and Third-Party Due Diligence. All new counterparties, and all existing counterparties on a rolling basis, are now subject to enhanced due diligence procedures that include verification of beneficial ownership through independent registry searches, adverse media screening, assessment of jurisdictional risk, and evaluation of the counterparty's own compliance program. No trading relationship may be onboarded or renewed without sign-off by the Chief Compliance Officer or her designee. For counterparties in elevated-risk jurisdictions — including the UAE, Turkey, and certain Central Asian jurisdictions — the due diligence requirements are further heightened.

3. Revised Export Control Classification Procedures. Dunmore has implemented mandatory ECCN classification review procedures for all transactions involving oilfield equipment and components. All such transactions are now subject to review by a dedicated export controls analyst within the compliance department, who evaluates the classification of the goods, the applicable licensing requirements, the identity and location of the end user, and the sufficiency of end-user certifications. Transactions involving items classified under controlled ECCNs require additional sign-off by the Chief Compliance Officer before execution.

4. Mandatory Escalation Mechanisms and Board-Level Reporting. The Enhanced Program establishes clear and mandatory escalation pathways for compliance concerns. Any employee who identifies a potential sanctions or export control issue is required to report it through a dedicated compliance hotline or directly to the compliance department. The Chief Compliance Officer reports directly to the Audit Committee of the Board of Directors on a quarterly basis and has direct access to the full Board at any time. Compliance metrics, including screening hit rates, due diligence completion rates, training completion rates, and the results of internal audits, are reported to the Board as part of these quarterly presentations.

5. Comprehensive Employee Training. All Dunmore employees globally — not only those in trading and compliance functions — are required to complete annual training on sanctions and export control compliance. Employees in elevated-risk functions, including trading, operations, finance, and logistics, are required to complete additional specialized training modules. The training program was developed in consultation with Pemberton Investors Solutions and is delivered through a combination of live sessions and e-learning modules. Training completion is tracked and reported to the Board as part of the quarterly compliance metrics.

6. Ongoing Monitoring, Testing, and Annual Audits. The Enhanced Program includes a robust ongoing monitoring and testing regime. The compliance department conducts quarterly transaction sampling and review, semi-annual testing of screening system effectiveness, and annual comprehensive compliance program audits. The results of these monitoring and testing activities are documented and reported to the Audit Committee of the Board. Additionally, Dunmore has committed to retaining an independent third party to conduct an annual assessment of the Enhanced Program's effectiveness for a minimum period of three years.

The Enhanced Program has been designed and implemented with close attention to the factors identified in the DOJ Evaluation of Corporate Compliance Programs (March 2023 update), including the adequacy of the company's risk assessment processes, the sufficiency of policies and procedures, the effectiveness of training and communications, the independence and resources of the compliance function, the existence of robust internal reporting mechanisms, and the commitment of senior management and the Board of Directors to compliance.

D. Supplemental Remediation Report

On January 15, 2024, Calderwood & Harkness submitted a detailed supplemental remediation report to the Department documenting the full implementation of the Enhanced Program. The report confirmed that all elements of the Enhanced Program described above were operational and functioning as designed. Specifically, the report documented the completion of the initial round of employee training (with a 98.7% completion rate globally), the successful implementation of the real-time screening system, the completion of enhanced due diligence reviews for all active counterparties, and the results of the first quarterly transaction sampling exercise, which identified no compliance exceptions.

A copy of the Supplemental Remediation Report is enclosed as Enclosure 2.

VI. VOLUNTARY DISGORGEMENT

On November 30, 2023, Dunmore made a voluntary disgorgement payment of $8,750,000 to the United States Treasury. This payment represents the estimated net profits derived from the nine (9) crude oil swap transactions that the internal investigation determined involved Volkhov-connected entities.

The disgorgement amount was calculated as follows: the nine tainted transactions had an aggregate notional value of approximately $156.3 million; forensic analysis by Ridgeline Advisory Group LLC determined that DTI's estimated net margin on these transactions — after accounting for direct transaction costs, hedging costs, and allocated overhead — was approximately 5.6%; the resulting estimated net profit of approximately $8.75 million was adopted as the disgorgement amount. The calculation methodology and supporting workpapers were shared with the Department in advance of the payment.

The disgorgement was entirely voluntary. It was made in advance of any demand by the Department or any other government agency, and it was not made pursuant to any settlement agreement, plea agreement, or other negotiated resolution. Rather, the payment was made as a unilateral demonstration of Dunmore's good faith and its commitment to accountability. By voluntarily surrendering the economic benefit derived from the tainted transactions, Dunmore sought to ensure that it did not retain any profit attributable to the misconduct — a principle that the Corporate Enforcement Policy recognizes as central to the declination analysis.

Confirmation of the U.S. Treasury disgorgement payment is enclosed as Enclosure 3.

VII. OFAC CAUTIONARY LETTER

As noted above, on April 15, 2024, OFAC issued a Cautionary Letter (Ref. OCA-2024-11587) to Dunmore, concluding the agency's review of the apparent violations disclosed in the company's voluntary self-disclosure filed on June 1, 2023. A Cautionary Letter is the most favorable enforcement outcome available to OFAC in matters involving apparent violations of the sanctions programs it administers. Unlike a Finding of Violation or a civil monetary penalty, a Cautionary Letter does not constitute a final enforcement action and does not result in any monetary sanction.

OFAC's decision not to impose a civil penalty was based on the agency's assessment of several mitigating factors, which OFAC identified in the Cautionary Letter itself. These factors include: (1) the voluntary nature of Dunmore's self-disclosure; (2) the substantial cooperation that Dunmore provided to both OFAC and the DOJ throughout the investigation; (3) the comprehensive and effective remedial measures that Dunmore implemented, including the adoption of the Enhanced Program; and (4) the voluntary disgorgement of profits made to the U.S. Treasury.

The OFAC disposition is directly relevant to the Department's declination analysis. The parallel regulatory proceeding has concluded without penalty, and the regulatory agency with primary jurisdiction over the sanctions violations at issue has determined that Dunmore's conduct warranted the most favorable available outcome. A DOJ declination would be fully consistent with the OFAC disposition and would reflect a coherent and proportionate government response to a matter in which the company has taken extraordinary steps to identify, disclose, remediate, and make whole the consequences of its former employees' misconduct.

VIII. APPLICABLE LEGAL STANDARDS AND POLICY CONSIDERATIONS

A. DOJ Corporate Enforcement Policy

The Corporate Enforcement Policy, as updated in September 2022, provides the governing framework for the Department's evaluation of corporate conduct in cases involving potential criminal liability. The Policy establishes that a company may receive a declination of prosecution where it has satisfied four criteria: (1) voluntary self-disclosure of misconduct to the Department; (2) full cooperation with the Department's investigation; (3) timely and appropriate remediation of the underlying compliance failures; and (4) disgorgement of profits resulting from the misconduct.

As set forth in detail throughout this letter, Dunmore has satisfied each of these criteria:

• Dunmore proactively identified the potential violations and engaged counsel before the Department's subpoena; subsequently filed a comprehensive voluntary self-disclosure with OFAC; and engaged in sustained, proactive dialogue with the Department throughout the investigation.

• Dunmore cooperated fully with the Department, conducting a comprehensive internal investigation, producing nearly 440,000 documents, making witnesses available for interviews (including a key cooperating witness), and sharing the full results of its investigation with the Department in the form of a 176-page report and multiple proffers.

• Dunmore implemented timely and comprehensive remedial measures, including the separation of culpable employees, the appointment of a highly qualified new Chief Compliance Officer, the engagement of an independent compliance consultant, and the adoption and full implementation of the Enhanced Program.

• Dunmore voluntarily disgorged $8.75 million in estimated net profits from the tainted transactions to the U.S. Treasury, in advance of any government demand.

The totality of these actions places Dunmore squarely within the category of cases that the Corporate Enforcement Policy contemplates as appropriate for a declination.

B. Criminal Statutes at Issue

We acknowledge that the Department's investigation has been conducted under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the Export Control Reform Act ("ECRA"), 50 U.S.C. §§ 4801–4852. These statutes carry significant criminal penalties, and we do not minimize the seriousness of the underlying conduct that has been the subject of this investigation.

However, we respectfully submit that the relevant considerations for purposes of the declination analysis weigh strongly in Dunmore's favor. The individuals primarily responsible for the misconduct — Derek Hargrave and Natasha Sorokin — have been separated from the company. The compliance failures that permitted the conduct to occur have been identified, analyzed, and comprehensively addressed through the Enhanced Program. The company has taken every step within its power to ensure that the conduct cannot recur. And the Department retains full discretion to pursue individual prosecutions of the culpable former employees, a course of action that Dunmore has not sought to impede or discourage in any way.

The Corporate Enforcement Policy recognizes that the purpose of corporate criminal enforcement is not punitive in isolation, but rather to incentivize responsible corporate behavior, promote voluntary disclosure, and ensure accountability. A declination in this case would serve all of these objectives by demonstrating that companies that act promptly and in good faith upon discovering potential violations will be treated fairly by the Department.

C. Relevant Regulatory Frameworks

For completeness, we note the specific regulatory authorities relevant to the conduct under investigation:

• OFAC Programs: Executive Order 14024 (April 15, 2021), "Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation"; Directive 2 under Executive Order 13662, "Blocking Property of Additional Persons Contributing to the Situation in Ukraine"; 31 C.F.R. Part 589, "Ukraine-/Russia-Related Sanctions Regulations."

• Export Administration Regulations: 15 C.F.R. Parts 730–774; Section 746.5 (Russia/Belarus license requirements); Export Control Classification Numbers 2B350 (chemical/biological equipment) and 2B999 (specific processing equipment not controlled by Wassenaar Arrangement or other multilateral regimes).

IX. SUMMARY OF FACTORS SUPPORTING DECLINATION

In the interest of clarity, we present a consolidated summary of the factors that, individually and collectively, support the issuance of a declination of prosecution for Dunmore Energy Holdings Ltd.:

1. Voluntary Self-Disclosure. Dunmore proactively identified the potential violations within five days of the catalyst event (the Volkhov SDN designation) and engaged outside counsel on April 14, 2022 — before the Department issued the grand jury subpoena on April 19, 2022. On June 1, 2023, Dunmore filed a comprehensive voluntary self-disclosure with OFAC's Compliance & Enforcement Division, disclosing the full scope of the apparent violations.

2. Full Cooperation. Dunmore conducted a comprehensive internal investigation involving 47 witness interviews across three rounds, the collection of 2,347,812 documents from six jurisdictions (with 438,916 deemed responsive and produced to the Department), the engagement of Ridgeline Advisory Group LLC for forensic accounting analysis, and the submission of a 176-page internal investigation report to the Department. Dunmore made a key cooperating witness, Omar Al-Rashidi, available for a DOJ interview on July 12, 2023, without conditions or limitations. Dunmore provided multiple voluntary proffers and supplemental submissions throughout the investigation.

3. Timely Remediation. Dunmore separated the culpable employees — Natasha Sorokin (separated September 15, 2022), Derek Hargrave (separated October 1, 2022), and Gerald Fisk (departed June 10, 2022) — within months of the investigation's commencement. The company appointed Priya Nayar as Chief Compliance Officer on August 1, 2022, bringing deep expertise in sanctions compliance to the organization. Dunmore retained Pemberton Investors Solutions LLC on December 15, 2022, to design a comprehensive remediation program. On October 1, 2023, the Board of Directors formally adopted the Enhanced Sanctions & Export Controls Compliance Program. Full implementation was confirmed in the supplemental remediation report submitted on January 15, 2024.

4. Voluntary Disgorgement. On November 30, 2023, Dunmore made a voluntary disgorgement payment of $8,750,000 to the U.S. Treasury, representing the estimated net profits derived from the nine tainted crude oil swap transactions. The payment was made entirely voluntarily, in advance of any government demand, and the calculation methodology was shared with and reviewed by the Department.

5. OFAC Disposition. On April 15, 2024, OFAC issued a Cautionary Letter (Ref. OCA-2024-11587) — the most favorable enforcement outcome available for matters involving apparent violations — without imposing any civil monetary penalty. OFAC cited Dunmore's voluntary self-disclosure, cooperation, remediation, and disgorgement as mitigating factors supporting this disposition.

6. Good Corporate Citizenship. Dunmore is a privately held company with approximately 3,200 employees worldwide whose livelihoods and economic well-being would be adversely and materially affected by a criminal prosecution. The company has invested over $31 million (gross) in investigating and remediating this matter, reflecting its deep commitment to accountability and compliance. After recovery under the company's directors and officers insurance policy with Garrison Mutual Insurance Co., the net cost to Dunmore has been approximately $24.075 million — a substantial sum that underscores the seriousness with which the company has approached this matter.

7. Individual Accountability. Dunmore has not sought to shield the individuals primarily responsible for the misconduct from accountability. The company permitted Hargrave, Sorokin, and Fisk to retain separate counsel and advanced their defense costs totaling approximately $3.4 million without conditioning advancement on cooperation with any particular narrative. The Department retains full discretion to pursue individual prosecutions of these former employees, and Dunmore has cooperated fully in providing the Department with the information and evidence necessary to evaluate such prosecutions.

X. REQUEST FOR FORMAL DECLINATION

Based on the foregoing, Dunmore Energy Holdings Ltd. respectfully and formally requests that the Department of Justice issue a written declination of prosecution in connection with the investigation referenced above, including grand jury subpoena GJ No. 22-418. Dunmore submits that the totality of its conduct — encompassing voluntary self-disclosure, full and proactive cooperation, timely and comprehensive remediation, and voluntary disgorgement of profits — satisfies each of the criteria set forth in the DOJ Corporate Enforcement Policy for a declination and compels such an outcome.

Dunmore remains prepared to meet with you, Trial Attorney Kovacs, Trial Attorney Pressman, or any other representative of the Department at your convenience should any additional information, clarification, or discussion be helpful to the Department's evaluation of this request. We look forward to the productive dialogue that has characterized our engagement with your office throughout this matter.

Finally, Dunmore wishes to affirm its commitment to maintaining the Enhanced Sanctions & Export Controls Compliance Program on an ongoing basis. The company views the Enhanced Program not as a temporary measure adopted to satisfy the government's expectations, but as a permanent and integral component of its business operations. Dunmore is committed to continuous improvement of its compliance infrastructure and to maintaining the highest standards of corporate conduct in its global operations.

We thank you for your careful consideration of this request.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Victoria Chambers Partner, White Collar Defense & Investigations Group Calderwood & Harkness LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006 Telephone: (202) 551-7400

Email: vchambers@calderwoodharkness.com

Matter No. 1016-00009

cc: (via electronic mail)

Samuel Kovacs, Esq., Trial Attorney, Counterintelligence and Export Control Section, National Security Division, U.S. Department of Justice

Diana Pressman, Esq., Trial Attorney, Counterintelligence and Export Control Section, National Security Division, U.S. Department of Justice

Marcus Wellbourne, Esq., General Counsel, Dunmore Energy Holdings Ltd. (via separate cover)

Howard Quinn, Esq., Partner, Calderwood & Harkness LLP

Enclosures:

1. OFAC Cautionary Letter (Ref. OCA-2024-11587), dated April 15, 2024

2. Supplemental Remediation Report, dated January 15, 2024

3. Confirmation of U.S. Treasury Disgorgement Payment ($8,750,000), dated November 30, 2023

PRIVILEGED & CONFIDENTIAL SUBJECT TO FEDERAL RULE OF CRIMINAL PROCEDURE 6(e)
CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006
Telephone: (202) 551-7400 Facsimile: (202) 551-7401 www.calderwoodharkness.com
April 1, 2024
VIA HAND DELIVERY AND ELECTRONIC MAIL
Meredith Calloway, Esq. Assistant United States Attorney National Security Division Counterintelligence and Export Control Section U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, DC 20530
Re: Dunmore Energy Holdings Ltd. — Request for Declination of Prosecution Grand Jury Subpoena GJ No. 22-418 (U.S. District Court for the District of Columbia, Grand Jury 22-2) Calderwood & Harkness Matter No. 1016-00009
Dear Ms. Calloway:
On behalf of our client, Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH"), a Cayman Islands–domiciled exempted company with limited liability and operational headquarters at 1200 McKinney Street, Suite 3400, Houston, Texas 77010, Calderwood & Harkness LLP respectfully requests that the U.S. Department of Justice ("DOJ" or the "Department") issue a formal declination of prosecution in the above-referenced matter. This letter addresses the investigation opened by the Department on or about April 19, 2022, and the grand jury subpoena bearing reference GJ No. 22-418, issued by the U.S. District Court for the District of Columbia sitting as Grand Jury 22-2 on that same date.
Calderwood & Harkness has served as defense counsel to Dunmore in this matter since April 14, 2022 — five days before the Department issued the grand jury subpoena and at a time when the company was already independently mobilizing its internal investigation. Over the course of the past nearly two years, Dunmore has demonstrated each of the hallmarks that the DOJ Corporate Enforcement Policy (as updated in September 2022) identifies as warranting a declination of prosecution: voluntary self-disclosure, full and proactive cooperation with the government, timely and thorough remediation of the underlying compliance failures, and voluntary disgorgement of all profits attributable to the misconduct at issue. Moreover, the Office of Foreign Assets Control ("OFAC") has concluded its own parallel review and, on April 15, 2024, issued a Cautionary Letter — the most favorable enforcement outcome available in matters involving apparent violations — without imposing any civil monetary penalty.
This letter sets forth in detail the factual and legal bases supporting our request. We respectfully submit that the totality of Dunmore's conduct since the discovery of this matter compels the conclusion that a declination is both appropriate and consistent with the Department's stated enforcement priorities and policies.
I. EXECUTIVE SUMMARY OF DUNMORE'S CONDUCT AND THE INVESTIGATION
A. Background on Dunmore Energy Holdings Ltd.
Dunmore Energy Holdings Ltd. is an exempted company incorporated with limited liability under the laws of the Cayman Islands, bearing Registration No. MC-334821. While domiciled in the Cayman Islands for corporate organizational purposes, Dunmore maintains its operational headquarters in Houston, Texas, where the company's senior management team, including its General Counsel and Chief Compliance Officer, are based.
Dunmore is engaged in oil and gas exploration, production, and trading, as well as renewable energy development. For the fiscal year ended December 31, 2021, Dunmore reported consolidated revenues of approximately $4.87 billion. The company employs approximately 3,200 individuals across its global operations, including personnel in the United States, the United Arab Emirates, Germany, Nigeria, the United Kingdom, and several other jurisdictions.
Dunmore conducts its operations through several key subsidiaries, including:
• Dunmore Trading International Ltd. ("DTI") — Dubai, United Arab Emirates (Dubai International Financial Centre License No. CL-4827). DTI is Dunmore's principal commodities trading arm and is the entity through which the transactions at issue in this investigation were conducted.
• Dunmore upstream Americas LLC — Houston, Texas (organized under the laws of the State of Delaware; EIN 84-2937561). This subsidiary manages Dunmore's upstream exploration and production assets in the Western Hemisphere.
• Dunmore Renewables GmbH — Hamburg, Germany. This subsidiary oversees Dunmore's growing portfolio of renewable energy development projects across the European Union.
• Dunmore Exploration West Africa Ltd. — Lagos, Nigeria. This subsidiary manages Dunmore's upstream exploration and production operations in West Africa.
Dunmore's equity is privately held. The majority shareholder is Greystone Capital Partners Fund IV, L.P., which holds approximately 62.5% of the company's outstanding equity. Dunmore's management team holds approximately 22.5%, and Thornbury Infrastructure Fund II, L.P. holds the remaining approximately 15%.
B. The Conduct at Issue
Between approximately March 2020 and April 2022, Dunmore's Dubai-based subsidiary, DTI, engaged in a series of commodities trading transactions and related commercial activities that are the subject of the Department's investigation. The conduct was principally directed by Derek Hargrave, who served as President of DTI during the relevant period, and Natasha Sorokin, who served as a Senior Trader on DTI's crude oil trading desk. Based on the findings of Dunmore's comprehensive internal investigation, the relevant conduct falls into three distinct but interrelated categories.
Volkhov Industrial Group JSC ("Volkhov"), a Russian energy conglomerate headquartered in Moscow, was designated by OFAC under Directive 2 of the sectoral sanctions program established pursuant to Executive Order 13662 on November 15, 2019. Subsequently, on April 6, 2022, Volkhov was added to the Specially Designated Nationals and blocked Persons List ("SDN List") under Executive Order 14024. Throughout the period at issue, Volkhov was subject to escalating sanctions restrictions that prohibited various categories of dealings by U.S. persons and, in certain respects, by non-U.S. persons where a sufficient U.S. nexus existed.
The three categories of conduct identified through the internal investigation are as follows:
1. Crude Oil Swap Transactions. Between March 2020 and March 2022, DTI executed fourteen (14) crude oil swap transactions with aggregate notional values totaling approximately $218.7 million. These transactions were executed with two Dubai-based counterparties: Petronova Trading FZE and Zenith Petroleum DMCC. Forensic analysis conducted by Ridgeline Advisory Group LLC, retained by Calderwood & Harkness for this purpose, determined that nine (9) of the fourteen (14) transactions — representing approximately $156.3 million in aggregate notional value — involved entities with undisclosed beneficial ownership connections to Volkhov. These nine transactions constituted potential violations of OFAC Directive 2 under Executive Order 13662, which imposed restrictions on certain dealings with designated persons in the Russian energy sector. Messrs. Hargrave and Sorokin were the primary decision-makers for these transactions, and documentary evidence gathered during the investigation indicates that both individuals were aware, or should have been aware, of the Volkhov-connected ownership structures underlying Petronova Trading FZE and Zenith Petroleum DMCC.
2. Oilfield Equipment Exports. During the same period, DTI facilitated the export of approximately $12.4 million in oilfield drilling equipment and components classified under Export Control Classification Numbers ("ECCNs") 2B350 and 2B999 to end users located in Russia. These shipments were routed through Caspian Logistik GmbH, a Hamburg-based freight forwarding company. The internal investigation identified evidence suggesting that false end-user certifications may have been provided in connection with certain of these shipments to conceal the ultimate Russian destination of the equipment. These exports potentially violated Section 746.5 of the Export Administration Regulations ("EAR"), 15 C.F.R. § 746.5, as well as applicable OFAC prohibitions. The exports were arranged by Hargrave and processed through DTI's commercial operations team with the knowledge and involvement of Sorokin.
3. Payment Structuring. Between March 2020 and March 2022, approximately $34.2 million was routed through 127 intermediary transactions at Crescent Commercial Bank PJSC in Dubai. The forensic accounting analysis revealed that these transactions were structured in a manner designed to obscure the beneficial ownership interest of Volkhov in the funds flowing through the trading relationships described above. The layering of payments through multiple intermediary accounts at Crescent Commercial Bank served to make it more difficult for compliance screening systems to detect the connection between DTI's counterparties and Volkhov. The structuring pattern was consistent across the relevant period and was orchestrated primarily by Sorokin, with Hargrave's knowledge and approval.
C. How the Matter Came to the DOJ's Attention
The sequence of events that brought this matter to light is directly relevant to the Department's assessment of Dunmore's conduct and, in particular, its entitlement to credit for voluntary self-disclosure.
On April 6, 2022, OFAC added Volkhov Industrial Group JSC to the SDN List pursuant to Executive Order 14024, significantly escalating the sanctions restrictions applicable to Volkhov beyond the Directive 2 sectoral sanctions that had been in effect since November 2019.
On April 11, 2022 — just five days after the SDN designation — Dunmore's then-Chief Compliance Officer, Gerald Fisk, conducted a routine OFAC screening refresh of the company's counterparty database in response to the new SDN designations. During this screening refresh, Mr. Fisk identified potential historical exposure through Petronova Trading FZE, one of DTI's Dubai-based trading counterparties. Mr. Fisk immediately notified Dunmore's General Counsel, Marcus Wellbourne, of the potential issue.
On April 14, 2022, Dunmore retained Calderwood & Harkness LLP to conduct a comprehensive internal investigation and to serve as defense counsel in connection with any resulting government inquiries. This retention occurred three days after the internal discovery and five days before any government contact.
On April 19, 2022, the Department of Justice issued grand jury subpoena GJ No. 22-418 through the U.S. District Court for the District of Columbia, Grand Jury 22-2. By that date, Dunmore had already retained outside counsel and commenced the initial phases of its internal investigation.
The critical point for purposes of the Corporate Enforcement Policy analysis is that Dunmore's internal discovery and engagement of counsel preceded the government's subpoena. While the temporal proximity between the two events is close, the record is clear that Dunmore acted independently and proactively upon identifying the potential exposure, and did not wait for government compulsion before taking action.
II. APPLICATION OF THE DOJ CORPORATE ENFORCEMENT POLICY
The Department's Corporate Enforcement Policy, as updated in September 2022, establishes a clear framework for evaluating corporate conduct in the wake of potential criminal violations. The Policy provides that a company may receive a declination of prosecution where it has: (1) voluntarily self-disclosed the misconduct to the Department; (2) fully cooperated with the Department's investigation; (3) timely and appropriately remediated the underlying compliance failures; and (4) agreed to disgorge any profits resulting from the misconduct.
The DOJ Evaluation of Corporate Compliance Programs, as updated in March 2023, provides additional guidance regarding the factors the Department considers in assessing the adequacy and effectiveness of a company's remediation efforts.
As set forth in detail below, Dunmore's conduct over the past two years satisfies — indeed, exceeds — each of the criteria identified in the Corporate Enforcement Policy as warranting a declination. We address each pillar in turn: (A) voluntary self-disclosure and proactive engagement; (B) full and proactive cooperation; and (C) timely and appropriate remediation. We separately address Dunmore's voluntary disgorgement of profits, which constitutes the fourth element of the Policy's framework.
III. VOLUNTARY SELF-DISCLOSURE AND PROACTIVE ENGAGEMENT
A. Internal discovery and Immediate Retention of Counsel
As described above, Dunmore's path to disclosure began within days of the catalyst event. When OFAC designated Volkhov to the SDN List on April 6, 2022, Dunmore's then-CCO Gerald Fisk conducted a routine screening refresh and, on April 11, 2022, identified potential historical exposure through Petronova Trading FZE. Mr. Fisk immediately escalated the issue to General Counsel Marcus Wellbourne, triggering an emergency review by senior management.
Within three days of that internal identification — on April 14, 2022 — Dunmore retained Calderwood & Harkness LLP and authorized the firm to commence a comprehensive internal investigation. Importantly, this action was taken before the Department issued grand jury subpoena GJ No. 22-418 on April 19, 2022. Dunmore did not wait for the DOJ subpoena to begin its investigation or to engage qualified outside counsel. The company was already mobilizing its response when the subpoena arrived, and the subpoena served only to confirm the seriousness of the inquiry — not to initiate Dunmore's own investigative efforts.
The Department has recognized in prior declination letters and policy guidance that early and independent action by a company upon discovering potential violations is a significant factor favoring a declination. Dunmore's conduct exemplifies precisely the type of prompt, good-faith response that the Corporate Enforcement Policy is designed to incentivize.
B. OFAC Voluntary Self-Disclosure
On June 1, 2023, following the completion of the principal phases of the internal investigation and the forensic accounting analysis, Dunmore filed a comprehensive voluntary self-disclosure ("VSD") with OFAC's Compliance & Enforcement Division. The VSD disclosed the apparent violations of OFAC-administered sanctions programs arising from the nine crude oil swap transactions involving Volkhov-connected entities, the oilfield equipment exports, and the structured payment activity through Crescent Commercial Bank PJSC.
The VSD was a detailed submission that provided OFAC with a full accounting of the relevant transactions, the internal investigation's findings regarding the involvement of Volkhov-connected entities, and a comprehensive description of the remedial measures Dunmore had already implemented and those that were in progress.
On April 15, 2024, OFAC concluded its review and issued a Cautionary Letter bearing reference number OCA-2024-11587. A Cautionary Letter represents the most favorable enforcement outcome available to OFAC in matters involving apparent violations. Critically, OFAC did not impose any civil monetary penalty. In reaching this disposition, OFAC cited Dunmore's voluntary self-disclosure, its substantial cooperation with both OFAC and the DOJ, its comprehensive remediation efforts, and its voluntary disgorgement of profits as mitigating factors that weighed against the imposition of a penalty.
The OFAC outcome is significant for several reasons. First, it confirms that the expert regulatory agency most directly responsible for administering the sanctions programs at issue has concluded that Dunmore's response to the underlying misconduct was sufficient to warrant the most favorable available outcome. Second, it underscores the genuineness and completeness of Dunmore's self-reporting, as OFAC was able to reach its determination based substantially on the information Dunmore itself provided. Third, it demonstrates a consistent pattern of favorable regulatory disposition that supports a parallel declination by the Department.
A copy of the OFAC Cautionary Letter is enclosed as Enclosure 1.
C. Proactive Engagement with the Department of Justice
From the earliest stages of this matter, Dunmore has engaged proactively and substantively with the Department, consistently providing information and analysis beyond what was required by the grand jury subpoena.
• July 15, 2022 — Initial Proffer. Calderwood & Harkness provided an initial proffer to AUSA Calloway and Trial Attorney Kovacs, presenting the preliminary findings of the internal investigation. This proffer included the initial identification of the fourteen crude oil swap transactions with Petronova Trading FZE and Zenith Petroleum DMCC, as well as preliminary information regarding the potential Volkhov connection. The proffer was provided voluntarily and before the internal investigation had been completed, reflecting Dunmore's commitment to real-time transparency with the Department.
• November 20, 2022 — Supplemental Proffer. Calderwood & Harkness provided a supplemental proffer incorporating the forensic accounting findings of Ridgeline Advisory Group LLC. This proffer refined the analysis of the fourteen crude oil swap transactions, identified the nine transactions with the strongest evidentiary connection to Volkhov-linked entities, and provided detailed financial flows and counterparty analysis.
• March 1, 2023 — White Paper on Corporate Enforcement Policy. Calderwood & Harkness submitted a white paper to the Department setting forth the legal and factual basis for the application of the Corporate Enforcement Policy to Dunmore's matter. This submission was intended to frame the ongoing dialogue and to ensure that the Department had a clear understanding of the company's position regarding its eligibility for a declination.
• May 15, 2023 — Comprehensive Internal Investigation Report. Calderwood & Harkness submitted a comprehensive 176-page internal investigation report to the Department. This report represented the culmination of more than a year of investigative work and included detailed findings regarding each of the three categories of conduct at issue, the roles and responsibilities of the individuals involved, the failures in compliance controls that permitted the conduct to occur, and the remedial measures undertaken and planned. The report was accompanied by supporting exhibits and appendices, including key transactional documents, organizational charts, and financial analyses.
• January 15, 2024 — Supplemental Remediation Report. Calderwood & Harkness submitted a detailed supplemental remediation report documenting the full implementation of the Enhanced Sanctions & Export Controls Compliance Program, the operational effectiveness of the new controls, and the results of initial testing and monitoring activities. This report confirmed that the remediation efforts described in prior submissions had been brought to completion and were functioning as designed.
At every stage of this process, Dunmore provided information to the Department that went beyond the scope of the grand jury subpoena. The company's approach was not merely responsive but affirmatively proactive, reflecting a genuine commitment to transparency and to assisting the Department in understanding the full scope and nature of the conduct at issue.
IV. FULL AND PROACTIVE COOPERATION
A. Scope of the Internal Investigation
Calderwood & Harkness conducted a comprehensive internal investigation on behalf of Dunmore spanning from April 2022 through early 2024. The investigation was designed to identify the full scope of the potentially problematic transactions, to determine the individuals responsible for the conduct, to assess the compliance failures that allowed the conduct to occur, and to develop a factual record sufficient to support both the company's voluntary disclosures to the government and its remediation efforts.
To ensure the rigor and credibility of the investigation, Calderwood & Harkness retained two specialized consulting firms to assist with critical workstreams:
Forensic Accounting. Calderwood & Harkness retained Ridgeline Advisory Group LLC, under Engagement No. RAG-2022-0319, to conduct a comprehensive forensic accounting analysis of the transactions at issue. The engagement was led by Dr. Margaret Liu, CPA, CFE, a nationally recognized expert in financial forensics with extensive experience in sanctions-related matters. Ridgeline's team analyzed transactional data across multiple financial institutions, performed beneficial ownership tracing through complex multi-jurisdictional corporate structures, and prepared detailed financial flow analyses documenting the movement of funds through intermediary accounts. Ridgeline delivered its final forensic accounting report on April 1, 2023. The findings of that report formed the basis for the supplemental proffer provided to the Department on November 20, 2022, and for the financial analysis contained in the comprehensive investigation report submitted on May 15, 2023.
E-discovery. Calderwood & Harkness retained Nexagen Analytics Inc., under Project No. NX-DEH-2204, to manage the collection, processing, and review of electronically stored information relevant to the investigation. The project was managed by Brian Cavanaugh, a senior project manager with significant experience in cross-border e-discovery matters. Nexagen collected a total of 2,347,812 documents from custodians and data sources across six jurisdictions: the Cayman Islands, the United Arab Emirates, the United States, Germany, Nigeria, and the United Kingdom. Following processing, de-duplication, and technology-assisted review ("TAR") using predictive coding methodologies validated through statistical sampling, 438,916 documents were deemed responsive to the investigation. The collection and initial processing of documents was completed by October 15, 2022, enabling the timely commencement of document productions to the Department.
The scope and depth of this internal investigation reflect Dunmore's commitment to understanding the full dimensions of the conduct at issue and to providing the Department with a complete and accurate factual record.
B. Witness Interviews
Calderwood & Harkness conducted interviews of forty-seven (47) current and former Dunmore employees over the course of the investigation. The interviews were conducted in three rounds, designed to progressively deepen the investigative team's understanding of the facts and to address issues identified through document review and forensic analysis:
Round 1 (May 18 – June 30, 2022): Twenty-two (22) interviews were conducted in Houston, Dubai, and London. These initial interviews focused on identifying the key fact witnesses, understanding the organizational structure and decision-making processes of DTI's trading desk, and establishing the basic factual framework for the investigation.
Round 2 (August 5 – September 30, 2022): Fifteen (15) interviews were conducted, focusing on specific transactional details identified through the initial document review and the early forensic accounting findings. These interviews included deeper dives with witnesses who had direct knowledge of the counterparty relationships with Petronova Trading FZE and Zenith Petroleum DMCC.
Round 3 (February 15 – March 15, 2023): Ten (10) interviews were conducted, including re-interviews of certain key witnesses in light of new information developed through the forensic accounting analysis and the complete document review, as well as interviews of newly identified witnesses whose relevance became apparent as the investigation progressed.
Of particular significance to the Department's assessment of Dunmore's cooperation is the role of Omar Al-Rashidi, who served as Head of Middle East Operations for DTI during the relevant period. Mr. Al-Rashidi emerged as a key cooperating witness during the internal investigation, providing substantial and detailed information regarding the operations of DTI's trading desk, the relationships with Petronova Trading FZE and Zenith Petroleum DMCC, and the roles played by Hargrave and Sorokin in directing the transactions at issue.
At Dunmore's initiative, Mr. Al-Rashidi was made available for a follow-up interview with the Department on July 12, 2023. That interview was conducted at Calderwood & Harkness's Washington, D.C. office, with AUSA Calloway and Trial Attorney Kovacs present. Mr. Al-Rashidi answered the Department's questions fully and without reservation, and Dunmore did not seek to limit the scope of the Department's inquiry or to condition Mr. Al-Rashidi's participation in any respect.
C. Document Productions
Dunmore produced a total of 438,916 responsive documents to the Department over the course of two principal productions, pursuant to a rolling production protocol agreed upon with the Department on July 10, 2022:
First Production (November 1, 2022): 287,412 documents, bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412. This production included the bulk of the transactional documents, trading records, email communications, and financial records identified through the document collection and review process.
Second Production (January 30, 2023): 151,504 documents, bearing Bates numbers DEH-DOJ-287413 through DEH-DOJ-438916. This production included additional documents identified through subsequent collection sweeps, documents from custodians interviewed in Round 2 of the witness interviews, and documents responsive to supplemental requests from the Department.
All productions were completed on time and in accordance with the rolling production protocol. The documents were produced in industry-standard load file format, with metadata preserved, and were accompanied by detailed production indices to facilitate the Department's review.
Only 12,847 documents were withheld from production on the basis of attorney-client privilege or attorney work product protection. Detailed privilege logs were provided with each production, and Dunmore responded promptly to any challenges or questions from the Department regarding individual privilege designations. The privilege withholding rate — approximately 2.8% of responsive documents — reflects the narrow and good-faith manner in which Dunmore asserted its privilege rights throughout this process.
D. Non-Interference and Transparency
Dunmore has not sought to impede the Department's investigation in any respect. To the contrary, the company has taken affirmative steps to preserve evidence, facilitate witness access, and ensure that the investigation could proceed without obstruction.
Comprehensive litigation hold notices were issued to all relevant custodians globally on April 20, 2022, the day after the grand jury subpoena was received, and a reminder notice was circulated on July 15, 2022. These notices covered all categories of potentially responsive documents and data, including electronic communications, hard-copy files, and data stored on personal devices.
Dunmore made key witnesses available for Department interviews without seeking to impose limitations on the scope or nature of the questioning. As noted above, the company affirmatively facilitated the Department's interview of Mr. Al-Rashidi and did not condition his participation on any terms.
Where the interests of individual employees diverged from those of the company, Dunmore respected those employees' rights to retain separate counsel and did not seek to interfere with their ability to do so. The following individuals retained separate counsel during the course of the investigation:
• Gerald Fisk (former Chief Compliance Officer; departed Dunmore on June 10, 2022): Represented by Catherine Blackthorn, Esq., Blackthorn & Associates LLP, Houston, Texas.
• Derek Hargrave (former President, DTI; placed on administrative leave on July 1, 2022; formally separated from the company on October 1, 2022): Represented by James Overstreet, Esq., Overstreet & McClain PLLC, Dallas, Texas.
• Natasha Sorokin (former Senior Trader, DTI; placed on administrative leave on May 16, 2022; formally separated from the company on September 15, 2022): Represented by Philip Keane, Esq., Wexford Keane LLP, Washington, D.C.
Dunmore advanced defense costs for these three individuals totaling approximately $3.4 million, pursuant to its indemnification obligations under applicable corporate governance documents and employment agreements. Critically, the company did not condition the advancement of defense costs on cooperation with any particular narrative or on the adoption of any particular position vis-à-vis the company or the Department. Each individual was free to provide information to the Department independently and to assert or waive his or her own rights as he or she saw fit.
The company's approach to individual interests underscores its commitment to a fair and transparent process. Dunmore has not sought to shield culpable individuals from accountability, nor has it attempted to coordinate or constrain the positions taken by separately represented former employees.
V. TIMELY AND APPROPRIATE REMEDIATION
A. Personnel Actions
Dunmore acted swiftly and decisively to remove from the organization the individuals primarily responsible for the conduct under investigation.
• Natasha Sorokin was placed on administrative leave on May 16, 2022, within approximately five weeks of the commencement of the internal investigation, as the early findings implicated her direct involvement in the crude oil swap transactions and payment structuring. She was formally separated from the company on September 15, 2022, following the conclusion of Round 1 of the witness interviews, which confirmed her central role in the misconduct.
• Derek Hargrave was placed on administrative leave on July 1, 2022, as the investigation developed additional evidence regarding his supervisory role and direct knowledge of the Volkhov-connected counterparty relationships. He was formally separated from the company on October 1, 2022.
• Gerald Fisk, the then-Chief Compliance Officer, departed Dunmore on June 10, 2022. While Mr. Fisk was the individual who initially identified the potential exposure during the OFAC screening refresh on April 11, 2022 — and deserves credit for that identification — the internal investigation subsequently revealed significant supervisory failures in the compliance function during his tenure, including inadequate counterparty due diligence procedures, insufficient beneficial ownership verification protocols, and a failure to implement effective escalation mechanisms within the compliance department. Mr. Fisk's departure was made under internal pressure in light of these findings.
To fill the critical leadership vacancy in the compliance function, Dunmore appointed Priya Nayar as the company's new Chief Compliance Officer, effective August 1, 2022. Ms. Nayar is a highly experienced sanctions compliance professional who previously served as Vice President of Global Sanctions Compliance at a major international financial institution, where she oversaw a team of more than sixty compliance professionals and was responsible for the institution's compliance with OFAC, EU, and UN sanctions programs. Ms. Nayar holds a J.D. from Georgetown University Law Center and is a Certified Anti-Money Laundering Specialist (CAMS). Her appointment reflected Dunmore's commitment to installing senior compliance leadership with the expertise and authority necessary to drive meaningful reform.
B. Engagement of Compliance Consultant
Recognizing that the remediation effort required external expertise and an independent perspective, Dunmore retained Pemberton Investors Solutions LLC, a Washington, D.C.–based consulting firm specializing in sanctions, export controls, and anti-money laundering compliance. The engagement commenced on December 15, 2022, and was led by Dr. Anton Bremer, a former senior official in OFAC's Compliance & Enforcement Division with more than twenty years of experience in sanctions compliance program design and implementation.
Marlowe Asset Management was tasked with conducting a comprehensive assessment of Dunmore's existing compliance infrastructure, identifying gaps and deficiencies, and designing an enhanced compliance program tailored to the company's risk profile and operational complexity. Pemberton Investors an extensive review that included on-site assessments at Dunmore's offices in Houston, Dubai, and Hamburg; interviews with compliance, legal, trading, and operations personnel; analysis of existing policies, procedures, and internal controls; and benchmarking against industry best practices and regulatory expectations.
Marlowe Asset Management delivered its remediation report and enhanced compliance program framework on September 15, 2023. The report contained detailed findings regarding the deficiencies in Dunmore's prior compliance program and set forth a comprehensive blueprint for the Enhanced Sanctions & Export Controls Compliance Program that Dunmore subsequently adopted.
C. Enhanced Sanctions & Export Controls Compliance Program
On October 1, 2023, the Dunmore Board of Directors formally adopted the Enhanced Sanctions & Export Controls Compliance Program (the "Enhanced Program"), based on the framework developed by Pemberton Investors Solutions and refined through collaboration with Dunmore's new Chief Compliance Officer, Priya Nayar, and Calderwood & Harkness.
The Enhanced Program includes the following key elements, each designed to address specific deficiencies identified through the internal investigation and the Marlowe Asset Management assessment:
1. Strengthened OFAC Screening Protocols. Dunmore has implemented a real-time, automated screening system that continuously screens all counterparties, transaction parties, and intermediaries against the OFAC SDN List, the Sectoral Sanctions Identifications List, the Consolidated Screening List maintained by the U.S. Department of Commerce Bureau of Industry and Security, the EU Consolidated List of Sanctions, and the UN Security Council Consolidated List. The system generates automatic alerts for potential matches, which are reviewed by trained compliance analysts and escalated through a defined protocol. The prior screening methodology — which relied on periodic batch screening — has been permanently retired.
2. Enhanced Counterparty and Third-Party Due Diligence. All new counterparties, and all existing counterparties on a rolling basis, are now subject to enhanced due diligence procedures that include verification of beneficial ownership through independent registry searches, adverse media screening, assessment of jurisdictional risk, and evaluation of the counterparty's own compliance program. No trading relationship may be onboarded or renewed without sign-off by the Chief Compliance Officer or her designee. For counterparties in elevated-risk jurisdictions — including the UAE, Turkey, and certain Central Asian jurisdictions — the due diligence requirements are further heightened.
3. Revised Export Control Classification Procedures. Dunmore has implemented mandatory ECCN classification review procedures for all transactions involving oilfield equipment and components. All such transactions are now subject to review by a dedicated export controls analyst within the compliance department, who evaluates the classification of the goods, the applicable licensing requirements, the identity and location of the end user, and the sufficiency of end-user certifications. Transactions involving items classified under controlled ECCNs require additional sign-off by the Chief Compliance Officer before execution.
4. Mandatory Escalation Mechanisms and Board-Level Reporting. The Enhanced Program establishes clear and mandatory escalation pathways for compliance concerns. Any employee who identifies a potential sanctions or export control issue is required to report it through a dedicated compliance hotline or directly to the compliance department. The Chief Compliance Officer reports directly to the Audit Committee of the Board of Directors on a quarterly basis and has direct access to the full Board at any time. Compliance metrics, including screening hit rates, due diligence completion rates, training completion rates, and the results of internal audits, are reported to the Board as part of these quarterly presentations.
5. Comprehensive Employee Training. All Dunmore employees globally — not only those in trading and compliance functions — are required to complete annual training on sanctions and export control compliance. Employees in elevated-risk functions, including trading, operations, finance, and logistics, are required to complete additional specialized training modules. The training program was developed in consultation with Pemberton Investors Solutions and is delivered through a combination of live sessions and e-learning modules. Training completion is tracked and reported to the Board as part of the quarterly compliance metrics.
6. Ongoing Monitoring, Testing, and Annual Audits. The Enhanced Program includes a robust ongoing monitoring and testing regime. The compliance department conducts quarterly transaction sampling and review, semi-annual testing of screening system effectiveness, and annual comprehensive compliance program audits. The results of these monitoring and testing activities are documented and reported to the Audit Committee of the Board. Additionally, Dunmore has committed to retaining an independent third party to conduct an annual assessment of the Enhanced Program's effectiveness for a minimum period of three years.
The Enhanced Program has been designed and implemented with close attention to the factors identified in the DOJ Evaluation of Corporate Compliance Programs (March 2023 update), including the adequacy of the company's risk assessment processes, the sufficiency of policies and procedures, the effectiveness of training and communications, the independence and resources of the compliance function, the existence of robust internal reporting mechanisms, and the commitment of senior management and the Board of Directors to compliance.
D. Supplemental Remediation Report
On January 15, 2024, Calderwood & Harkness submitted a detailed supplemental remediation report to the Department documenting the full implementation of the Enhanced Program. The report confirmed that all elements of the Enhanced Program described above were operational and functioning as designed. Specifically, the report documented the completion of the initial round of employee training (with a 98.7% completion rate globally), the successful implementation of the real-time screening system, the completion of enhanced due diligence reviews for all active counterparties, and the results of the first quarterly transaction sampling exercise, which identified no compliance exceptions.
A copy of the Supplemental Remediation Report is enclosed as Enclosure 2.
VI. VOLUNTARY DISGORGEMENT
On November 30, 2023, Dunmore made a voluntary disgorgement payment of $8,750,000 to the United States Treasury. This payment represents the estimated net profits derived from the nine (9) crude oil swap transactions that the internal investigation determined involved Volkhov-connected entities.
The disgorgement amount was calculated as follows: the nine tainted transactions had an aggregate notional value of approximately $156.3 million; forensic analysis by Ridgeline Advisory Group LLC determined that DTI's estimated net margin on these transactions — after accounting for direct transaction costs, hedging costs, and allocated overhead — was approximately 5.6%; the resulting estimated net profit of approximately $8.75 million was adopted as the disgorgement amount. The calculation methodology and supporting workpapers were shared with the Department in advance of the payment.
The disgorgement was entirely voluntary. It was made in advance of any demand by the Department or any other government agency, and it was not made pursuant to any settlement agreement, plea agreement, or other negotiated resolution. Rather, the payment was made as a unilateral demonstration of Dunmore's good faith and its commitment to accountability. By voluntarily surrendering the economic benefit derived from the tainted transactions, Dunmore sought to ensure that it did not retain any profit attributable to the misconduct — a principle that the Corporate Enforcement Policy recognizes as central to the declination analysis.
Confirmation of the U.S. Treasury disgorgement payment is enclosed as Enclosure 3.
VII. OFAC CAUTIONARY LETTER
As noted above, on April 15, 2024, OFAC issued a Cautionary Letter (Ref. OCA-2024-11587) to Dunmore, concluding the agency's review of the apparent violations disclosed in the company's voluntary self-disclosure filed on June 1, 2023. A Cautionary Letter is the most favorable enforcement outcome available to OFAC in matters involving apparent violations of the sanctions programs it administers. Unlike a Finding of Violation or a civil monetary penalty, a Cautionary Letter does not constitute a final enforcement action and does not result in any monetary sanction.
OFAC's decision not to impose a civil penalty was based on the agency's assessment of several mitigating factors, which OFAC identified in the Cautionary Letter itself. These factors include: (1) the voluntary nature of Dunmore's self-disclosure; (2) the substantial cooperation that Dunmore provided to both OFAC and the DOJ throughout the investigation; (3) the comprehensive and effective remedial measures that Dunmore implemented, including the adoption of the Enhanced Program; and (4) the voluntary disgorgement of profits made to the U.S. Treasury.
The OFAC disposition is directly relevant to the Department's declination analysis. The parallel regulatory proceeding has concluded without penalty, and the regulatory agency with primary jurisdiction over the sanctions violations at issue has determined that Dunmore's conduct warranted the most favorable available outcome. A DOJ declination would be fully consistent with the OFAC disposition and would reflect a coherent and proportionate government response to a matter in which the company has taken extraordinary steps to identify, disclose, remediate, and make whole the consequences of its former employees' misconduct.
VIII. APPLICABLE LEGAL STANDARDS AND POLICY CONSIDERATIONS
A. DOJ Corporate Enforcement Policy
The Corporate Enforcement Policy, as updated in September 2022, provides the governing framework for the Department's evaluation of corporate conduct in cases involving potential criminal liability. The Policy establishes that a company may receive a declination of prosecution where it has satisfied four criteria: (1) voluntary self-disclosure of misconduct to the Department; (2) full cooperation with the Department's investigation; (3) timely and appropriate remediation of the underlying compliance failures; and (4) disgorgement of profits resulting from the misconduct.
As set forth in detail throughout this letter, Dunmore has satisfied each of these criteria:
• Dunmore proactively identified the potential violations and engaged counsel before the Department's subpoena; subsequently filed a comprehensive voluntary self-disclosure with OFAC; and engaged in sustained, proactive dialogue with the Department throughout the investigation.
• Dunmore cooperated fully with the Department, conducting a comprehensive internal investigation, producing nearly 440,000 documents, making witnesses available for interviews (including a key cooperating witness), and sharing the full results of its investigation with the Department in the form of a 176-page report and multiple proffers.
• Dunmore implemented timely and comprehensive remedial measures, including the separation of culpable employees, the appointment of a highly qualified new Chief Compliance Officer, the engagement of an independent compliance consultant, and the adoption and full implementation of the Enhanced Program.
• Dunmore voluntarily disgorged $8.75 million in estimated net profits from the tainted transactions to the U.S. Treasury, in advance of any government demand.
The totality of these actions places Dunmore squarely within the category of cases that the Corporate Enforcement Policy contemplates as appropriate for a declination.
B. Criminal Statutes at Issue
We acknowledge that the Department's investigation has been conducted under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the Export Control Reform Act ("ECRA"), 50 U.S.C. §§ 4801–4852. These statutes carry significant criminal penalties, and we do not minimize the seriousness of the underlying conduct that has been the subject of this investigation.
However, we respectfully submit that the relevant considerations for purposes of the declination analysis weigh strongly in Dunmore's favor. The individuals primarily responsible for the misconduct — Derek Hargrave and Natasha Sorokin — have been separated from the company. The compliance failures that permitted the conduct to occur have been identified, analyzed, and comprehensively addressed through the Enhanced Program. The company has taken every step within its power to ensure that the conduct cannot recur. And the Department retains full discretion to pursue individual prosecutions of the culpable former employees, a course of action that Dunmore has not sought to impede or discourage in any way.
The Corporate Enforcement Policy recognizes that the purpose of corporate criminal enforcement is not punitive in isolation, but rather to incentivize responsible corporate behavior, promote voluntary disclosure, and ensure accountability. A declination in this case would serve all of these objectives by demonstrating that companies that act promptly and in good faith upon discovering potential violations will be treated fairly by the Department.
C. Relevant Regulatory Frameworks
For completeness, we note the specific regulatory authorities relevant to the conduct under investigation:
• OFAC Programs: Executive Order 14024 (April 15, 2021), "Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation"; Directive 2 under Executive Order 13662, "Blocking Property of Additional Persons Contributing to the Situation in Ukraine"; 31 C.F.R. Part 589, "Ukraine-/Russia-Related Sanctions Regulations."
• Export Administration Regulations: 15 C.F.R. Parts 730–774; Section 746.5 (Russia/Belarus license requirements); Export Control Classification Numbers 2B350 (chemical/biological equipment) and 2B999 (specific processing equipment not controlled by Wassenaar Arrangement or other multilateral regimes).
IX. SUMMARY OF FACTORS SUPPORTING DECLINATION
In the interest of clarity, we present a consolidated summary of the factors that, individually and collectively, support the issuance of a declination of prosecution for Dunmore Energy Holdings Ltd.:
1. Voluntary Self-Disclosure. Dunmore proactively identified the potential violations within five days of the catalyst event (the Volkhov SDN designation) and engaged outside counsel on April 14, 2022 — before the Department issued the grand jury subpoena on April 19, 2022. On June 1, 2023, Dunmore filed a comprehensive voluntary self-disclosure with OFAC's Compliance & Enforcement Division, disclosing the full scope of the apparent violations.
2. Full Cooperation. Dunmore conducted a comprehensive internal investigation involving 47 witness interviews across three rounds, the collection of 2,347,812 documents from six jurisdictions (with 438,916 deemed responsive and produced to the Department), the engagement of Ridgeline Advisory Group LLC for forensic accounting analysis, and the submission of a 176-page internal investigation report to the Department. Dunmore made a key cooperating witness, Omar Al-Rashidi, available for a DOJ interview on July 12, 2023, without conditions or limitations. Dunmore provided multiple voluntary proffers and supplemental submissions throughout the investigation.
3. Timely Remediation. Dunmore separated the culpable employees — Natasha Sorokin (separated September 15, 2022), Derek Hargrave (separated October 1, 2022), and Gerald Fisk (departed June 10, 2022) — within months of the investigation's commencement. The company appointed Priya Nayar as Chief Compliance Officer on August 1, 2022, bringing deep expertise in sanctions compliance to the organization. Dunmore retained Pemberton Investors Solutions LLC on December 15, 2022, to design a comprehensive remediation program. On October 1, 2023, the Board of Directors formally adopted the Enhanced Sanctions & Export Controls Compliance Program. Full implementation was confirmed in the supplemental remediation report submitted on January 15, 2024.
4. Voluntary Disgorgement. On November 30, 2023, Dunmore made a voluntary disgorgement payment of $8,750,000 to the U.S. Treasury, representing the estimated net profits derived from the nine tainted crude oil swap transactions. The payment was made entirely voluntarily, in advance of any government demand, and the calculation methodology was shared with and reviewed by the Department.
5. OFAC Disposition. On April 15, 2024, OFAC issued a Cautionary Letter (Ref. OCA-2024-11587) — the most favorable enforcement outcome available for matters involving apparent violations — without imposing any civil monetary penalty. OFAC cited Dunmore's voluntary self-disclosure, cooperation, remediation, and disgorgement as mitigating factors supporting this disposition.
6. Good Corporate Citizenship. Dunmore is a privately held company with approximately 3,200 employees worldwide whose livelihoods and economic well-being would be adversely and materially affected by a criminal prosecution. The company has invested over $31 million (gross) in investigating and remediating this matter, reflecting its deep commitment to accountability and compliance. After recovery under the company's directors and officers insurance policy with Garrison Mutual Insurance Co., the net cost to Dunmore has been approximately $24.075 million — a substantial sum that underscores the seriousness with which the company has approached this matter.
7. Individual Accountability. Dunmore has not sought to shield the individuals primarily responsible for the misconduct from accountability. The company permitted Hargrave, Sorokin, and Fisk to retain separate counsel and advanced their defense costs totaling approximately $3.4 million without conditioning advancement on cooperation with any particular narrative. The Department retains full discretion to pursue individual prosecutions of these former employees, and Dunmore has cooperated fully in providing the Department with the information and evidence necessary to evaluate such prosecutions.
X. REQUEST FOR FORMAL DECLINATION
Based on the foregoing, Dunmore Energy Holdings Ltd. respectfully and formally requests that the Department of Justice issue a written declination of prosecution in connection with the investigation referenced above, including grand jury subpoena GJ No. 22-418. Dunmore submits that the totality of its conduct — encompassing voluntary self-disclosure, full and proactive cooperation, timely and comprehensive remediation, and voluntary disgorgement of profits — satisfies each of the criteria set forth in the DOJ Corporate Enforcement Policy for a declination and compels such an outcome.
Dunmore remains prepared to meet with you, Trial Attorney Kovacs, Trial Attorney Pressman, or any other representative of the Department at your convenience should any additional information, clarification, or discussion be helpful to the Department's evaluation of this request. We look forward to the productive dialogue that has characterized our engagement with your office throughout this matter.
Finally, Dunmore wishes to affirm its commitment to maintaining the Enhanced Sanctions & Export Controls Compliance Program on an ongoing basis. The company views the Enhanced Program not as a temporary measure adopted to satisfy the government's expectations, but as a permanent and integral component of its business operations. Dunmore is committed to continuous improvement of its compliance infrastructure and to maintaining the highest standards of corporate conduct in its global operations.
We thank you for your careful consideration of this request.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Victoria Chambers Partner, White Collar Defense & Investigations Group Calderwood & Harkness LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006 Telephone: (202) 551-7400
Email: vchambers@calderwoodharkness.com
Matter No. 1016-00009
cc: (via electronic mail)
Samuel Kovacs, Esq., Trial Attorney, Counterintelligence and Export Control Section, National Security Division, U.S. Department of Justice
Diana Pressman, Esq., Trial Attorney, Counterintelligence and Export Control Section, National Security Division, U.S. Department of Justice
Marcus Wellbourne, Esq., General Counsel, Dunmore Energy Holdings Ltd. (via separate cover)
Howard Quinn, Esq., Partner, Calderwood & Harkness LLP
Enclosures:
1. OFAC Cautionary Letter (Ref. OCA-2024-11587), dated April 15, 2024
2. Supplemental Remediation Report, dated January 15, 2024
3. Confirmation of U.S. Treasury Disgorgement Payment ($8,750,000), dated November 30, 2023