Worcester Business Journal

4 Worcester Business Journal | January 21, 2019 | wbjournal.com C E N T R A L M AS S I N B R I E F IPG CEO sues U.S. Treasury over Russian oligarch list V E R BAT I M Middle Eastern lights "We do everything from universities to country clubs to municipal facilities. We've done them all around the world, including in the Middle East and Caribbean ... You end up with some significant markets that are viable and worth growing in." Steven Rothschild, CEO of Worcester lighting company Access Fixtures, on developing specialty lights for uses around the globe Marijuana payments "Rather than engage in litigation that ties up commonwealth resources, I think it makes more sense to go back to the Legislature and talk about what needs to be done to address the problem." Cannabis Control Commissioner Kay Doyle, on the need for the agency to seek legislative changes to ensure host community agreements between municipalities and marijuana companies comply with the law Beer partnership for charity "When the news of Firefighter Roy came out, I was at Wormtown the next day, and we all agreed that the time is now." Wachusett Brewing Co. President Christian McMahan on his company and Wormtown Brewery in Worcester partnering to release a beer to benefit the daughter of Worcester firefighter Christopher Roy, who died in the line of duty T he Russian-American billion- aire founder and chief exec- utive of Oxford-based IPG Photonics is suing the U.S. Department of the Treasury for listing him as a Russian oligarch. at designation could eventually freeze Valentin Gapontsev's assets or block him from being in the country. "Dr. Gapontsev's wealth comes from his invention of market-leading indus- trial laser technologies, not from any corrupt parceling out of public assets to cronies of President Putin," the Decem- ber court complaint said. e Treasury, at the behest of Congress, compiled a list of Russian oli- garchs and political operatives last year to comply with a law imposing sanc- tions on Iran, North Korea and Russia. at law, Countering America's Adversaries rough Sanctions Act of 2017, required a report on the effects of imposing sanctions on Russian businesses in the U.S. with close ties to Russian President Vladimir Putin and the Kremlin. Gapontsev, a Worcester resident, says in a 33-page complaint he does not belong anywhere near that list. e list compiled by the Treasury simply copied the list of Russian bil- lionaires from a March 2017 issue of Forbes magazine, Gapontsev alleges. Forbes has since removed Gapontsev from that list, and he is now listed as an American billionaire because his res- idence, company and wealth are based in the U.S. According to the complaint, the com- pany's customers and financial institu- tions have begun questioning whether they should continue to do business with IPG. "At least one counterparty stated they assumed that IPG Photonics, due to its founder, CEO, and substantial owner's designation as a Russian oligarch by the Secretary, is effectively disqualified from doing business with U.S. persons and corporations," the complaint said. Most affected is the com- pany's small but growing business with U.S. govern- ment contractors. Now, the government and contractors have told the company "they believed they could no longer with with IPG Photonics" due to Gapontsev's inclusion on the list. e complaint details how Gapontsev, born in the Soviet Union and raised in Ukraine, worked at the Soviet Academy of Sciences to re- search fiber-based lasers and amplifiers. Aer publishing a scientif- ic paper, an Italian tele- communications company contracted with Gapontsev's company, dubbed STC IRE- Polus Partnership, to develop a high-powered erbium fiber amplifier. at is credited as his first major breakthrough and was not funded by the Russian govern- ment, the complaint notes. In 1997, Gapontsev's products were qualified for use in BellSouth, a U.S.- based telecommunications company for a fiber-optic network. It was then Gapontsev established IPG Photonics and opened its Oxford Forbes moved Valentin Gapontsev from its Russian billionaires list to its American billionaires list after the U.S. Treasury allegedly used the former to label Gapontsev as a Russian oligarch. BY ZACHARY COMEAU Worcester Business Journal Staff Writer headquarters aer a $100 million in private equity investments from U.S.-based TA Associates and Merrill Lynch, which took a minority owner- ship in the company. It was scientific innovation, hard work and contracts with western corporations that drove Gapontsev's wealth, he said. According to the complaint, Russian entities are far from being the company's biggest customers. "By region, 44 percent of the company's sales are to compa- nies in China, 12 percent of the company's sales are to companies in the United States, 8 percent of the company's sales are to com- panies in Germany, 21 percent of the company's sales are to 'Other Europe,' and 15 perecnt of the company's sales are to 'Other Asia.' Of this 15 percent, approx- imately 2 percent of total sales were in Russia," the suit alleges. Notably, some other cus- tomers include government contractors Lockheed Martin and Boeing. The physicist says he has only met Putin once, in 2011, while receiving an award for scientific achievement by a Russian. But it was the U.S. and other countries he credits with his success. "Dr. Gapontsev is the polar opposite of a Russian oligarch," the complaint said. "He had no friends in high places in the Russian government. His wealth came exclusively from his individual scientific innovation and global market demand for his unique products. He is not a 'Russian oligarch.'" e suit charges Department of the Treasury Secretary Steven Mnuchin as a defendant, and summons include him, the Treasury, and the U.S. Attorney General's office. e case, however, is on hold, with Congress and President Donald Trump failing to agree on a government funding package. W

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