Judge Refuses to Approve Fokker’s Multimillion-Dollar Sanctions Penalty
As we reported in June 2014, Fokker Services B.V. (FSBV), a Netherlands-based aerospace company, reached a global settlement of USD $21 million with the Office of Foreign Assets Control (OFAC), the U.S. Department of Commerce's Bureau of Industry and Security (BIS), and the U.S. Attorney’s Office for the District of Columbia regarding allegations of 1,112 violations of the Iranian Transactions and Sanctions Regulations (ITSR) and of 41 violations of the SSR. However, on February 5, 2015, the Honorable Richard J. Leon of the U.S. District Court for the District of Columbia rejected the settlement, stating that it “does not constitute an appropriate exercise of prosecutorial discretion.”
Although the U.S. Attorney for the District of Columbia who handled the case said that the “prosecution sends a clear message that there will be consequences for those who seek to profit from violating and circumventing U.S. trade laws,” Judge Leon disagreed. In his February 5 opinion, the judge criticized the leniency of the 18-month deferred prosecution agreement (DPA) that accompanied the settlement and the dollar amount of the fine. He wrote that the deal “would undermine the public’s confidence in the administration of justice and promote disrespect for the law for it to see a defendant prosecuted so anemically for engaging in such egregious conduct for such a sustained period of time and for the benefit of one of our country’s worst enemies.” Judge Leon also questioned why the DPA terms lacked the appointment of an independent monitor “trusted by the Court to verify for it and the Government both that this rogue company truly is on the path to complete compliance.”
Judge Leon did not articulate specific modifications to the agreement but said he remains “open to a modified version” if the DOJ and FSBV agree to different terms for his review.
According to 2014 court filings, both the government and FSBV argued that the court’s role in this process is confined to ensuring that the defendant entered the agreement willingly and knowingly, and that the DPA doesn’t violate the defendant’s right to a speedy trial. Refuting this limited interpretation of the role of “the Court to serve as a rubber stamp,” Judge Leon referred to last year’s ruling out of the U.S. District Court for the Eastern District of New York that the district court does have the power to approve or reject such an agreement.
Fokker announced it will appeal Judge Leon’s ruling.
Former Defense Contractor Employee Pleads Guilty to AECA Violations
In late February 2015, a former employee of three U.S. defense contractors, Mozaffar Khazaee, pleaded guilty in the U.S. District Court for the District of Connecticut to AECA violations arising from efforts to send to recipients in Iran export-controlled technology related to the U.S. Air Force F35 Joint Strike Fighter and F-22 Raptor programs. Khazaee had stolen the sensitive, proprietary material from his defense contractor employers and attempted to use this information over a four-year period to obtain employment in Iran.
Khazaee succeeded in sending some export-controlled documents to Iran via email. He failed, however, in his attempt to send an unlicensed shipment to Iran containing digital media with thousands of documents, many of which were labeled as "ITAR-controlled" (i.e., subject to the International Traffic in Arms Regulations) or “export controlled.” U.S. authorities arrested Khazaee before he boarded a flight to Iran and found additional export-controlled documents about military jet engines in his belongings. The court set sentencing for May 20, 2015. Khazaee faces up to 20 years in federal prison and a potential USD $1 million fine.
An FBI representative highlighted the importance for U.S. companies to remain vigilant to the risk of theft of sensitive technologies.
Japanese Man Sentenced to 30-Month Prison Term for Export Violation
Late last month, the U.S. District Court for the Western District of New York sentenced Japanese citizen Iteru Masui, age 30, to 30 months in prison for violation of AECA. Masui attempted to export from the United States AN/PRC-152 radios, controlled for export by the U.S. Munitions List (USML). Special agents of the Department of Homeland Security discovered and stopped Masui’s attempted illegal export.
Maryland Man Sentenced For Planned Exports to Iran
In early February 2015, the U.S. District Court for the District of Maryland sentenced 34-year-old Ali Saboonchi of Maryland to two years in prison, for conspiracy and seven counts of exporting U.S.-manufactured industrial products and services to Iran in violation of the ITSR. According to trial testimony, the defendant created a business to procure goods to be sent to Iran and, in conspiracy with three fugitive co-defendants, exported U.S.-manufactured industrial goods and services to Iranian businesses. Saboonchi shipped items intended for Iranian customers to entities in the United Arab Emirates (UAE) and China without obtaining authorization to export the products. The co-conspirators then arranged the transport of goods from UAE and China to the customers in Iran.
See additional reporting at Examiner.com.
Texas Man Sentenced for Illegally Exporting Night Vision Devices
Earlier this month, the U.S. District Court for the District of Maryland sentenced Texas resident David Kelley to an 18-month prison term, for an estimated 60 illegal exports of night vision devices on the USML in violation of the ITAR. Kelley operated a business that sold night vision and other military-style equipment. Over a nine-month period, he sold the night vision devices to foreign customers in 24 countries without obtaining the necessary license and marked the shipments with various false labels.
Learn more at My Fox Houston.