ESCO Corporation Agrees to More than $2 Million Settlement with OFAC for Apparent Violations of the Cuban Assets Control Regulations
ESCO Corporation, based in Portland, Oregon, entered into a $2,057,540 settlement with OFAC for alleged violations of the Cuban Assets Control Regulations (CACR) related to its Canadian subsidiary’s purchase, between 2007 and 2011, of briquettes made or derived from Cuban nickel. The Cuban-origin nickel was allegedly sourced from persons on OFAC’s Specially Designated Nationals List (SDN). Although OFAC did not disclose the number of apparent violations, it stated that the subsidiary conducted “large-volume and high-value transactions,” thereby causing significant harm to the objectives of the Cuba sanctions program.
OFAC found that ESCO acted with reckless disregard for the sanctions program, failing to recognize “red flags” in the public domain indicating that the briquettes were derived from Cuban nickel. However, the settlement, a reduction from the base penalty of $3,048,208, reflects, among other factors, OFAC’s determination that ESCO voluntarily disclosed the alleged violations, had implemented compliance enhancements and had cooperated with the investigation.
Indam International, Inc. Reaches OFAC Settlement for Apparent Violations of the ITSR
Indam International, Inc. based in Houston, Texas, agreed to a $44,850 settlement with OFAC for alleged violations of the ITSR for exporting or attempting to export nine shipments of unidentified goods to the United Arab Emirates with reason to know the shipments were ultimately destined for two oil drilling rigs in or destined for Iranian waters.
The settlement was a reduction from the base penalty of $69,000, despite OFAC’s determination that Indam failed to conduct due diligence to identify the end users of its shipments and that U.S. Customs and Border Protection (CBP) previously seized an Indam shipment in 2006 similarly destined for a drilling rig in Iranian waters. The reduction apparently reflects OFAC’s finding that Indam did not have actual knowledge of the ultimate destination or location of the recipient oil rigs and acknowledgement that the company forfeited to CBP the goods involved in four of the shipments.
Georgia Man Sentenced for Violation of Arms Export Control Act and Possession of Pipe Bombs
In mid-October, the U.S. District Court for the Middle District of Georgia sentenced Robert Shubert Sr. to a 78-month prison term, the maximum allowable under U.S. Sentencing Guidelines, following Shubert’s guilty plea involving violations of the Arms Export Control Act and possession of an unregistered firearm. Shubert had exported defense articles to a foreign country without authorization over a period of five and a half years, preparing false documentation to facilitate the exports. In addition, authorities found more than 80 pipe bombs in two of his homes. A DOJ official commenting on the case remarked, “Shubert showed a total disregard for the laws of the United States . . . and the potential harm the defense articles he exported could pose to others.” The court also imposed a $15,000 fine and ordered Shubert to forfeit $147,892.