Department of Commerce Export Violations
On April 18, 2008, the Department of Commerce’s Bureau of Industry and Security (“BIS”) entered into a settlement agreement with Engineering Dynamics, Inc. (“EDI”), of Kenner, La., under which EDI agreed to pay nearly $133,000. EDI was charged with conspiring to violate the Export Administration Regulations (“EAR”) and the Iranian Transactions Regulations, by exporting an engineering software program to Iran through its co-conspirators in Brazil, without obtaining the required U.S. government authorization. BIS alleged that the scheme, which constituted a single violation of the EAR, continued over roughly a 12-year period, from March 1995 through February 2007.
On April 30, 2008, BIS issued an Order affirming the findings of fact and conclusions of law in a Recommended Decision and Order (“RDO”) issued against Kabba & Amir Investments, Inc. d/b/a International Freight Forwarders (“IFF”), of Toronto. According to the RDO, IFF violated the EAR when it took constructive possession of a shipment of x-ray film processors and facilitated their attempted export to Cuba via Canada, without the required BIS export license. The Order, which became effective upon its May 7, 2008 publication in the Federal Register, assessed a number of penalties against IFF, including a $6,000 fine and a threeyear denial of export privileges. BIS stated that the Order could be waived in its entirety, provided IFF paid the penalty in full within 30 days of issuance and committed no further violation within the three-year suspension period.
On May 5, 2008, the U.S. District Court for the District of Arizona denied Mohammad Reza Alavi’s (“Alavi”) Motion to Dismiss Count 1 of the Superseding Indictment, charging him with violations of the International Emergency Economic Powers Act (“IEEPA”) and the Iranian Transactions Act. Alavi, an engineer from Iran, contested the indictment on the basis that his alleged software export to Iran was not prohibited from export and required no export license. The court denied his motion to dismiss determining that whether a specific item is on BIS’s Commerce Control List is a political question not subject to judicial review.
On May 19, 2008, BIS ordered that a 10-year denial of export privileges imposed in May 2007 against Winter Aircraft Products (“Winter Air”) be made applicable to Iberair Lines (a/k/a “Desarollos Ind. Iberair, SL” and “Desarollos Empresariales Iberair L”) and to Ana Belen Diaz (a/k/a/ “Ana Vazquez”) (collectively “the Respondents”). BIS found the Respondents were related to Winter Air by ownership, control, position of responsibility, affiliation, or other connection in the conduct of trade or business, thus making the imposition of the Order against the Respondents necessary to prevent its evasion.
On May 20, 2008, BIS entered into a settlement agreement with TFC Manufacturing, Inc. (“TFC”), of Lakewood, Calif., under which TFC agreed to pay $31,500. TFC was charged with violating the EAR by providing technology for the production of aircraft parts to an employee who was an Iranian national (a deemed export). According to the terms of the settlement, if TFC failed to pay the penalty in a timely manner, BIS could take further action to deny all of TFC’s export privileges for one year.
On May 27, 2008, Alavi was convicted of illegally accessing a U.S. computer to use software from a former employer, the largest nuclear plant in the United States. A sentencing hearing has not yet been set, but Alavi could be fined up to $250,000 and could face five years in prison. A second trial was scheduled for Aug. 1 to retry Alavi on the two remaining charges over which the jury deadlocked: one count of stealing protected software from the nuclear plant and one count of illegally exporting the software in violation of the trade embargo with Iran.
On June 5, 2008, BIS entered into an agreement with Andes Chemical Corporation (“Andes”) of Miami to settle charges that Andes committed a total of eight violations of the EAR at various times during 2003, 2004, 2006, and 2007. The charges stemmed from Andes’ voluntary self-disclosure that it exported sodium bifluoride to Jamaica on six occasions without the required license, and failed to file Shipper’s Export Declarations or Automated Export System records on two of those occasions. Under the agreement, Andes incurred a $60,000 penalty, and could face denial of its export privileges for a year if it failed to pay in a timely manner.
On June 6, 2008, BIS ordered the complete denial of export privileges of Galaxy Aviation Trade Company, Ltd., Hooshang Seddigh, Hamid Shakeri Hendi, Hossein Jahan Peyma, and Iran Air (collectively “the Denied Persons”) for 180 days, and the denial, also for 180 days, of specific export privileges of Ankair related to a particular Boeing 747 aircraft. BIS claimed that the Denied Persons, variously from London and Iran, were attempting to purchase the aircraft from the Turkey-based Ankair, and to re-export the plane from Turkey to Iran, without the necessary U.S. Government authorization. It thus found that violation of the EAR was likely and imminent, and that the temporary denial order was necessary to prevent future violations.
On June 6, 2008, Reston, Va.-based WaveLab, Inc. (“WaveLab”) was sentenced to one year of supervised probation and a $15,000 fine, and ordered to forfeit $85,000 in profits it made in conjunction with its unlawful export of electronic components to China. The sentence was negotiated as part of a March 7, 2008 plea agreement, in which WaveLab admitted that it had knowingly and willfully exported more than 2,400 power amplifiers that could be used in satellite and wireless communications, without the necessary export license for goods with dual civilian and military uses.
On June 6, 2008, Khalid Ahmed, of Virginia, was sentenced to five months in federal prison and assessed a fine of $1,500 for attempting to export firearms to the Sudan without the necessary State Department license. Agents from the Immigration and Customs Enforcement bureau had been investigating Ahmed’s activities for some time, and had previously intercepted a package of gun parts he attempted to send to the Sudan by mail. Additionally, in August 2007, customs agents found parts of an assault rifle concealed by Ahmed in his wife’s luggage for a trip to the Sudan. Ahmed was arrested Jan. 31, 2008 and pleaded guilty to the firearms chargeson March 13.
On June 11, 2008, BIS entered into a settlement agreement with Brighton Equipment Corporation (“Brighton”) of Paramus, N.J., under which Brighton agreed to pay $17,500. Brighton was charged with violating the EAR by exporting software to the People’s Republic of China without the required license. According to the terms of the settlement, if Brighton failed to pay the penalty in a timely manner, BIS could take further action to deny all of Brighton’s export privileges for one year.
On June 18, 2008, the DOJ announced that Xiaodong Sheldon Meng, a software engineer from China, was sentenced to a prison term of 24 months and three years of supervised release after the prison term, as well as a fine of $10,000 and forfeiture of computer equipment that had been seized in the case. In August 2007, Meng pleaded guilty to violations of the Economic Espionage Act, the AECA and the International Traffic in Arms Regulations. His conviction under the AECA was the first involving military source code.
On June 20, 2008, BIS ordered the waiver of the remainder of a five-year non-standard denial of export privileges of Stamford, Conn.-based Omega Engineering, Inc. (“Omega”). The denial, which was limited to export activity involving Pakistan, was originally imposed Nov. 12, 2003, based on charges that Omega committed 17 violations of the EAR. In the ensuing years, Omega provided “extraordinary cooperation” in BIS’ investigation and subsequent prosecution of the attempted unlawful export of U.S.-origin goods to Iran, which was a primary factor in the decision to waive the remaining months of the denial period. The waiver took effect when it was published in the Federal Register June 30, 2008.
On June 23, 2008, BIS ordered the complete denial of export privileges of Reza Mohammed Tabib (a/k/a “Reza Tabib” and “Re Tabib”), and extended the denial to Terri Tabib (a/k/a “Terri Repic”) (collectively “the Tabibs”), until May 8, 2012. On May 8, 2007, Reza Tabib pleaded guilty to violating the International Emergency Economic Powers Act (“IEEPA”), for attempting to export various aircraft parts from the United States to Iran without the required license. BIS found the extension of the denial to Terri Tabib, Reza Tabib’s wife and business partner, was necessary to prevent its evasion. BIS also revoked all licenses issued pursuant to the EAR in which either of the Tabibs had an interest at the time of Reza Tabib’s conviction.
On June 23, 2008, the DOJ announced that Hassan Saied Keshari, Traian Bujduveanu, Kesh Air International Corp., and Orion Aviation Corp. (“defendants” collectively) were charged in an 11-count indictment returned by a Federal Grand Jury in Miami, with violations of the IEEPA, the AECA, and the United States Iran Embargo for their conspiracy to export U.S. military aircraft parts to Iran. If the defendants are convicted, they face significant jail time and fines of up to $1 million.
On June 24, 2008, an indictment was filed in U.S. District Court in Des Moines alleging AECA violations against Rigel Optics and its president, Donald W. Hatch. According to the indictment, in 2002 and 2003, Rigel Optics illegally imported certain defense articles, including night vision optical equipment from Russia and Belarus.
On July 9, 2008, the DOJ announced that Riad Skaff (“Skaff”), a former ground services coordinator at O’Hare International Airport, was sentenced to two years in prison for smuggling $396,000 and for illegally exporting defense articles without obtaining the required export licenses. Skaff was arrested after smuggling money and defense articles at the request of undercover agents from U.S. Immigration and Customs Enforcement (“ICE”).
On July 10, 2008, BIS issued an order modifying the temporary denial of export privileges of respondent Ankair based on additional evidence provided by the Office of Export Enforcement that showed that the Denied Persons subject to the original order were attempting to re-export a Boeing 747. Consequently, BIS modified its original order as to Ankair to deny Ankair’s export privileges of all exports or re-exports of items subject to the EAR.
On July 10, 2008, BIS issued an Order affirming the terms of the Settlement Agreement between BIS and Advanced Orientation Systems, Inc. (“AOS”), and ordering that AOS pay $15,000 of the $31,500 assessed against it within 30 days from the date of the Order. If AOS timely pays the $15,000 penalty and avoids violations of the Export Administration Act for one year, then the remaining $16,500 fine will be waived.
On May 1, 2008, BIS entered into a settlement agreement with Aviall Pte. Ltd. (Singapore) (“Aviall Singapore”), a foreign subsidiary of the Delaware-based Aviall, Inc., to address charges that it committed two violations of the EAR when it received and failed to report a purchase order from a customer in Bahrain that included a provision promoting an unlawful foreign boycott. While neither admitting nor denying the truth of the allegations, Aviall Singapore agreed to pay a civil penalty of $3,600, an obligation which, if not met, would result in the loss of its export privileges for a year from the date of the settlement agreement.
Office of Foreign Assets Control (“OFAC ”) Violations
On May 2, 2008, OFAC announced that York International Corporation (“York”) had remitted $669,507 to settle allegations that it violated the Iranian Transactions Regulations, the Sudanese Sanctions Regulations, and the Iraqi Sanctions Regulations in the course of sales of air conditioning and refrigeration equipment to Iran and Sudan by foreign nationals employed by York. The company was also accused of making improper payments to Iraqi government officials in conjunction with licensed sales of refrigeration equipment under the United Nations Oil-for-Food Program. The circumstances surrounding the matter were voluntarily disclosed to OFAC by Johnson Controls, Inc., which acquired York after the alleged violations occurred.
On May 2, 2008, OFAC announced the remittance of nearly $132,800 by Engineering Dynamics Inc. (“EDI”), of Kenner, La. to settle charges brought by both the Department of Commerce and the U.S. Attorney for the Eastern District of Louisiana that EDI violated the Iranian Transactions Regulations on multiple occasions between March 2003 and February 2007. During that time, EDI allegedly imported and exported, without the necessary authorization, an engineering software program to facilitate the design of offshore oil and gas structures. EDI voluntarily disclosed the matter to OFAC.
On May 2, 2008, OFAC announced that Knight Industries and Associates, Inc. (“Knight”), of Auburn Hills, Mich, paid nearly $17,500 to settle charges that it violated the Iranian Transactions Regulations between November 2003 and June 2007, by exporting material-handling systems to Iran without the necessary license. According to the announcement, Knight disclosed the matter to OFAC on its own accord, and subsequently instituted a comprehensive compliance program to prevent future violations of the regulations.
On May 2, 2008, OFAC announced that it had assessed a $1,875 civil penalty against Journey Corp. Travel Management (“Journey”), of New York, on the grounds that Journey violated the Cuban Assets Control Regulations on or about Oct. 22, 2003, by facilitating the purchase of airline tickets to Cuba on behalf of a U.S. person. Journey did not voluntarily disclose the matter to OFAC.
On May 2, 2008, OFAC announced its assessment of a $2,414 penalty against the Newman Group Computer Services Corp. (“Newman”) of Dexter, Mich., on the grounds that in March 2007, Newman attempted to export computer equipment to an entity in Khartoum, Sudan without a license, thereby violating the Sudanese Sanctions Regulations. Newman did not voluntarily disclose the matter to OFAC.
On May 2, 2008, OFAC announced that International Transport Solutions, Inc. (“ITS”), of Carlsbad, Calif., had been assessed a $2,700 civil penalty for violating the Former Liberian Regime of Charles Taylor Sanctions Regulations. ITS allegedly attempted nearly three years earlier to engage in a transfer of funds to a blocked person. ITS did not voluntarily disclose the matter to OFAC.
On May 2, 2008, OFAC announced that it had assessed a civil penalty of $1,085 against Jor Creek Enterprises (“Jor Creek”) of Olney, Md. for alleged violations of the Charles Taylor Sanctions Regulations. Specifically, Jor Creek was accused of paying the automobile insurance premiums of a blocked person between Aug. 11, 2004, and March 10, 2005. Jor Creek did not voluntarily disclose the matter to OFAC.
On May 2, 2008, OFAC announced that an individual had agreed to a settlement totaling $5,425.50 for allegedly purchasing Cuban cigars over the Internet between November 2004 and May 2006, which constituted unlawful dealing in property in which Cuba or a Cuban national had an interest. The individual did not voluntarily disclose the matter to OFAC.
On May 2, 2008, OFAC announced a $1,014 settlement with an individual accused of dealing in property in which Cuba or a Cuban national had an interest. The individual allegedly purchased Cuban cigars over the Internet between December 2003 and April 2006. The individual did not voluntarily disclose the matter to OFAC.
On May 2, 2008, OFAC announced a $1,000 settlement with an individual accused of purchasing Cuban cigars over the Internet during the year 2005, which constituted dealing in property in which Cuba or a Cuban national had an interest. The individual did not voluntarily disclose the matter to OFAC. On May 2, 2008, OFAC announced its settlement with an individual accused of dealing in property in which Cuba or a Cuban national had an interest, for purchasing Cuban cigars over the Internet between January 2005 and June 2006. The individual, who did not voluntarily disclose the matter to OFAC, agreed to pay $830.
On May 2, 2008, OFAC announced that an individual had agreed to a settlement totaling $562.50 for allegedly dealing in property in which Cuba or a Cuban national had an interest, by purchasing Cuban cigars over the Internet on three occasions. The individual did not voluntarily disclose the matter to OFAC. On June 6, 2008, OFAC announced that Spirit Airlines, Inc. (“Spirit”) of Miramar, Fla., had remitted $100,000 to settle allegations that it violated the Cuban Assets Control Regulations between September 2004 and March 2007. The charges were raised after Spirit voluntarily disclosed that it may have acted without an OFAC license, or outside the scope of a preexisting license, when it transferred funds to Cuba for over-flight payments.
On June 6, 2008, OFAC announced the remittance of $67,574 by United Radio, Inc. d/b/a BlueStar (“BlueStar”), of Florence, Ky., to settle allegations that its subsidiary, BlueStar Canada, violated the Cuban Assets Control Regulations between March 1, 2004, and Nov. 16, 2005. BlueStar voluntarily disclosed to OFAC that its subsidiary had unlawfully shipped electronic products to Cuba.