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Recent Export Violations

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Recent U.S. Export Violations

Going to prison or paying a large fine for an export violation seems hypothetical or imaginary until it happens to you. The possibilities are horrifying to both individuals and businesses, but regrettably, American businesses and business people are convicted and fined, and American business people do go to jail. Their names, their company names, and their violations are matters of public knowledge and consequently the cause of a great deal of damage to both brand and personal reputation, as well as future prospects.

The heaviest fines are for willful, criminal convictions (currently up to $1 million, increasing to up to $10 million or ten times the value of the export when the new Export Administration Act is passed). Civil penalties are not as harsh, but still consequential.

In addition to fines and prison terms under criminal and civil sanctions, there are administrative sanctions (including denial of export privileges and exclusion from practice), statutory sanctions, seizure and forfeiture, cross-debarment, denial of licenses or approvals, and suspensions of the right to contract with the United States Government that can ruin a company.

Case materials courtesy of the United States Government Bureau of Industry and Security (BIS) and Department of Justice.

2014 U.S. Export Violations

Wind River Systems

October 2014. Wind River Systems agreed to pay $750,000 in order to settle allegations that it had sold encryption software to entities on the BIS Entity List. The penalty was approved to "serve as a reminder to companies of their responsibility to know their customers and, when using license exceptions, to ensure their customers are eligible recipients".

Robbins & Myers Belgium S.A

October 2014. Robbins & Myers Belgium S.A pled guilty to the illegal export of drilling equipment to Syria. The company agreed to pay $1,000,000 in criminal fines for the export of the goods, which they sold initially for only $31,716.

Harold Rinko

September 2014. Harold Rinko pled guilty to conspiracy to illegally export laboratory equipment from the U.S. to Syria via Jordan, the U.A.E., and the U.K. Rinko could be sentenced to up to five years in prison, as well as fined up to $250,000.

Epsilon Electronics Inc.

July 2014. Epsilon Electronics Inc. was assessed a penalty of $4,073,000 for allegedly violating the Iranian Transactions and Sanctions Regulations (ITSR) after shipping audio and video equipment to a company that it knew, or ought to have known, would re-export it to Iran. Epsilon's lack of a compliance program was mentioned as one factor that helped determine the severity of the fine.

Bank of America, N.A.

July 2014. Bank of America, N.A. agreed to pay $16,562,700 to settle allegations it violated the Foreign Narcotics Kingpin Sanctions Act (FNKSR). The apparent violations included a failure to block five accounts owned by individuals on OFAC's SDN List, and processing 208 transactions conducted by said individuals. The apparent violations were determined to be egregious, due in part to deficiencies known to be present in its OFAC Screening Tool.

Intersil Corporation

June 2014. Intersil Corporation entered into a consent agreement with the DDTC to settle allegations that it had engaged in the unauthorized export and re-export of integrated circuits controlled under ITAR, leading to potentially thousands of export violations. As part of the consent agreement, Intersil agreed to pay $6,000,000 in fines and a further $4,000,000 on remedial compliance measures, a total penalty of $10,000,000.

BNP Paribas SA

June 2014. BNP Paribas SA agreed to pay $963,619,900 to settle apparent violations of OFAC regulations involving multiple financial transfers to the Sudan, Iran, Burma, and Cuba, over the span of several years. Multiple factors contributed to the severity of the fine, among them senior managment's knowledge of the apparent violations and the company's lack of a adequate compliance policies and procedures.

Fokker Services

June, 2014: Fokker Services B.V. (FSBV) agreed to pay $21,000,000 to settle allegations that it repeatedly violated the Iranian Transactions and Sanctions Regulations (ITSR) and the Sudanese Sanctions Regulations (SSR) by exporting or reexporting aircraft spare parts to Iran and the Sudan. The apparent violations were determined to be egregious, in part because FSBV had no formal OFAC compliance process in place during most of the period in which the violations were alleged to have occurred.

Janiece Michelle Hough

June, 2014 Janiece Michelle Hough was found guility of one count of smuggling goods from the United States after she shipped two Advanced Combat Optical Gunsights to Germany as part of her home business operations. She did so without the requisite license needed for the parts under the ITAR. Following her guilty plea, Hough was sentenced to six months of imprisonment, followed by three years of supervised release. Hough was also ordered to perform 100 hours of community service and to forfeit $198,054.

Decolar.com, Inc.

May 2014. Decolar.com, Inc. agreed to pay $2,809,800 to settle alleged violations of the Cuban Assets Control Regulations (CACR). The settlement amount was influenced in part by the lack of any OFAC compliance program at the time of the apparant violations.

Aramex Emirates, LLC

May, 2014: The Bureau of Industry and Security announced that Aramex Emirates, LLC, located in Dubai, United Arab Emirates (U.A.E.), agreed to pay a $125,000 civil penalty in connection with the unlicensed export and reexport to Syria, via the U.A.E., of network devices and software without the required BIS licenses.

CWT B.V.

April 2014. CWT B.V. agreed to pay $5,990,490 to settle allegations it violated the Cuban Assets Control Regulations (CACR). The settlement amount was influenced by the fact that CWT was a "sophisticated international corporation" that nonetheless lacked an adequate OFAC compliance program.

Hetran, Inc

April 2014. Hetran, Inc. and its CEO, Helmut Oertmann were charged with conspiracy to evade export reporting requirements and with smuggling to Iran. The item in question, a dual-use single lathe machine. The company now faces a potential fine of up to $1,000,000, while Oertmann could receive a prison term of up to ten years if found guilty.

John Alexander Talley

April, 2014: A U.S. District Judge sentenced John Alexander Talley (42, Seattle, Washington) to 30 months in federal prison for conspiracy to violate the International Emergency Economic Powers Act and the Iranian Transaction Regulations. According to court documents, from about 2009 to about September 2012, Talley and his company conspired with others to unlawfully export sophisticated enterprise level computer equipment from the United States to Iran, and to provide computer information technology (IT) support services for the equipment, all in violation of the United States embargo.

Esterline Technologies Corporation

March 2014. Esterline Technologies Corporation entered into a consent agreement with the DDTC to settle allegations that it improperly transfered technical data to foreign person employees and misclassified defense items controlled under ITAR. As part of the consent agreement, Esterline agreed to pay $10,000,000 in fines and another $10,000,000 for remedial compliance measures, a total penalty of $20,000,000.

Ubiquiti Networks, Inc

March 2014. Ubiquiti Networks, Inc agreed to pay $504,225 to settle allegations it violated the Iranian Transactions and Sanctions Regulations (ITSR). The apparent violations involved the export or re-export of broadband wireless technology to Iran. Though the case was ruled non-egregious, the settlement amount was influenced by the fact that Ubiquiti had no OFAC compliance program in place at the time the violations allegedly occurred.

Intevac

February, 2014: The Bureau of Industry and Security announced that it reached a $115,000 civil settlement with Intevac, Inc., of California. BIS fined the company for five violations of the Export Administration Regulations (EAR), including the unauthorized release of export controlled manufacturing technology to a Russian national working at its U.S. facility. The settlement involves "deemed exports," releases of controlled technology made to a foreign national located in the U.S.

Domingos, Carlos (Spain Night Vision)

February 2014. Carlos Dominguez was administratively debarred due to the alleged re-export without proper U.S. authorization of hundreds of night vision goggles, in addition to other defense articles and related technical data, controlled under ITAR.

Area S.p.A.

February 2014. Italy-based Area S.p.A agreed to pay a civil penalty of $100,000 to settle allegations that it deliberately sold U.S. origin network monitoring technology to a Syrian firm.

Joint-Stock Commercial Bank "Bank of Moscow"

January 2014. Joint-Stock Commercial Bank "Bank of Moscow" agreed to pay $9,492,525 to settle allegations it violated the Weapons of Mass Destruction Proliferators Sanctions Regulations and Executive Order 13382 by transferring funds to Iran from Russia. OFAC found the absence of adequate compliance polices to be an aggravating factor in the case.

Clearstream Banking, S.A.

January 2014. Clearstream Banking, S.A. Sagreed to pay $151,902,000 to settle allegations it violated the Iranian Transactions and Sanctions Regulations (ITSR). Clearstream's quick response to the apparent violations, which included implementing strong sanctions compliance standards, was considered a mitigating factor that prevented the penalties from being higher.

Mozaffar Khazaee

January 2014. Mozaffar Khazaee is indicted on two counts of transporting, transmitting and transferring in interstate commerce goods obtained by theft, conversion, or fraud. He is alleged to have stolen proprietary material relating to military jet engines, and then attempted to transport it to Iran. He faces up to 20 years in prison if convicted on all counts.

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2013 U.S. Export Violations

Selected U.S. Export Enforcement and Embargo Criminal Prosecutions

The following are snapshots of some selected export and embargo-related criminal prosecutions handled by the Justice Department. These cases resulted from investigations by the Department of Homeland Security's U.S. Immigration and Customs Enforcement (ICE), the Federal Bureau of Investigation (FBI), the Department of Commerce's Bureau of Industry and Security (BIS), the Pentagon's Defense Criminal Investigative Service (DCIS), and other law enforcement agencies. Also included are several settlement cases, illustrating civil penalties.

Peter Gromacki

November, 2013: the United States Attorney announced that Peter Gromacki, a U.S. citizen, was sentenced in federal court to three months in prison for exporting high-grade carbon fiber to China. In order to evade United States restrictions on export of this type of carbon fiber to China, Gromacki enlisted the help of co-conspirators in Europe and China and made false statements on U.S. customs forms.

Weatherford International Ltd

November, 2013: The Bureau of Industry and Security announced Weatherford International Ltd. in Houston, Texas, and four of its subsidiaries (collectively, "Weatherford") have agreed to pay a $50 million civil penalty following allegations that they exported oil and gas equipment to Iran, Syria and Cuba in violation of the Export Administration Regulations (EAR) and the Iranian Transactions and Sanctions Regulations (ITSR). The fine is largest civil penalty levied by the Bureau of Industry and Security to date.

Meggitt

August 2013. Meggitt faces proposed charges based on allegations that it violated section 38 of the AECA and section 127 of the ITAR in connection with the unauthorized export of defense articles, to include technical data; the unauthorized provisions of defense services; violation of the terms of provisos or other limitations of license authorizations; and, the failure to maintain specific records involving ITAR-controlled transactions. To settle these allegations, Meggitt shall pay in fines and in remedial compliance measures a civil penalty of twenty-five million dollars ($25,000,000). Twenty-two million dollars ($22,000,000) of this civil penalty will be suspended as set forth in paragraph (17)(b) of the Consent Agreement on the condition that Meggitt applies this amount to self-initiated, pre-Consent Agreement remedial compliance measures.

Aeroflex

August 2013. Aeroflex faces proposed charges based on allegations that it violated section 38 of the AECA and section 127 of the ITAR in connection with violations related to the unauthorized export, retransfer, and re-export of defense articles, to include technical data, including to proscribed destinations. To settle these allegations, Aeroflex shall pay in fines and in remedial compliance measures a civil penalty of eight million dollars ($8,000,000). Four million dollars ($4,000,000) of this civil penalty will be suspended as set forth in paragraph (19)(b) of the Consent Agreement on the condition that Aeroflex applies this amount to self-initiated, pre-Consent Agreement remedial compliance measures.

Precision Image Corporation

July 2013. U.S. Immigration and Customs Enforcement announced that Precision Image Corporation owner Chih-Kwang Hwa pled guilty to exporting restricted technical data to a Taiwanese electronics manufacturer. He now faces a potential maximum penalty of a 20 year prison term and $1,000,000 fine at his sentencing.

American Express Travel Related Services Company, Inc.

July 2013. The Treasury Department announced that American Express Travel Related Services Company, Inc. had agreed to pay a $5,226,120 settlement after having apparent violations of the Cuban Assets Control Regulations (CACR). The company had issued over 14,000 tickets for travel between Cuba and various countries other than the U.S. Many of these countries had laws that permitted activities prohibited by the CACR, and so the tickets required OFAC authorization, which was neither sought nor given. The fine was particularly heavy because investigators determined that the company had an inadequate compliance program given the scope of its activities.

Intesa Sanpaolo S.p.A

June 2013. The Treasury Department announced that Intesa Sanpaolo S.p.A had agreed to pay a $2,949,030 settlement after apparently violating several OFAC sanctions. Among Intesa's sins, it had conducted business with an Italian firm, Irasco, that was found to be Iranian owned. The fine was particularly harsh because Intesa was found to have failed to maintain a sufficiently robust compliance program over the time the apparent violations took place.

The American Steamship Owners Mutual Protection and Indemnity Association, Inc.

May 2013. The Treasury Department announced that The American Steamship Owners Mutual Protection and Indemnity Association, Inc. had agreed to pay a $348,000 settlement for apparent violations of various OFAC sanctions. Their apparent offense? They processed insurance claims and issued Letters of Undertaking that involved Cuba, Iran, and Sudan.

Lisong Ma

May 2013. The Bureau of Industry and Security announced that Lisong Ma, a Chinese citizen, allegedly tried to export weapons-grade carbon fiber to China. He potentially faces up to 20 years in prison and a million dollar fine if convicted.

Alex Tsai and Gary Tsai

May 2013. The Bureau of Industry and Security announced that Alex Tsai and Gary Tsai allegedly tried to unlawfully export controlled metal-working equipment to North Korea. According to the BIS press release "Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine; money laundering carries a maximum of 20 years in prison and a $500,000 fine; and conspiracy to defraud the United States carries a maximum of five years in prison and a $250,000 fine."

Computerlinks FZCO

April 2013. The Bureau of Industry and Security announced that Computerlinks FZCO would pay a $2,800,000 settlement over alleged violations of the EAR. Computerlinks allegedly exported and reexported software and equipment to Syria without proper export licenses.

Raytheon Company

April 2013. The DDTC announced that Raytheon Company had agreed to pay a $4,000,000 penalty for violating multiple sections of the ITAR and spend an additional $4,000,000 on remedial measures to prevent future violations. Raytheon was found, among other things, to have inaccurately tracked temporary imports and exports, to have improperly documented those imports and exports, and to have allowed foreign partners to have manufactured approved exports beyond the amount permitted by their licenses.

Mehdi Khorramshahgol

March 2013. The Bureau of Industry and Security reported that Mehdi Khorramshahgol allegedly reexported industrial parts to Iran after initially exporting them to the United Arab Emirates. He now faces up to twenty years in prison if convicted.

EGL, Inc.

March 2013. The Treasury Department announced that EGL, Inc. had agreed to pay a $139,650 settlement for alleged violations of the Iranian Transactions and Sanctions Regulations and the Cuban Assets Control Regulations. EGL made the mistake of acting as a freight forwarder for a company shipping to an oil rig located in Iranian waters.

American Optisurgical, Inc.

February 2013. The Treasury Department announced that American Optisurgical had agreed to pay a $404,100 settlement after having allegedly violated the Iranian Transactions and Sanctions Regulations by selling medical supplies to Iranian parties or to third parties known to be passing the supplies to Iranian entities. The stiffness of the fine was mitigated by the fact that that OFAC would have granted a license for the supplies if one had been properly sought.

Offshore Marine Laboratories

February 2013. The Treasury Department announced that Offshore Marine Laboratories agreed to pay a $97,695 settlement after having allegedly violated the Iranian Transactions and Sanctions Regulations. The company shipped supplies to the United Arab Emirates, but the ultimate destination was known to be, or ought to have been known to be, an Iranian oil rig.

Timothy Gormley

January 2013. The Bureau of Industry and Security reported that Timothy Gormley unlawfully shipped controlled microwave amplifiers to multiple prohibited countries. He was sentenced to 42 months in prison for this crime.

Ellman International

January 2013. The Treasury Department announced that Ellman International agreed to pay a $191,700 settlement after having allegedly violated the Iranian Transactions and Sanctions Regulations. In this case, the violation of OFAC sanctions was found to be willful and with knowledge of the illegal nature of the transactions involved. However, the violations took place under a different ownership, and the new owners were the ones who brought the matter to OFAC's attention. They also took steps to implement a robust compliance program to help prevent future violations. In light of this, the fines were lessened considerably.

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2012 U.S. Export Violations more +

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2011 U.S. Export Violations more +

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2010 U.S. Export Violations more +

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2009 U.S. Export Violations more +

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2008 U.S. Export Violations more +

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2007 U.S. Export Violations more +

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2003 U.S. Export Violations more +

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2002 U.S. Export Violations more +

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2001 U.S. Export Violations more +

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2000 U.S. Export Violations more +

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1999 U.S. Export Violations more +

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1998 U.S. Export Violations more +

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1997 U.S. Export Violations more +

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1996 U.S. Export Violations more +

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1995 U.S. Export Violations more +

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