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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.

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.

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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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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