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In FY99, BXA's Office of Export Enforcement (OEE) and the Office of Enforcement Analysis (OEA) continued their programs to prevent and investigate dual-use export control violations and thereby protect important national security and foreign policy interests safeguarded by the Export Administration Act (EAA) and Export Administration Regulations (EAR). Additionally, Export Enforcement's Office of Antiboycott Compliance implements the antiboycott policy and program articulated in Section 8 of the EAA.
BXA's Export Enforcement arm has 163 trained professionals, including 103 special agents, who enforce the EAA and the EAR, the Fastener Quality Act, and the Chemical Weapons Convention. Export Enforcement protects U.S. national security, foreign policy, and economic interests by educating exporters, interdicting illegal exports, and prosecuting violators, without impeding legitimate trade activities. Working closely with BXA's licensing officers and policy staff, BXA's export law enforcement officers apply their special skills and understanding of the export control system to minimize exports of potentially damaging items to unreliable users.
When there is reason to believe that the EAA or EAR have been violated, Export Enforcement's special agents and compliance officers investigate and recommend the initiation of appropriate charges. During FY99, $2,153,000 in civil penalties and $1,001,000 in criminal fines were imposed for export control violations of the EAA and EAR. A total of $79,000 in civil penalties for antiboycott violations of the EAA and EAR was imposed.
The Office of Export Enforcement (OEE) is headquartered in Washington, D.C. Its Investigations Division has eight field offices, located in Los Angeles and San Jose; Chicago; Dallas; Miami; Boston; New York; and Herndon. Special Agents are empowered to make arrests, carry firearms, execute search warrants, and seize items about to be illegally exported.
OEE's Intelligence and Field Support Division, also located at headquarters, is staffed by special agents and analysts. This staff serves as a conduit between the intelligence community and OEE's field offices.
OEA assists OEE's field offices and BXA's licensing offices by receiving and disseminating export control-related information. OEA also makes recommendations to BXA's licensing officers concerning pending license applications based on intelligence and investigative information.
During FY99, OEE conducted numerous investigations, some of which led to both criminal and administrative sanctions. It also issued 263 warning letters in cases of minor violations, informing the recipients that OEE had reason to believe they had violated the EAR, and that increased compliance efforts were warranted.
During FY99, BXA special agents worked with the Department of Justice to secure indictments and information against 11 individuals and five companies. (See Table II.6-1 for a list of FY99 criminal convictions for EAA violations.) Criminal fines imposed in cases investigated by Commerce or jointly by Commerce and The U.S. Customs Service ("Customs") totaled $1,001,000.
In addition, administrative sanctions -- civil monetary penalties, denial of export privileges, or both -- were levied on individuals and/or businesses. Civil monetary penalties totaled $2,153,000 in FY99. Under the EAA, the maximum civil penalty was $10,000 per violation for items controlled for foreign policy reasons and $100,000 per violation for items controlled for national security reasons. During FY99, because of congressional failure to reauthorize the EAA, provisions of the EAA and EAR were continued in effect by the President under authority granted to him by the International Emergency Economic Powers Act (IEEPA). The maximum civil penalty under IEEPA, regardless of the type of control, is $11,000 per violation.
Administrative sanctions may also include a denial of export privileges. An order denying export privileges prohibits the denied person from participating in any export transaction involving any U.S.-origin good or technology subject to the EAR. It also prohibits other firms or individuals from engaging in transactions with, or on behalf of, the denied party when U.S.-origin goods or technologies are involved. Parties who violate this prohibition may also be fined, denied export privileges themselves, or subjected to other sanctions authorized by the EAA, IEEPA or EAR, including criminal penalties. In FY99, 26 parties were denied export privileges for EAA and EAR violations, or for criminal violations of certain other statutes as set forth in Section 11(h) of the EAA. (Administrative cases completed in FY99 are summarized in Table II.6-2.)
OEE and OEA routinely review all incoming license applications. During FY99, BXA enforcement personnel examined 7,566 export license applications in considerable detail to assess diversion risks, identify potential violations, and determine the reliability of proposed consignees as recipients of controlled U.S.-origin items. Based on this review, OEE recommended that 274 license applications either be rejected or returned without action because of diversion risks or other enforcement concerns. Together, these applications represented $176 million in potential illegal trade.
In addition, as part of BXA's ongoing responsibility for preventing illegal exports before they occur, 398 pre-license checks (PLCs) were completed in FY99 and enforcement staff recommended that 84 license applications be rejected or returned without action. Together, these applications represented more than $115 million of trade in situations in which violations of the EAA and EAR may have occurred had the transactions been completed.
Export Enforcement also assessed the results of 497 post-shipment verifications (PSVs) completed during FY99. Of these PSVs, 330 were conducted by OEE special agents as part of the Safeguards program, while the other 167 were conducted by Foreign Commercial Service or other personnel assigned by American Embassies. Twenty-six PSVs produced information that required further enforcement action.
Under the Chemical Weapons Convention (CWC) implementing legislation passed in the fall of 1998, certain commercial chemical production and processing facilities will be required to submit data declarations and to permit international inspections. In preparation for fulfilling its responsibilities under this legislation, EE participated in mock inspection exercises with BXA's Export Administration and the Office of Chief Counsel for Export Administration at chemical production and processing facilities. Export Enforcement also worked with the State Department and other government agencies to clarify enforcement roles under the CWC implementing legislation and proposed regulations. EE included special training sessions on the CWC treaty implementing legislation and CWC inspections as part of its continuing training for all EE agents.
The National Defense Authorization Act (NDAA) enacted on November 18, 1997, contains provisions requiring regulation and careful scrutiny of sales of high-performance computers to certain countries of concern. OEA maintains a high-performance computer division to coordinate and supervise all enforcement responsibilities under the NDAA. A provision of the NDAA requires those who wish to export high-performance computers to certain countries to notify the Department at least ten days prior to export. During the ten-day period, relevant Government agencies review the pre-export notification. If any agency has an objection, a license is required.
EE included special training sessions on high-performance computers and on the NDAA as part of continuing training for all EE agents, and conducted post-shipment verifications mandated by the NDAA. All of EE's FY99 safeguard trips involved NDAA-mandated PSVs. EE submitted the NDAA annual report to the designated Congressional committees in January 1999. The report covered exports of high-performance computer exports to countries of the greatest proliferation concern, and the results of EE's post shipment verifications for those exports for the period November 18, 1997, through November 17, 1998.
As part of its public education efforts, OEE special agents participated in numerous seminars and trade shows across the country. They also developed contacts with private sector firms through Project Outreach, a program which provides firms with specific export guidance, gives OEE a better understanding of the private sector's needs, and provides valuable investigative leads. OEE conducted 1,160 Project Outreach visits during the fiscal year.
OEE's Safeguards Verification Program was developed in 1990 to ensure the legitimate use of strategic U.S. goods and technology by the newly emerging democracies of Central Europe, traditional points of diversion to the former Soviet Union. Since then, OEE's Safeguards Verification Program has expanded worldwide to conduct on site pre-license and post-shipment checks using Export Enforcement personnel instead of officers from Commerce's U.S. and Foreign Commercial Service. The Safeguards Verification Teams travel overseas to determine the disposition of licensed or otherwise controlled U.S.-origin commodities, particularly those of proliferation concern. These Safeguards Verification Teams also assess the suitability of foreign firms to receive U.S.-origin licensed goods and technology and conduct educational visits to foreign firms, often in cooperation with host government officials.
In FY99, EE continued and enhanced its international cooperative efforts. Working with its BXA and interagency counterparts, EE had a number of significant achievements. Its representative at the U.S. Embassy in Beijing conducted the first ever post-shipment visits in the People's Republic of China. EE conducted these visits under the new End-use Visit Arrangement, which it successfully negotiated with its counterparts at China's Ministry of Foreign Trade and Economic Cooperation. These end-use visits had been a goal of the United States for the last 15 years. In addition, EE helped organize two export control seminars -- in Beijing and in Washington -- to discuss with Chinese officials "best practices" for effective dual-use export controls.
This year, EE worked with Hong Kong to increase its cooperation with the United States on enforcement matters. The October 1997 agreed minute, signed by Secretary Daley with his Hong Kong counterpart, continues to form the basis for U.S.-Hong Kong export control cooperation. Throughout the year, both in Hong Kong and Washington, officials worked together to ensure that U.S. products destined for Hong Kong were not illegally diverted to China. EE worked with Hong Kong Customs officials on a significant enforcement case -- ASL Limited, involving diversions of high-performance computers to China via Hong Kong.
EE also hosted a number of enforcement seminars and workshops with other countries, including the fourth in a series of enforcement exchanges with Russian enforcement officials. In September 1999, a U.S. interagency enforcement team, led by EE, met with Russian counterparts in Moscow. These meetings advanced U.S. understanding of how export enforcement is handled in Russia, and included the first discussions by Russian officials of specific export enforcement actions they have taken.
In April 1999, EE hosted an interagency enforcement team from the Ukraine in the third of a series of discussions that examined enforcement and preventive enforcement issues. The U.S. delegation, led by EE, was able to convince Ukraine to expand its export enforcement work to deter worldwide proliferation efforts.
EE also participated in U.S. export control seminars and workshops with more than 50 countries in the Newly Independent States (NIS), Central/Eastern Europe, Baltic States, Central Asian republics, and all significant Countries in the Far East. EE, often the only U.S. enforcement representatives, provided in-depth information on the practical methods to enforce export control laws and regulations.
This year EE continued to work with foreign counterparts as part of the DOD-FBI Counter Proliferation Program for NIS and Central/Eastern European Countries. EE special agents were part of the U.S. government enforcement cadre, which provided extensive training to Georgian, Slovenian and Moldovan enforcement authorities at the Budapest-based International Law Enforcement Academy.
EE also took part in discussions with the international nonproliferation regimes, including enforcement seminars of The Wassenaar Arrangement and the Missile Technology Control Regime and the plenary sessions of the Nuclear Suppliers Group. EE participated in the January 1999 Asian Export Control Seminar involving 19 Pacific Rim countries and chaired the seminar's enforcement panel.
Throughout the year, EE continued its enforcement assistance to the four nuclear NIS, as well as Baltic, Central European, Central Asian, and Transcaucasian states. The Assistant Secretary for Export Enforcement and other senior EE officials met with many Central European and NIS export control delegations in Washington, D.C. to provide perspectives on EE's investigative and preventive enforcement techniques.
As a result of EE's efforts, the governments of these countries have either implemented or initiated export control programs that incorporate effective enforcement concepts, including development of watch lists, end-use checks, a professionally-trained investigative force, interagency and international law enforcement cooperation, and use of administrative and criminal sanctions and penalties.
As the volume of export licenses has decreased, EE has increased the number of Shipper's Export Declarations (SEDs) that it reviews. Under the SED Review Program, on-site reviews of selected SEDs are conducted by OEE Special Agents at U.S. ports. OEE Special Agents review numerous transactions before selecting a smaller target group for closer scrutiny.
A systematic review of SEDs at EE Headquarters is also conducted after shipments have occurred. OEA receives microfilm copies of the actual SEDs and a computerized index of key data fields of every SED from the Census Bureau. OEA uses the index to produce a list of SEDs targeted for closer review. Following this review, OEA identifies SEDs that may indicate violations of the EAR and refers them to OEE. Over the past year, OEA referred 221 SEDs to OEE on the basis of these SED reviews.
EE initiated the Visa Application Review Program in 1990 to prevent unauthorized access to controlled technology or technical data by foreign nationals visiting the United States. Section 734.2(b)(1) of the EAR defines an Aexport@ to include the release of technology or software to a foreign national in the United States (other than persons lawfully admitted for permanent residence in the United States). A release of technology to a foreign national is deemed to be an export to the home country of that person.
In FY99, EE restructured its Visa Application Review Program, developing new criteria and thresholds for evaluating incoming visa applications for targeting purposes. EE has narrowed its focus and is concentrating on specific products most often used in weapons of mass destruction projects. OEA's evaluation and analysis of visa application cable traffic involves preventive enforcement efforts such as recommending denial of certain visas, intelligence gathering, and the referral of enforcement leads to OEE's field offices for possible case development.
During FY99, OEA reviewed information on thousands of visa applications to detect and prevent possible EAR violations. Of these, 227 visa applications were referred to OEE's field offices for further investigation. In some instances, based upon OEA's recommendations, the State Department declined to issue visas due to the risk of transfer of sensitive technology. In a few cases, OEA analysts uncovered possible visa fraud on the part of the foreign applicant. These findings were forwarded to the State Department's Fraud Unit for further investigation and action.
On November 23, 1998, the Commerce Department issued an order pursuant to Section 11(h) of the EAA denying the U.S. export privileges of Japanese businessman Kiyoyuki Yasutomi until January 5, 2008. On January 5, 1998, Yasutomi pleaded guilty in U.S. District Court in Washington, D.C., to violating the EAA by illegally exporting U.S.-origin computer equipment from Japan to Pakistan without the required export license. The court sentenced Yasutomi to 18 months of imprisonment and a $10,000 criminal fine. The investigation was conducted by the OEE's Miami Field Office.
On February 18, 1999, the Commerce Department's Under Secretary for Export Administration, William A. Reinsch, imposed a $750,000 civil penalty on the Aluminum Company of America (ALCOA) for 100 violations of the EAR. Under Secretary Reinsch affirmed an administrative law judge's (ALJ) finding that ALCOA exported potassium fluoride and sodium fluoride from the United States to Jamaica and Suriname on 50 occasions, between June 1991 and December 1995, without obtaining the required export licenses. The ALJ also found that the company made false statements on export control documents in each shipment. Although these chemicals were added to the Department's control list in March 1991, ALCOA's export compliance program failed to recognize and incorporate the change. The investigation was conducted by OEE's Dallas Field Office.
On February 26, 1999, the Commerce Department imposed a $60,000 civil penalty on PPG Industries de Mexico, S.A. de C.V. (PPG Industries), a Mexican chemical company, to settle alleged violations of the EAR. The Department alleged that, on eight separate occasions between July 1993 and March 1995, PPG Industries was responsible for exporting potassium fluoride from the United States to Mexico without the required licenses. The Department also alleged that, on two of those occasions, PPG Industries knew that violations would occur. Potassium fluoride is controlled for export by a multilateral agreement with the 30-nation Australia Group of chemical producers because, in addition to its legitimate commercial uses, the chemical has the potential to serve as a precursor for some chemical weapons. A portion of the penalty, $20,000, will be suspended for one year, then waived if PPG Industries commits no violations during that time. The investigation was conducted by OEE's Chicago Field Office.
On March 23, 1999, the Commerce Department denied Aldrich Ames all export privileges until April 24, 2004, pursuant to Section 11(h) of the EAA, based upon his conviction under the Espionage Act for conspiring with other persons, including officers of the intelligence services of the Union of Soviet Socialist Republics and later The Russia Federation, to knowingly communicate, deliver, and transmit to a foreign government information relating to the national defense of the United States.
On March 23, 1999, the Commerce Department denied Harold Nicholson all export privileges until June 5, 2007, pursuant to Section 11(h) of the EAA, based upon his conviction under the Espionage Act for conspiring with other persons, including officers of the intelligence services of the Russian Federation, to knowingly communicate, deliver, and transmit, and attempt to communicate, deliver, and transmit to representatives of a foreign government information relating to the national defense of the United States.
On March 29, 1999, the Commerce Department imposed a $708,000 civil penalty on CN Biosciences, Inc. of San Diego, California, and its subsidiary Calbiochem-Novabiochem (UK) Ltd., of the United Kingdom, for allegedly violating export control laws on biological agents by shipping various U.S.-origin biological toxins without the required export licenses. The Department alleged that, on 171 separate occasions between July 1992 and January 1994, CN Biosciences, Inc. exported U.S.-origin biological toxins from the United States to various destinations without the required export licenses; and that, on six separate occasions between November 1992 and January 1994, Calbiochem-Novabiochem (UK) Ltd. reexported a U.S.-origin biological toxin from the United Kingdom to the Republic of Ireland without the required reexport authorization from BXA. Half of the penalty, $354,000, is suspended for a one-year period, provided that the companies commit no violations of the EAR during that time. CN Biosciences Inc. voluntarily disclosed the shipments and cooperated with the investigation.
Export controls on biological agents are part of U.S. obligations to the 30-nation Australia Group, whose members are committed to curbing proliferation of chemical and biological weapons. The investigation was conducted by OEE's Los Angeles Field Office.
On April 12, 1999, the Commerce Department denied Khaled Khalil El-Awar of Houston, Texas, all export privileges until August 5, 2003, pursuant to Section 11(h) of the EAA. On August 5, 1995, Khaled El-Awar was convicted in the U.S. District Court for the Southern District of Texas of violating the IEEPA by exporting and causing to be exported steel pipe and oil field accessories from the United States to Rotterdam, Holland, for transshipment to Libya.
On April 13, 1999, the Commerce Department imposed a $50,000 civil penalty on Schott Fiber Optics, Inc. (Schott), of Southbridge, Massachusetts, to settle alleged violations of the EAR. The Department alleged that, on 20 separate occasions between November 1993 and April 1994, Schott exported U.S.-origin fiber optic image inverters to the Netherlands without obtaining the required export licenses. Fiber optic inverters are used in the manufacture of night vision equipment and are controlled for national security, foreign policy and missile technology reasons. A portion of the penalty, $10,000, is suspended for one year and will be waived, provided that Schott does not violate the EAR during the suspension period. The investigation was conducted by OEE's Boston Field Office.
On April 27, 1999, the Commerce Department denied the export privileges of American Protection Corporation until August 8, 2001. The Department determined that American Protection Corporation is related to William F. McNeill, a person denied all U.S. export privileges until August 8, 2001, pursuant to Section 11(h) of the EAA, based on his criminal conviction for illegally exporting riot shields to Romania in violation of IEEPA. The investigation was conducted by OEE's Boston Field Office.
On June 2, 1999, the Commerce Department imposed a $10,000 civil penalty on Kidde-Fenwal, Inc. of Ashland, Massachusetts, for allegedly attempting to export fire alarm control equipment to Iran through the United Arab Emirates (UAE). The Department alleged that, in 1995, Kidde-Fenwal falsely represented in shipping documents that the ultimate destination of the equipment was the UAE when it knew the goods were ultimately destined to Iran. A portion of the penalty, $2,500, is suspended for one year and will be waived, provided that Kidde-Fenwal does not violate the EAR during the suspension period. The investigation was conducted by OEE's Boston Field Office.
On June 21, 1999, the Commerce Department imposed a $30,000 civil penalty on Sun Microsystems of California, Ltd., a Hong Kong company, to settle allegations that it violated the EAR by arranging for shipments of computers to the People's Republic of China (PRC) that did not adhere to a condition of the export license. The Department alleged that, in September 1993, Sun Microsystems of California Ltd. arranged for a shipment of computers to the PRC that it knew or had reason to know was contrary to the condition on the export license. The Department also alleged that in October 1993, Sun Microsystems of California Ltd. arranged for a shipment of computers to the PRC, falsely representing that the shipment was authorized under a BXA license. The investigation was conducted by OEE's Washington Field Office.
On July 12, 1999, the Commerce Department's Under Secretary for Export Administration imposed ten-year denials of all U.S. export privileges on SFT Advertising Agency of Moscow, Russia (SFT), and its Director, Dmitry Chernyshenko, based on findings that they engaged in a scheme to cause the export of a U.S.-origin computer from the United States through Germany to Russia without obtaining the appropriate authorization that they knew or had reason to know was required by the EAR. The Under Secretary found that, in connection with the transaction, Chernyshenko, acting in his capacity as Director of SFT, falsified information to conceal material facts directly or indirectly from a United States agency for the purpose of or in connection with affecting an illegal export. The Department also alleged that, in connection with the transaction, both Chernyshenko and SFT caused, counseled or induced a third party to state on a Shipper's Export Declaration that the shipment of the computer was authorized for export from the United States to Germany under a general license. The investigation was conducted by OEE's Chicago Field Office.
On July 19, 1999, the Commerce Department denied the export privileges of Kurt Alan Stand, Theresa Marie Squillacote and James Michael Clark, pursuant to Section 11(h) of the EAA, based upon their convictions under the Espionage Act. Stand, Squillacote and Clark were convicted for conspiring with other persons to illegally communicate information relating to the national defense of the United States, with intent and reason to believe that this information would be used to the injury of the United States and to the advantage of foreign governments. Stand and Squillacote were denied export privileges until January 22, 2009, and Clark was denied export privileges until December 4, 2008.
On July 21, 1999, a U.S. District Court in the District of New Jersey sentenced Hadi Shalchi, a Staten Island, New York, businessman, to imprisonment for six months, a $30,000 criminal fine, home confinement for four months, and supervised release for three years as a result of his pleading guilty to making false statements in connection with the illegal export of auto parts to Iran. In addition, Shalchi's business, Continental A.P. Co., Inc., of Hopelawn, New Jersey, was sentenced to a $200,000 criminal fine and five years' probation after pleading guilty to charges that it had illegally exported auto parts to Iran. The investigation was conducted by OEE's New York Field Office.
On August 3, 1999, the Commerce Department denied the export privileges of Fadi Boutros, also known as Fadi E. Sitto, Fadi Jirjis, and Fred Boutros, until April 29, 2009, pursuant to Section 11(h) of the EAA, based upon his conviction under the Arms Export Control Act and IEEPA. Boutros was convicted in the U.S. District Court in New Haven, Connecticut for willfully attempting to export defense articles on the U.S. Munitions List from the United States to Iraq via Jordan without the required export license from the Department of State, and of willfully dealing and attempting to deal in defense articles on the U.S. Munitions List intended for exportation to Iraq via Jordan. Boutros was also convicted for engaging and attempting to engage in activity intended to promote such dealing without the required authorization from the Department of The Treasury, in violation of the embargo against Iraq contained in the Office of Foreign Assets Control's Iraqi Sanctions Regulations.
On August 5, 1999, the Commerce Department imposed a $25,000 civil penalty on Starlite Technical Service, Inc. of Chicago, Illinois (Starlite), to settle allegations in connection with the unauthorized exports of U.S.-origin chemicals to Lebanon and Colombia without the required export licenses. The Department alleged that, on five separate occasions between January 1994 and December 1996, Starlite exported U.S.-origin chemicals without obtaining the required export licenses. To implement a multilateral agreement with the 30-nation Australia Group of chemical producers, the Department controls certain U.S.-origin chemicals for export because, in addition to their legitimate commercial uses, these chemicals have the potential to serve as precursors in chemical weapons. The investigation was conducted by OEE's Chicago Field Office.
On September 30, 1999, the Commerce Department imposed a $5,000 civil penalty on Gilbert & Jones, Inc., of New Britain, Connecticut, to settle allegations that the company exported potassium cyanide to Taiwan on two occasions in 1994 and 1995 without obtaining the required export licenses. The without obtaining investigation was conducted by OEE's Boston Field Office.
On September 30, 1999, the Commerce Department imposed a $10,000 civil penalty on Varlen Corporation, an Illinois-based company, for a false statement made by its former wholly-owned subsidiary, Precision Scientific, Inc., on an export control document in connection with a shipment to Iran. The Department alleged that Precision Scientific shipped a U.S.-origin incubator to Iran through its independent distributor in the Netherlands. Precision Scientific identified the Netherlands as the country of ultimate destination on the Shipper's Export Declaration when, in fact, the intended ultimate destination was Iran. Varlen self-disclosed the violation and agreed to accept responsibility for the actions of Precision Scientific. The investigation was conducted by OEE's Chicago Field Office.
On September 30, 1999, the Commerce Department imposed a $290,000 civil penalty on American Type Culture Collection (ATCC) of Manassas, Virginia, a nonprofit organization, to settle allegations that, on 58 separate occasions between 1993 and 1996, the company exported U.S.-origin microorganisms to various destinations without obtaining the required export licenses. ATTC voluntarily disclosed the activity to BXA, the $290,000 civil penalty was suspended, and ATCC agreed to collaborate with BXA on educational efforts designed to improve industry compliance with export controls on biological agents. The investigation was conducted by OEE's Herndon Field Office.
On January 12, 1999, a U.S. District Judge in Portland, Oregon, sentenced Henry Joseph Trojack to imprisonment for seven years for his role in conspiracy to ship impregnated alumina and gas turbine parts to Iran in violation of U.S. conspiracy, export control and money laundering laws. Trojack will be subject to supervised release for three years when he finishes his prison term. Trojack had been convicted of conspiring with others to illegally export impregnated alumina, a chemical catalyst, to Iran. The investigation was conducted jointly by OEE's San Jose Field Office and the U.S. Customs Service.
On January 15, 1999, a U.S. district judge in Washington, D.C., sentenced Yuri Montgomery to three years of probation for violations of the EAA and IEEPA. Yuri Montgomery and Fortend USA had earlier pled guilty to exporting various U.S.-origin crime control items from the United States to Macedonia and Slovenia without the required export licenses. The investigation was conducted by OEE's Boston Field Office and the U.S. Customs Service.
On January 25, and February 1 and 2, 1999, the Commerce Department issued orders pursuant to Section 11(h) of the EAA, denying the export privileges of, respectively, Francisco Javier Ferreiro-Parga, of Coruña, Spain, for ten years, Jose Luis Sesin, of Miami, Florida, for eight years, and Kenneth Broder, of the Dominican Republic, for nine years. Ferreiro-Parga, Sesin and Broder were convicted in the U.S. District Court for the Southern District of Florida of violating IEEPA by exporting goods to the Dominican Republic that were transshipped to Cuba without the required export licenses. Sesin was also convicted of exporting the shipments under a false bill of lading. On June 18, 1999, the Department amended the February 2 order against Broder to suspend its application to export EAR 99 items (items subject to the EAR, but not on the Commerce Control List) to the Dominican Republic by Broder or on his behalf for use or consumption. The investigation was conducted jointly by OEE's Miami Field Office and the Customs Service.
On January 8, 1999, Yufeng Wang was indicted by a federal grand jury in Washington, D.C. on charges of violating U.S. export control laws and making a false statement to the U.S. government relating to the shipment of a 60-ton riot control vehicle equipped with a pressurized pepper gas dispensing system to the People's Republic of China. Wang was arrested in Detroit, Michigan on February 12, 1999, and is currently scheduled to stand trial in February 2000 in Washington, D.C. The investigation was conducted by OEE's Boston Field Office and the Customs Service.
On March 9, 1999, a federal grand jury in the U.S. District of Massachusetts in Boston returned a five-count indictment charging Collin Xu, also known as Collin Shu and Zhihong Xu, and Yi Yao, also known as Yao Yi, Lion Photonics, Canada, Inc., of Montreal, Canada, and Lion Photonics, Inc., of Beijing, People's Republic of China (PRC), with conspiring to illegally export U.S.-origin fiber optic gyroscopes to the PRC without the required U.S. government authorization. Yao and Xu have been arrested on charges related to the indictment and are currently in custody pending trial. The investigation was conducted by OEE's Boston Field Office, the Royal Canadian Mounted Police, and the U.S. Customs Service.
On March 17, 1999, Mahmood Reza Hashemi, a resident of Budd Lake, New Jersey, and owner of Refinery Industries in Budd Lake, was arrested by Special Agents of OEE's New York Field Office on charges of illegally exporting methane gas detection equipment to Iran. Subsequently, Hashemi appeared before a U.S. Magistrate in the District of New Jersey, where he posted bail and agreed to travel restrictions. The investigation is being conducted by OEE's New York Field Office, with the assistance of the U.S. Customs Service and the Federal Bureau of Investigation.
On April 23, 1999, the U.S. District Court in Orlando, Florida, sentenced John R. Strome, president, of the Melbourne, Florida firm Brevard International Technical Services, to imprisonment for two years, probation for two years, and a criminal fine of $1,000 for violating U.S. restrictions on exports to embargoed destinations. Strome, a Canadian citizen, pled guilty on December 17, 1998 to conspiracy to illegally export commodities to embargoed Middle East countries, in violation of 18 U.S.C. ' 371. Strome's conviction was the result of a two-year investigation by OEE's Miami Field Office and the U.S. Customs Service.
On April 29, 1999, Interlink Computer Technology, Inc. (Interlink), represented by its President, Ali Mozaffari, pled guilty in the U.S. District Court for the Northern District of
California to charges that it attempted to export from the United States to Iran, through Germany, U.S.-origin computers and computer equipment in violation of the Iranian embargo. The court ordered Interlink to serve a one-year period of probation and pay a $30,000 criminal fine. The Court also ordered Interlink to pay a $5,000 civil fine to the Office of Foreign Assets Control. In a related administrative action, the Commerce Department ordered Ali Mozaffari, individually and doing business as Interlink, to pay a $5,000 civil penalty and denied both Interlink and Mozaffari's export privileges for five years. The denial period was suspended for five years and will be waived, provided that Mozaffari and Interlink have committed no violation of the EAR during the suspension period. The investigation was conducted jointly by OEE's San Jose Field Office and the U.S. Customs Service.
On May 26, 1999, a U.S. District Court jury for the Western District of Louisiana found Dien Duc Huynh and his corporation, Dien's Auto Salvage, guilty of violating the EAA and the Trading with the Enemy Act, and of conspiracy to commit theft of government property in connection with the illegal export of military surplus vehicles and vehicle parts to Vietnam. Following his conviction, Dien Duc Huynh agreed to plead guilty to two forfeiture counts, and to pay the government $250,000 in lieu of forfeiting his property to the government. The conviction resulted from a joint investigation by OEE's Dallas Field Office, the U.S. Customs Service and the Department of Defense. Investigators found evidence that the defendants were purchasing surplus military vehicles from Army bases in the United States and Europe and exporting them to Vietnam through Singapore in violation of U.S. export control laws. The vehicles are controlled for national security, antiterrorism, and regional stability reasons. On May 13, 1999, Son Kim Nguyen, a co-conspirator charged in a related criminal action, pled guilty to charges of exporting military vehicles and vehicle parts to Vietnam without the required Commerce Department authorization.
On July 12, 1999, Under Secretary Reinsch signed an order affirming the recommended decision of the administrative law judge (ALJ) that imposed a 20-year denial of all export privileges against TIC, Ltd., The Bahamas, and Export Materials, Inc., Houston, Texas. The ALJ found that the two companies conspired with Thane-Coat, Inc., Stafford, Texas; its president, Jerry Vernon Ford; and its vice-president, Preston John Engebretson, to export U.S.-origin pipe coating materials valued at $35 million to Libya without the authorization required under the EAR. The ALJ also found that the companies made false statements on export control documents in connection with the exports.
On April 20, 1999, BXA's Assistant Secretary for Export Enforcement renewed the October 23, 1998, temporary denial order for an additional 180 days against Thane-Coat, Inc., Jerry Vernon Ford, and Preston John Engebretson, denying them all export privileges for items exported or to be exported to the United Kingdom, the Bahamas, Libya, Cuba, Iraq, North Korea, Iran and any other country or countries that may subject in the near future to a general trade embargo. In addition, at least 14 days in advance of any export that any of the denied persons intend to make of any item from the United States to any destination worldwide, the denied person must provide to BXA notice of the intended export, copies of all documents reasonably related to subject transactions, and the opportunity during the 14-day notice period to physically inspect the item at issue. On the same date, the Assistant Secretary renewed the October 23, 1998, order against TIC, Ltd. and Export Materials, Inc. for an additional 180 days.
The original temporary denial orders were issued in May 1997 and were subsequently renewed, based on the Department's reason to believe that, between 1994 and 1996, the respondents employed a scheme to export U.S.-origin products from the United States, through the United Kingdom or Italy, to Libya, a country subject to a comprehensive economic sanctions program, without the required authorization. The investigation is being conducted jointly by OEE's Dallas Field Office and the U.S. Customs Service.
On July 12, 1999, the Commerce Department imposed a 20-year denial of all U.S. export privileges on Fawzi Mustapha Assi, a Lebanese naturalized U.S. citizen, of Dearborn, Michigan, for attempting to export from the United States to Lebanon a thermal imaging camera without the export license that he knew or had reason to know was required. The Department also alleged that, in connection with the attempted export, Assi failed to file with the Customs Service, at the time of the attempted export, the Shipper's Export Declaration required by the EAR. The equipment that Assi was attempting to export was intended for Hizballah, which has been designated as a foreign terrorist organization by the Secretary of State.
In a separate criminal action in July 1998, Assi was arrested by special agents from OEE's Chicago Field Office, the Federal Bureau of Investigation and the Customs Service for attempting to export U.S.-origin items without the required export licenses and for attempting to provide material support or resources to a designated foreign terrorist organization. Assi admitted to procuring items for the Hizballah organization in Lebanon for its use. The U.S. Magistrate released Assi on an unsecured bond. Assi was indicted in August 1998 on charges alleging violations of IEEPA, the Arms Export Control Act, and the Antiterrorism and Effective Death Penalty Act, and failing to appear in court. He is currently a fugitive.
On July 13, 1999, the Commerce Department imposed a three-year denial of export privileges on Nancy Ann Harvey of Salem, Oregon, for allegedly exporting U.S.-origin shotguns and shotgun shells to the Republic of South Africa (South Africa) in violation of the EAR and IEEPA. The Department also alleged that, in connection with this transaction, Harvey made false or misleading statements of material fact on an export control document. At the time of export, the shotguns and shotgun shells required a license for export to South Africa. The investigation was conducted jointly by OEE's San Jose Field Office and the Customs Service.
On July 15, 1999, Morris Rothenburg and Sons, Inc, doing business as Rothco, a Smithtown, New York, company, pled guilty in the U.S. District Court in Uniondale, New York, to charges that the company illegally exported and attempted to export handcuffs to the Republic of Croatia and gas masks to Japan. In connection with the plea, Rothco agreed to pay a criminal fine of $500,000 and prosecution costs in the amount of $200,000.
In a related administrative action, the Commerce Department ordered Rothco to pay a $200,000 civil penalty and denied its export privileges for one year to settle alleged violations of the EAR. The denial period was suspended and will be waived, provided that, during the period of suspension, Rothco has committed no violation of the EAR. The Department alleged that, on 19 separate occasions between 1994 and 1996, Rothco illegally exported to various countries U.S.-origin handcuffs, defender SAP gloves, stun guns, and pistol laser sights without the required export licenses. The Department also alleged that, on one occasion in 1995, Rothco attempted to export handcuffs to El Salvador without the required export license. The investigation was conducted jointly by OEE's New York Field Office and the U.S. Customs Service.
On August 18, 1999, Peter L. Appelbaum, president of Pacorp, Inc., Miami, Florida, pled guilty in U.S. District Court, Southern District of Florida, Miami Division, to charges of violating the Arms Export Control Act and the International Emergency Economic Powers Act by illegally exporting defense articles and crime control equipment to Honduras without the required State Department and Commerce Department licenses. The exported items included night vision equipment subject to the International Traffic in Arms Regulations, handcuffs, shackles, fingerprint powders, and dyes subject to the EAR. The conviction was the result of a joint investigation by the OEE's Miami Field Office and the U.S. Customs Service.
On August 18, 1999, Summit United Industries, Inc. (Summit), Houston, Texas, pled guilty in the U.S. District Court in the Southern District of Texas to charges that the company illegally exported oil field equipment to Libya in violation of the International Emergency Economic Powers Act and the Libyan Sanctions Regulations. Summit was sentenced to a $10,000 criminal fine and a $400 special assessment fee. The investigation was conducted jointly by OEE's Dallas Field Office and the U.S. Customs Service.
On August 24, 1999, Abdulamir Mahdi, a Canadian businessman, pleaded guilty in U.S. District Court in Orlando, Florida, to a criminal indictment charging him with violating U.S. export controls restricting trade with Iran and Iraq. Mahdi, an Iraqi national, used two Toronto companies, OTS Refining Equipment Corporation and Tech-Link Development Corporation, to buy U.S. oil-field and industrial equipment for diversion to Iran and Iraq.
Mahdi was a former associate of Melbourne, Florida businessman John Strome, who also pled guilty to violating U.S. restrictions on trade with Iran, Iraq and Libya. Commerce and Customs agents arrested Mahdi on March 17, 1999, while he was on a business trip to Florida. In pleading guilty to the charges, Mahdi admitted that he conspired with Strome to procure oil field and industrial equipment for Iraq and Iran valued in excess of $10 million. The conviction was the result of a joint investigation by OEE's Miami Field Office and the U.S. Customs Service.
On September 17, 1999, Immunostics, Inc., a New Jersey company, pled guilty in the U.S. District Court in New Jersey to charges of knowingly and willfully making false statements and representations to the U.S. government on export control documents The plea was the result of a joint investigation by OEE's New York Field Office and the U.S. Customs Service.
On September 27, 1999, a U.S. District Court in the Southern District of Florida, sentenced Oscar Osman, president of Antilliana Trading Corporation, to imprisonment for one year, supervised release for three years, and a $30,000 criminal fine for illegally exporting U.S.-origin goods to Cuba. Osman had pled guilty to charges of conspiracy to violate the export control laws, and to knowingly exporting goods without authorization. The case is the result of a joint investigation by the OEE's Miami Field Office and the U.S. Customs Service.
On September 30, 1999, the Commerce Department imposed a $10,000 civil penalty on Laser Devices, Inc., a Monterey, California, exporter, to settle allegations that the company attempted to export, through the U.S. Postal Service, laser gun aimer/sights to Taiwan without the required authorizations. The investigation was conducted jointly by OEE's San Jose Field Office and the U.S. Customs Service.
| Indictment/ |
Defendant |
Charge(s) |
Enforcement Organization(s) |
Sanction |
|---|---|---|---|---|
| 12/2/98 |
Federal Parts International, Inc., Medi Azarin, a.k.a. Michael Azarin, and Farhad Azarin |
Violation of U.S. embargo against Iran. |
Commerce/ |
Trial pending. |
| 12/17/98 |
John R. Strome |
Conspiracy to illegally export commodities to embargoed Middle Eastern countries |
Commerce/ |
Convicted 12/17/98. Received a $1,000 fine, a 24-month term of imprisonment and 24 months of probation. |
| 1/8/99 |
Yufeng Wang, a.k.a, Alan Wang |
Illegal export of defense articles to the People's Republic of China and filing of false statements with the U.S. Government. |
Commerce/ |
Trial pending. |
| 3/2/99 |
Continental A.P. Co. Inc. and Hadi Shalchi |
Illegal export of auto parts to Iran and false statements in connection with the export. |
Commerce |
Continental and Shalchi were convicted 7/21/99. Continental received a $200,000 fine. Shalchi received a $30,000 fine, a six-month term of imprisonment, four months of home confine-ment and three years of probation. |
| 4/29/99 |
Interlink Computer Technology, Inc. |
Attempted export of computers and computer equipment to Iran. |
Commerce/ |
Interlink was convicted on 6/10/99. Interlink received a $30,000 criminal fine, one year of probation and was ordered by the court to pay a $5,000 civil fine to the Office of Foreign Assets Control. |
| 6/11/99 |
Morris Rothenberg and Sons, d.b.a. Rothco |
Illegal export and attempted export of handcuffs to the Republic of Croatia and export of gas masks to Japan. |
Commerce/ |
Rothco was convicted on 7/15/99. Received a $500,000 fine and was ordered to pay $200,000 as reimbursement for the costs of the prosecution. |
| 6/15/99 |
Abdulamir Mahdi, a.k.a. Amir Mahdi |
Conspiracy to illegally export industrial equipment to Iran and Iraq. |
Commerce/ |
Guilty plea on 8/24/99. Awaiting sentencing. |
| 6/22/99 |
Oscar Osman |
Conspiracy to illegally export containers of foodstuff and other goods Cuba. |
Commerce/ |
Osman was convicted on 7/14/99. Received a $30,000 fine, one year of imprisonment and three years of supervised release. |
| 6/24/99 |
Microtek International Development Systems Division, Inc., Joe-Pin Ouyang, Amir Janversan and Hamid Janversan |
Conspiracy to attempt to illegally export computer processor emulators to Iran. |
Commerce/ |
Trial pending.
|
| 7/22/99 |
Summit United Industries, Inc |
Illegal export of oil field equipment to Libya. |
Commerce/ |
Convicted on 8/18/99. Summit received a $10,000 fine. |
Go to Chapter Eight
In April of 2002 the Bureau of Export Administration (BXA) changed its name to the Bureau of Industry and Security(BIS). For historical purposes we have not changed the references to BXA in the legacy documents found in the Archived Press and Public Information.