Older News

2017 News Articles >>

Commerce/BIS: Ali Eslamian and Equipco (UK) Ltd of London, UK, Denied Export Privileges for 4 Years, Ordered to Pay $250,000 to Settle Alleged Violation of TDO

(Source: Commerce/BIS)

* Respondent: Ali Eslamian and Equipco (UK) Ltd. of London, UK.

* Charges: Between in or about October 2011, and in or about February 2012, Eslamian took actions prohibited by a BIS temporary denial order issued as to Eslamian on 24 August 2011 (“TDO” or “24 August 2011 TDO”). The TDO was issued pursuant to Section 766.24 of the Regulations, was effective upon issuance, and was published in the Federal Register on 31 August 2011… The TDO was a renewal of an existing BIS temporary denial order, the primary respondent was Mahan Airways, an Iranian airline…

Eslamian violated the TDO by participating in a transaction subject to the Regulations between in or about October 2011, and in or about February 2012, by carrying on negotiations concerning and ordering an aircraft engine subject to the Regulations during that time period… In doing so, Eslamian acted at least in part through Equipco (UK) Ltd. (“Equipco”), a company owned and directed by Eslamian.

The U.S. origin International Aero Engine (“IAE”) aircraft is an item subject to the Regulations, classified under Export Control Classification Number (“ECCN”) 9A991.d, and controlled for anti-terrorism reasons. …

* Penalty:

– Civil penalty in the amount of $250,000

* Debarred: Four (4) years from the date of this Order, provided that Eslamian has made full and timely payment of the civil penalty.

* Date of Order: 28 September 2017.

Commerce/BIS: Miltech, Inc. of Northampton, MA, to Pay $230,000 to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.

* Respondent: Miltech, Inc., Northampton, MA

* Charges: 18 Charges of 15 C.F.R. § 764.2(a): Engaging in Prohibited Conduct

On eighteen occasions between on or about 14 October 2011 and or about 24 July 2014, Miltech engaged in conduct prohibited by the EAR when it exported items subject to the EAR from the United States to China and Russia without the required BIS licenses. Specifically, Miltech exported active multiplier chains, items classified under Export Control Classification Number (“ECCN”) 3A001.b.4, controlled on national security and anti-terrorism grounds, and valued in total at approximately $364,947, without seeking or obtaining the licenses required for these exports pursuant to section 742.4 of the EAR. …

* Penalty: Civil penalty of $230,000, of which $180,000 needs to be paid within 30 days, and the remaining $50,000 will be suspended and waived after two years if Miltech complies with the terms of its settlement agreement and this order.

* Debarred: Not if penalty is paid as agreed, and Miltech complies with the other terms of its settlement agreement and this order.

* Date of Order: 25 September 2017.

American Shipper: “New Jersey Firm Fined $400,000 for Export Violation”(Source: American Shipper, 15 Sep 2017) [Excerpts.]

The State Department’s Directorate of Defense Trade Controls (DDTC) this week imposed a $400,000 civil penalty against Barrington, N.J.-based Bright Lights USA for exports of unauthorized defense components and technical data in violation of the International Traffic in Arms Regulations (ITAR).

Bright Lights notified DDTC of two ITAR violations in voluntary self-disclosures filed with the agency in April 2013 and June 2016.

The primary reason for the violations relates to the company not staying current with the former Obama administration’s Export Control Reform (ECR) regarding transition of ITAR-related commodities/technology from the State Department’s U.S. Munitions List to the Commerce Control List. The wrong commodity jurisdiction resulted in the incorrect export licensing classification, which further resulted in export violations for both the physical export of the items and the illegal transfer of technology made by the company.

State/DDTC: Bright Lights USA, Inc., Barrington, NJ to Pay $400,000 to Settle Alleged AECA and ITAR Violations(Source: State/DDTC)

* Respondent: Bright Lights USA, Inc., 145 Shreve Ave., Barrington, NJ

* Charges: Eleven charges of violations of the AECA and ITAR between 2010 and 2012, and 2014 and 2015

– Four Charges of Unauthorized Export of Defense Articles to a Proscribed Destination

– One Charge of Unauthorized Export of Defense Article (Technical Data)

– One Charge of Failure to Maintain and Provide Required Records

– Five Charges of Unauthorized Export of Defense Articles (Parts and Components)

* Civil Settlement: $400,000

* Debarred or Suspended from Export Transactions: Not if penalty is paid and corrective actions are completed as agreed.

* Result of Voluntary Self-Disclosure: Yes

* Date of Order: 11 September 2017

* Available documents:

– Proposed Charging Letter

– Consent Agreement

– Order

* Mitigating Factors:

– Submitting two voluntary disclosures;

– Cooperating with the Department’s review of the disclosed events and signed multiple agreements tolling the statutory period;

– Provided information suggesting that the violations were not wilful in nature; and

– Significant improvements to its export compliance program that reduce the likelihood of future violations.

* Aggravating Factors:

– Central role of an individual with a prior AECA conviction;

– Significant ITAR training and compliance program deficiencies that directly contributed to the violations;

– Unauthorized export of technical data to a proscribed destination.

Justice: “CEO of International Metallurgical Company Sentenced to 57 Months in Prison for Conspiring to Export Specialty Metals to Iran”(Source: Justice) [Excerpts.]

Earlier today, at the federal courthouse in Brooklyn, New York, Erdal Kuyumcu, the chief executive officer of Global Metallurgy, LLC, based in Woodside, New York, was sentenced to 57 months in prison following his June 14, 2016 guilty plea to conspiracy to violate the International Emergency Economic Powers Act by exporting specialty metals from the United States to Iran.  The sentencing proceeding was held before Chief United States District Judge Dora L. Irizarry. …

According to court documents, Kuyumcu, a U.S. citizen, conspired to export from the United States to Iran a metallic powder primarily composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).  As established during a two-day presentencing evidentiary hearing, the metallic powder has potential military and nuclear applications.  Such specialized metals are regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism, and exporting them without the required license is illegal.

In furtherance of the illegal scheme, Kuyumcu and others plotted to obtain more than 1,000 pounds of the metallic powder from a U.S.-based supplier.  To hide the true destination of the goods from the supplier, Kuyumcu arranged for the metallic powder to be shipped first to Turkey and then to Iran.  Kuyumcu used coded language when discussing shipment of the powder with a Turkey-based co-conspirator, such as referring to Iran as the “neighbor.”  Shortly after one of the shipments was sent from Turkey to Iran, a steel company in Iran sent a letter-sized package to Kuyumcu’s Turkey-based co-conspirator.  The Iranian steel company had the same address as an OFAC-designated Iranian entity under the Weapons of Mass Destruction proliferators sanctions program that was associated with Iran’s nuclear and ballistic missile programs.  …

Commerce/BIS: Narender Sharma and Hydel Engineering Products of Rampur Bushahr, India, to Pay $100,000 to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.]

* Respondent: Narender Sharma and Hydel Engineering Products of Rampur Bushahr, India

* Charges: 15 C.F.R. § 764.2(d) – Conspiracy to Export Items from the United States to Iran, Including to an Iranian Government Entity, without the Required U.S. Government Authorization:

Beginning no later than in or around May 2009, and continuing through in or around January 2012, Hydel/Sharma conspired and acted in concert with others, known and unknown, to violate the Regulations and to bring about an act or acts that constitutes a violation of the Regulations. The purpose of the conspiracy was to evade the long-standing and well-known U.S. embargo against Iran in order to sell and export U.S.-origin waterway barrier debris systems and related components to Iran via transshipment through third countries, including to Mahab Ghodss, an Iranian Government entity, without the required U.S. Government authorization.

The conspiracy led to the attempted export of a waterway barrier debris system, an item subject to the Regulations, designated EAR99,3 and valued at $420,256, from the United States to Mahab Ghodss in Iran, via transshipment through the United Arab Emirates (“UAE”). This item also was subject to the Iranian Transactions Regulations (“ITR”), administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). …

* Penalty:

– A civil penalty in the amount of $100,000 for which they are jointly and severally liable

– Narender Sharma and Hydel Engineering Products may not, directly or indirectly, participate in any way in any transaction involving any commodity, software or technology exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations. … The five-year denial period set forth above shall be suspended during a probationary period of five years under this Order, and shall thereafter be waived, provided that Hydel and Sharma have made full and timely payment as set forth above, have otherwise complied with the terms of the Settlement Agreement and this Order, and have committed no other violation of the Act or the Regulations or any order, license, or authorization issued thereunder.

* Debarred: Not if penalty is paid as agreed.

* Date of Order: 31 August 2017.

Commerce/BIS: Cryofab, Inc. of Kenilworth, NJ, to Pay $35,000 to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.]

* Respondent: Cryofab, Inc., Kenilworth, NJ

* Charges: 2 Charges of 15 C.F.R. § 764.2(a) — Engaging in Conduct Prohibited by the Regulations:

On two occasions, on or about July 19, 2012 and December 4, 2012, respectively, Cryofab engaged in conducted prohibited by the Regulations by exporting gas storage containers and related tools and accessories, items subject to the Regulations, designated EAR99, and valued in total at $21,570, from the United States to the Bhabha Atomic Research Center (BARC), an Indian Department of Atomic Energy entity located in Mumbai, India, without the BIS licenses required by Section 744.11 and Supplement No. 4 to Part 744 of the Regulations. On the first occasion, Cryofab exported a liquid helium storage container and accessory (total value: $16,275), and on the second occasion, it exported a liquid nitrogen storage container and operating tool (total value: $5,295). BARC is and at all times pertinent hereto was an organization listed on the Entity List set forth at Supplement No. 4 to Part 744 of the Regulations. BARC was added to the Entity List on June 30, 1997.

Although an experienced exporter, Cryofab failed to screen the Entity List in connection with these two transactions and failed to seek or obtain the BIS licenses required pursuant to Section 744.11 and Supplement No. 4. It also erroneously listed the items as eligible for shipment without a license (“NLR,” or No License Required) on the Shipper’s Letter of Instructions for each shipment. …

* Penalty:

– Civil penalty of $35,000;

– Cryofab shall complete an external audit of its export controls compliance program; and

– Cryofab shall hire an unaffiliated third-party consultant with expertise in U.S. export control laws to conduct the external audit of its compliance with U.S. export control laws (including recordkeeping requirements).

* Debarred: Not if penalty is paid, and the audit completed as agreed.

* Date of Order: 18 August 2017.

Commerce/BIS: Harold Rinko/Global Parts Supply of Hallstead, PA, to Pay $100,000 and Debarred for Ten Years to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.]

* Respondent: Harold Rinko/Global Parts Supply, Hallstead, PA

* Charges: One charge of 15 C.F.R. §764.2(d)- Conspiracy

Beginning in at least September 2007, and continuing through at least May 2011, Rinko/Global Parts Supply conspired and/or acted in concert with others, known and unknown, to bring about an act that constitutes a violation of the Export Administration Regulations (“EAR”). The purpose of the conspiracy was to procure U.S.-origin goods, items subject to the EAR, from suppliers in the United States for export from the United States to Syria without the required authorization from BIS.

Rinko/Global Parts Supply’s co- conspirators included Moawea Deri, a citizen and resident of Syria, and his brother, Ahmad Feras Diri, also known as Feras Diri, a citizen and resident of the United Kingdom (“U.K.”), who both operated d-Deri Contracting & Trading, a business located in Damascus, Syria that also transacted business in and through the U.K. In furtherance of the conspiracy, Rinko/Global Parts Supply procured items subject to the EAR from U.S. suppliers and exported or attempted to export them to Syria through a third country. These items were either specifically listed on the Commerce Control List or designated as EAR99. …

* Penalty: Civil penalty in the amount of $100,000. However, all of which shall be suspended for a period of five years from the date of this Order, and thereafter shall be waived, provided that during this five-year payment probationary period, Rinko has fully and timely complied with the quarterly reporting requirements described in the Order and has not committed a violation of the Act, or any regulation, order, license, or authorization issued thereunder.

* Debarred: For a period of ten years from the date of the Order. However, the ten-year denial period shall be suspended for a period of ten years from the date of the Order, and shall thereafter be waived, provided that during this ten-year probationary period Rinko has timely completed and submitted each of the quarterly reports as set forth above, and has not committed any violation of the Act or the Regulations or any order, license or authorization issued thereunder.

* Date of Order: 26 July 2017

DHS/ICE: “New Zealand Man Sentenced for Conspiring to Export Sensitive Parts to China”

(Source: DHS/ICE) [Excerpts.]

A New Zealand man who traveled to Seattle last year to take possession of export-restricted parts designed for missile and space applications was sentenced Thursday to two years in federal prison for conspiring to violate the Arms Export Control Act, following a probe by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

William Ali, 38, has been in federal custody since his arrest April 11, 2016, by HSI special agents. At Thursday’s sentencing, U.S. District Judge Thomas S. Zilly said, “You knew that if you did it you could go to jail and you proceeded to do it…you laughed and you were undeterred in your decision to come here.” …

According to records in the case and testimony presented at trial, Ali emailed several companies and distributors in April 2015 about purchasing certain accelerometers that are designed for use in spacecraft and missile navigation. These accelerometers cannot be exported from the United States without a license from the U.S. State Department, which Ali did not have. HSI learned of Ali’s inquiries and began an investigation. …

Over the next year, Ali communicated by phone and email with an HSI undercover special agent, and with a person in China known in his emails as “Michael.” Michael was the person seeking the accelerometers, as well as certain gyroscopes that are designed for military use. Ali was working to find a way to purchase the devices and transport them secretly to Michael in China. In multiple emails, Ali made clear he was aware that export of the accelerometers and gyroscopes was illegal. Ali sent the undercover agent nearly $25,000 for the devices – money he got from Michael. Ali traveled to Seattle and met with the undercover HSI special agent April 11, 2016, at a downtown hotel. Shortly after Ali took possession of the devices he was arrested.  Ali had with him an airline ticket to Hong Kong and a visa to travel to China.

Commerce/BIS: Hassan Zafari of Brentwood, CA, to Pay $52,500 to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.]

* Respondent: Hassan Zafari, Brentwood, CA.

* Charges: One Charge of 15 C.F.R. § 764.2(b): Causing, Aiding, or Abetting an Unauthorized Export to Iran:

In or about September and October 2014, Hassan Zafari, a.k.a. Sam Zafari (“Zafari”), caused, aided, or abetted a violation ofthe Regulations. Specifically, Zafari caused, aided or abetted the export from the United States to Iran, via the United Arab Emirates (“UAE”), of a used industrial laser system subject to the Regulations and valued at approximately $12,000, without the required U.S. Government authorization.

* Penalty: Civil penalty of $52,500.

* Debarred: Not if penalty is paid as agreed.

* Date of Order: 28 June 2017.

Commerce/BIS: Axis Communications, Inc. of Chelmsford, MA, to Pay $700,000 to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.]

* Respondent: Axis Communications, Inc., Chelmsford, MA

* Charges:

– Thirteen Charges of 15 C.F.R. § 764.2(a), Export of Thermal Imaging Cameras Without the Required Licenses:

On 13 occasions between on or about 16 March 2011, and on or about 15 July 2013, Axis engaged in conduct prohibited by the Regulations when it made unlicensed exports from the United States to Mexico of thermal imaging cameras, items subject to the Regulations, classified under Export Control Classification Number 6A003.b.4, controlled for national security and regional stability reasons, and valued in total at $391,819. These exports to Mexico required BIS licenses pursuant to Sections 742.4 and 742.6 of the Regulations.

– Two Charges of 15 C.F.R. § 764.2(i): Failure to Comply with Recordkeeping Requirements:

On two occasions, on or about 17 June 2013, and on or about 15 July 2013, respectively, Axis failed to comply with the recordkeeping requirements set forth in Section 762.2 of the Regulations in connection with exports from the United States to Mexico of thermal imaging cameras, items subject to the Regulations, classified under Export Control Classification Number 6A003.b.4, and controlled for national security and regional stability reasons. Axis failed to retain documents required to be retained under Section 762.2, including, but not limited to, invoices relating to these exports.

* Penalty:

– Civil penalty of $700,000

– Complete an external audit of its export controls compliance program

– Hire an unaffiliated third-party consultant with expertise in U.S. export control laws to conduct the external audit of its compliance with U.S. export control laws

* Debarred: Not if penalty is paid as agreed, the audit is completed, and the audit results submitted.

* Date of Order: 9 June 2017.

Commerce/BIS: Cryomech, Inc. of Syracuse, NY, to Pay $28,000 to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.]

* Respondent: Cryomech, Inc., Syracuse, NY

* Charges: 1 Charge of 15 C.F.R. § 764.2(a): Engaging in Prohibited Conduct:

On one occasion, on or about August 16, 2012, Cryomech engaged in conduct prohibited by the Regulations when it exported an LNP-20 Liquid Nitrogen Plant, an item subject to

the Regulations, designated EAR99, and valued at $33,587, from the United States to the All-Russian Scientific Research Institute of Experimental Physics (VNIIEF) a.k.a Russian Federal Nuclear Center-VNIIEF (RFNC-VNIIEF) in Sarov, Russia, without the required BIS license. …

* Penalty:

– Civil penalty of $700,000

– Complete an external audit of its export controls compliance program

– Hire an unaffiliated third-party consultant with expertise in U.S. export control laws to conduct the external audit of its compliance with U.S. export control laws

* Debarred: Not if penalty is paid as agreed, the audit is completed, and the audit results submitted.

* Date of Order: 9 June 2017.

DHS/ICE: Four Arizona Residents Receive Lengthy Prison Terms for Exporting Firearms and Ammunition to Hong Kong(Source: DHS/ICE) [Excerpts.]

Four Arizona residents have been sentenced to lengthy prison terms for their role in a scheme to illegally export weapons and ammunition to Hong Kong, following a multiagency probe that included U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

Peter Steve Plesinger, 55, of Sahuarita, and Stephen Edward Smith, 63, of Tucson, were sentenced Wednesday by U.S. District Judge James A. Soto. Plesinger received a term of 87 months. Smith was sentenced to 102 months in prison. Both men had previously pleaded guilty to exporting munitions to Hong Kong, dealing firearms without a license, and money laundering. Two other defendants, Irina Cvetkovic and Earl Richmond, both of Sahuarita, were charged and convicted for lessor roles in the conspiracy.

In 2014, law enforcement authorities in Hong Kong intercepted a package containing 139 rounds of ammunition that had been shipped from Arizona by Plesinger.  A search of the intended recipient’s Hong Kong residence resulted in the recovery of three rifles, two pistols, four rifle barrels, a silencer, and at least 9,000 rounds of ammunition. Further investigation revealed Plesinger had previously shipped those items to Hong Kong in packages with innocuous labels. Additionally, investigators determined Plesinger had been paid at least $64,500 to ship large quantities of firearms, ammunition, and silencers to Hong Kong, and that Smith had been paid at least $59,550 for making similar shipments.

“The sentences imposed in this case should send a strong message to those who would consider illegally exporting firearms, ammunition, or silencers to other countries,” stated Acting United States Attorney Elizabeth A. Strange. “We will continue to work diligently with our national and international partners to vigorously investigate and prosecute such conduct.”

“I wish to compliment the tenacity of the ATF agents and prosecuting attorneys who brought this case to a successful conclusion,” said ATF Assistant Special Agent in Charge Mark Murray. “Our agents left no stone unturned as they doggedly pursued these criminals and brought them to justice. ATF will continue our role in enforcing violations of the federal firearms and explosives laws both domestically and in this case internationally.”

“HSI, together with our domestic and international law enforcement partners, is dedicated to making communities safer by bringing criminals to justice,” said HSI Special Agent in Charge Scott Brown. “The successful outcome of this case is a direct result of the steadfast efforts of federal agents to prevent firearms from falling into the hands of transnational criminal organizations that pose a threat to public safety both here and abroad.” …

Justice: California Bay Area Residents Charged In Scheme To Export Components For Production Of Night Vision Rifle Scopes(Source: Justice) [Excerpts.]

New charges supplement bank fraud conspiracy charges filed against the defendants in September of last year

Naum Morgovsky and Irina Morgovsky were charged today for their respective roles in an alleged scheme to export components for the production of night vision rifle scopes in violation of the Arms Export Control Act, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The superseding indictment supplements bank fraud charges that were leveled in September of last year against Naum Morgovsky and Mark Migdal.

According to the superseding indictment, Naum and Irina Morgovsky owned night vision businesses in the United States and purchased numerous scope components including image intensifier tubes and lenses.  The superseding indictment alleges the Morgovskys conspired to ship these items to a night vision manufacturing company in Moscow, Russia that was partly owned by Naum Morgovsky.  The United States Munitions List prohibits export of the items unless the exporter obtains a license from the Department of State, Directorate of Defense Trade Controls.  According to the superseding indictment, the Morgovskys did not have such a license.

In addition, the superseding indictment alleges the Morgovskys took steps to conceal their crimes so that they could continue to run their illegal export business undetected.  According to the superseding indictment, Naum Morgovsky laundered the proceeds of the export conspiracy, used a bank account in the name of a deceased person to conceal the ownership and control of the scheme’s proceeds.  The superseding indictment further alleges that Irina Morgovsky allegedly used a passport that she fraudulently obtained in the name of another individual to travel to Russia three times in 2007.

The superseding indictment includes the charges against Naum Morgovsky and Mark Migdal in the indictment filed in September of 2016.  Specifically, the superseding indictment repeats that between June 2009 and April 2016, Morgovsky and Migdal conspired to defraud two federally-insured banks, now Bank of America and EverBank, by seeking those banks’ approval for a short sale of two condominiums owned by Migdal.  The two condominium units were in the same building in Kihei, Maui.  The superseding indictment alleges that Morgovsky and Midgal conspired to convince the banks to allow the properties to be sold in a short sale to an individual who was, in reality, deceased.  A short sale is a sale in which a lender allows a property to be sold at a price that is less than the amount owed on the loan.  According to the superseding indictment, the conspiracy also involved submission of false statements to the bank about Midgal’s employment status and income.  After the banks approved the short sales in 2009 and 2010, Migdal continued to treat the property as his own, including collecting rent and paying taxes and homeowners’ association dues.  The properties allegedly were transferred to Migdal’s wife in 2016.

In addition, the superseding indictment alleges that, during 2009 and 2010, Migdal submitted false statements to a federally insured bank.  According to the superseding indictment, Migdal sought to obtain loan modifications for his residence in Portola Valley and his rental property in Mountain View by falsely stating he had rented part of his residence, by submitting a false employment offer letter, and by falsely stating his rental property in Mountain View was his principal residence. …

Any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  The Superseding Indictment also seeks forfeiture of the false passport, a residence in Portola Valley, a condominium in Mountain View, and the two Hawaii condominiums.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. …

[Editor’s Note: an overview of the charges and maximum statutory sentences against Naum Morgovsky, Irina Morgovsky, and Mark Migdal is available here.]

Justice: Singapore Man Sentenced to 40 Months in Prison for Plot Involving Exports to Iran of U.S. Components(Source: Justice) [Excerpts.]

Lim Yong Nam, aka Steven Lim, 43, a citizen of Singapore, was sentenced today (Thursday) to 40 months in prison for his role in a conspiracy that caused thousands of radio frequency modules to be illegally exported from the U.S. to Iran, at least 14 of which were later found in unexploded improvised explosive devices (IEDs) in Iraq. …

Lim was extradited in 2016 from Indonesia, where he had been detained since October 2014 in connection with the U.S. request for extradition. He pleaded guilty on Dec. 15, 2016, to a charge of conspiracy to defraud the U.S. by dishonest means. Lim will be deported upon completion of his sentence.

Lim and others were indicted in the District of Columbia in June of 2010 on charges involving the shipment of radio frequency modules made by a Minnesota-based company. The modules have several commercial applications, including in wireless local area networks connecting printers and computers in office settings. These modules include encryption capabilities and have a range allowing them to transmit data wirelessly as far as 40 miles when configured with a high-gain antenna. These same modules also have potentially lethal applications. Notably, during 2008 and 2009, coalition forces in Iraq recovered numerous modules made by the Minnesota firm that had been utilized as part of the remote detonation system for IEDs. According to the plea documents filed in the case, between 2001 and 2007, IEDs were the major source of American combat casualties in Iraq.

In a statement of offense submitted at the time of the guilty plea, Lim admitted that between August 2007 and February 2008, he and others caused 6,000 modules to be purchased and illegally exported from the Minnesota-based company through Singapore, and later to Iran, in five shipments, knowing that the export of U.S.-origin goods to Iran was a violation of U.S. law.  In each transaction, Lim and others made misrepresentations and false statements to the Minnesota firm that Singapore was the final destination of the goods; at no point in the series of transactions did Lim or any of his co-conspirators inform the company that the modules were destined for Iran.   Similarly, according to the statement of offense, Lim and others caused false documents to be filed with the U.S. government, in which they claimed that Singapore was the ultimate destination of the modules. Lim and his co-conspirators were directly aware of the restrictions on sending U.S.-origin goods to Iran.

Shortly after the modules arrived in Singapore, they were kept in storage at a freight forwarding company until being aggregated with other electronic components and shipped to Iran. There is no indication that Lim or any of his co-conspirators ever took physical possession of these modules before they reached Iran or that they were incorporated into another product before being re-exported to Iran.

According to the statement of offense, 14 of the 6,000 modules the defendants routed from Minnesota to Iran were later recovered in Iraq, where the modules were being used as part of IED remote detonation systems. …

[Editor’s Note: this release was also published on the DHS/ICE Newsroom website.]

Commerce/BIS: Access USA Shipping, LLC of Sarasota, FL, to Pay $27,000,000 to Settle Alleged Export Violations(Source: Commerce/BIS) [Excerpts.]

* Respondent: Access USA Shipping, LLC, Sarasota, FL

* Charges:

– Charges 1-129: 15 C.F.R. §764.2(h) – Evasion:

On one hundred twenty-nine (129) occasions beginning on or about 21 April 2011, and continuing through on or about 7 January 2013, Access USA Shipping, LLC (“Access”) engaged in transactions or took other actions to evade the Export Administration Regulations (“EAR” or “Regulations”). Specifically, Access took actions that enabled foreign customers to purchase items subject to the EAR through Access without U.S. merchants knowing the items were intended for export and that were designed at least in part to avoid detection by the U.S. Government and law enforcement. These actions included mis-describing and undervaluing the items in false export control documents; undervaluing the items improperly to avoid the filing of the required export control documents; allowing foreign customers to place orders through Access employees to avoid export scrutiny; destroying or altering export control documents; and failing to maintain records related to export transactions. …

– Charges 130-146: 15 C.F.R. §764.2(a) – Engaging in Conduct Prohibited by the Regulations by Exporting or Attempting to Export Crime Control Items without the Required License:

On seventeen (17) occasions between on or about 23 August 2011, and or about 24 January 2013, Access engaged in conduct prohibited by the EAR when it exported or attempted to export items classified under Export Control Classification Number (“ECCN”) 0A987 and controlled for Crime Control reasons without the BIS export licenses required pursuant to Section 742.7 of the EAR. The destinations included Argentina, Austria, Hong Kong, Indonesia, Libya, South Africa, and Sweden. …

– Charges 147-150: 15 C.F.R. §764.2(a) – Engaging in Conduct Prohibited by the Regulations by Exporting or Attempting To Export Items Subject to the Regulations to a Listed Entity Without the Required License:

On four occasions between on or about 17 October 2012, and on or about 15 February 2013, Access engaged in conduct prohibited by the EAR when it exported or attempted to export items subject to the Regulations from the United States to Transsphere Oy in Finland without the BIS license required pursuant to Section 744.11 and Supplement No. 4 to Part 744 of the Regulations. The items were classified under ECCN 5A991 and controlled for anti-terrorism reasons, or were designated as EAR99. Transsphere Oy is a Finish entity listed on the Entity List …

* Penalty: Civil penalty of $27,000,000, of which $17,000,000 shall be suspended for two years from the date of this Order, and waived provided that during this two year payment probationary period, Access has committed no violations of the Export Administration Act, or any regulation, order, license or authorization issues thereunto, has made full and timely payment of the $10,000,000, and has complied with all the other terms of its Settlement Agreement, and has committed no violation of the Non-Prosecution Agreement that Access has entered with U.S. Attorney’s Office for the Middle District of Florida

* Debarred: Not if penalty is paid as agreed, Access has complied with all the other terms of its Settlement Agreement, and has not failed to comply with the terms of the Non-Prosecution Agreement.

* Date of Order: 9 February 2017

Commerce/BIS: ZTE of Shenzhen and Hi-New Shenzhen, China, to Pay $661,000,000 for Export Violations(Source: Commerce/BIS) [See related items #10, #13, and #16.]

* Respondents: Zhongxing Telecommunications Equipment Corporation, Shenzhen, China, and ZTE Kangxun Telecommunications Ltd., Hi-New Shenzhen, China, collectively known as ZTE

* Charges: 380 violations of the EAR:

– One Charge of 15 C.F.R. § 764.2(d) -Conspiracy

– 283 Charges of 15 C.F.R. § 764.2(e) – Acting with Knowledge of a Violation in Connection with Unlicensed Shipments of Telecommunications Items to North Korea via China

– 16 Charges 15 C.F.R. § 764.2(h) – Evasion

* Penalty: Civil penalty of $661,000,000. The payment of $361,000,000 shall be made to the U.S. Dept. of Commerce within 60 days of the date of this Order. Payment of the remaining $300,000,000 shall be suspended for a probationary period of seven years provided that all the requirements set out in the Order are met.

* Main requirements:

– ZTE shall complete and submit six audit reports of its compliance with U.S. export control laws, with respect to all exports, reexports, or transfers (in-country) that are subject to the EAR;

– ZTE shall hire an unaffiliated third party consultant with expertise in U.S. export control laws to conduct the external audits;

– The audits required shall be in substantial compliance with the Export Management Program sample audit module, available on the BIS website;

– ZTE will ensure that all records required to be kept or retained under the EAR are stored in or fully accessible from the United States;

– ZTE will allow the U.S. government to verify ZTE’s adherence to its export control compliance program and the EAR

– ZTE shall provide extensive training on applicable export control requirements to its leadership, management, and employees, including the leadership, management and employees of its affiliates, subsidiaries, and other entities worldwide over which it has ownership or control

* Debarred: Not if penalty is paid as agreed and all requirements set out in the Order are met.

* Date of Order: 7 March 2017

Commerce/BIS: Milwaukee Electric Tool Corp. of Brookfield, WI, to Pay $301,000 to Settle Alleged Export Violations(Source: Commerce/BIS)

* Respondent: Milwaukee Electric Tool Corporation, Brookfield, WI

* Charges: 25 Charges of 15 C.F.R. § 764.2(a) – Engaging in Prohibited Conduct:
On 25 occasions between April 2012 and May 2014, Milwaukee Electric Tool Corporation (“Milwaukee Electric”) engaged in conduct prohibited by the EAR by exporting thermal imaging cameras, items subject to the EAR, from the United States to various countries, including Hong Kong, Colombia, Ecuador, El Salvador, and Mexico, without the required Department of Commerce export licenses. The items are classified under Export Control Classification Number (“ECCN”) 6A003.b.4, controlled for National Security and Regional Stability reasons, and valued in total at approximately $129,284. Pursuant to Sections 742.4 and 742.6 of the EAR, a BIS export license is required before the items can be exported to each of the destinations at issue. By exporting these items without the required export licenses, Milwaukee Electric committed 25 violations of Section 764.2(a) of the EAR.

* Penalty: Milwaukee Electric shall be assessed a civil penalty in the amount of $301,000.

* Debarred: Not if penalty is paid as agreed.

* Date of Order: 19 January 2017.

Commerce/BIS: Dane Francisco Delgado of Eden, TX, Denied Export Privileges for 10 Years(Source: Commerce/BIS)

* Respondent: Dane Francisco Delgado, Eden, TX

* Charges: On 4 November 2014, in the U.S. District Court for the Southern District of Texas, Dane Francisco Delgado (“Delgado”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. § 2778 (2012)) (“‘AECA”). Specifically, Delgado knowingly and willfully conspired with persons known and unknown to export, furnish, and cause to be exported from the United States to Mexico defense articles designated on the United States Munitions List without having first obtained from the Department of State a license or written authorization for such export. Delgado was sentenced to 60 months in prison, three years of supervised release, and a $100 assessment.

* Debarred: Delgado’s is denied export privileges under the Regulations for a period of 10 years from the date of Delgado’s conviction, until 4 November 2024.

* Date of Order: 29 December 2016.

Commerce/BIS: Robert Luba of Waymart, PA, Denied Export Privileges for 10 Years(Source: Commerce/BIS)

* Respondent: Robert Luba, Waymart, PA

* Charges: On 25 April 2016, in the U.S. District Court for the District of New Jersey, Robert Luba (“Luba”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. § 2778 (2012)) (“AECA”). Specifically, Luba knowingly and willfully exported and caused to be exported from the United States to India a defense article, that is, the technical drawing for the NSSN Class Submarine, Torpedo Tube, Open Breech Door, Gagging Collar A, Drawing Number 7072856, which was designated as a defense article on the United States Munitions List, without having first obtained from the Department of State a license for such export or written authorization for such export. Luba was sentenced six months in prison, three years of supervised release, $173,736.67 in restitution, and a $200 assessment.

* Debarred: Luba is denied export privileges under the Regulations for a period of 10 years from the date of Luba’s conviction 25 April 2026.

* Date of Order: 29 December 2016.

Commerce/BIS: Kamran Ashfaq Malik of Joint Base MDL, NJ, Denied Export Privileges for 5 Years(Source: Commerce/BIS)

* Respondent: Kamran Ashfaq Malik, Joint Base MDL, NJ

* Charges: On 29 June 2015, in the U.S. District Court for the District of Maryland, Kamran Ashfaq Malik (“Malik”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. § 2778 (2012)) (“AECA”). Specifically, Malik knowingly and willfully exported and caused the exportation of firearm parts and accessories designated as defense articles in Category I of the United States Munitions List, to wit: a .223 caliber rifle lower receiver, a .334 caliber rifle lower receiver, two .223 caliber rifle bolt carriers, and two .223 10 round magazines, from the United States and destined for Pakistan without having first obtained the required licenses or authorizations from the Department of State. Malik was sentenced to 24months in prison, three years o f supervised release, and a $100 assessment.

* Debarred: Malik is denied export privileges under the Regulations for a period of 5 years from the date of Malik’s conviction, until 29 June 2020

* Date of Order: 29 December 2016.


The following represent the considered views of the Export Group for Aerospace, Defence & Dual-Use, and, as such, is proprietary to EGADD and should not be copied or otherwise used without seeking prior permission.

There had been much debate since the Referendum decision to leave the EU. The EGADD Executive committee thought that it could be useful to produce a short paper on the risks and opportunities created by this decision, as far as reasonably possible, ahead of the invoking of Article 50 and the necessary diplomatic negotiations with our former partners in the EU to achieve our desired ends. Much of the legislation in place in relation to Export Controls and Sanctions will not be impacted; however, there will be need for negotiation in relation to EU legislation pertaining to Dual-Use goods and the Intra Community Transfers Directive for Military Goods.

The issues surrounding Authorised Economic Operator (AEO) and the Union Customs Code (UCC) will not be addressed here as there are other, more relevant committees focused on these issues….

Reality Check – BREXIT – The Effect on Export Controls


The challenges for exporters are multiplying. Economic protectionism in the USA, ever stricter sanctions on Russia, Iran and North Korea, and escalating cybercrime are all important considerations for the export market. In the UK however, Brexit is the looming question. Without knowing which form Britain’s separation from the European Union will take, it is difficult for exporters to anticipate what the effects will be on their business. And yet preparedness is essential if they intend to land on their feet.

Stephen Osborne, Research Associate at Project Alpha – King’s College London’s centre for developing countermeasures to illicit trade – outlines two possible versions of Brexit. In one scenario, he told Global Trade Controls’ correspondent, more permissive export controls in the UK could lead to a competitive advantage for UK exporters. The downside, however, is that the UK could “become a target for procurement networks looking to acquire goods for military or WMD programmes,” which would in turn lead to a “reluctance by EU member states and their respective licensing authorities to export dual-use goods to the UK.” What at first sight appears to be a benefit to UK exporters could therefore harm the economy as a whole. The alternative? A stricter UK export control regime which places British exporters at a disadvantage, but preserves the EU’s confidence in the UK as a responsible importer of dual-use goods.

Across the channel, European regulators are also facing tough choices. In their recent proposal for modernising export controls, the EU Commission acknowledged the risks posed to the privacy and security of EU citizens by the increasing proliferation of potentially invasive cyber surveillance technologies. Their response was to expand the definition of dual use items to include “software and technology… which can be used for the commission of serious violation of human rights or international humanitarian law”. By the time the proposals come into effect, most likely in the Spring of next year, exporters will need to familiarise themselves with the new guidelines to ensure that they remain compliant.

Taking place in London this November, the Global Trade Controls conference will convene to discuss these issues and many others. Join an international roster of export compliance professionals, as well as over forty expert speakers, to discuss the implications of Brexit, the modernisation of EU export policy, sanctions under the Trump administration, considerations for exporters in Asia, technology transfers in the cloud, and much more.

Exchange ideas with your peers in a range of interactive sessions including close knit roundtable discussions, networking lunches, and practical case studies on recent developments including ZTE and Epsilon Electronics. On the first day of the conference is the Export Licensing & Trade Controls Seminar, which will provide a comprehensive introduction to trade controls and the process of export licensing.

Speakers for Global Trade Controls 2017 include representatives from Google, IBM, Marshall Aerospace and Defence Group, Deloitte, Thomson Reuters, PricewaterhouseCoopers and many others. Among the confirmed speakers are:

Ian Stewart, Head of Project Alpha, King’s College London

Lillian Norwood, Manager of IBM Governmental Programs, Export Regulation Office, IBM Corporation

Brinley Salzman, Director of Overseas and Exports, ADS Group Ltd

Michael Lutz, Director of Global Trade Compliance, Google

Katja Stockburger, Legal Counsel for Foreign Trade Governance, ZF Friedrichschafen AG

Laurence Carey, Group Control Manager, Marshall Aerospace and Defence Group

Join us at Global Trade Controls this November to hear what they have to say. Find out more here: https://goo.gl/csdYvw


SIPRI is pleased to draw attention to a recently published Concept Paper and set of Good Practice Guides examining the challenges facing the establishment and implementation of an effective Internal Compliance Programme (ICP) by companies and research institutes subject to dual-use and arms export controls.

An ICP is an arrangement that an entity affected by dual-use and arms export controls puts in place to ensure that it is complying with both these controls and its own internal policies. In recent years, the European Union (EU) and national governments have been encouraging companies and other stakeholders to adopt ICPs and to allow those that do so to benefit from reduced administrative requirements. However, while the requirement to have an ICP is being increasingly mainstreamed, the guidance and tools available to companies and other affected stakeholders on how one should be established and maintained is often deficient and not targeted at those most in need of assistance.

This SIPRI Concept Paper maps the key challenges faced by many of the sectors and actors most impacted by the EU’s dual-use and arms export controls, and the steps that have been taken—and could be taken—to help those affected to set up and run an effective ICP. The paper builds on past research by SIPRI in this area as well as information collected from export compliance officers, experts affiliated with industry associations and representatives of European licensing authorities.

The five accompanying SIPRI Good Practice Guides present available sector and actor-specific compliance-related guidance material. They cover the nuclear, defence and aerospace, and information and communication technology sectors, as well as academic and research, and transport and distribution service providers. Each Guide includes guidance material produced by national governments, the EU and other bodies, as well as publicly available ICPs produced by companies and research institutes.

SIPRI would be glad to receive feedback on the Concept Paper and accompanying Good Practice Guides. For more information about SIPRI’s work on dual-use and arms export controls please visit Dual-use and Arms Trade Control Programme homepage or contact Sibylle Bauer or Mark Bromley.

DOWNLOAD THE CONCEPT PAPER AND GOOD PRACTICE GUIDES:

Challenges and good practices in the implementation of the EU’s arms and dual-use export controls: A cross-sector analysis

Internal compliance and export control guidance documents for actors from academia and research
SIPRI Good Practice Guide: Export Control ICP Guidance Material no. 1

Internal compliance and export control guidance documents for the information and communications technology sector
SIPRI Good Practice Guide: Export Control ICP Guidance Material no. 2

Internal compliance and export control guidance documents for the nuclear sector
SIPRI Good Practice Guide: Export Control ICP Guidance Material no. 3

Internal compliance and export control guidance documents for transport or distribution service providers
SIPRI Good Practice Guide: Export Control ICP Guidance Material no. 4

Internal compliance and export control guidance documents for the defence and aerospace sector
SIPRI Good Practice Guide: Export Control ICP Guidance Material no. 5

Stockholm International Peace Research Institute (SIPRI)
SIPRI is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament. Established in 1966, SIPRI provides data, analysis and recommendations, based on open sources, to policymakers, researchers, media and the interested public. SIPRI is regularly ranked among the most respected think tanks worldwide.


Following a query, on behalf of a Member Company, it has been confirmed to EGADD by the UK Ministry of Defence that the ONLY people who are authorised to issue Crown Exemption/Immunity letters to companies to move items on the UK Government’s behalf, are the UK MoD staff who are embedded within the Export Control Joint Unit. No other letters, from any other sources, can or should be relied upon, as we are aware of a number of instances in which companies, who have done so, have been found to be in breach of the regulations. The current information (at the time of writing) on this on the GOV.UK website was not up-to-date, and its guidance was wrong, and should NOT be relied upon. It must also be noted that Crown Immunity does not cascade down through the supply chain, despite comments to the contrary.

If any companies need any further clarification on this issue, they should contact: Brinley.Salzmann@adsgroup.org.uk.


Some of the items covered in the March newsletter include:

  • Current research activities
  • Meet the Project Alpha Staff
  • Study of WMD Proliferation Financing Typologies: Interim Report
  • Examining Intangible Technology Controls
  • DPRK Successful Missile Test
  • Putin, Trump and the JCPOA

Project Alpha – March 2017 Newsletter

2016 News Articles >>

Transparency is a key theme of the Coalition Government and plays a vital role in enabling the public to hold the Government to account. It is particularly important in a high profile area such as export control – confidence in the workings of the export licensing system needs to be shared by Parliament and by the public.

Transparency-in-Export-Licensing–Government-Response—BIS—July-2012

The Export Control Organisation has just commenced consultations with Industry aimed at the replacement, in 2017, of the current SPIRE electronic licensing system, to produce a new, improved and more user-friendly system for companies to use to apply electronically for import licences, export licences, exhibition clearances, security gradings, F680s, etc, etc. The first formal consultation meeting with Industry took place on 13th January, and a copy of the blog that has been created on this project is available at: www.egadd.org.uk/useful-guidance/. All Members are encouraged to get involved in this process and provide inputs to these consultations.

Please respond with feed back to:

James Curran | Delivery Manager | Digital | Department for Business, Innovation & Skills |1 Victoria St Level 6 Orchard 1 | Mobile 07584 618 200 |www.bis.gov.uk


2015 News Articles >>

Data and information collection for EU dual-use export control policy review

As part of the ongoing review of the EU dual-use export control system, the European Commission is conducting an impact assessment. This study supports the impact assessment through the collection and analysis of data and information. The April
2014 Communication ‘Ensuring security and competitiveness in a changing world’, which outlines the review options, issues and actions provides the overall rationale and framework for this study. The Stockholm International Peace Research Institute (SIPRI) implemented the project jointly with Ecorys during January to September 2015.

The project included three main Actions:

(1) development of the methodology for data collection;

(2) analysis of the baseline scenario through the collection of data and information, both on the structure and performance of directly affected sectors,and with regard to the impact of current controls and related problems; and

(3) the analysis of the review options and corresponding review actions.

The project combines EU- and sector-wide data with case studies on the machine tools, chemical and aerospace sectors. A strong focus of the study has been the implementation and future expansion of controls on exports of cyber-surveillance technologies and related review options.

FINAL REPORT ANNEXES FINAL REPORT – Data and information collection for EU dual-use export control policy review

FINAL REPORT ANNEXES

The Economic Times of India

By Manu Pubby

A formal list of defence items that can be exported has been endorsed by the ministry of defence, bringing India at par with international laws governing arms trade. The move – which identifies 16 broad categories of products that can be exported after clearance – is expected to boost military trade with experts saying that it brings clarity to private companies pursuing export orders.

FULL ARTICLE >

Notices to Exporters 2012/25 and 2012/26 – Republishing of consolidated UK Strategic Export Control List along with number of Open General Export Licences…

We have agreed to circulate the draft pages of the HMRC Officers Guidance (VTRANS) for information- please see 3 attached documents.  These pages will update the guidance currently published here: http://www.hmrc.gov.uk/manuals/vtransmanual/index.htm

Other pages (not included) will have consequential amendments to fit the numbering and cross referencing and other minor tweaks.