2019 Recap Part II: BIS Enforcement Actions

BIS Fines Lebanese Company for 20 EAR Violations

A Lebanese energy equipment company was fined $368,000 by the Bureau of Industry and Security after it illegally reexported generators to Syria, according to a settlement agreement signed Nov. 27. Ghaddar Machinery allegedly committed 20 violations of the Export Administration Regulations from 2014 to 2016, totaling about $730,000 worth of exports, BIS said. Ghaddar agreed to pay the penalty in five installments through November 2021. Failure to make the payments could result in more penalties, according to the settlement agreement, including a two-year denial of export privileges.

The company reexported “generator sets” from Lebanon to Syria after receiving generator engines from a Britain-based supplier and directly from the U.S. The generators were assembled in Lebanon using the U.S.-origin engines, which were subject to the EAR because they contained more than 10-percent controlled U.S. content, the settlement agreement said. Ghaddar never sought a BIS license for the generators.

Ghaddar first began buying U.S.-origin engines from the U.S.-owned supplier in Britain before buying directly from the U.S. in 2015. In 2014, the British supplier “specifically warned” Ghaddar that its engines could not be reexported to Syria without a license, BIS said. Ghaddar “certified” to the British supplier’s U.S. parent company that it understood U.S. sanctions and was in compliance with U.S. laws, despite continuing with the illegal reexports, BIS said.

BIS Denies Export Privileges for Miami Company, Two People for EAR Violations

A Miami-based company, its manager and its registered agent were denied export privileges for illegally exporting goods to Syria, the Bureau of Industry and Security said in Nov. 14 notices. Arash Caby, Ali Caby and their company, Arrowtronic, violated the Export Administration Regulations by illegally exporting aircraft parts and equipment to Syrian Arab Airlines, a Specially Designated Global Terrorist, BIS said.

Arrowtronic was denied export privileges for six years from the date of the Oct. 30 order. BIS also suspended export privileges for both Arash Caby and Ali Caby for four years with an additional two-year probationary period, BIS said. The two-year probation will be waived if they commit no other violations of the Export Control Reform Act.

BIS said Arash and Ali Caby worked with Marjan Caby in 2013 and 2014 to buy airplane parts from U.S. suppliers and ship them to Syria. To hide the exports, they provided “materially false or misleading documents and information” and arranged for payments of the exports to be made by third-party companies. The scheme allowed them to complete “multiple transactions” with Syrian Air and ship the parts to the airline’s transshipment point in Dubai, United Arab Emirates, BIS said.

Ali Caby managed the Bulgarian office of Arrowtronic, also known as AW-Tronics, and Arash Caby managed its Miami office, BIS said. Marjan was the company’s internal auditor. Each “exchanged numerous emails” with other company employees authorizing the exports to Syrian Air, the agency said. The emails contained “instructions that were designed to prevent U.S. law enforcement from detecting” the illegal exports, BIS said, “and to allow them to continue by changing the routing of exports from AW-Tronics/Arrowtronic’s Miami, Florida office.”

Commerce Revokes Export Privileges for IEEPA Violations

The Department of Commerce denied a man export privileges after he was convicted of violating the International Emergency Economic Powers Act, Commerce said in a notice. Mojtaba Biria illegally exported gas turbine parts to Germany “with knowledge” the parts would be re-exports to Iran. Biria was convicted Aug. 14, 2019, and sentenced to time served and a $5,000 fine, the notice said. Commerce revoked Biria’s export privileges for 10 years from his date of conviction.

Commerce Fines Company for Illegal Exports, Failure to Comply With EAR Record-Keeping Requirements

A Rhode Island veterinary instrument supplier was fined $136,000 by the Commerce Department for 11 violations of the Export Administration Regulations, Commerce said in a charging letter signed Nov. 7. The company, Cotran Corp., illegally exported electric cattle prods to Venezuela, Mexico, South Africa and the Czech Republic without the required license, and did not comply with EAR record-keeping requirements, Commerce said.

Between 2011 and 2015, Cotran illegally exported $81,010 worth of the prods to the four countries on 10 occasions. Although the company had previously applied for and received “a number” of export licenses for the prods, “including to some of the destinations and end-users at issue,” Cotran did not have proper licenses for these 10 exports, Commerce said. The company did not ”properly monitor” the expiration dates for its export licenses, the charging letter said. Cotran also violated EAR record-keeping requirements by failing to retain invoices and bills of lading relating to the exports, according to Commerce.

Cotran was fined $136,000 to be paid out in installments over the next year, but Commerce agreed to waive $86,000 worth of the penalty if Cotran does not commit another violation of the Export Control Reform Act during its four-year probationary period. If Cotran does not make its payments on time, the company will be subject to further charges, the agency said. Commerce may also deny Cotran’s export privileges for two years if it does not “comply in full” with the terms of the settlement agreement.

Commerce Revokes Export Privileges for AECA Violations

The Commerce Department revoked export privileges for Alexis Vlachos, who was convicted of violating the Arms Export Control Act in 2018 after illegally exporting firearms controlled on the U.S. Munitions List to Canada, Commerce said in an Oct. 23 notice. Vlachos was sentenced to 51 months in prison, and a $200 fine, the notice said. Commerce revoked Vlachos’ export privileges for seven years dating from her Sept. 4, 2018, conviction.

Jaguar Imports to Pay Nearly $100,000 in Settlement With BIS

Jaguar Imports of Orlando, Florida, will pay a $98,000 civil penalty to the Commerce Department's Bureau of Industry and Security as part a settlement with the agency over unlicensed exports to Colombia, Mexico and Canada, BIS said in an Oct. 9 notice. The company is said to have illegally exported pepper spray, stun guns, handcuffs and police batons to the countries between 2015 and 2017, BIS said. The items were classified on the Commerce Control List and valued at about $35,355, the agency said. As part of the settlements Jaguar Imports “shall not take any action or make or permit to be made any public statement, directly or indirectly, denying the allegations.” If the company fails to comply with the agreement, Jaguar Imports may see its export privileges denied, the agency said. The BIS order is effective Oct. 9, it said.

Commerce Revokes Export Privileges for Illegal Exports to Syria

The Department of Commerce revoked export privileges for Rasheed Al Jijakli, who was convicted in 2018 of violating the International Emergency Economic Powers Act after trying to illegally export tactical gear to the U.S. from Syria, Commerce said in a Sept. 30 notice. The gear included U.S. “laser boresighters and day- and night-vision rifle scopes,” Commerce said. Jijakli was sentenced to 46 months in prison, two years of supervised release and a $5,000 fine, the notice said. Commerce revoked Jijakli’s export privileges for 10 years dating from his Dec. 20, 2018, conviction in the Central California U.S. District Court.

Commerce Revokes Export Privileges for AECA Violations

The Department of Commerce revoked export privileges for Barbara Jo Luque, who was convicted of violating the Arms Export Control Act in 2018 after illegally attempting to export items controlled on the U.S. Munitions List to Mexico, Commerce said in a Sept. 30 notice. The items included 5,000 rounds of “FMJ Russian 7.62x39 mm ammunition” and 125 Ak-47 KCI 30-round magazines, the notice said. Luque was sentenced to six months in prison, two years of supervised release and a $100 fine, the notice said. Commerce revoked Luque’s export privileges for seven years dating from her April 25, 2018, conviction.

Commerce Strips Export Privileges for AECA Violations

The Department of Commerce banned export privileges for a man who was convicted of violating the Arms Export Control Act in 2018, Commerce said in a Sept. 30 notice. Commerce said the man, Eldar Rezvanov, illegally exported items on the U.S. Munitions List to Russia, including seven fully assembled firearms, 10 firearm stocks, 130 fully assembled lower receivers, 133 firearm frames, 158 firearm barrels, 266 firearm slides, 435 functional firearm parts and 966 magazines. Rezvanov was sentenced to 46 months in prison, three years of supervised release and a $100 fine, and was placed on the State Department’s Debarred List. Commerce revoked Rezvanov’s export privileges for 10 years from his July 24, 2018, conviction.

Commerce Revokes Export Privileges for Illegal Exports of Gun Components

The Department of Commerce revoked export privileges for Benjamin James Cance, who was convicted in 2016 of violating the Arms Export Control Act, Commerce said in a Sept. 30 notice. Cance illegally exported gun components listed on the U.S. Munitions List, Commerce said, and was sentenced to four years in prison, two years of supervised release and a $3,000 fine. Cance was also placed on the State Department’s Debarred List, the notice said. Commerce revoked Cance’s export privileges for 10 years from his Jan. 15, 2016, conviction.

Commerce Denies Export Privileges for Illegal CCL Exports

The Department of Commerce denied a man export privileges after he was convicted of violating the International Emergency Economic Powers Act, Commerce said in a Sept. 30 notice. Kenneth S. Chait illegally exported “ceramic metal triggered spark gaps, also known as nuclear triggered spark gaps,” listed on the Commerce Control List. Chait was convicted November 13, 2018, and sentenced to one year and one day in prison, two years of supervised release and a $100 fine, the notice said. Commerce revoked Chait’s export privileges for five years from his date of conviction.

Commerce Revokes Export Privileges for Illegal Firearm Exports to Turkey

Commerce revoked export privileges for Sammy Smith, who was convicted in 2018 of violating the Export Control Act after trying to illegally export firearms components from the U.S. to Turkey, Commerce said in an Aug. 30 notice. Smith tried to export several items on the U.S. Munitions List, including “glock pistol upper receivers, barrels and recoil springs, Lone Wolf pistol upper receivers with matching barrels and a Beretta PX4 pistol short barrel,” Commerce said. Smith was sentenced to two months in prison, six months of supervised release and a $100 fine, the notice said. Commerce revoked Smith’s export privileges for seven years dating from his July 9, 2018, conviction.

BIS Denies Export Privileges for Unlicensed Exports to Lebanon

Commerce’s Bureau of Industry and Security revoked export privileges for four people after they exported guns, ammunition and other defense-related items from the U.S. to Lebanon, BIS said Aug. 13. The four people -- Ali Afif Al Herz, Sarah Majid Zeaiter, Adam Al Herz and Bassem Afif Herz -- were convicted in 2016 of violating the Arms Export Control Act by exporting items on the U.S. Munitions List without State Department licenses. Each was sentenced to prison and placed on the State Department’s Debarred List.

BIS is denying export privileges for all four people for up to 10 years after their conviction dates. The order also bans any person or company from exporting items on behalf of the four people. The order, Aug. 13 in each case, may be appealed within 45 days of the date of the order.

Commerce Denies Export Privileges for IEEPA Violations

The Commerce Department Bureau of Industry and Security denied a woman export privileges after she was convicted of illegally exporting space communication technology from the U.S. to Hong Kong in violation of the International Emergency Economic Powers Act, Commerce said Aug. 5. Si Chen was convicted in October 2018 and sentenced to 46 months in prison and three years of supervised release. She is banned from exporting items from the U.S. until Oct. 10, 2028, Commerce said.

Commerce Denies Export Privileges for Unlicensed Latvia Export

The Commerce Department's Bureau of Industry and Security denied a man export privileges after he was convicted of illegally exporting a “barrel and breech casing” for a Glock carbine pistol to Latvia, Commerce said Aug. 5. Michael Shapovalov, who was sentenced to 34 months in prison after his May 2018 conviction for violating the Arms Export Control Act, is banned from exporting from the U.S. until May 23, 2025.

Commerce Denies Export Privileges for Illegal Export to Mexico

The Commerce Department's Bureau of Industry and Security denied a man export privileges after he was convicted in August 2018 of helping to illegally export about 1,000 rounds of ammunition from the U.S. to Mexico in violation of the Arms Export Control Act, Commerce said Aug. 5. Juan Jesus De La Rosa was sentenced to 27 months in prison and three years of supervised release for aiding and abetting the export and trying to export the ammunition, which were designated as defense items on the U.S. Munitions List and required a State Department license. De La Rosa is banned from exporting from the U.S. until Aug. 28, 2028.

Commerce Revokes Export Privileges for EAR, Iran Sanctions Violations

Commerce denied export privileges for two Iranian nationals and their company after they tried to export a $15,000 micro drill press from the U.S. to Iran, Commerce’s Bureau of Industry and Security said in a July 8 denied export order. Commerce also fined them $300,000 for trying to violate the Export Administration Regulations and the Iranian Transactions and Sanctions Regulations.

In 2013, U.S. citizens Pouran Aazad and Sadr Emad-Vaez used their company, Ghareh Sabz Co., to buy the “highly accurate” drill press from a U.S. manufacturer, Commerce said. The drill came with a “video edge finder, process inspection camera, and spray mister system,” the order said.

Aazad and Emad-Vaez tried to avoid U.S. export controls by telling the U.S. manufacturer to send the drill press to the United Arab Emirates “Since we are not able to receive the cargo directly,” according to the order. They also told the U.S. company to list the Dubai address in all documents. Once the drill arrived in the UAE, Aazad and Emad-Vaez planned to export it to Iran without the proper U.S. export license, Commerce said.

BIS discovered the scheme before the drill was exported and detained it in a San Francisco airport warehouse, Commerce said. Aazad and Emad-Vaez are required to pay the $300,000 civil penalty within 30 days of the date the order was issued or face more penalties. Commerce also revoked export privileges for Aazad, Emad-Vaez and their company for 10 years.

Commerce Strips Export Privileges for IEEPA Violations

Commerce’s Bureau of Industry and Security banned export privileges for a man who was convicted of illegally exporting gas turbine parts in 2018, Commerce said in a June 28 order. Commerce said the man, Olaf Tepper, violated the International Emergency Economic Powers Act after he exported parts to Germany that were intended for an end-user in Iran. Tepper did not have the proper export license from the Treasury's Office of Foreign Assets Control. Tepper was sentenced to two years in prison and a $5,000 fine in addition to the export ban, which included revoking all of Tepper’s BIS-related licenses. The ban will last 10 years after his conviction date of Aug. 3, 2018, Commerce said.

Commerce Renews Temporary Denial Order for Export Violations

The Commerce Department’s Bureau of Industry and Security renewed the temporary denial order of export privileges issued to Mahan Airways and several affiliated people and entities in 2018, according to an order signed by the Office of Export Enforcement on June 5. The order was renewed to “prevent an imminent violation” of more regulations, Commerce said.

The order stems from a 2008 decision by the assistant secretary of Commerce for export enforcement to deny Mahan Airways export privileges for 180 days. Several other affiliated people and entities, named in the order, were eventually added to prevent evasions of the denial order, Commerce said.

Commerce detailed a list of violations and illegal transactions conducted by Mahan Airways and affiliates, saying the violations represented a “blatant disregard of U.S. export controls.” Commerce said the initial denial order was issued after Commerce found evidence that Mahan Airways and other parties violated the Export Administration Regulations by knowingly re-exporting several U.S.-origin aircrafts to Iran, including Boeing 747s and an “MD-82 aircraft.” Mahan Airways subsequently hid from the U.S. the fact that the planes were being used regularly and were being flown between Iran and Syria. Among other export violations, Mahan Airways also exported “computer motherboards” from the U.S. to Iran, violating U.S. export laws, Commerce said.

In renewing the temporary denial order, Commerce said the violations by Mahan Airways and others “have been significant, deliberate and covert” and “there is a likelihood of future violations.” Commerce said all U.S. companies should “cease dealing” with Mahan Airways “and the other denied persons in connection” with the violations.

Commerce Settles With US Company for Antiboycott Violations

The Commerce Department Bureau of Industry and Security's Office of Antiboycott Compliance settled with a U.S.-based company for $54,000 after the company committed 27 violations of the Export Administration Regulations, enforcement records show. An order signed by Commerce May 20 says Zurn Industries, LLC completed transactions from the U.S. to Qatar and the United Arab Emirates related to actions that “would have the effect of furthering or supporting a restrictive trade practice or unsanctioned foreign boycott.” Zurn did not report “receipts of these requests” to Commerce, as required by law, the records said. Zurn must pay the fine to Commerce within 30 days of the order or face additional charges, and may have export licenses or privileges revoked. If Zurn does not pay the fine, its “export privileges” will be denied for one year.

BIS Denies Export Privileges Due to Illegal Rifle Exports

Commerce's Bureau of Industry and Security denied export privileges to Arnoldo Arredondo on March 25, BIS said in a notice. Arredondo was convicted in 2017 for conspiring in the export of rifles to Mexico that “were designated as defense articles on the United States Munitions List, without the required U.S. Department of State licenses,” BIS said. The denial of export privileges will last for 10 years from the date of the conviction -- that is, until Nov. 28, 2027, BIS said.

Export Privileges Denied by BIS Over Mishandling of Classified Documents

The Commerce Department's Bureau of Industry and Security denied export privileges to Mohan Nirala on March 25, BIS said in a notice. Nirala was convicted in 2017 for violations of the Espionage Act after having unauthorized possession of classified documents, BIS said. The denial of export privileges will last for 10 years from the date of the conviction -- that is, until March 13, 2027, BIS said.