Comments on: Ex-Employee Accuses Security Company of ITAR Violations http://www.exportlawblog.com/archives/1517 Latest News on DDTC, BIS, OFAC, and other export law matters Fri, 10 Feb 2012 10:06:23 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Hillbilly http://www.exportlawblog.com/archives/1517/comment-page-1#comment-95156 Hillbilly Mon, 05 Apr 2010 15:35:22 +0000 http://www.exportlawblog.com/?p=1517#comment-95156 While it is satisfying that ITAR is making another appearance on Rocky Top (that's the Knoxville area to you folks outside the SEC), it's even more interesting that counsel filed in state chancery court alleging only state common law causes of action when there are at least two possible avenues of attack under federal law which could have gotten the plaintiff into federal court. Although there is case law from the DC District in 1995 to the effect that there is no private right of action under the AECA/ITAR, export control violations can serve as a back door into a RICO action (triple damages plus attorneys fees)and/or a false claims act (qui taim) claim. As to RICO, while export control violations are not a direct predicate offense, proceeds derived export control violations were included under money laundering under 18 U.S.C. 1956 as part of the PATRIOT Act in 2001, which is a RICO predicate offense. With respect to a False Claim Act qui tam action, it should be remebered that not so long ago in the Roth and Atmospheric Glow cases, the indictment brought by the AUSA for Rocky Top included a fraud claim based on the theory that the numerous "willful" AECA violations in violation of the contract were intentional fraud and deprived UT of the honest services (which could also reenforce the RICO claim by helping establish a pattern). That same theory could serve as the basis for a qui tam action by a whistleblower, provided that a government contract is involved. Given the other bad acts alleged, if true there were sufficient other bad acts to support both federal causes. Of course, the state law claims could have been tacked on as ancillary claims. Perhaps plaintiff's counsel didn't allege the federal claims precisely in order to stay in Chancery and avoid the possibility of drawing the same U.S. District Court judge as poor Dr. Roth. While it is satisfying that ITAR is making another appearance on Rocky Top (that’s the Knoxville area to you folks outside the SEC), it’s even more interesting that counsel filed in state chancery court alleging only state common law causes of action when there are at least two possible avenues of attack under federal law which could have gotten the plaintiff into federal court. Although there is case law from the DC District in 1995 to the effect that there is no private right of action under the AECA/ITAR, export control violations can serve as a back door into a RICO action (triple damages plus attorneys fees)and/or a false claims act (qui taim) claim. As to RICO, while export control violations are not a direct predicate offense, proceeds derived export control violations were included under money laundering under 18 U.S.C. 1956 as part of the PATRIOT Act in 2001, which is a RICO predicate offense. With respect to a False Claim Act qui tam action, it should be remebered that not so long ago in the Roth and Atmospheric Glow cases, the indictment brought by the AUSA for Rocky Top included a fraud claim based on the theory that the numerous “willful” AECA violations in violation of the contract were intentional fraud and deprived UT of the honest services (which could also reenforce the RICO claim by helping establish a pattern). That same theory could serve as the basis for a qui tam action by a whistleblower, provided that a government contract is involved. Given the other bad acts alleged, if true there were sufficient other bad acts to support both federal causes. Of course, the state law claims could have been tacked on as ancillary claims.

Perhaps plaintiff’s counsel didn’t allege the federal claims precisely in order to stay in Chancery and avoid the possibility of drawing the same U.S. District Court judge as poor Dr. Roth.

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