According to the indictment, which was unsealed on Monday, the defendant Philip Chaohui He owned and operated a company called Sierra Electronic Instruments, of which he was the only employee. Estimated sales revenues for 2010 were $110,000. I was unable to locate any website for the company, and the company’s web footprint consisted of two sparse directory entries.

Even so, He and Sierra got their hands on $549,654 worth of radiation hardened, space qualified memory chips from Aeroflex, a Colorado Springs chip designer and manufacturer. Seven months later, He drove his car to the Port of Long Beach and to a PRC-flagged ship there which had recently arrived from Shanghai and was scheduled to return in a week. The chips in question were in the defendant’s trunk concealed “in several plastic infant formula containers placed inside five boxes which were sealed and labeled as “milk powder” written in Chinese.

The indictment doesn’t describe what happened next, but it’s pretty clear. The federal agent that had been tailing Mr. He informed his buddies who swooped down on Mr. He, waving guns and shouting typical law enforcement stuff at him before dragging him away in handcuffs. The indictment suggests that before the dockside bust, the feds had snooped into his bank account and phone records and identified numerous phone calls to the PRC and, more ominously, two wires from the PRC to Mr. He totaling just under $500,000. As a result, Mr. He’s careful concealment of the goods in baby formula was a waste of time.

It doesn’t take a rocket scientist to guess what happened here. Obviously, Aeroflex smelled a rat when this one-man storefront operation wanted to lay his hands on a half-million dollars worth of highly specialized space-qualified circuitry, so they alerted the authorities. All the while Mr. He was agonizing over whether it was safest to hide the goods in baby formula, cans of dog food or boxes of knitting needles, he was already a marked man. Had he gone in for a smaller amount (for which he certainly would have been paid less) he might be basking in the Southern California sun. Indeed, he reminds me of the would-be bicycle thief who tried to walk out of my condo building’s parking garage with two bicycles rather than racing off swiftly on one bicycle.

He went down too.

Seyed Mojtaba Atarodi, a professor at Tehran’s prestigious Sharif University of Technology was arrested on December 7, 2011, when he stepped off a plane in Los Angeles where he had arrived for a medical visit to his brother’s cardiologist. The criminal complaint against him is sealed and the arrest was only made known because his name shows up in the Federal Bureau of Prisons inmate locator.

A bail hearing was held last week and Atarodi has been released on bail, partly due to his health problems. He has recently had two heart attacks, two heart surgeries and a stroke. Articles published by Atarodi that can be found on the web appear to deal mainly with semiconductor and microchip technology without any specific defense applications.

The U.S. government has still not released any information on the charges against Atarodi, although it is widely, and legitimately, assumed that they are export related. A spokesman for Sharif University said that Professor Atarodi was charged with buying scientific equipment from the United States, stating:

He was trying to buy some equipment for his lab, and the equipment was very, very simple, ridiculously simple stuff that anybody can buy. …

An official statement released by Sharif University, which appears to be aware somehow of the items mentioned in the indictment, said this about the items in question:

The items mentioned in the indictment, if truly purchased by him are all simple, basic, and elementary components and equipment that are easily sourced and can be found in every electrical engineering department. It is so disappointing to note that most of the items in question are not even the so called “dual use” equipment.

Of course, the Iran sanctions cover all items of any sort exported from the U.S., although an arrest and criminal prosecution is rare for items without some further strategic significance.

Even though the U.S. government’s lips are sealed, Atarodi’s defense counsel is not quite so taciturn and said to the Associated Press reporter that his client was more or less guilty:

Kohn said prosecutors “meticulously” built their case against Atarodi, who had come to Los Angeles seeking treatment from his brother’s cardiologist.

Meticulously? A statement like that, if he has been accurately quoted, makes you wonder which side of the case the defense attorney is being paid to argue. I suppose that if the government case is so “meticulous,” the alleged defense attorney can just teach Mr. Atarodi how to say “guilty” in English, collect his CJA reimbursement, and wait for another appointment.

The story begins in June 2006 when an unnamed company in Singapore sought to order certain military antennae from Microwave Engineering. In preparation for requesting an export license, Microwave Engineering asked the Singapore company to execute a Form DSP-83 (Nontransfer and Use Certificate). When the company, citing its own internal policies, refused to sign the DSP-83, the sale and export were cancelled by Microwave Engineering’s export compliance officer.

When Cheung learned of the cancellation of the sale, he contacted another Massachusetts company, and agreed with that local company that it would purchase the military antennae and ship them to the company in Singapore. Thereafter, the local company purchased antennae from Microwave Engineering and exported them without license to the company in Singapore. The local company also purchased antennae from Microwave Engineering for export to another company in Singapore, Corezing International. Corezing is subject to another indictment, and the U.S. is seeking extradition, in connection with its role in the exports of radio modules from the United States to Iran which were later found in improvised explosive devices in Iraq.

The criminal information alleges that Cheung was aware that the purchases by the unnamed local company were destined for the customer in Singapore and that he took no action to stop these exports or to obtain the required licenses from the Directorate of Defense Trade Controls (“DDTC”).

Moral of the story: if your export compliance officers stops a sale, it is probably not a good idea to try to find another way to make the sale.

So I’m hoping that readers will be equally amused by an export law forfeiture case that is titled United States v. Twenty Miljam 350 IED Jammers and that was recently decided by the Second Circuit Court of Appeals. The twenty jammers at issue were manufactured by an Israeli company called Wireless Avionics. They were seized by Immigration and Customs Enforcement during a criminal proceeding against the CEO of the company for attempting to export these items without a license from the Directorate of Defense Trade Controls. They had been manufactured for sale to NATO, but DDTC had denied an export license claiming that the devices would interfere with radios used by U.S. forces in Afghanistan. The CEO then tried to disassemble them and export them from the U.S. for reassembly and sale elsewhere, which led to the seizure of the jammers, his arrest and a criminal indictment.

Now comes the odd part. For reasons not clearly explained by the Second Circuit opinion, the U.S. dropped all criminal charges provided that the CEO agreed to waive any future claims against the U.S. and the ICE agents for false arrest and to waive any objection to the forfeiture of the devices. The CEO, however, contested the forfeiture claiming that he was forced to sign the release under duress, the duress apparently being the threat of criminal prosecution. He also argued that the items were not on the United States Munitions List and did not require an export license. The Second Circuit dismissed the duress claim in large part based on a letter that the CEO sent after signing the waiver in which he said he had signed it voluntarily. And although the court notes that items on the USML require a license, it does not discuss whether these items were on the USML or not.

The Wireless Avionics website asserts that these devices are covered by “ECCN class 5.A.1.h,” presumably a reference to ECCN 5A001.h. That ECCN has a somewhat cryptic note that says “See also . . . Category XI of the International Traffic in Arms Regulations.” It would seem that whether an IED jammer fits under ECCN 5A001.h or Category XI of the ITAR would depend on whether it was specifically designed, modified or configured for military application.

Here the fact that the products were destined for NATO and were called — of all things — by the model name “Miljam” both suggest the items might well be Category XI. But then it’s hard to understand why the government folded like cheap lawn chairs and tried to get a promise that no one would get sued for false arrest. It also doesn’t help the Wireless Avionics case here that it applied for a license from DDTC which was denied. On the other hand, there is nothing to indicate that these jammers had been ruggedized, shielded or otherwise specifically adapted for military vehicles.

Because all we can do is speculate about the Government’s action here, speculation is welcomed in the comments section.

The DOJ press release in July regarding the initial plea is larded with the typically hyperbolic language of prosecutors in export cases, but with a twist.

“We simply can’t risk that companies trying to manufacture military equipment on the cheap will expose our troops to more danger than they already face,” said U.S. Attorney Fishman.

“Our armed forces deserve the very best equipment to perform their missions in these difficult times,” said Edward T. Bradley, Special Agent in Charge, Department of Defense, Defense Criminal Investigative Service (DCIS), Northeast Field Office. “Fraudulent practices, designed to illegally enrich a corporation, and which could compromise the integrity and reliability of that vital equipment is inexcusable. The Defense Criminal Investigative Service is committed to vigorously investigating such violations of law.”

“This case underscores ICE’s commitment to work tirelessly with our law enforcement partners to investigate individuals or corporate organizations that circumvent federal regulations in the name of greed,” said Peter T. Edge, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (ICE HSI) in Newark. “When our troops’ safety is put in jeopardy, our national security is also compromised.”

And here I always thought that the purpose of the China arms embargo was to keep weapons and military technology out of the hands of the Chicoms because they were a military threat. Instead it appears that the reason is because they make shoddy stuff. If that’s the reason, is an arms embargo of Taiwan next?

Twenty-five year old Texas woman and Russian expat, Anna Fermanova, was sentenced to four months in federal prison and four months of home confinement after she pleaded guilty to having tried to export Russian night vision equipment, which she concealed inside pairs of Uggs in her luggage.

The defense argued that the sentencing guidelines, which in Fermanova’s case called for a sentence between 46 and 57 months, should not be applied on the basis, inter alia, that there was no harm to national security. The night vision, according to the defense, was destined for Fermanova’s father-in-law in Moscow who was Target Master at a private hunting club in Moscow. He intended to sell the night vision equipment to wealthy clients who would use the scopes to hunt wild game. The judge evidently accepted this argument.

Because the defendant is an attractive young blonde woman with a Facebook page on which she posted a number of her photos, this case quickly became catnip for the media which labelled Ms. Fermanova as the “sexy Russian spy” (or “sexy Russian smuggler”) and then rolled in the story as often as possible. Here’s my question, albeit mostly rhetorical: if a defendant in an export prosecution is an attractive young man, would the media call him a “sexy” spy?

Pendzich, of course, had little choice but to plead guilty to one count of violating the Arms Export Control Act (“AECA”). An article that appeared last week in the Knoxville News reported on the sentencing hearing at which the judge gave Pendzich a 46-month sentence for the illegal exports.

The applicable federal sentencing guideline for an AECA violation allows the judge to take into account national security considerations in determining the appropriate sentence. The defense argued that since the plates were shipped to federal agents there had been no adverse impact on national security. The prosecution reached deep into its bag of hypotheticals and argued:

Although not intended by the defendant, had he been successful, the bulletproof vests and body armor he attempted to export could possibly have ended up in the hands of narco-terrorists.

And if the plates had been made of highly-enriched uranium the narcos could have built and exploded a nuclear bomb. Unfortunately for Pendzich, the sentencing judge bought this coulda-shoulda-woulda line of argumentation and threw the book at him.

The Supreme Court term began today — today being the first Monday in October — and it got right to work by denying the certiorari petition of Professor of Professor J. Reece Roth, a professor emeritus at the University of Tennessee who had been convicted of violating the Arms Export Control Act (“AECA”). The conviction was based on, among other things, Professor Roth permitting access by a foreign graduate student to technical data relating to an Air Force military drone project. In January of this year, the Sixth Circuit dismissed Professor Roth’s appeal, which makes this pretty much the end of the road for Professor Roth.

Roth’s petition for certiorari argued that the Sixth Circuit was incorrect in its finding that the wilfulness element necessary for a conviction under the Arms Export Control Act did not require a finding that Professor Roth knew that the technology in question was on the United States Munitions List. The Sixth Circuit instead held that the standard was satisfied if Professor Roth knew that his conduct was unlawful without regard to any specific knowledge he might have relating to the USML.

Roth’s petition for certiorari relied on the Eighth Circuit’s decision in United States v. Gregg, 829 F.2d 1430, 1437 & n.14 (8th Cir. 1987) which appeared to hold that a conviction required a finding that the defendant knew the exported item was on the USML. The United States government, in its brief opposing Professor Roth’s petition for certiorari, argued that the decision in the Gregg case, although it cited a jury instruction requiring that the defendant knew the export item was on the USML, did not hold that the conviction would have been reversed if the jury instruction had not referenced the USML and had simply required knowledge by the defendant that the conduct was unlawful.

After his guilty plea, Knapp was subject to a possible sentence of up to 30 years. The prosecution recommended a sentence of no more than 57 months, and the judge abided by that recommendation by sentencing Knapp to 46 months. The judge may well have been influenced to take 11 months off that recommendation by the defendant’s expression of remorse. Before sentencing, Knapp said that “he did not know at the time he was selling the items that it would be harmful to the U.S., but upon reflection in jail … he realized that it was detrimental to the U.S.” Although Knapp has been in jail since July 2010, he will only receive a credit of up to 150 days for time served.

The charges arise from a secondary inspection of Liu by Customs and Border Patrol Protection agents at Newark Airport on November 29, 2010, as Liu was returning from the People’s Republic of China. Although Liu allegedly told agents he had been visiting family in China, inspection of his luggage revealed conference badges and other evidence that he had attended a technical conference in China during that trip. The inspection also revealed that his computer had various documents relating to defense navigation systems from the company where Liu worked as an engineer.

There is no evidence that Liu actually disclosed any of these documents during his trip to China. However, simply carrying the documents into China, even if they weren’t disclosed to anyone there, is considered an export of those documents.

The criminal complaint that preceded the April indictment hilariously mangles the definition of “export” in the International Traffic in Arms Regulations in order to make the case that Liu exported the technical data at issue:

The regulations promulgated pursuant to the Act, known as the International Traffic in Arms Regulations (hereinafter, “ITAR”) define exporting to include, among other things: “[s]ending or taking a defense article out of the United States in any manner . . . by a person whose personal knowledge includes technical data.”

Sharp-eyed readers and fellow ITARnauts will no doubt notice the odd omission of “except” where the ellipses appear. Here’s how that section actually reads in full with the deleted words emphasized:

Export means: (1) Sending or taking a defense article out of the United States in any manner, except by mere travel outside of the United States by a person whose personal knowledge includes technical data.

Oops. What is supposed to be a sensible exception to the definition of “export” is turned into a new requirement by this misquotation.