Supermicro, Inc., a computer hardware manufacturer based out of San Jose, California, pleaded guilty on Monday to a criminal export violation and agreed to pay a criminal penalty of $150,000. Supermicro admitted that on or about December 28, 2001, it shipped 300 motherboards, worth just under $30,000, to a company in the U.A.E. knowing that the motherboards would be immediately re-exported to Iran. At the time of the export, the motherboards were subject to National Security controls and required a license for export to Iran.

Previously, on September 7, Supermicro and BIS agreed to settle claims made by BIS in a charging letter alleging violations arising out of other exports by Supermicro that were destined to Iran. The charging letter lists exports by Supermicro of motherboards, superservers and computer chassis. Supermicro settled these allegations in the charging letter by an agreement to pay a civil penalty of $125,400.

Interestingly, the exported computer chassis referred to in the BIS charging letter are EAR99, i.e. not subject to a BIS license requirement. BIS premised the violations for the exports of the chassis on EAR § 746.7 which notes that OFAC authorization is required for shipments to Iran under the Iranian embargo. Failure to obtain that authorization for an EAR99 item was then viewed by BIS as a violation of EAR § 764.2(a).

UPDATE: Richard Pettler, a partner at Fragomen, Del Rey, Bernsen & Loewy in San Francisco and counsel to Supermicro, contacted me to provide additional details that were not in the press accounts that I relied on. This post has been updated to reflect his comments.

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