The Bureau of Industry and Security (“BIS”) recently announced settlement agreements with Massachusetts-based Select Engineering, Inc., and with David Rainville, its Vice-President of Administration. Select Engineering agreed to settle charges that it exported medical electrode sensor elements and stainless steel snap connectors used in medical devices to Iran without a license. The items were alleged to have been exported to Iran by means of a transshipment through the UAE. As part of its settlement with BIS, Select agreed to pay a civil penalty of $52,800.

David Rainville was accused by BIS of violating 15 C.F.R. § 764.2(g) by making false representations to the BIS agent during the course of BIS’s investigation of the unlicensed exports. Specifically, it was alleged that Rainville told the investigator that he had spoken with an international trade specialist at the Department of Commerce after the unlicensed export when, in fact, he spoke with the specialist before the export. The specialist was alleged to have told Rainville before the export that an OFAC license would be required. Rainville agreed to a civil penalty of $35,200. (Ouch!)

The perplexing thing about this case is trying to understand why Select went ahead and shipped the items without getting license. Licenses are routinely granted here and are easy to obtain from OFAC. The settlement documents indicate that, in 2001, Select had applied for and obtained an OFAC license to ship the same kind of medical equipment to Iran. And, apparently, an employee of the Department of Commerce had specifically advised the company of the license requirement prior to the export at issue. I suppose that the company didn’t want to wait for license, but they paid a heavy price for their haste and risked criminal prosecution as well.

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