Yesterday the Bureau of Industry and Security (“BIS”) released four settlement agreements arising out of a scheme by a large Taiwanese company to use its U.S. subsidiary to export products (mostly chemicals, metals and electronic components) on the Commerce Control List without the required export licenses. The parent company, with an improbably soothing name for a distributor of toxic chemcals, Well-Being Enterprise Co., Ltd. signed a settlement agreement pursuant to which the company agreed to pay a $250,000 fine, $220,000 of which would be suspended if the company committed no further export violations during the next five years. The company also agreed to a 20-year suspension of its export privileges with respect to items listed on the Commerce Control List (“CCL”). Hui-Fen Chen a.k.a. Angela Chen, an employee of the company also agreed to a similar 20-year suspension of export privileges.

Well-Being’s U.S. subsidiary, a San-Francisco-based company named Elecmat, Inc. signed a settlement agreement under which it agreed to a twenty-year suspension of all export privileges for all U.S.-origin items (not just items on the CCL). Elecmat’s manager, Theresa Huei-Min Chang, agreed to a two-year suspension of export privileges for all U.S.-origin items.

The charging documents contain a number of allegations that suggest that the companies and individuals involved in this scheme knew exactly what they were doing was in violation of U.S. export laws. Well-Being told Elecmat what products to buy and instructed Elecmat not to tell or reveal to its vendors that the items were for export. In instances where Well-Being was concerned that the vendor might be aware of the connection between Well-Being and Elecmat, Well-Being instructed Elecmat to buy the products to be exported under a false name. Ms. Chang, the manager of Elecmat, apparently wanting to distance herself from Elecmat’s activities with Well-Being, claimed that she received no individual compensation from Well-Being and ran the company as a “favor,” even though it was subsequently learned that Well-Being transferred approximately $6500 per month to her brother’s account.

As in every case where people are engaged in illegal unlicensed exports, it’s hard not to speculate why they didn’t apply for a license. As a distributor of, rather than a user of, the illegally exported items, it is likely that Well-Being didn’t want to license the exports because the products were destined for end users, likely in Mainland China, that wouldn’t be approved.

Another interesting issue here is why Well-Being’s suspension of export privileges was limited to items on the CCL while the denial for Elecmat was for all U.S.-origin goods. The answer seems to be that Well-Being was in Taipei and beyond BIS’s jurisdiction. If the denial order for Well-Being had covered all U.S. origin goods, Well-Being wouldn’t have had any practical motivation to sign the Settlement Agreement and pay the requested fines.

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