California-based Telogy LLC (“Telogy”), a distributor of test equipment, agreed last week with the Bureau of Industry and Security (“BIS”) to a suspended $76,000 fine in connection with Telogy’s exports of three oscilloscopes and one spectrum analyzer. The fine was suspended on the condition that Telogy commit no further export violations for a one-year period. No export denial order was agreed to as part of the settlement agreement. Telogy voluntarily disclosed the matter to BIS.

At first the completely suspended fine suggests the appearance of a kinder, gentler BIS after a long history of BIS punishing exporters who make voluntary disclosures with needlessly punitive fines. Of course, a further examination of what was going on quickly extinguishes that false hope.

BIS released at the same time as the Telogy settlement a settlement with Telogy International NV, the Belgian affiliate of Telogy, pursuant to which Telogy International agreed to pay $75,000 of a $467,000 fine, with the rest being suspended on condition that Telogy International commit no further export violations for a one-year period. That settlement agreement involved re-exports of 22 oscilloscopes from Belgium to Israel and one spectrum analyzer to South Africa. What is interesting about this is that these exports by Telogy International are not charged in the settlement agreement with Telogy, and that the exports charged in the Telogy settlement aren’t charged in the Telogy International settlement.

That raises a very interesting question. Telogy was charged with evading the regulations by shipping to Telogy International in Belgium items that, while not requiring a license to Belgium, would require a license to the ultimate destination. The three charges against Telogy were two oscilloscopes to India, one spectrum analyzer to the PRC, and one oscilloscope to Israel. This latter export occurred, it was alleged, in June or July of 2007. On the other hand, Telogy International is charged with exports to South Africa and Israel. The last of the exports by Telogy International to Israel charged by BIS was in March 2007. The interesting question is whether the shipments charged against Telogy that were allegedly destined for India, the PRC and Israel were ever actually shipped by Telogy International to those destinations. And if so, why weren’t they included in the charges against Telogy International?

Needless to say, the fact that the Telogy charges aren’t reflected in the Telogy International charges can only really be explained if those three shipments never made it to their intended destination. Telogy is accused of violation section 764.2(h) of the Export Administration Regulations (“EAR”) which forbids “taking any . . . action with intent to evade the provisions of … the EAR.” The charges alleged by BIS accuse Telogy of taking action to evade the EAR when it shipped (legally) the items to Belgium with the intention that Telogy International re-export the items (illegally) to Israel, the PRC and India.

So BIS apparently wants to punish an unconsummated intention to export an item without a required license. This isn’t strictly a thought crime, as provocatively suggested by the headline to this post, because the thought has to be coupled with an action, here the export to Belgium. By how far is this away from a thought crime? What kind of action is covered? If Telogy sent an email stating that it was sending the item to Belgium for re-export but never did send the item to Belgium, would sending the email be an action with intent to evade? Suppose Telogy wrote that email but didn’t even send it? Is the mere writing of the email an action with intent to evade? Perhaps an officer of Telogy booted up a computer with intent to write the email but never even wrote the email. Or went to the office intending to write the email but never even logging into an email program. Even a conspiracy charge at least requires some agreement with another person to punish an unconsummated crime.

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