Mar
15
I’m Stunned (Well, Actually, Not)
Posted by Clif Burns at 8:18 pm on March 15, 2011
Category: BIS
From the department of low-hanging fruit, the topic of today’s post is an enforcement action by the Bureau of Industry and Security (“BIS”) against Amy Farrow, the sole proprietor of the Wholesale Discount Store of Bethlehem, Pennsylvania (pictured right) for unlicensed exports of stun guns. Ms. Farrow agreed to a 2-year export denial order to settle the BIS charges.
Wholesale Discount Store has one employee, Ms. Farrow, and approximately $50,000 in annual revenues. She appears to run the business from her home. And the charging papers do not suggest that she had any idea that she needed a license to export the stun guns. Although BIS is to be commended for not whacking Ms. Farrow with a huge fine in this instance, it is still hard not to wonder whether scarce government funds spent in this enforcement action wouldn’t have been better spent to educate small businesses about what can and can’t be exported without a license.
There was apparently a blue light special on stun guns at BIS recently because on the same day that BIS released charging documents relating to Ms. Farrow, the agency also released charging documents relating to its charges against another home basement retailer, Ms. Sandra Stevens, of Mira Loma, California. (If you search the address for Ms. Stevens shown in the BIS documents, Google Maps Street View will show a modest suburban home at the address in question). Ms. Stevens agreed to a one-year denial order to settle charges that she exported $3,995 worth of stun guns without BIS licenses.
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Copyright © 2011 Clif Burns. All Rights Reserved.
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7 Comments:
Hi Clif,
I work in both compliance and training, and have a business producing computer based eLearning related to import/export compliance. From a trainer’s perspective, I can tell you why the government didn’t invest their enforcement funds toward training.
It’s simple. The people that know their responsibilities seek out the training on their own, whether from the BIS or from me. But the people that don’t know often don’t care, and so will not seek training, even if offered to them for free along with fatty hotel conference break food.
Instructional designers and eLearning developers know that to, engage a learner, the training has to be relevant.
No relevance? No interest.
No interest? No bother. Or if forced to take it, no retention.
What better way to make it relevant than with a penalty. It’s what I call getting religion.
Jim Dickeson
Import Export Geeks
Import Export Compliance Training
@Jim. Voltaire said, in reference to the British execution of Admiral Byng, “Dans ce pays-ci, il est bon de tuer de temps en temps un amiral pour encourager les autres.” (“In this country, it’s a good idea to kill an admiral from time to time to encourage the others”). However, he did not say this approvingly.
Public flailings of people who unknowingly violate an obscure regulation buried in the hundreds of thousands of pages that make up the CFR is certainly good for the economic interest of you, me and other compliance professionals, but not much more. A warning letter or an “outreach visit” to such innocent violators would conserve administrative resources in these cases and then, if the exporter doesn’t see the light, I see no problem throwing the book at them.
It’s also not like there aren’t intentional violators out there who deserve the administrative attention of BIS more than two suburban housewives selling stuff out of their basements.
Have you considered the anti-terrorism aspect of this? The relative size of an operation is irrelevant. Jihadis are unlikely to be operating “big box” stores supported by an Export Compliance Department, but are very likely to be operating from a rental basement. How does one decide to export stun guns in the first place? Who are the clients? If I were the investigating authority, I would be interested to know whether these exporters of stun guns also exported plastic ties, plastic bags, duct tape, and other items that might facilitate abductions, torture, terroristic activities, etc. Frankly, I’m glad to see that we have eyes on these minnows. I’d be happier still if we’d also keep our eyes on the sharks that are somehow allowed to come and go at will.
I don’t know the details of mitigation or settlement, but it doesn’t appear to me that they did throw the book, else it would have been considerably more. I believe that the penalty at the time of all 116 offences was $250,000. You do the math.
Perhaps the flailing needn’t be public, but that’s a different argument.
@Jim. I commended BIS in the post for not fining Ms. Farrow the 300 billion trillion dollars they were entitled to under the statute and just imposed a denial order. My beef wasn’t that the punishment was too harsh but that the government was wasting resources on these piddly cases. A phone call from BIS telling these folks that stun guns need licenses, would have taken about five minutes. If the two retailers ignored those calls, then throw the book at ’em.
Just so I’m not misunderstood, as a matter of law, BIS has every right to fine unintentional violators. I’m just talking about enforcement priorities here.
Clif,Paul said,in the first epistle to Timothy; 1 Tim 5,20: “Ceux qui pèchent,reprends-les devant tous, afin que les autres aussi éprouvent de la crainte.”(“Them that sin reprove in the sight of all, that the rest also may be in fear.”) So public flailing is an ancient custom.
My read on this is that BIS seems to be making a statement that whether large or small,violaters of the EAR are subject to fines, penalties, etc.
I agree with another poster that terrorist concerns (and possibly illegal transhipment concerns) may be involved in these cases. It seems to me that these housewives – and others like them – who may have little or no knowledge of the export laws governing their merchandise could easily become unwitting targets of bad actors.
