Archive for the ‘Criminal Penalties’ Category

Apr

29

Florida Man Sentenced for Brokering Dual-Use Exports

Posted by at 10:10 pm on April 29, 2015
Category: BIS • Criminal Penalties

Universal Industries HQ via Google Maps https://goo.gl/maps/TNQDh [Fair Use]
ABOVE: Universal Industries HQ

Russell Henderson Marshall, a UK citizen living in Florida, pleaded guilty and was sentenced to 41 months in prison and deportation on charges that he brokered dual-use items listed on the Commerce Control List. Yes, that’s right — for brokering non-USML items listed on the CCL. Because there is no prohibition on unlicensed brokering of items on the CCL, you may wonder how this happened.

To understand how this happened, we have to go back to 2012 when Universal Industries Limited, Inc., was slapped by the Bureau of Industry and Security with an Order Denying Export Privileges based on Universal’s conviction under the Arms Export Control Act for unlicensed exports of military aircraft parts. The order prohibited Universal or any of its employees from “carrying on negotiations concerning … any item … to be exported from the United States.”

Marshall was the CEO of Universal and was charged with two counts of violating the denial order. The first count, as described in the factual proffer supporting Marshall’s guilty plea, alleged that he sent an email to a potential U.S. purchaser quoting a price for three aircraft temperature sensors. A document recovered after a BIS agent did some dumpster diving behind Universal’s office.  Documents found in the trash revealed that the sensors were destined for the Royal Air Force of Thailand. The second count alleged that Marshall exchanged emails with a U.S. company related to a jet aircraft part to be exported to the Pakistan Air Force. The content of the emails sent by Marshall are not revealed.

Oddly, the factual proffer devotes considerable space to establishing that the items involved were ECCN 9A619.x. Given that the Denial Order would be violated if Marshall sent an email with a price quote for a Snickers Bar that was to be sent to Canada as a family birthday gift, it is not quite clear why the documents go to such length to establish that the items were not simply EAR99.

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Copyright © 2015 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Apr

22

Houston CEO Indicted For Not Having an Export License That He Didn’t Need

Posted by at 7:23 pm on April 22, 2015
Category: BIS • Criminal Penalties • Iran Sanctions • OFAC

Smart Power Systems and Bahram Mechanic via http://www.smartpowersystems.com/content/main/corporateinformation.html [Fair Use]Houston-based Smart Power Systems and its CEO Bahram Mechanic (as well as various other individuals) were indicted last week on charges that they exported certain export-controlled items to Iran without a license. The indictment alleges that certain uninterruptible power supplies, microcontrollers and digital signal processing chips, all allegedly classified as ECCNs 3A991,  were transshipped through third countries to a company in Tehran, allegedly controlled by Mechanic.

Not surprisingly, the indictment tries to make the case that these run-of-the-mill electronic items are critical military goods that Iran can use to launch missiles and build nuclear bombs. Of course, the government’s credibility in its assessment of the alleged capabilities of these items is rather diminished by its claim that these items are classified as ECCN 3A991, one of the least stringent export controls under the Export Administration Regulations. At best, however, the microcontrollers are 3A991.a, which covers microprocessors meeting certain computational benchmarks. The uninterruptible power supplies are not covered at all by 3A991 and are almost certainly EAR99.

Worse, for the government, if the uninterruptible power supplies are EAR99,  then the government’s theory of what laws were broken by their exports to Iran completely collapses. The indictment alleges that the defendants violated the International Emergency Economic Powers Act because no license was obtained from the Bureau of Industry and Security (“BIS”). Apparently, no one at the DOJ looked at EAR Section 746.7, which indicates that a BIS license is required only for certain items. EAR99 items are not among them.

Of course, a license from the Office of Foreign Assets Control (“OFAC”) is required to export EAR99 items from the United States to Iran. But the government is not alleging Mechanic and Smart Power needed an OFAC license; instead, it is saying they  didn’t have a BIS license even though they did not need that license. If the government can’t get the law it is enforcing right, it should not try to send people to jail for violating it.

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Copyright © 2015 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Apr

21

Texas Judge Indicted For Illegal Firearm Exports

Posted by at 10:38 pm on April 21, 2015
Category: Arms Export • Criminal Penalties • DDTC
Judge Tim Wright [Credit: Williamson County][Fair Use]
ABOVE: Judge Tim Wright

Well, it is probably safe to say that not many (if any) judges have been indicted on allegations of illegally exporting firearms. But that’s what happened to Judge Tim Wright, a judge in Williamson County, Texas, who was charged with various firearm charges, including illegal exports of firearms. There are few details in the indictment beyond alleging that Judge Williams, which the indictment rather oddly insists on calling “Timothy L. Wright, III, aka ‘The Judge,'” sold guns to a person without an export license knowing that the guns were intended for export.

This is a strangely odd locution: it alleges that Judge Wright knew that the guns were for export but does not allege that the Judge knew that the purchaser did not have an export license or that the Judge knew that his sale or the export were illegal. This probably explains why Judge Wright was charged under the Anti-Smuggling Statute, 18 U.S.C. § 554, and not under the Arms Export Control Act, 22 U.S.C. § 2278. There is well-established precedent under the Arms Export Control Act that a conviction can only be had if the defendant knew that his export was in violation of law. On the other hand, it appears hat prosecutors believe, as I have said previously, that they can establish a criminal violation of 18 U.S.C. § 554 simply by proving the defendant knew that the item was to be exported without any requirement that they prove he knew that the export was illegal.

Whether a court will send someone to jail on such a flimsy showing of criminal intent remains to be seen.

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Copyright © 2015 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Apr

16

Thursday Grab Bag

Posted by at 8:05 am on April 16, 2015
Category: Crimea Sanctions • Criminal Penalties • Cuba Sanctions • Iran Sanctions • OFAC • Sudan • Syria

Grab BagHere are a few recent developments that you may have missed:

  • Last month we criticized the Department of Justice for conspiring with foreign luxury car makers to jail U.S. citizens who exported luxury cars to China to arbitrage the difference between U.S. and Chinese prices for these vehicles. Apparently, the DoJ now is having second thoughts about wasting taxpayer money and its resources on this nonsense. According to the  New York Times, settlements have recently been reached in nine states where prosecutors have agreed to return seized cars to, and drop charges against, luxury car exporters. Good.
  • On Monday we reported that Obama was going to drop Cuba from the list of state sponsors of terrorism, a move we thought was largely symbolic. Yesterday he did just that, and provided the 45-day notice required under the three acts that provide the basis for the list: § 6(j)(4)(A)(i)-(iii) of the Export Administration Act of 1979; § 40(f)(1)(A)(i)-(iii) of the Arms Export Control Act; and § 620A(c)(1)(A)-(C) of the Foreign Assistance Act of 1961. The linked New York Times article wrongly states that Congress can block this action with a joint resolution. Only the Arms Export Control Act provides for this blocking mechanism, and, as we noted, there’s no way that the White House will remove Cuba from the current arms embargo. So a joint resolution under the AECA would be, like the removal itself, largely symbolic
  • The Office of Foreign Assets Control (“OFAC”) revised its rules on Monday to amend the Syrian Sanctions Regulations to permit certain activities with respect to written publications, including the ability to pay advances and royalties, to substantively edit manuscripts and to create marketing campaigns. These activities have been permitted for Cuba, Sudan and Iran since 2004. Don’t try this yet in Crimea which remains, bizarrely and incomprehensibly, the most heavily sanctioned place on the face of the planet
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Copyright © 2015 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Mar

30

Brotherly Love Only Goes So Far

Posted by at 1:15 pm on March 30, 2015
Category: Arms Export • Criminal Penalties

Ariel Maralit[Fair Use]I’ll admit it and apologize in advance.  The main reason for this story and for this link to Britain’s worst newspaper is so that I can run the picture of Ariel Maralit. Ariel, the guy in the photo on the right brandishing the weapons and wearing the moronic grin, is the brother of former NYPD officer Rex Maralit and former U.S. customs agent Wilfredo Maralit.  Both former law enforcement brothers have now pleaded guilty to violations of the Arms Export Control Act in connection with a little business they ran with brother Ariel in the Philippines.   Seems Ariel would take orders from customers in the Philippines for AR-15s, semi-automatic weapons and assault rifles and would then send these orders on to brothers Rex and Wilfredo in the United States.  The brothers would use their law enforcement discounts to buy the weapons cheaply and then pack them up and ship them to Ariel for a tidy profit.  Rex is quoted as saying he just thought he was “avoiding red tape.”   Wilfredo’s lawyer said he was just in it for the money.

And now for the best part.  Rex and Wilfredo

were told they would receive a lighter sentence if they could convince their brother Ariel to come to the United States and face charges, but the brothers were unsuccessful.

Allegedly Ariel replied to his brothers’ pleas to give himself up by sending them a recording of “Baretta’s Theme.”  You remember: “Don’t do the crime if you can’t do the time.” Okay, I made up this last part about sending the song, but once you start linking to the Daily Mail, it’s hard not to follow their example.

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Copyright © 2015 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

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