ExportLawBlog » 2017

Archive for September, 2017

Sep

22

Export Control Reform Arrives (Soon?) For Small Arms

Posted by Clif Burns at 4:00 pm on September 22, 2017

Gun Show by M&R Glasgow [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/EfXLa [cropped] Rumors have begun to circulate that export control reform is coming to USML Category I small arms despite thoughts that this might never happen. The reporters in this Reuters article, who clearly have little background in export policy and reform, have fallen on their fainting couches, clutched their pearls, and conjured up terrifying images of an out-of-control international arms bazaar that will result. This is, of course, silliness. Thousands of items have transitioned from the USML to the 600 series of the Commerce Control List without military items falling willy-nilly into the hands of foreigners.

There are two issues I think are worthy of comment without histrionics. The first relates to brokering issues. I have been a critic of DDTC’s brokering rules, not because of their concept, but mostly because of their implementation. The rules have been improved by restricting the registration and licensing requirements to brokers who are U.S. citizens or who are located in and acting from the United States. But I think that potentially removing small arms shipments from the restrictions of the brokering rules is not necessarily a good idea. Remember that the reason that these were passed in the first place was that U.S. persons were shipping small arms from foreign countries to regional disputes and rebellions outside the United States where those arms were used for genocide or otherwise against the foreign policy of the United States. The EAR has no controls on brokering and would not control export of foreign-manufactured arms (without U.S. content) to areas outside the United States by U.S. citizens or persons in the United States. The brokering issue is negligible when we talk about other transitioned items, like certain military aircraft parts. But the issue is front and center when it comes to small arms.

Another interesting effect of transitioning small arms to the CCL, and one that will be probably a beneficial one, relates to the issue of providing firearms training to foreign persons. As it stands, the definition of defense services in section 120.9 covers ” training â€¦ foreign persons â€¦ in the â€¦ maintenance, â€¦ operation, â€¦ or use of defense articles.” So a U.S. person could not show a foreign person how to clean a rifle but could provide a copy of the publicly available rifle manual with cleaning instructions to the foreign person. After transition of the rifle as a 600 series item to the EAR, since the information on how to clean the rifle is published, a U.S. person could show the foreign person how to clean the rifle rather than just provide a copy of the manual. This, of course, seems a much more sensible result.

Permalink

Comments Off

Sep

19

America’s Worst Spy Sentenced

Posted by Clif Burns at 11:52 pm on September 19, 2017

Category: Criminal Penalties • DDTC • ITAR

DOJ Interview Video of Gregory Allen Justice [Public Domain - Work of U.S. Government] Yesterday, Gregory Allen Justice, a former Boeing engineer, who tried to sell satellite information to undercover agents he believed were Russian spies, was sentenced to five years in jail. I reported on the case previously here, noting that Justice was playing spy to get money for an online girlfriend (who had catfished him with sexy photos of another woman and to whom he was sending gifts, such as charcoal grills, from Amazon). Justice, who admitted he was under the spell of Â the TV show “The Americans,” Jason Bourne and James Bond (and had even taken online spy courses), demonstrated his intimate knowledge of spy craft when he gave a receipt to the fake spies for the money they paid him after he made his first drop. Seriously. Worst spy ever. He might as well have posted pictures of the drop on Facebook — oh wait, that wouldn’t have been a problem because Russian spies apparently can post on Facebook without anyone noticing.

Permalink

Comments Off

Sep

13

Beware the Smiley Face!

Posted by Clif Burns at 6:06 pm on September 13, 2017

Category: Criminal Penalties • Iran Sanctions • OFAC

Camellia George via http://blog.venmo.com/2015/10/20/introducing-camellia-george-kah-meel-ya-head-of-product-development-1 [Fair Use]

ABOVE: Parisa Mohamadi

A recently unsealed criminal complaint alleges that Parisa Mohamadi, an Iranian-born U.S. citizen, was responsible for exports of approximately $3 million of goods from the United States to Iran between 2010 and 2012. The fact pattern alleged in the indictment is a familiar one: the items, requested by Iranian buyers, were purchased by Mohamadi in the United States and shipped to a free zone company she incorporated in Dubai and then were transshipped to Iran from there.

Of course, there is no criminal violation without criminal intent. And in these transshipment fact patterns, where the shipment from the U.S. to Dubai would not require a license (if considered alone) and the shipment from Dubai to Iran was also one that was legal under UAE law, it is conceivable (indeed fairly likely) that the exporter may think that this shipment route is legal. (Remember we live in a country where 7 percent of the population believes that chocolate milk comes from brown cows.)

The criminal complaint understands this issue and tries to forward proof of Ms. Mohamadi’s criminal intent. Â Truth be told, the government’s proof of criminal intent by Ms. Mohamadi can only be described as, well, completely whack-a-doodle.

The first “proof” cited by the complaint is this statement made by Mohamadi in an email:

I KNOW WHICH COUNTRIES ARE EMBARGO AND SANCTION AND WHICH COUNTRY WILL BE EMBARGO AND SANCTION, I AM AS SHIP OWNER, SO I KNOW HOW IS SHIPPING WORKS TO FIXED THE SHIPMENTS IN ADVANCE THUS DO NOT WORRY FOR THIS DELIVERY SCHEDULE, I NEVER SHOOT MY SELF.

The complaint adds a snarky footnote pointing out that the spelling mistakes and grammatical errors are those of Ms. Mohamadi alone and not an indication of any illiteracy on the part of the investigating DHS agent who signed the affidavit. This snark might have been justified but for the agent’s reference elsewhere in the complaint to an “I-Phone” (for iPhone) and multiple references to “U.S. Principal Party of Interest” (instead of “U.S. Principal Party in Interest”). Of course, nothing in this difficult-to-parse statement is inconsistent with a belief that the shipment was legal if it went through Dubai first. Â As Ms. Mohamadi tried to make clear, she never shoots herself.

But the agent saved the best “proof” for last (with my bold and italics added):

Similarly, on November 1, 2011, Individual D from Iranian Business A emailed MOHAMADI: “How are you. I am at the sanction solution and money transfer conference in the university. So far I we doing it like no one does, very happy to be here, of course I am the youngestÂ here, and and we do it like no one. That’s what separate us from the others.” MOHAMADI responded: “Good to hear that we are the best but off course in knew that already.” This was followed by three smiley faces.

The best I can tell the agent believes that the smiley faces are proof of criminal intent because nothing else in Mohamadi’s quoted statement about “being the best” even comes close. You might recall that FBI agents get specific training in smiley faces and their meaning, so I suppose DHS agents get that training as well.

And that’s it. That’s what the criminal complaint cites to prove that the defendant knew that shipping items from the U.S through a foreign company in Dubai to Iran was illegal: Â three smiley faces and a desire not to shoot herself. Â Maybe that’s why Ms. Mohamadi doesn’t have much of a smiley face in her mug shot.

Permalink

Comments Off

Sep

11

Florida Imposes Its Own Embargo on Cuba

Posted by Clif Burns at 5:34 pm on September 11, 2017

Category: BIS • Cuba Sanctions • OFAC

Rick Scott Head Shot by Rick Scott [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/7Td7dc 2007 [cropped] Last week, before other things got in the way, Florida governor Rick Scott looked in the mirror and suddenly realized that he had been elected by the American voters to run the foreign policy of the United States. So, without further delay, Scott announced that Florida would cut off all state funding for any port that permitted traffic to Cuba. As a result, the ports in Everglades and Palm Beach cancelled memoranda of understanding that they were planning to sign with Cuban officials visiting the state.

Now, of course, we all understand that Governor Scott’s 8th grade civics class may not have covered some of the finer points of the U.S. Constitution, and we also understand that Cuba-bashing is a favorite sport for Florida politicians, but even a quick review of the Supreme’s Court’s decision in Crosby v. National Foreign Trade Council reveals the problems with the governor’s actions here. In Crosby, Massachusetts prohibited state agencies from buying goods from companies that did business with Burma. The Supreme Court held that the law was preempted by the Supremacy Clause of the United States Constitution. In doing so, the Court noted that the Massachusetts law interfered with the ability of the federal government to conduct foreign policy with respect to Burma. Central to that holding was the court’s finding that the Massachusetts law penalized companies for engaging in trade with Burma that was expressly permitted by the federal sanctions against Burma

Here, Governor Scott’s threat extends to all trade with Cuba, even if that trade isÂ permitted by a specific or general license. So, to take a timely example, it is legal, under section 515.591 of the Cuban Assets Control Regulations and License Exception SCP of the Export Administration Regulations to export goods and services to Cuba to assist with rebuilding infrastructure damaged by Hurricane Irma. Yet, under the threatened action, if that relief is shipped through a Florida port, that port will be penalized by Florida. This does seem, shall we say, pretty ungrateful under the circumstances: Irma’s strength, and impact on Florida, was lessened by the time she spent wreaking havoc on the northern coast of Cuba. Florida ought to think of that before blocking aid to Cuba in rebuilding destroyed infrastructure.

Permalink

Comments (1)