IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA :

 v. : CRIMINAL NO. 04-699 

NOZZLE MANUFACTURING :

COMPANY

GOVERNMENT’S ARRAIGNMENT,

PLEA, AND SENTENCING MEMORANDUM

I. INTRODUCTION

The United States Attorney filed a one count

information on October 28, 2004 charging defendant Nozzle

Manufacturing Company with the attempted violation of the

Presidential Embargo against Iran in violation of Title 50,

United States Code, Section 1705(b). Defendant Nozzle

Manufacturing had previously entered into a written plea

agreement with the government, the terms of which follow. 

The parties have also agreed that the record contains

sufficient information to permit the Court to exercise its

sentencing authority without a presentence report. 

Accordingly, the parties respectfully submit that the Court

may exercise its discretion in this case to arraign and

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accept the defendant’s plea, and to impose sentence, at the

first hearing.

II. PLEA AGREEMENT

The parties have entered into a written plea

agreement pursuant to Fed. R.Crim.P. 11(c)(1)(C), the

essential terms of which follow:

1. The parties agree that the following specific

sentence appropriately disposes of the case:

a. Defendant shall pay a criminal fine of $10,000

on the date of sentencing.

b. Defendant shall pay a special assessment of

$400 on the date of sentencing.

c. Under U.S.S.G. § 8D1.1, a period of corporate

probation is neither mandatory nor necessary

and shall not be imposed in this case because

the corporation is no longer in business.

d. Defendant agrees to the entry of a separate

order by the Secretary of the U.S. Department

of Commerce (the "Commerce Order") imposing a

civil penalty of $10,000, to be paid at the

time of sentencing. The Commerce Order shall

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resolve all civil and administrative sanctions

arising from defendant’s criminal conduct in

this matter and will not subject defendant to

denial of exporting privileges. Defendant

waives the statute of limitations as to the

Commerce Order, and further agrees that the

Commerce Order will not take effect until

defendant’s guilty plea is entered to the

charge set forth in the Information.

e. Defendant agrees to enter into a Settlement

Agreement with the Secretary of the U.S.

Department of Treasury (the "Settlement"),

through the Office of Foreign Assets Control,

imposing a civil penalty of $10,000, to be

paid before sentencing. The Settlement shall

resolve all civil and administrative sanctions

arising from defendant’s violation of 50

U.S.C. § 1705(a) in this matter. Defendant

waives the statute of limitations as to the

Settlement, and further agrees that the

Settlement will not take effect until

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defendant’s guilty plea is entered to the

charges set forth in the Information.

f. Defendant forfeits its right, title and

interest in nozzles seized by United States

Customs (a legacy agency of United States

Immigration and Customs Enforcement) on or

about September 24, 1999, and in the sum of

$3,000, which represents proceeds from the

export of replacement nozzles to Iran in

violation of 50 U.S.C. § 1705, 31 C.F.R. 

§§ 560.204 and 560.205, and Executive Orders

12957, 12959, and 13059. Defendant shall pay

the $3,000 at the time of sentencing.

2. If the Court rejects this plea agreement and the

agreed upon sentence, the defendant shall have, under Rule

11(c)(5)(B), an opportunity to withdraw its guilty plea.

3. Pursuant to § 6B1.4 of the Sentencing Guidelines,

the parties enter into the following stipulations under the

Sentencing Guidelines Manual effective November 1, 1998. It

is understood and agreed that: (1) these stipulations are

not binding upon either the Probation Department or the

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Court; and (2) the Court may make factual and legal

determinations that differ from these stipulations and that

may result in an increase or decrease in the Sentencing

Guidelines range and the sentence that may be imposed:

a. the applicable sentencing guideline for

the purpose of determining the appropriate fine is 

§ 8C2.10; and

b. there is no basis for, and the parties

will not seek, either an upward departure or a downward

departure under the Sentencing Guidelines.

4. In exchange for the undertakings made by the

government in entering this plea agreement, the defendant

voluntarily and expressly waives all rights to appeal or

collaterally attack the defendant’s conviction, sentence, or

any other matter relating to this prosecution, whether such

a right to appeal or collateral attack arises under 18

U.S.C. § 3742, 28 U.S.C. § 1291, 28 U.S.C. § 2255, or any

other provision of law.

a. Notwithstanding the waiver provision

above, if the government appeals from the sentence, then the

defendant may file a direct appeal of his sentence.

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b. If the government does not appeal, then

notwithstanding the waiver provision set forth in this

paragraph, the defendant may file a direct appeal but may

raise only claims that:

1. the defendant’s sentence exceeds the

statutory maximum as set forth below; or

2. the sentencing judge unreasonably

departed upward from the otherwise applicable sentencing

guideline range.

If the defendant does appeal pursuant to this paragraph, no

issue may be presented by the defendant on appeal other than

those described in this paragraph.

5. The government agrees that it will not bring

any other criminal charges against the defendant or any of

its current or former directors, officers, employees, or

shareholders for any conduct arising from the company's

shipment or attempted shipment of products directly or

indirectly to Iran, identified in the Information.

III. ELEMENTS AND EVIDENCE

The government must establish the following

elements beyond a reasonable doubt to prove a violation of

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50 U.S.C. §1705(b), Executive Orders 12957, 12959 and 13059,

and 31 C.F.R. §§560.204 and 560.205:

1. The defendant willfully

2. exported, sold, or supplied

3. to Iran

4. directly or indirectly from the United States

5. technology or services

6. not licensed by United States Treasury, Office of

Foreign Assets Control.

The government would offer the following documents

and testimony to satisfy these elements if the case were to

proceed to trial:

CONDUCT BEFORE THE 9/3/99 SEIZURE

1. September 3, 1997: Notations in Monarch Nozzle

General Manager Harry Beccari’s daily planner: "Iran: Blank

boxes, Henning Elsasser." (Elsasser owns a distribution

company in Germany called HP Technik). The next page of the

planner states: "HP Technik Henning Elsasser, Iran order

14,5000 @ $1.92 each."

2. September 4, 1997: Fax from Linda Shockey,

Beccari’s administrative assistant, to Elsasser confirming

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$1.60 price for the nozzles to Iran. "Please proceed with

your official order."

3. January 27, 1998: Fax from Elsasser to Shockey

stating that "This company from Iran did finally open an L/C

for 5200 nozzles now. The price is horrible but I know

Harry needs volume and so I decided to accept this order. 

Please talk to him about a special price for these nozzles

because we don’t have even 5 cent on each piece."

4. January 29, 1998: Fax to Elsasser from Shockey

in which she states that "NS Nozzles for Iran. Harry has

okayed a .07 reduction on price for the 5200 pcs. (I think

he likes you!!) Your order will be ready for shipment by end

of February. If I can push sooner - I will. Attached is

the order acknowledgment." (There is an order acknowledgment

dated 1/28/98 for over 19,000 nozzles).

5. February 6, 1998: Elsasser faxes Shockey

telling her "Push as hard as you can please. I need these

nozzles latest 26.02.1998 here in Karlsruhe. It is mostly

because of the 45 (degree) NS nozzles for the Iran order. 

If you tell me the type you need more time I could maybe

cancel some until our next order."

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6. February 11, 1998: Elsasser faxes Shockey that

next week delivery is okay, "We have to get ride (sp) of the

Iran staff (?stuff?) on the 26th of February." 

7. February 13, 1998: Elsasser faxes Shockey that

"I hope delivery time beginning next week is ok because this

guy from Iran starts to get on my nerves with earlier and

earlier delivery."

8. February 16, 1998: A fax from Mary Slavin at

Monarch to Elsasser stating that "your orders shipped on

Friday (February 13, 1998). We will have the flight details

later today." The fax confirms the invoice numbers,

including the invoice number per the order acknowledgment of

1/28/98. 

9. February 19, 1998: Fax from Shockey to

Elsasser stating "Glad to hear the shipment arrived in time

to meet your requirements for the L/C from Iran."

10. May 1, 1998: Fax from Shockey to Elsasser

stating that Monarch will issue a credit note for the Iran

order in the amount of $404.04 (5772 pcs. x $.07).

11. June 18, 1998: Elsasser faxes a letter from

the Lakam Company in Tehran, Iran and appends a note to

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Harry Beccari asking what he should do and to please advise. 

The letter from the Iranian Company to Elsasser says that

they (the Iranians) are interested in working with HP

Technik but, as best can be determined from the stilted

English, they are after a more competitive price.

12. June 25, 1998: Elsasser sends a fax to Shockey

asking Harry to answer "my different questions" on the last

fax.

13. June 25, 1998: Later that day, Shockey faxes

Elsasser that "Harry is working on your fax. He did say

okay to Iran customer - same deal as last time." 

14. October 27, 1998: Fax from Elsasser to Harry

Beccari stating that "I did get another order from Iran

today for 5772 nozzles Typ R/PLP. The price is more than

lousy but I thought getting up the volume is most important

for both of us. They actually wanted Steinen but I was able

to change them to Monarch over the price. They will pay USD

1.89 per nozzle and I have to cover all banking fees and

delivery costs in Germany. I would appreciate very much if

I could get the price of USD 1.63 like last time for this

order. I don’t want a credit note for hp!!!"

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15. October 27, 1998: Shockey faxes Elsasser that

5,772 R/PLP nozzles for Iran - Okay @ US $1.63 price."

16. February 1, 1999: Elsasser faxes Linda Shockey

and asks in somewhat stilted English "Do you want the

address from our customer in Iran he isn’t allowed to buy in

Germany or England anymore. Do you have you would like to

serve him through?"

17. July 21, 1999: Elsasser faxes Shockey that "My

customer from Iran contacted me again today (I hat (sp)

doing business with him) he needs another 5772 nozzles which

I could order separately from you as soon as I get the

order. Delivery can’t be direct, because he ain’t allowed to

buy in the USA. I expect him to do advance payment, hope he

accepts or I won’t deliver him."

 18. July 26, 1999: Fax to Shockey from Elsasser

stating that "I think I will get the Iran order for 6000

nozzles in the next 2 days. I would need this order to be

sent to us separately because we don’t want to unpack it. 

Is this possible? Further do we also need the price of $1.60

USD like last year."

Case 2:04-cr-00699-BMS Document 3 Filed 01/18/05 Page 11 of 21
 

1 These boxes had come into Steer’s possession on September

2, 1999 via Air Cargo Express, who had picked them up at Miller’s

request after he had talked to Linda Shockey on September 1,

12

19. July 28, 1999: Fax to Shockey from Elsasser

stating that "I did manage to get the Iran order today for

6000 pieces of nozzles. We have to make a separate order

out of this because I don’t want to unpack the nozzles here. 

Means I need a full delivery for this and no part

deliveries." 

20. July 30, 1999: Monarch invoice, marked "Office

Copy" reflecting 6000 nozzles at a cost of $9,600 to HP

Technik, purchase order 990.508 Iran, Monarch No. 14537.

THE SEIZURE

21. September 3, 1999: Christopher Miller, Export

Account Manager for the John A. Steer Freight Forwarding

Company, Folcroft, Pennsylvania, called Customs Inspector

John Penswater, Office of Field Operations, Outbound Air

Group, Philadelphia, Pennsylvania and reported that he had

an export shipment from Monarch Nozzle Company, Swedesboro,

New Jersey. The shipment consisted of five boxes, two

marked destined for Germany and two marked destined to

Iran.1 Miller stated that he had contacted Linda Shockey of

Case 2:04-cr-00699-BMS Document 3 Filed 01/18/05 Page 12 of 21
1999. The cartons weighed 375 pounds and were valued at $11,068.

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Monarch and asked her if the boxes were really going to

Iran. Shockey became defensive and said that the shipment

was going to Germany, and then they were shipping it to

Iran. Shockey acknowledged that they had done this in the

past with HP-Technik in Germany. Miller told Shockey "that’s

illegal, we can’t ship to Iran." When Shockey responded

that it was going to Germany, Miller told her that knowing

it’s going to Iran is transhipping and that was illegal. 

Shockey told Miller to black out "Iran" from the two boxes. 

When Miller said that he could not do that, Shockey became

abrasive with Miller and told him either to black out "Iran"

or return the boxes to Monarch and they would get another

freight forwarder. Shortly thereafter, after Miller

conferred with his supervisors, U.S. Customs was called. On

September 5th or 7th, Shockey called Steer and asked about

the status of the shipment and was told that U.S. Customs

had placed the shipment on hold. 

22. September 3, 1999: Customs Inspector John

Penswater, examined and detained five Monarch Nozzle Company

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 The boxes were addressed to HP-Technik, Gablonzerstrasse

21, 76185 Karlsruhe, Germany, Attn: Henning Elsasser.

 

3

 The packing list had Iran listed next to purchase order

number 990.508, Monarch No. 14537. This order was for 6000

nozzles: (1440) 1.00 GPH x 60 deg. MTDR; (900) 1.50 GPH x 60 deg.

MTDR; (900) 2.00 GPH x 60 deg. MTDR; (900) 2.25 x 60 deg. MTDR;

(900) 2.50 x 60 deg. MTDPLP; (600) 8.50 x 60 deg. MTDPLP; (36)

2.50 x 45 deg. MTDPLP.

14

cartons containing oil burner nozzles destined for Germany.2

Two of the five cartons and their individual packing lists

were marked "Iran."3 There was no attempt to hide the

marking as it is scrawled in black magic marker on the

cardboard boxes: "HP Technik, Iran, Box 1 of 5." The

proforma invoice for this shipment was signed by Linda

Shockey.

23. September 3, 1999: Linda Shockey sends an

urgent fax on Monarch stationary to Henning Elsasser that

she needs to speak with him concerning his shipment.

CONDUCT AFTER THE 9/3/99 SEIZURE

24. September 9, 1999: Inspector Penswater

received a message that Shockey had called. On September

10, 1999, Penswater returned Shockey’s call and, at her

request, faxed her the documents authorizing Customs to

detain Monarch’s shipment. Later that same day, Penswater

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received a call from a person who identified himself as a

manager from Monarch but would not provide his name. The

manager asked for permission to record the conversation and

then complained that "I pay your salary and your taxes," and

"why would you put people out of work because of what was

written on a box?" When Penswater told the "manager" that

his boxes were being detained because the documentation

indicated that they may be diverted to Iran, the Monarch

"manager" stated that they were going to Germany. Upon

being asked why Iran was written on the boxes and packing

slips, the "manager" refused to answer the question. When

asked who the end user was, the "manager" said it wasn’t his

concern what Germany does with the nozzles and that he

didn’t care.

25. September 10, 1999: Elsasser faxes Linda

Shockey a handwritten note and says that he got an order for

one piece (and provides the specifications). He adds

"Please add this nozzle to the Iran order when you pack it

new . . . Looking forward to receive the order through a new

forwarder soon."

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26. September 20, 1999: Exodus Command Center,

U.S. Customs, Washington, D.C. determined that Monarch

Nozzle did not have a license to ship goods to Iran. 

27. September 22 & 23, 1999: U.S. Customs seized

the original paperwork related to the above shipment. Steer

told Customs that between September 1998 to September 1999

approximately 9 shipments were made by Monarch to HP

Technik. For three of those shipments, the Monarch contact

person was Kathy Hanly; for the last six shipments, the

contact person was Linda Shockey. 

28. September 24, 1999: General Manager Harry

Beccari faxes Elsasser that "Big problems with Customs

Special Agent assigned. We may have to send you a

replacement until we can clear it."

 29. October 1999: All during this month messages

are being faxed to Monarch by Elsasser such as on October

10, 1999: "Please add to the Iran order when you get it

back" ordering 300 1.35 x 80 degree MTDNS on purchase order

990.655. Other similar messages are: "Were you successful

with the Iran delivery, I really need this stuff; Hope to

hear positive news concerning the Iran delivery soonest

Case 2:04-cr-00699-BMS Document 3 Filed 01/18/05 Page 16 of 21
 

4 900 were ordered but only 684 were sent. The remaining 226

were shipped out on November 11, 1999.

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because my trouble really gets bigger day by day." On

October 11, 1999 Elsasser faxes that "Following this page

will you receive a big order as requested from you . . .

Anything new concerning the Iran order? We very urgently

need the brass nozzles, our customer can’t send out his

cleaning machines (DM 15,000,-) because of the missing

nozzles. Please send me the letter from the special agents

by fax. I want to frame it and put it on the wall here in

my office."

30. Comparison of confiscated shipment to new

order placed on October 11, 1999:

Seized Shipment New Shipment

Invoice # 22065 Invoice # 22673

Date Ordered: 7/30/99 Date Ordered: 10/11/99

Order # 14537 Order # 15053

Purchase Order # 990.508 Purchase Order # 990.674

Date Shipped: 8/31/99 Date Shipped 10/29/99

1440 1.00 GPH x 60N MTDR 600 1.00 GPH x 60N MTDR

 900 1.50 GPH x 60N MTDR 900 1.50 GPH x 60N MTDR

 900 2.00 GPH x 60N MTDR 684 2.00 GPH x 60N MTDR4

 900 2.25 x 60N MTDR 600 2.25 x 60N MTDR 

 900 2.50 x 60N MTDPLP 300 2.50 x 60N MTDPLP

 600 8.50 x 60N MTDPLP 300 8.50 x 60N MTDPLP

 360 2.50 x 45N MTDPLP 0 2.50 x 45N MTDPLP

Case 2:04-cr-00699-BMS Document 3 Filed 01/18/05 Page 17 of 21
 

5 When interviewed, representatives of BAX claimed that this

designation was less sinister than it appeared, meaning only that

it was a new customer who wanted this shipment delivered quickly.

18

31. November 1, 1999: Fax from John Liebe, BAX

Global, a freight forwarder, to Kim Lombardo, BAX, America

stating "Monarch Nozzle has convinced their largest customer

in Germany to use us for exports out of Swedesboro, NJ. 

We’re handling the first shipment today, and it’s a hot

one."5

32. November 4, 1999: Fax from Elsasser to Shockey

stating "Thank you very much for the list of the delivery. 

It is good that the old staff (?stuff?) is on the delivery

and all sizes we are short of right now."

33. Testimony by Harry Beccari. Beccari would

tesify as follows pursuant to an immunity agreement with the

government: he was the general manager of Monarch in

September 1999 and had been in that position since March

1994, having worked his way up in the company from being a

helper on the shop floor in 1977. Bob Onraet was his

immediate supervisor, the president of Monarch Nozzle, and

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6 As indicated earlier, in September 1999, Monarch was

still a division of Newton Tool, and under the umbrella of

JEP Manufacturing Group, Incorporated. 

19

the chief controlling officer of the JEP Manufacturing

Group.6 

Beccari became aware of the seized shipment of

nozzles, bound for HP Technik, Monarch’s German distributor,

in September 1999. He stated that, at the time of the

seizure, he was unaware that it was illegal to ship to Iran. 

He told Onraet of the Customs seizure, and made his own

efforts, at Onraet’s suggestion, to try and get the seizure

released by Customs. Onraet told him that he, Onraet, did

not believe it was a serious matter and said that they would

just pay the fine, get the shipment out, and “life goes on.”

Beccari would further testify that he got into a

heated argument on the telephone with a Customs agent.

IV. STATUTORY MAXIMUM SENTENCE

The Court may impose the following statutory

maximum sentence: five years probation, a fine of not more

than $50,000 or twice the gross gain or loss resulting from

the offense, and a $400 special assessment. Defendant may

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also be subject to the denial of exporting privileges for a

period up to 10 years.

V. THE GOVERNMENT’S SENTENCING RECOMMENDATION

Pursuant to the parties’ plea agreement, and

Fed.R.Crim.P. 11(c)(1)(C), the government agrees that the

sentence outlined above in the discussion of the plea

agreement appropriately disposes of the case.

Respectfully submitted,

PATRICK L. MEEHAN

United States Attorney

________________________________

CHRISTOPHER R. HALL

Assistant United States Attorney

Validation of Sig. Code: CRH4364

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CERTIFICATE OF SERVICE

I certify that a true and correct copy of the

foregoing court paper has been served by first class United

States mail, postage prepaid, upon the following counsel of

record:

James m. Becker, Esq.

Saul Ewing

Centre Square West

1500 Market Street, 38th Floor

Philadelphia, PA 19102-2186

________________________________

CHRISTOPHER R. HALL

Assistant United States Attorney

DATED: 

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