[Federal Register Volume 62, Number 144 (Monday, July 28, 1997)]
[Notices]
[Pages 40331-40332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19816]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration


Decision and Order

    On April 29, 1993, the Office of Export Enforcement, Bureau of 
Export Administration, United States Department of Commerce 
(hereinafter ``BXA''), issued a charging letter initiating an 
administrative proceeding against William A. Roessl, individually and 
formerly doing business as Enigma Industries (hereinafter collectively 
referred to as ``Roessl''). The charging letter alleged that Roessl 
committed three violations of the Export Administration Regulations 
(currently codified at 15 CFR Parts 730-774 (1997)),\1\ issued pursuant 
to the Export Administration Act of 1979, as amended (50 U.S.C. app. 
Secs. 2401-2420 (1994)) (hereinafter the ``Act'').\2\
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    \1\ The alleged violations occurred in 1989. The Regulations 
governing the violations at issue are found in the 1989 version of 
the Code of Federal Regulations (15 CFR parts 768-799 (1989)). Those 
Regulations define the violations that BXA alleges occurred, and are 
referred to hereinafter as the former Regulations. Since that time, 
the Regulations have been reorganized and restructured; the 
restructured Regulations establish the procedures that apply to the 
matters set forth in this decision and order.
    \2\ The Act expired on August 20, 1994. Executive Order 12924 (3 
CFR, 1994 Comp. 917 (1995)), extended by Presidential Notices of 
August 15, 1995 (3 CFR, 1995 Comp. 501 (1996)) and August 14, 1996 
(3 CFR, 1996 Comp. 298 (1997)), continued the Regulations in effect 
under the International Emergency Economic Powers Act (50 U.S.C.A. 
Secs. 1701-1706 (1991 & Supp. 1997)).
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    Specifically, the charging letter alleged that, on or about June 
28, 1989, Roessl exported a U.S.-origin Floating Point Systems model 
164 Array Processor from the United States through Canada to the 
Federal Republic of Germany without the validated license that Roessl 
knew or had reason to know was required by Section 772.1(b) of the 
former Regulations. BXA alleged that, by exporting commodities to any 
person or destination in violation of or contrary to the terms of the 
Act, or any regulation, order or license issued under the Act, Roessl 
violated Section 787.6 of the former Regulations. BXA also alleged 
that, by selling, transferring, or forwarding commodities to be 
exported from the United States with knowledge or reason to know that a 
violation of the Act or any regulation, order, or license issued 
thereunder occurred, was about to occur, or was intended to occur, 
Roessl violated Section 787.4(a) of the former Regulations.
    Furthermore, the charging letter also alleged that, in connection 
with the shipment described above, Roessl filed, directly or 
indirectly, with the U.S. Customs Service a Shipper's Export 
Declaration (SED) on which it was represented that the goods described 
thereon were being exported from the United States for ultimate 
destination in Canada when, in fact, as Roessl knew, the goods were not 
intended for ultimate destination in Canada. BXA alleged that, by 
making or causing the making of a false or misleading statement of 
material fact, directly or indirectly, to a United States agency in 
connection with the preparation, submission, or use of an SED, an 
export control document, Roessl violated Section 787.5(a) of the former 
Regulations.
    BXA has presented evidence that the charging letter was served on 
Roessl on February 23, 1996.\3\ After he was finally served, the 
parties agreed, by stipulation dated March 22, 1996, to an extension of 
time, until May 24, 1996, for Roessl to answer the charging letter. 
Roessl has failed to file an answer to the charging letter, as required 
by Section 766.7 of the Regulations, and is therefore in default. Thus, 
pursuant to Section 766.7 of the Regulations, BXA moved that the 
Administrative Law Judge (hereinafter the ``ALJ'') find the facts to be 
as alleged in the charging letter and render a Recommended Decision and 
Order.
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    \3\ The Recommended Decision and Order represents that BXA 
served the charging letter on April 29, 1993, when in fact, the 
charging letter was issued on that date and then served on February 
23, 1996.
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    Following BXA's motion, the ALJ issued a Recommended Decision and 
Order in which he found the facts to be as alleged in the charging 
letter, and concluded that those facts constitute three violations of 
the former Regulations by Roessl, as BXA alleged. The ALJ also agreed 
with BXA's recommendation that the appropriate penalty to be imposed 
for that violation is a denial, for a period of ten years, of all of 
Roessl's export privileges. As provided by Section 766.22 of the 
Regulations, the Recommended Decision and Order has been referred to me 
for final action.
    Based on my review of the entire record, I affirm the findings of 
fact and conclusions of law in the Recommended Decision and Order of 
the ALJ. As the ALJ noted, Roessl has been difficult to locate and has 
not cooperated with the resolution of this matter--even after agency 
counsel agreed to an extension of time to file his answer to the 
charging letter. A civil monetary penalty would not likely be 
collected. Accordingly, a period of denial of Roessl's export 
privileges is a more effective and appropriate penalty.
    Additionally, I agree with the ALJ that the period of denial of 
export privileges should be substantial. This case is aggravated both 
by Roessl's failure to participate in the administrative enforcement 
process and by the fact that the case involves an exportation through

[[Page 40332]]

Canada. Under U.S. export control law, exports to Canada rarely require 
an export license. This important rule facilitates the substantial 
trade between the closely connected U.S. and Canadian economies. The 
license exception for Canada applies, however, only to goods intended 
for use in Canada. In this case, Rossel abused this exception. To abuse 
this exception is to risk losing it. A violation such as this is a 
serious matter and should receive a penalty that demonstrates that 
fact. The ALJ was correct in recommending the imposition of a ten-year 
period of denial of export privileges.
    Accordingly, it is therefore ordered, First, that, for a period of 
ten years from the date of this Order, William A. Roessl, individually 
and formerly doing business as Enigma Industries, 145-B Crescent, 
Beverly Hills, California 90202, and all his successors, assignees, 
officers, representatives, agents and employees, whenever acting within 
the scope of their employment with Roessl, may not, directly or 
indirectly, participate in any way in any transaction involving any 
commodity, software or technology (hereinafter collectively referred to 
as ``item'') exported or to be exported from the United States that is 
subject to the Regulations, or in any other activity subject to the 
Regulations, including, but not limited to:
    A. Applying for, obtaining, or using any license, License 
Exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
Untied States that is subject to the Regulations, or in any other 
activity subject to the Regulations; or
    C. Benefiting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the Regulations, or in any other activity subject to the Regulations.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of the denied person any item 
subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the denied person of the ownership, possession, or 
control of any item subject to the Regulations that has been or will be 
exported from the United States, including financing or other support 
activities related to a transaction whereby the denied person acquires 
or attempts to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from the denied person of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from the denied person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the 
Regulations that has been or will be exported from the United States 
and that is owned, possessed or controlled by the denied person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by the denied person if such service involves the use of any 
item subject to the Regulations that has been or will be exported from 
the United States. For purposes of this paragraph, servicing means 
installation, maintenance, repair, modification or testing.
    Third, that, after notice and opportunity for comment as provided 
in Section 766.23 of the Regulations, any person, firm, corporation, or 
business organization related to the denied person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
this Order.
    Fourth, that this Order does not prohibit any export, reexport, or 
other transaction subject to the Regulations where the only items 
involved that are subject to the Regulations are the foreign-produced 
direct product of U.S.-origin technology.
    Fifth, that this Order shall be served on Roessl and on BXA, and 
shall be published in the Federal Register.

    This Order, which constitutes the final agency action in this 
matter, is effective immediately.

    Dated: July 22, 1997.
William A. Reinsch,
Under Secretary for Export Administration.
[FR Doc. 97-19816 Filed 7-25-97; 8:45 am]
BILLING CODE 3510-DT-M