Source: https://www.egad.org.uk/2018/12/19/happens-violate-export-controls-usa-january-december-2018/
Timestamp: 2019-04-18 20:39:27+00:00

Document:
Eric Baird, the former owner and Chief Executive Offer (CEO) of a Florida-based package consolidation and shipping service, has pleaded guilty to one count of felony smuggling and admitted to 166 administrative violations of U.S. export control laws as part of a global settlement with the U.S. Department of Justice (DOJ) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS).
On December 12, 2018, Baird’s criminal plea was accepted by a federal judge in the U.S. District Court for the Middle District of Florida, and BIS issued an Order outlining the administrative violations and imposing civil penalties of $17 million, with $7 million suspended, and a 5-year denial of export privileges, of which one year is suspended. The civil penalty is the largest to be paid by an individual in BIS history. In February 2017, Access USA settled with BIS and agreed to an administrative civil penalty of $27 million, with $17 million suspended.
Additionally, Baird established and/or authorized Access USA’s “personal shopper” program. As part of this program, Access USA employees purchased items for foreign customers from a shopping list while falsely presenting themselves to U.S. merchants as the domestic end-users of the items. In some cases, Baird directed or authorized Access USA employees to use his personal credit card information, and in others Baird personally asked Access USA employees to apply for and use personal credit cards of their own to make such purchases and have the items sent to their personal addresses. As a result, in addition to being misled to believe that a domestic customer and end-user was involved when the items were in fact intended for export, the U.S. merchant would be misled to believe that Access USA itself was not involved in the transaction.
* Charges: Engaging in Prohibited Conduct (15 CFR Part 764.2(a)), specifically the respondent exported camera accessories to Iran via the United Arab Emirates without the required U.S. Government authorization.
* Penalty: Civil penalty of $8,500.
* Date of Order: 10 Dec 2018.
Details: The US Department of Commerce’s Bureau of Industry and Security (BIS) has announced that Shai Gear LLC, d/b/a Spider Camera Holster and Spider Camera and located in Lansing, New York, has agreed to pay a civil penalty of US$8,500 to settle charges that it committed one violation of EAR § 764.2(a) (Engaging in Prohibited Contact). BIS charged that on or about July 5, 2017, Shai Gear exported camera accessories to Iran via the United Arab Emirates without the required US Government authorization. The camera accessories were subject to the Regulations, designated EAR99, and valued in total at approximately US$6,058.3 The items were subject to the Iranian Transactions and Sanctions Regulations (“ITSR”) administered by the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). Absent prior authorization by OFAC, the ITSR prohibit, as they did at all times pertinent in this case, the exportation, re-exportation, sale, or supply, directly or indirectly, from the United States of any goods, technology, or services to Iran, including the exportation, re-exportation, sale, or supply of such items to a third country undertaken with knowledge or reason to know that the items were intended for supply, trans-shipment, or re-exportation, directly or indirectly, to Iran. See 31 C.F.R. § 560.204 (2017, 2018). Pursuant to EAR § 746.7, no person may export or reexport any item that is subject to the Regulations if such transaction is prohibited by the ITSR and has not been authorized by OFAC. See 15 C.F.R. § 746.7(e) (2018).
BIS Reaches Settlement with Mohawk Global Logistics Corp.
Charges 2-3: On two separate occasions, on or about February 12, 2014, and on or about August 12, 2015, Mohawk caused, aided, and/or abetted a violation of the Regulations, namely, the export of Real-Time Back Reflection Laue Camera Detectors and Accessories, items subject to the Regulations, designated EAR99, and valued at $177,156, to the University of Electronic Science and Technology of China (“UESTC”) in Chengdu, People’s Republic of China, without the required BIS license. At all relevant times, UESTC was listed on the Entity List, and a BIS license was required to export any item subject to the Regulations to that entity. See 15 C.F.R. § 744.11 and Supp. No. 4 to 15 C.F.R. Part 744 (2014-2015). Mohawk provided freight forwarding services for the initial unlicensed export of these items to UESTC on or about February 12, 2014. Documents provided to Mohawk by the exporter clearly identified UESTC’s full name as it is listed on the Entity List, along with a near-exact match for the entity’s address. Mohawk used screening software in connection with this transaction, but failed to flag the transaction, assertedly because it failed to use UESTC’s full, unabbreviated name. Without further inquiry or due diligence, Mohawk proceeded with the transaction and prepared and filed EEi that falsely indicated the export was “NLR.” On the second occasion, on August 12, 2015, Mohawk caused, aided, and/or abetted the unlicensed export to UESTC of the same exact items, which had been returned to the U.S. manufacturer for warranty repair. Documents provided to Mohawk by the exporter again identified UESTC’s full name and a near-exact match for the entity’s address. For this second export, Mohawk failed to screen the transaction and proceeded to forward the item for export to UESTC. No EEi was filed in connection with this second export of the items to UESTC.
Mohawk is to pay the $155,000 civil penalty in three instalments as follows: $45,000 no later than September 15,2018; $45,000 no later than February 1, 2019; and $45,000 no later than June 15, 2019. Payment of the remaining $20,000 shall be suspended through December 15, 2019, and thereafter shall be waived, provided that during this payment probationary period: Mohawk has timely paid $135,000 to the Department of Commerce as set forth above; has otherwise complied with the provisions of the Agreement and this Order; and has committed no other violation of the Act or the Regulations or any order, license or authorization issued thereunder.
* Respondent: Merit Aerospace and Yanghong Zhou of Pasadena, CA.
* Debarred: 4 years from the date of this order.
* Date of Order: 25 May 2018.
The US Department of State’s Directorate of Defense Trade Controls (DDTC) has entered into a Consent Agreement with FLIR Systems, Inc., to settle charges that it committed over 300 violations of the ITAR, including unauthorized export of defence articles, including: technical data; the unauthorized provision of defence services to various countries, including proscribed destinations; violation of the terms and conditions or other limitations of license authorizations; and failure to provide accurate and complete reporting pursuant to Part 130 of the ITAR involving sensitive thermal imaging systems. FLIR Systems agreed to pay a US$30m civil penalty (US$15m of which may be suspended if it implements the remedial compliance measures set forth in the Consent Agreement) and, among other measures, the appointment of a Special Compliance Official/Internal Special Compliance Official for four years.
Federal Express Corporation d/b/a FedEx Express has agreed to pay a civil penalty of US$0.5m and complete external audits of its export controls compliance program cover FedEx fiscal years 2017-2020 to settle charges that it committed 53 violations of EAR § 764.2 (Causing, aiding, or abetting exports to entities on the Entity List without the required licenses). BIS alleged that on fifty-three occasions between on or about July 1, 2011, and on or about January 19, 2012, FedEx caused, aided or abetted acts prohibited by the Regulations when it facilitated the export of civil aircraft parts and equipment used for electron microscope manufacturing, items subject to the Regulations and classified under Export Control Classification Number (ECCN) 9A991 or 7A994 and controlled for Anti-Terrorism (“AT”) reasons, or designated as EAR99, 3 and valued in total at approximately $58,091, from the United States to Aerotechnic France SAS (“Aerotechnic”) in France, or to the Pakistan Institute for Nuclear Science and Technology (“PINSTECH”) in Pakistan, without the required BIS licenses.
Weiming Zhang, a.k.a. John Zhang and Seasia Enterprises (USA), Inc. have jointly and severally agreed to pay a civil penalty of US$100,000 ($50,000 payable within 30 days and the payment of the remaining $50,000 suspended for five years and thereafter waived if the parties commit no further violations of the Order or the EAR) and denial of their export privileges for five years (suspended for a probationary period of five years and thereafter waived if the parties commit no further violations of the Order or the EAR) to settle charges that they committed one violation of EAR § 764.2(d) (Conspiracy to export items controlled for national security reasons from the United States to China without the required BIS licenses). Specifically, BIS alleged that Zhang/Seasia obtained electronic equipment from U.S. manufacturers, in what Zhang/Seasia made to appear to the U.S. manufacturers as domestic transactions. After Zhang/Seasia received the equipment at Seasia’s address in Huntington, New York, they exported the items while taking various additional actions designed to avoid export control scrutiny and detection by U.S. law enforcement, including, for example, concealing the type of equipment involved, its value, and/or ultimate destination. Zhang/Seasia used packaging that they deliberately re-labeled to identify falsely the items inside as, for example, low-value computer motherboards, which would not have required a BIS license to export to China. In addition, on at least one occasion, Zhang/Seasia did not export the equipment directly to China, but instead transshipped it to China via Hong Kong, while falsely stating or causing to be stated on export transaction documents that Hong Kong was the ultimate destination. Zhang/Seasia used Beijing Onsky Technologies, a.k.a. Beijing Lingtian, a Hong Kong company that, like Seasia, Zhang owned and controlled, to facilitate the transshipment of the equipment to China after it arrived in Hong Kong from the United States.
On or about January 23, 2010, April 6, 2010, and May 14, 2010, respectively, Trilogy International engaged in conduct prohibited by the Export Administration Regulations (“EAR”) by exporting items subject to the EAR and controlled on national security grounds to Russia without the required BIS export licenses.
The items involved were an explosives detector and a total of 115 analog-to-digital converters. The items were classified under Export Control Classification Numbers 1A004 and 3A001, respectively, controlled as indicated above on national security grounds, and valued in total at approximately $76,035. Each of the items required a license for export to Russia pursuant to Section 742.4 of the EAR.
Between on or about January 20,2010, and May 14,2010, Johnson caused, aided, and/or abetted three violations of the EAR, specifically, three exports from the United States to Russia of items subject to the EAR without the required BIS export licenses.
The items involved were an explosives detector and a total of 115 analog-to-digital converters, classified under Export Control Classification Numbers 1A004 and 3A001, respectively, controlled on national security grounds, and valued in total at approximately $76,035. Each of the items at issue required a BIS license for export to Russia pursuant to Section 742.4 of the EAR.
– Civil penalty of $100,000 against William Michael Johnson.
* Debarred: Both Trilogy International Associates, Inc. and William Michael Johnson are denied export privileges for a period of 10 years from the date of this Order, until 26 February 2028.
(Source: Commerce/BIS, 27 Nov 2017.) [Excerpts.]* Respondent: Pilot Air Freight LLC a/k/a Pilot Air Freight Corp. of Lima, PA.
* Charges: On one occasion, in or about February 2015, Pilot Air Freight LLC a/k/a Pilot Air Freight Corp. (“Pilot”) of Lima, PA, caused, aided, and/or abetted a violation by the Regulations by facilitating the attempted unlicensed export of items subject to the Regulations from the United States to IKAN Engineering Services (“IKAN”), an entity in Pakistan listed on BIS’s Entity List. The items included an ultrasonic mill cutting machine, which is classified under Export Control Classification Number (“ECCN”) 2B991 and controlled for Anti-Terrorism reasons, and related electronical equipment, designated as EAR99, and were valued in total at approximately $250,287.
– A civil monetary penalty in the amount of $175,000. The payment of $100,000 shall be made to the U.S. Commerce Department within 30 days of the order. Payment of the remaining $75,000 shall be suspended through March 31, 2020 and thereafter shall be waved, provided that during the probationary period under the Order: Pilot has timely paid $100,000 to the Department of Commerce; has otherwise complied with the provisions of the Settlement Agreement and this Order; and has committed no other violation of the Act, or any regulation, order, license or authorization issued thereunder.
– Pilot shall complete two external audits of its export compliance program.
* Date of Order: 21 Nov 2017.
– Civil penalty of $10,000, which shall be suspended for two-years and afterwards waived if no further violations are committed.
– Complete an external audit of its export control compliance program. The results of the audits, including any relevant supporting materials, shall be submitted to Commerce/BIS.
* Debarred: Not if the audit is completed and submitted as agreed.
* Date of Order: 11 January 2018.

References: § 764
 § 560
 § 746
 § 746
 § 744
 § 764
 § 764