Opinion ID: 619535
Heading Depth: 2
Heading Rank: 1

Heading: The Jammers, the Prosecution of Wallach, and the Stipulation

Text: Wallach, a former Israeli military officer who resides in Israel, was the majority shareholder, CEO, and chief engineer of Wireless Avionics (Wireless), an Israeli electronics company that made and sold, inter alia, components for devices capable of interfering with the electronic signals used to detonate improvised explosive devices (IEDs). These interference devicescalled jammersare also capable of disabling other electronic communications equipment, such as that used by the armed forces of the United States and the North Atlantic Treaty Organization (NATO). The Arms Export Control Act, 22 U.S.C. § 2751 et seq., gives the President of the United States authority to control the import and the export of defense articles[,]. . . to designate those items which shall be considered as defense articles[,] . . . and to promulgate regulations for the import and export of such articles. 22 U.S.C. § 2778(a)(1). Items so designated constitute the United States Munitions List, id. Authority to designate items as defense articles for such a list (the USML) has been delegated to the State Department, see 22 C.F.R. § 120.1(a), which has determined that an article may be designated a defense article if it: (a) Is specifically designed, developed, configured, adapted, or modified for a military application, and (i) Does not have predominant civil applications, and (ii) Does not have performance equivalent (defined by form, fit and function) to those of an article or service used for civil applications; or (b) Is specifically designed, developed, configured, adapted, or modified for a military application, and has significant military or intelligence applicability such that control under this subchapter is necessary, 22 C.F.R. § 120.3(a)-(b). Any individual or entityother than an officer or employee of the United States government in his or her official capacitywho is in the business of manufacturing, exporting, or importing any defense articles is required to register with the State Department, 22 U.S.C. § 2778(b)(1)(A)(i); and items listed on the USML may not lawfully be exported from or imported into the United States without a license issued by the State Department's Directorate of Defense Trade Controls (DDTC), see id. § 2778(b)(2); 22 C.F.R. § 120.1(b)(2)(i). Any willful violation of § 2778 or of any rule or regulation issued thereunder is a felony, the penalty for which, in 2009, was imprisonment for up to 10 years and/or a fine of up to $1,000,000. See 22 U.S.C. § 2778(c) (2006).
On March 13, 2009, Wallach was arrested by agents of the Department of Homeland Security, Immigration and Customs Enforcement (ICE), and charged with attempting and conspiring to export items listed on the USML, to wit the Jammers, without a license or other written authorization from the State Department, in violation of 22 U.S.C. § 2778(b)(2) and 18 U.S.C. § 371. The criminal complaint, filed against him in the United States District Court for the Southern District of New York (March 2009 Complaint or Criminal Complaint), alleged that Wallach and Wireless had provided components to a company in New Jersey (NJ Company) for the manufacture of the Jammers and that the Jammers were expected to be sold to NATO, which had signed a purchase order for the Jammers in February 2008. ( See March 2009 Complaint ¶¶ 7(b)-(c).) It alleged that DDTC, in March 2008, had denied the NJ Company an export license for the Jammers on the ground that they could interfere with existing equipment being used by United States forces in Afghanistan. ( See id. ¶ 7(b).) The Criminal Complaint alleged that, after DDTC refused to grant the necessary export license to the NJ Company, Wallach urged the NJ Company's ownerwho was an ICE confidential source (CS)to transfer the Jammers to Wallach's possession so that Wallach could sell them to a third party outside of the United States. ( See id. ¶¶ 3(a), 7, 7(c).) It alleged that Wallach told the CS that Wallach was willing to sell the MILJAM-350 IED Jammers to any third party who was willing to buy them. ( Id. ¶ 7(c).) The Criminal Complaint alleged that the CS provided ICE with documents relating to his business dealings with Wallach and allowed ICE to record telephone conversations with Wallach. On March 13, 2009, the CS, in New York City, had several recorded conversations with Wallach in preparation for the finalization of Wallach's purchase of the Jammers. Later that day, Wallach, the CS, and an ICE undercover agent met at the NJ Company's warehouse. Wallach stated that he wanted to ship the Jammers first to a United States locationwhich he refused to disclosewhere he and another person would disassemble them for shipment of the components to Israel and Turkey, where the Jammers could be reassembled. ( See March 2009 Complaint ¶ 8(b).) The Criminal Complaint alleged that: c. The CS advised WALLACH that he should get an export license before shipping the MILJAM-350 IED Jammers overseas, and discussed the fact that an export license required the exporter to designate an end user. WALLACH proposed that he fabricate the name of the end user or simply mislabel the equipment as a civilian product. d. WALLACH advised that the end users of the twenty MILJAM-350 IED Jammers in question might be in Iraq, and that he had numerous customers in the Middle East region. The CS asked WALLACH why he did not get an export license. WALLACH responded that he could not get one. e. WALLACH asked the CS why he (the CS) did not sell the MILJAM-350 IED Jammers to overseas customers. The CS responded that he (the CS) could not get an export license. WALLACH then stated that this was why his customers came to him for the MILJAM-350 IED Jammers. (March 2009 Complaint ¶¶ 8(c)-(e).) After the meetings on March 13 between Wallach and the CS, Wallach was arrested. Several days later, ICE agents seized the Jammers from the NJ Company's warehouse.
On July 9, 2009, on motion of the government, the Criminal Complaint against Wallach was dismissed, without prejudice. On July 10, 2009, Wallach and Wireless entered into an agreement with the government that provided, in pertinent part, as follows: WHEREAS, on or about March 13, 2009, Alon Wallach (Wallach) was arrested by special agents of the United States Department of Homeland Security, Immigration and Customs Enforcement (ICE), and thereafter charged in a criminal complaint, United States v. Alon Wallach, 09 Mag. 698 (S.D.N.Y.) (Criminal Complaint), which was dismissed without prejudice on or about July 9, 2009; WHEREAS, on or about March 19, 2009, twenty MILJAM-350 IED Jammers (the Jammers) were obtained by ICE from the New Jersey premises of Integrated Security Solutions, LLC, in connection with the investigation that gave rise to the Criminal Complaint; WHEREAS, Wallach is the Chief Executive Officer and majority owner of Wireless Avionics, Ltd.; WHEREAS, Wallach and Wireless Avionics represent and agree that Wallach and Wireless Avionics are the sole owners of the Jammers by virtue of the Assignment and Release Agreement dated March 13, 2009, entered into between Integrated Security Solutions, LLC and Wireless Avionics. . . . WHEREAS, Wallach and Wireless Avionics agree that they will not contest the forfeiture of the Jammers to the United States. IT IS HEREBY STIPULATED AND AGREED: 1. Wallach and Wireless Avionics, Ltd., agree not to contest the administrative or judicial forfeiture of the Jammers to the United States and will not assist a third party in asserting a claim to the Jammers in any forfeiture proceeding. 2. Wallach and Wireless Avionics are hereby barred from asserting any claim against the Government, ICE agents and employees of the Government and ICE in connection with Wallach's arrest on March 13, 2009, the acquisition and/or possession of the Jammers, including but not limited to any claim that there was no probable cause for his arrest and/or no proper basis for the acquisition of the Jammers by ICE. 3. Wallach and Wireless Avionics further agree to hold harmless the Government, ICE and any and all of the Government's ICE's agents and employees from any and all claims arising from any acts, incidents, or occurrences in connection with the acquisition and/or possession of the Jammers, including but not limited to any third-party claims of ownership of the Jammers. 4. This Stipulation and Release constitutes the complete agreement between the parties hereto and may not be amended except by written consent thereof. (Stipulation and Release dated July 10, 2009 (Stipulation), WHEREAS ¶¶ and ¶¶ 1-4 (emphases added).) The Stipulation was executed by Wallach on behalf of himself and Wireless and by Wallach's defense attorney.