Apr
15

Work by Chinese Grad Student Leads To Deemed Export Conviction

Posted by Clif Burns at 9:52 pm on April 15, 2008
Category: Criminal Penalties • Deemed Exports

Unmanned aerial vehicleDaniel Max Sherman, a former employee of Knoxville-based Atmospheric Glow Technologies, entered a guilty plea today in federal court to a conspiracy with a former University of Tennessee professor to provide controlled technical data to a Chinese student research assistant in violation of the Arms Export Control Act. AGT had given a subcontract relating to its research on a military drone aircraft to UT’s Plasma Sciences Laboratory, and the professor and the Chinese research assistant were working on the project.

Sherman’s plea hearing went a little off track when Sherman declined to admit to one of the essential elements of the crime which led to a little prompting — and a misstatement of the law — by the prosecutors:

Sherman indicated to [Judge] Varlan that although he was admitting guilt he maintains he was unaware of the provisions of the Arms Export Control Act that would have restricted the work to U.S. citizens only barring a special permitting process. However, [prosecuting attorney]Theodore noted that the law states a person violating the action either must know or should have known about the act’s requirements and Sherman’s claim of ignorance would not pass muster.

Sherman then conceded that point and formally entered his guilty plea.

The AECA’s requirement of willfulness as an element of a criminal charge is a requirement that the defendant knew that the export was illegal. It is not whether the defendant knew or should have known that the export was illegal. Increasingly, it seems, U.S. attorneys are finding the scienter requirement to be too pesky to bother with and are looking for novel ways to disregard it.

[Thanks to Mike Deal for alerting me to this story.]

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3 Comments:

  • Apparently, the AUSA is aware that he misrepresented the law. He told the New York Sun that case law in the 6th Circuit allowed the court to infer “willful blindness”. The transcript of the plea hearing isn’t available, yet, but the 16 page Information filed in Sherman’s case alleges no essential facts that would support a specific finding by the court of willful blindness. In fact, the only allegations supporting willfulness are that the SBIR contract that ultimately resulted contained standard DoD boilerplate that mentioned export controls and that one e-mail sent round before the contract suggested that the information was “AECA” controlled.

    Given that the SBIR contract involved patented technology that Dr. Roth invented before entering into the contract, it is also very questionable whether, and how much of the research involved was actually subject to restrictions or subject to the ITAR rather than the EAR. In fact, the Information filed by the government calls the contract a “Munitions Contract”, but later refers to it as an SBIR contract. SBIRs are rarely for the development of a specific weapons system and usually are more for the development of a concept or innovation.

    The exporting community and the academic community both need to demand an investigation by Justice’s Inspector General. This case has the potential to adversely affect both the economy and academic freedom. Its too important to regarded as a mere abberation.

    Comment by Mike Deal on April 18th, 2008 @ 11:22 am

  • Mike- I also spotted the NY Sun’s “deliberate ignorance” case law reference in the NYS, thanks for the amplifying information.

    You reference a 16 page information (document?) filed in the Sherman case. Is it web available or can it be otherwise obtained.

    Comment by David Brady on April 21st, 2008 @ 9:02 am

  • The Information (a pleading that initiates a criminal which is used instead of an indictment in cases where a negotiated plea is expected)is available directly from the Court in pdf format through the PACER on-line system for 8 cents a page.

    If you would like to email me at exportlaw@bellsouth.net I’ll send you a copy for free.

    I recommend that compliance professionals who are non-lawyers sign up for PACER because its often the only way to get a copy of an indictment, order or brief, and copies of indictments and informations are very useful in convincing management that a compliance program is in their best interest.

    Comment by Mike Deal on April 21st, 2008 @ 11:48 am

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