Woman Indicted for Failure to File Electronic Export Information Forms

Posted by at 11:19 am on April 25, 2016
Category: BISChinaCriminal Penalties

Harbin Engineering University via http://english.hrbeu.edu.cn/skin/default/images/officer_r8_c61.jpg [Fair Use]
ABOVE: Harbin Engineering

Amin Yu bought things for Harbin Engineering University (“HEU”) in China — all EAR99 items, none of which required an export license. She listed an incorrect value for the items on documents that she gave to UPS, FedEx and various freight forwarders. As a result, none of them filed Export Electronic Information forms for the shipments. The federal government has now indicted Yu, accusing her of being a Chinese spy and indicting her for failure to file the required EEIs. This is the first and only indictment of anyone for failing to file EEIs for EAR99 items. It’s rather like accusing someone who put the wrong postage on a letter with being a terrorist.

The first count of the indictment (in case newspaper crime reporters get bored and don’t read the whole thing) is for failure to register as a foreign agent under the Foreign Agents Registration Act (“FARA”). This is catnip for reporters who quiver with excitement each and every time they can give their editors a story with the word “spy” in it. Even the once venerable Newsweek fell for this ploy, referring to Yu in its headline as a “Chinese Spy.”

These FARA counts are also, as we’ve seen before, a sure sign that the government has a lousy case that it can only win with a generous dollop of press-induced hysteria about the defendant.

The problem with these bogus FARA “spy” counts is that it is not illegal to buy stuff for foreign governments (or foreign government-run universities as was the case here.) A significant exclusion is set forth in section 3(d) of the act for certain “non-political” activities, including “engaging … in private and nonpolitical activities in furtherance of the bona fide trade or commerce of such foreign principal.” In other words, acting as a commercial agent for foreign governments, foreign companies and foreign individuals by buying stuff for them does not make the person engaged in that activity a foreign agent required to register under the act. (The requirement that the trade be bona fide is to prevent the foreign principal from trying to spread influence in the United States by having its agents buy items that it doesn’t need.) And when you read the indictment that is all that Yu did: she bought things for HEU.

As to the EEI-related counts, things are not much better with the government’s case. It appears that in some instances the EEIs weren’t filed because the amounts declared for the exported goods were too low. Whether this was anything other than an attempt to reduce Chinese import duties when the items arrived in China is unclear. In some instances, it is not clear at all why the forwarders and shipping companies did not file EEIs because the declared values where above the EEI exemption limit of $2500. The indictment also focuses on an instance where the shipping documents did not use Yu’s full name and another where the address of HEU was missing.

What appears to have gotten the DOJ all worked up here is that the items involved could be used for unmanned submersible vehicles. But so far the federal government has put no controls on these items, which at the moment are mostly being used for oceanography, deep-sea exploration, underwater oil prospecting, and meteorology. If the government doesn’t want the Chinese developing underwater submersibles with U.S. origin goods, it knows how to do it and, for some reason, hasn’t.

Photo Credit: Harbin Engineering University via http://english.hrbeu.edu.cn/skin/default/images/officer_r8_c61.jpg [Fair Use]


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Copyright © 2016 Clif Burns. All Rights Reserved.
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One Comment:

What a fascinating indictment.

Paragraph 41 looks pretty bad for Yu given that she listed 3 different line items (all with the same description) at a value of $2,499.99. My guess would be that Yu saw something on the waybill saying that items valued over $2,500 would require an EEI, and thus decided to split them up.

Paragraph 42 looks pretty bad for both the government and for UPS. Even if Yu did what is claimed in paragraph 42, UPS still should have filed an EEI, given that the items would almost certainly have had the same HTSUS number, and would have not qualified for the EEI exemption provided in 15 CFR 30.37(a).

The indictment mentions multiple times “YU failed to file any EEI with the U.S. government through the AES.” Now granted, you can’t make up a value for export, but what about the instances where the broker goofed? Should Yu have registered for and filed the EEI directly through AES Direct? Or in the instances where UPS should have filed, should she have known to have requested the ITN from UPS after EEI submission?

Then you have the USPPI allegations – “the U.S. Principal Party (USPPI) was listed as “Amin”, when in fact the USPPI was YU, acting through IFour International;” Yu and Amin are one in the same. Based on the indictment, it seems that IFour is the USPPI as the company in the PRC was wiring funds to an IFour bank account. So is the government claiming that IFour should have been listed as the USPPI? Or that Amin Yu should have used her complete full name?

Further they say that Yu listed an incomplete ultimate consignee (no address) and that the EIN was wrong (listed as 455507735FL). I would love to know what was wrong with the EIN. . . was Yu making up EINs? Did she accidentally put one too many “fives” in the number?

I bet that the government could find similar violations at 99% of exporting companies. Incorrect values listed, incorrect ultimate consignee types, incomplete consignee information, typo errors in EIN numbers. They could probably nab nearly every company for incorrect state of origin data elements, as it is the state where the goods begin their journey for export, not the U.S. state of export.

To your ultimate point, this obviously has to do with the destination country and type of goods being exported. I wonder if the U.S. would have indicted her had she been working for a South Korean University and all the other facts had remained the same?

Comment by Jeff on April 28th, 2016 @ 1:49 pm