Archive for the ‘Arms Export’ Category


Jan

31

Russian Export Defendant Slapped on Wrist, Told to Leave U.S.


Posted by Clif Burns at 5:35 pm on January 31, 2014
Category: Arms ExportCriminal Penalties

By  Sgt. Scott M. Biscuiti [Public domain], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ADefense.gov_photo_essay_090329-M-7747B-015.jpgBack in November, this blog reported on the indictment of a Russian citizen, Roman Kvinikadze, on charges that he attempted to export military thermal imaging sights without the required State Department license. As we noted then, the indictment created a bit of a diplomatic row between the United States and Russia, with Russia claiming that federal agents knowingly provoked Kvinikadze to violate the law and then lured him into the United States to arrest him. The Russian pique was directed at statements by the undercover U.S. agent to Kvinikadze that the sights required an export license but that if the license was unavailable there were other ways he could ship the sights to Kvinikadze. Although these facts might not support the narrowly construed entrapment defense, they can easily been seen as grounds for a diplomatic contretemps.

Well, the Russian irritation seems to have been heard loud and clear in Washington. Last week, a federal judge sentenced Kvinikadze, who had entered a guilty plea, to time served and a $7500 fine. He also ordered Kvinikadze to leave the United States, something that Kvinikadze was no doubt happy to do with or without a judicial order requiring him to do so. Kvinikadze had been in custody for 147 days so time served was significantly less than would have been required under federal sentencing guidelines which would have specified a minimum sentence of 33 to 41 months. News reports stated that the prosecutor requested the reduced sentence, and the judge justified it by stating that “Kvinikadze may not have fully appreciated the potential damage to relations between the U.S. and Russia if the sights had fallen into wrong hands.”

When I reviewed the docket to see if I could find anything else to justify this lenient sentence, I discovered that the Presentence Report, the Presentence Report Recommendation and an Addendum to the Presentence Report were all sealed and unavailable for review. Although there are a number of reasons that this could be the case, including the possibility of the discussion of some extremely private matters involving Kvinikadze, my money is that these were sealed because they have a discussion of the diplomatic ramifications of the sentence, something that prosecutors and courts are loathe to reveal. So when Kvinikadze is safely back in Russia, I’m going to bet he sends an effusive thank you note to his BFF Vladimir Putin.

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Nov

11

From Russia with … Weapon Sights and a Diplomatic Row?


Posted by George Murphy at 5:54 pm on November 11, 2013
Category: Arms ExportCriminal PenaltiesDDTCUSML

By  Sgt. Scott M. Biscuiti [Public domain], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ADefense.gov_photo_essay_090329-M-7747B-015.jpg

Last week, a federal judge in Wyoming set trial for February of next year for Russian Roman Kvinikadze, who was arrested this August on charges that he attempted to export thermal imaging weapon sights without a required license from the U.S. State Department.

The story of Kvinikadze’s arrest began last year when he contacted an undercover Department of Homeland Security agent on the Chinese e-commerce site, Alibaba.com.  It is unclear from court documents what the DHS agent posted on Alibaba.com to attract Kvinikadze, but it was enough for Kvinikadze to introduce himself as an aspiring hunting store owner that wanted a quote for weapon sights.  According to the criminal complaint, Kvinikadze eventually traveled to a Las Vegas gun show where the DHS agent told him that the sights required a U.S. export license but “there were other ways to ship the weapon sights without a license.”  Kvinikadze apparently expressed continued interest and later went to meet the agent in Wyoming, where he was arrested.

According to Russian media on Friday, the Russian Foreign Ministry’s human rights commissioner described Kvinikadze’s arrest as a “kind of American law enforcement agency approach to Russian citizens [that] is becoming increasingly disrespectful of international law and bilateral agreements, including the 1999 agreement on mutual legal assistance in investigating crimes.”  He also reportedly described Kvinikadze as “being knowingly provoked to violate the law as he was lured into the United States [to be arrested].”

The Russian government appears to be intimating Kvinikadze’s entrapment defense at trial.  Although a successful entrapment defense is difficult and complex, Kvinikadze appears to have a better chance than previous foreign nationals engaging with undercover U.S. agents online.  In September, we discussed the arrest of Patrick Campbell, the foreign national arrested at JFK airport for, among other things, having yellowcake uranium in his luggage.  In that case, again beginning on Alibaba.com, Campbell responded to a DHS agent’s solicitation for yellowcake and informed the agent that he could “handle” any U.S. export restrictions that concerned the agent in shipping uranium to Iran.

In Kvinikadze’s case, critical facts are the reverse: Kvinikadze found the DHS agent purporting to be a seller and the DHS agent was the one who informed Kvinikadze of  a required U.S. export license and “ways” to avoid getting one.  The criminal complaint is, however, peppered with suggestions that Kvinikadze was a sophisticated buyer and was not lured, but rather conspired, to export the sights illegally.

What may be Kvinikadze’s best defense is the Russian government’s support.  The Russian human rights commissioner has reportedly also said that “[Kvinikadze’s] situation is being closely followed by the Russian Foreign Ministry,” and that after Kvinikadze’s arrest, “our consular workers got in touch with him and with the prison authorities in Nebraska where he is being held … We will continue providing consular-legal assistance to our compatriot.”

There are, of course, a host of reasons why U.S. law enforcement looks for foreign threats on foreign websites where activity threatening U.S. security interests is taking place.  However, how such operations are conducted as well as their frequency and targets have, as this case shows, diplomatic ramifications.

Based on the Russian government’s response, one has to wonder how the United States would respond if the weapon sights were looking the other way.  How Russia’s response to Kvinikadze affects U.S. law enforcement strategy remains to be seen.  In the meantime, if sites like Alibaba.com are open for undercover U.S. law enforcement, any U.S. business should be keenly aware that other countries are likely doing the same.

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Oct

31

Lessons in Spycraft: Don’t Try This at Home


Posted by Clif Burns at 6:50 pm on October 31, 2013
Category: Arms ExportCriminal PenaltiesDDTC

Source http://www.defenseimagery.mil/imagery.html#a=search&s=f-15&chk=6cff0&t=0&p=2&guid=76a6c050743c287abd63255e111c2a6e7a281d91 [Public Domaiin; work of federal employee]A New Jersey woman, Hannah Robert, was arraigned on Monday on charges that she exported ITAR-controlled technical drawings without a DDTC license in violation of the Arms Export Control Act. The drawings allegedly involved parts for the F-15, the Chinook helicopter and other military aircraft as well as nuclear submarines.

According to the DOJ press release, Ms. Robert used an unusual method of exporting the technical drawings to her overseas contact:

Starting in October 2010, Robert transmitted the military drawings for these parts to India by posting the technical data to the password-protected website of a Camden County, N.J., church where she was a volunteer web administrator. This was done without the knowledge of the church staff. Robert e-mailed R.P. the username and password to the church website so that R.P. could download the files from India. Through the course of the scheme, Robert uploaded thousands of technical drawings to the church website for R.P. to download in India.

A key element in any export prosecution is scienter, that is, proof that the defendant knew that his or her conduct was illegal. If these allegations are true, the prosecution is not going to have a hard time in establishing that Ms. Robert knew that she should not have sent these drawings out of the country without a license.

For espionage aficionados, this technique is known as a dead drop and in the Internet era dead drops have been done on such places as draft folders of shared Gmail accounts (viz., the love letters of General Petraeus and Paula Broadwell). It’s probably safe to say that churches, whether brick and mortar or their virtual locations, are not the best location for a dead drop. The DOJ press release doesn’t reveal how Ms. Robert got nabbed but I have a pretty clear picture of some shocked vicar stumbling on these drawings late one night and calling the feds.

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Sep

12

I’m Going to Disney World!


Posted by Clif Burns at 11:46 pm on September 12, 2013
Category: Arms ExportCriminal Penalties

You may think of “I’m Going to Disney World!” as an iconic slogan from a Superbowl ad, but in many cases they are instead the famous last words of foreign export defendants. Consider Sergei Baltutski, a Belarusian, who said this last April before taking his family on a trip to Disney World. Problem is, Mr. Baltutski had been having fellow Belarusians in the United States ship to him in Belarus military night vision purchased from eBay, and he got nabbed at the airport on his way to see Mickey and friends. Worst. Vacation. Ever.

Baltutski pleaded guilty, and his sentencing hearing took place recently in Philadelphia. According to his lawyer, the items, approximately $700,000 worth of night vision, were simply used by Belarusian hunters to bag wild boar which, apparently, mostly run at night. Who knew there were that many wild boar, and that many hunters, in Belarus? The sentencing hearing has been deferred a few weeks to permit Baltutski’s lawyers to prepare their boar argument to counter the prosecution’s request for higher sentences based on the potential harm to national security posed by Baltutski’s exports.

One interesting detail, provided in this news report, is that Baltutski’s accomplices sent some of the night vision to him through the Belarusian diplomatic pouch. Say what? The Belarusians are permitting illegal exports of defense articles via their diplomatic pouch? It seems to me that if the government is serious about the threat of these exports, somebody needs to have a long talk with the folks at the Belarusian Embassy. The Vienna Convention probably prohibits prosecuting anyone in the Embassy, but it doesn’t prevent putting the folks involved on a plane back to Belarus

Baltutski’s case is missing from Pacer, but here’s the indictment of his co-conspirators.

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Aug

9

Voluntary Disclosure to DDTC Leads to $8 Million Fine


Posted by Clif Burns at 3:14 pm on August 9, 2013
Category: Arms ExportDDTC

Aeroflex HQ source: http://www.aeroflex.com/ams/img/content/Plainview_Facility_sm.jpg [fair use]A press release published today on the State Department website revealed that the Directorate of Defense Trade Controls exacted a consent decree from Aeroflex in Plainview, NY, under which, among other things, Aeroflex will pay $8 million in fines as a result of alleged violations of the International Traffic in Arms Regulations. Half of that amount will be suspended if DDTC approves various compliance expenditures by the company including the retaining of a special compliance official to conduct two internal audits.

The consent agreement and related documents have not yet been posted on the DDTC website so full details of what got Aeroflex into hot water are not immediately apparent. However, the press release indicates that “nearly all” of the violations were voluntarily disclosed by Aeroflex to DDTC, making this a drastic departure from the way DDTC normally treats voluntary disclosures. The press release also states that the exports at issue largely resulted “from the failure to properly establish jurisdiction over defense articles and technical data,” suggesting that Aeroflex did not have internal procedures to classify its products before exporting them.

One statement in the press release, however, is particularly interesting. The State Department accused Aeroflex of “causing unauthorized exports of ITAR-controlled microelectronics by domestic purchasers.” I am not at all sure what that means but my guess is that it may mean that Aeroflex “caused” unauthorized exports by domestic purchasers by selling them goods without identifying them as ITAR controlled, probably because Aeroflex had not classified the items itself and did not itself know that they were ITAR-controlled. If this is the case, domestic producers of defense articles best run for cover since a vast number of them sell ITAR-controlled products to domestic purchasers without making specific disclosures that the items are export controlled. Now companies should be concerned that the failure to make such a disclosure to domestic purchasers can lead to substantial fines.

We will have a better idea of what is involved here once the underlying documents are released, and I will post on them once that happens.

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