Two Men in China Indicted by U.S. for Export Violations
Posted by Clif Burns at 8:42 pm on December 18, 2012
Category: BIS • Criminal Penalties
An FBI press release today announced the indictment of two Chinese citizens, both of whom are now in China and both of whom were in China at the time of the alleged criminal activity, for efforts to export programmable logic devices from the United States to China. The devices in question, presumably field programmable logic devices controlled under ECCN 3A001.a.2, were manufactured by Lattice Semiconductor Corporation of Hillsboro, Oregon.
One of the defendants, Wan Yi Luan, adopted the presidential-sounding alias Nicholas Bush and attempted to have the items shipped to the New York address of a freight forwarder, falsely representing that this was the address of a New York company that was supposedly the customer. It’s not too hard to figure out what went wrong with this plan.
Of course, if Yuan wasn’t smart enough to come up with a better plan, he was smart enough to stay out of the United States, which is why the FBI press release says this:
“The Department of Justice is committed to finding, charging, and prosecuting anyone who attempts to illegally procure American technology,” said Amanda Marshall, U.S. Attorney for the District of Oregon. “Even if we cannot arrest them overseas, we will seek to forfeit any assets we find in the United States.”
I think it is safe to say that the Chinese probably won’t permit us to arrest or to extradite Yuan. But all is not lost. Apparently, BIS and the FBI were able to seize $414,000 sent by Yuan as down payments for the PLDs.
We’re From The Government and We’re (Not) Here to Help You
Posted by Clif Burns at 5:50 pm on December 11, 2012
The Bureau of Industry and Security (“BIS”) recently released settlement documents under which the agency imposed a $23,000 fine on Capintec, Inc., for an unlicensed export of an EAR99 nuclear dose calibrator worth $5,120 dollars to Pakistan. The export required a license because it allegedly was sent to the Pakistan Atomic Energy Commission, which is listed on BIS’s Entity List.
The charging documents make a big deal about an “outreach” visit paid to Capintec in which BIS agents supposedly
discussed with Capintec the need to screen all parties to an export transaction against, inter alia, BIS’s Entity List to determine whether an export license was required.
Although this was not used to add a charge against Capintec for exporting “with knowledge,” it does illustrate that there are good reasons why companies might want to schedule these meetings with their lawyers present since the content of the meetings is often used by BIS in subsequent penalty proceedings.
Another thing bears comment here. The item involved is used in nuclear medicine to calibrate doses used, for example, to provide radiation treatment to cancer patients. The PAEC is in charge of all nuclear medicine in Pakistan and runs 14 hospitals in 12 cities providing treatment to cancer patients. It would surprise me if the purchaser of these medical devices was the PAEC and not one of its hospitals instead. None of these hospitals are mentioned or referenced on the Entity List, and this might well have been the reason that the item was shipped by Capintec without a license even if it checked the list. Of course, there’s not enough information in the charging documents to determine the exact addressee of the export, so it’s impossible to tell whether this was the case or not.
The safest course for exporters is to exercise caution in exporting anything relating to nuclear medicine to Pakistan and to apply for a license in all cases. There is a presumption of approval for export licenses for EAR99 items to PAEC, so a license request will likely be granted easily and promptly.
Call Kevin Wolf
Posted by Clif Burns at 4:57 pm on November 16, 2012
ABOVE: Kevin Wolf
Do you want to talk to an important official at the Bureau of Industry and Security about export reform? Well, here’s your chance. BIS is resuming its weekly teleconferences with Kevin Wolf, the Assistant Secretary of Commerce, on December 12, 2012, at 2:30 p.m. EST. The dial-in number for the conference calls is: 1-888-455-8218 and the participant code: 6514196. Callers should dial in 10 minutes early.
These calls will occur weekly on Wednesdays (except for December 26 when I hope the Assistant Secretary and this blog’s readers will all be spending a well-deserved Christmas vacation at home with family and friends). The purpose of these calls is to provide information on export control reform initiatives and to assist parties in preparing comments in pending rulemaking proceedings related to export reform.
There’s only one small catch: Questions for Kevin should be sent in advance of the call to firstname.lastname@example.org with a subject line of “teleconference questions.” So, if you were planning to ask Mr. Wolf about his thoughts about what will happen in the next season of “Mad Men” or some other topic of burning, but non-export, interest, don’t bother to push the send button. I have it on good authority that public comment on export control reform is both wanted and valued by BIS, so don’t pass up this opportunity.
Voluntary Disclosure Leads To Large Fine
Posted by Clif Burns at 2:17 pm on November 9, 2012
Illinois-based Littlefuse, Inc., which, not surprisingly, makes fuses, filed a voluntary disclosure with the Bureau of Industry and Security (“BIS”) relating to 37 unlicensed exports, worth $90,017.96, to the Philippines (presumably its own manufacturing facility there.) In return for its efforts, BIS wrangled an agreement from the company to pay a $180,000 fine. Yes, I know that BIS could have fined Littlefuse 100 Billion Dollars (more accurately, 9.25 million dollars, at $250,000 per export), but twice the value of the exports seems exorbitant where there is no evidence that Littlefuse knew of and intentionally ignored the license requirement.
Interestingly, the charging documents accuse Littlefuse of exporting a “liquid crystal polymer” classified as ECCN 1C008.b to the Philippines. Unfortunately, the ECCN in question only controls “liquid crystal copolymers.” “What’s a little ‘co’ among friends?” you may ask. Polymer, copolymer, schmopolymer. Actually, there is a difference. A copolymer is “a polymer derived from two (or more) monomeric species, as opposed to a homopolymer where only one monomer is used.” So, whereas all copolymers are polymers, not all polymers are copolymers. In other words, exporting a “liquid crystal polymer” is not necessarily a violation of the rules.
BIS expects exporters to have sufficient sophistication to understand and apply the technical terminology of the Commerce Control List with substantial penalties imposed for failure to do so. That is not such a reasonable expectation when the agency itself appears not to understand the relevant terminology used by its own control list.
T Minus 180 and Counting
Posted by Clif Burns at 5:17 pm on November 7, 2012
I suppose it was inevitable. The Bureau of Industry and Security (“BIS”) today announced a proposed rule that would require that a final voluntary disclosure be filed within 180 days after the filing of the initial notification. Currently there is no time limit imposed during which the final disclosure must be filed after the initial notification.
The proposed rule would allow an extension to be granted upon a showing that “more than 180 days is reasonably needed to complete the narrative account.” Examples given of circumstances that might justify an extension include mass layoffs (gee, thanks!), bankruptcy (dead companies don’t talk) and delays in obtaining BIS classification decisions necessary to the final disclosure (imagine that!).
To be fair, it does seem that 180 days should in most cases be enough time to conduct the necessary internal investigation and file the final voluntary disclosure. Currently, the Department of State imposes a much shorter deadline — 60 days — between the filing of the initial notification and the final voluntary disclosure. Even so, I can’t resist pointing out that this is another example of an agency that imposes deadlines on the people it regulates but imposes no such deadlines upon itself. After the final voluntary disclosure is filed, BIS can take as much time as it wants to provide a decision.
Comments on the proposed rule are requested by January 7, 2013.