Archive for the ‘Criminal Penalties’ Category



US Drops Charges Against Prof Accused of Emailing While Chinese-American

Posted by at 6:42 pm on September 13, 2015
Category: Criminal Penalties

Prof. Xiaoxing Xi via [Fair Use]
ABOVE: Dr. Xiaoxing Xi

In May of this year, federal agents raided the home of a Chinese-American physics professor, Dr. Xiaoxing Xi,  and dragged him from his home in handcuffs before his young daughters on charges that he emailed to a colleague in China design schematics for a pocket heater, a device used in superconductor research, despite a written agreement not to share such information. Temple University, where Dr. Xi taught, unceremoniously stripped him of his title of Chairman of the Physics Department, put him on administrative leave and restricted his communications with others at the university.

The DOJ shortly afterwards sent out an overheated press release, noting, for some reason, that Professor Xi, who is a naturalized U.S. citizen, was a “native of the People’s Republic of China,” apparently based on the heretofore unknown jurisprudential principal in criminal trials that defendants are innocent until proven Chinese.

Last Friday the government dropped all charges against Professor Xi, alluding obliquely in the court papers that, after the indictment, unspecified “additional information came to the attention of the government.” According to this New York Times article, the unspecified information was that the design schematics were not for the device that the government thought they were. More bluntly, the government was too stupid to understand what the designs were for, got the designs for another device confused with the one Professor Xi had agreed not to share, and then tried to wreck his life. Oh, and did the DOJ promptly issue a press release admitting its mistake? Of course not. Are you crazy? They apparently did not even tell Professor Xi they were sorry.

Dr. Xi said this to the New York Times:

I don’t expect them to understand everything I do. … But the fact that they don’t consult with experts and then charge me? Put my family through all this? Damage my reputation? They shouldn’t do this. This is not a joke. This is not a game.

Dr. Xi’s lawyer, according to the Times, went further and suggested that the prosecution targeted Dr. Xi because he was Chinese.

If he was Canadian-American or French-American, or he was from the U.K., would this have ever even got on the government’s radar? I don’t think so

Of course not. The DOJ press release which notes that Xi was born in China makes that clear. Apparently the folks at DOJ don’t think that they are bound either by actual science or by federal laws prohibiting discrimination based on national origin.


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Russian Export Case Larded with Bogus Spying Charges: Part 2

Posted by at 9:10 pm on September 10, 2015
Category: Criminal Penalties

Alexander Fishenko
ABOVE: Alexander Fishenko

Almost two years ago, this blog reported on the charges against Alexander Fishenko who, among other things, was accused of shipping various USML and CCL items to the Russian government without a license. Yesterday, according to this DOJ press release, Fishenko pleaded guilty to all the charges against him.

These charges included charges that Fishenko failed to register under the Foreign Agents Registration Act, a charge calculated to elicit a frenzy of headlines about the charges against a “Russian Spy.” And the press predictably took the bait then and took the bait again in reporting the plea agreement. The nominally respectable Bloomberg News headlined the plea deal as “Military Technology Exporter Admits to Spying for Moscow.” Even the previously mentioned DOJ press release only called Fishenko a “Russian Agent.”

The statute involved is the Foreign Agents Registration Act, which requires that any person in the United States acting on behalf of any foreign person, not just foreign governments or spymasters, must register with the Department of Justice. Section 1(c)(1) of the Act, 22 U.S.C. § 611(c)(1), defines the precise activities that trigger the registration requirement, including political activities for a foreign person or government, acting as a publicity agent for a foreign government or person, dispenses money on behalf of the foreign government or person, or representation of the foreign government or person before a government agency.

Under this definition, Fishenko might, I suppose, be said to have dispensed money on behalf of his Russian buyers in buying the items that were exported to them. The problem with this theory of liability under the act is section 3(d) of the Act which exempts from the registration requirements “private and nonpolitical activities in furtherance of the bona fide trade or commerce of such foreign principal.” Because the act covers acting on behalf of foreign governments and private foreign entities, every exporter would be a “foreign agent” or “spy” without this exemption.

As this blog noted in the original post, the only activity that Fishenko was accused of in engaging in for the Russian government was buying stuff. The fact that it was exported without a license does not prevent it from being bona fide trade. The bona fide requirement is designed to prevent foreign persons or governments from spreading influence simply by buying things that they don’t actually need. And again, because the act covers not just foreign governments but all foreign entities, if lacking a license for the export prevented the purchase for the foreign person from being bona fide trade, then all persons guilty of illegal exports are also necessarily “spies” unless they register under FARA.

Of course, since Fishenko pleaded guilty, we will never know how a court would come out on these arguments. If, as I suspect, the FARA charges were simply designed to poison the well with spy charges, the government might not have even bothered to press those charges had it ultimately been forced to go to trial.

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Don’t Believe Everything You Read in the Newspaper

Posted by at 11:32 am on July 27, 2015
Category: BISCriminal PenaltiesIran Sanctions

Republian Herald HQ via Google Maps [Fair Use]

From the Republican Herald (Pottsvile, PA) story on a guilty plea by Falcon Instrumentation and Machinery FZE in connection with an attempted shipment by Pennsylvania-based Hetran, Inc. of a bar peeling machine to Iran:

Federal prosecutors allege the machine, valued at more than $800,000 and weighing more than 50,000 pounds, has both military and civilian uses, which meant Hetran could not ship it to Iran without obtaining a license from the U.S. government. The machine is used in the production of high-grade steel, which is used in making automobiles and aircraft parts, according to prosecutors.

As astute readers of this blog will no doubt already know, U.S. companies like Hetran can’t ship anything at all (including EAR99 items) to Iran without a license or an applicable exception. But before we jump down the throat of a poor reporter in Pottsville, let’s think about what likely happened. In doing that, realize first that local reporters like DOJ press releases more than cats love catnip. Just rewrite it a little and push send and the day’s work is done.

And, indeed, as suspected there is a DoJ press release and it says this:

Under U.S. law and regulations, American companies are forbidden to ship “dual use” items (items with civilian as well as military or proliferation applications), such as the peeler, to Iran without first obtaining a license from the U.S. Government.

Sigh. I realize the export law and economic sanctions are a somewhat complicated area of law, but it does not seem unreasonable to suggest that the government employees who are charged with sending people to jail for export violations at least make an effort to understand the laws that they enforce.

[Note: I’m on vacation this week, so this is the last post for this week; normal posting resumes next week.]

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That’s His Story and He’s Sticking to It

Posted by at 5:47 pm on July 11, 2015
Category: Agricultural ExportsCriminal Penalties

Midamar Halal Pizza via [Fair Use]Back in 2014, this blog reported here and here on the indictment of Midamar Corporation for exporting non-halal meat to Malaysia and Indonesia, both countries which forbid the importation of non-halal meat products. I expressed some concern that the theory of the case turned the Department of Justice into the Islamic Religious Police given the extent to which the indictment depended on allegations that the slaughterhouse used by Midamar failed to comply with halal requirements by, e.g., using non-Muslims to slaughter animals.

The case went to the jury last Friday and it appears from local press reports (here and here) that the theory of the indictment has been narrowed. The case seems to have shifted away from the claim that the exported meat was not halal but rather that Midamar obtained meat from a slaughterhouse that had not been approved by Malaysia or Indonesia and put the number of a slaughterhouse approved by the two countries on the the USDA Food Safety Inspection Service Form 9060-6 required to accompany the export. (A spokesman for Midamar told this blog that the warehouse used by Midamar was, in fact, complying with halal requirements.)

The defense’s response to this theory is that the mislabeling was not a criminal act. The defendant, William Aossey

testified Thursday that changing the labels and documents, which are required under law for halal beef products, isn’t a criminal offense.

“It’s a minor labeling infraction, nothing criminal about it,” Aossey said told jurors.

He admitted to changing the establishment number belonging to PM Beef in Windom, Minn., to another number belonging to J.F. O’Neill Packing Co. in Omaha, Neb., because PM wasn’t approved to export beef to Malaysia and Indonesia during the years 2007 to 2010.

At first, this seems to be pretty much game over for the defense, given the defendant’s apparent admission in open court that he faked the establishment numbers on the USDA Export Certificate. Of course, Aossey admitted changing the numbers because the evidence on that count appears to have been overwhelming. The strategy of the defense, as set forth in its motion to dismiss the indictment, is that the USDA has exclusive authority over meat misbranding and false statements on USDA export certificates. Moreover, the defense argued this exclusive jurisdiction extends to prevent prosecution for such acts under 18 U.S.C. § 1001 ,a/k/a the “Martha Stewart” law, which criminalizes false statements made to federal officers and agencies.

The trial judge was having none of this and denied Aossey’s motion to dismiss. So, the defense ploy here is to hope for jury nullification and, if that doesn’t work, set up grounds for an appeal.

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The Ostriches and the Kookaburra: A Fable for Our Time

Posted by at 8:38 am on June 19, 2015
Category: BISCriminal Penalties

Ostrich, Wainstalls by James Preston [CC-BY-SA-2.0 (], via Flickr[cropped]

Two austere ostriches, Osgood and Osbad, who lived near an old gum tree somewhere in the Australian outback, ran a successful business buying cattle prods made by Cow Poke, Inc., located in Kankakee, Illinois, and selling them to cattle farmers in Australia. One day they received an order from the kookaburra who lived in their old gum tree for one of their cattle prods. He even offered cash in advance and said that he would have many other orders in the future.

Osgood looked quizically at the kookaburra and wondered why a kookaburra might need a cattle prod, but decided not to ask. As it was an unusually warm afternoon, he decided to cool off by burying his head in the sand.

Osbad, dreaming of future orders and hoping to buy a bus trip to Perth for a holiday weekend, asked the kookaburra to hand over the money and promised to bring him a cattle prod right after he paid the money, which he did.

“Don’t you wonder,” said the kookaburra, “what on earth I could possibly do with a cattle prod?”

“No!” said Osbad, “I DO NOT!! It’s quite hot and I think I’ll join my mate Osgood and cool off by burying my head in the sand.”

“Actually,” said the kookaburra, “I’m selling them to my customers in Iran,” but by the time he had said the word “Iran,” Osbad’s head was completely covered with sand and he couldn’t hear a word that the kookaburra was saying.

When the Cow Poke Cattle Prods were discovered in Iran, investigators for the Bureau of Industry and Security (“BIS”) traced them back to Osgood and Osbad. The Australians served a provisional arrest warrant on the two ostriches who were subsequently extradited to the United States for trial. Once the jurors heard that Osgood and Osbad buried their heads in the sand, it was all over for poor birds, and they were convicted and sentenced to 6 years in a maximum security prison.

On appeal to the Seventh Circuit, Judge Posner upheld the conviction of Osbad and reversed the conviction of Osgood. He noted

There is no evidence that suspecting he might be [helping the kookaburra sell cattle prods to Iran, Osgood] took active steps to avoid having his suspicions confirmed. Suppose [the kookaburra] had said to him “let me tell you [where the cattle prods are really going],” and he had replied: “I don’t want to know.” That would be ostrich behavior (mythical ostrich behavior—ostriches do not bury their heads in the sand when frightened; if they did, they would asphyxiate themselves). An ostrich instruction should not be given unless there is evidence that the defendant engaged in behavior that could reasonably be interpreted as having been intended to shield him from confirmation of his suspicion that he was involved in criminal activity. [This is exactly what Osbad did, which is why we reverse for Osgood and uphold the conviction for Osbad.]

Osbad remained in maximum security prison, while Osgood was allowed to return to the outback in Australia. On his return, Osgood found a letter from BIS indicating that it had entered a thirty-year export denial order and fined him $250,000 for the sale of the cattle prods to Iran, noting that while ignoring red flags, without more, might save you from jail, it would not save you from the wrath of BIS.

Morale: If you’re going to bury your head in the sand, do it before the kookaburra sings.

The Seventh Circuit opinion in United States v. Macias, which I adapted here, makes clear that simply ignoring red flags is not enough to support the criminal intent necessary for  a conviction. The failure to engage in further due diligence in the face of red flags is not, in Judge Posner’s view, sufficient. Instead, there must be some “active avoidance” of learning the facts that the red flags suggest may be probable.  Another example of active avoidance given in the opinion involves a hypothetical situation where a landlord, fearing he has rented his property to drug dealers, changes his normal commuting route to avoid driving by the house, fearing he might see drug activity if he did.  The “active” in the “avoidance” here is changing the route.

A fuller and more serious discussion of United States v. Macias, written by my colleague Mark Srere and me, can be found here.

[Apologies to James Thurber.]

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