Archive for the ‘Criminal Penalties’ Category


Oct

28

U.S. Indicts Exporter for Failing to Meet Halal Meat Standards


Posted by at 7:59 pm on October 28, 2014
Category: Agricultural ExportsCriminal Penalties

Midamar Halal Pizza via http://www.midamarhalal.com/Product/Pizza/Halal-Pizza/166/Halal-Beef-Pepperoni-Pizza-12in-bake-Rise.aspx [Fair Use]Who knew that the Islamic Religious Police had an office at Main Justice? You might justifiably wonder that reading this indictment in which an Iowa man, William B. Aossey Jr., is accused of violating federal law by exporting meat from a slaughterhouse not certified as halal to Indonesia and Malaysia, both Muslim countries where the importation of non-Halal meat is forbidden by law. Aossey is the owner of Midamar Corporation, a leading producer and exporter of Halal meat and food products.

Actually, the prosecutors get to this odd result by a familiar route, namely accusing the defendant of making false statements to the federal government in connection with the export. We saw this in the warm chicken case which we reported on back in 2012. In order to encourage U.S. exports, the U.S. Department of Agriculture agrees to certify to foreign governments that agricultural products exported from the United States comply with the importing country’s requirements. As part of that process, the exporter fills out a USDA Food Safety Inspection Service Form 9060-6, which is an application for the required export certificate. In that application, just above the signature line, is the following sentence:

Under penalty of law, I certify that the product covered by this application for export meets the inspection requirements for the country of destination.

If the importing country requires that the animal be slaughtered by a Muslim in a particular manner while invoking the name of the deity and that has not happened, then the statement on the Form 9060-6 is false and a violation of 21 U.S.C. § 611(b)(5), which prohibits false statements in applications for export certificates. Violation of that provision is made criminal by 21 U.S.C. § 676.  The indictment alleges that the defendant’s company represented in the export certificate that the meat came from a Halal-certified slaughterhouse when in fact it came from another, non-Halal slaughterhouse.

It is not quite clear why the charge was under 21 U.S.C.  § 611(b)(5), which provides for a maximum jail term of three years, rather than under 18 U.S.C. § 1001, which penalizes false statements to federal agencies and provides for a maximum jail term of five years. Perhaps it was because the defendant was recently appointed by the U.S. Secretary of Commerce to the position of Vice Chair of the Iowa District Export Council, a fact oddly omitted from the indictment. I suppose that’s worth cutting the guy just a little slack.

UPDATE: We received the following communication from Midamar:

In your article “U.S. Indicts Exporter for Failing to Meet Halal Meat Standards” in your Export Law Blog you state “You might justifiably wonder that reading this indictment in which an Iowa man, William B. Aossey Jr., is accused of violating federal law by exporting non-Halal meat to Indonesia and Malaysia…” Midamar is a company that has built its brand on halal integrity and would never falsely label any product as Halal if it was not Halal. Bill Aossey is not accused of exporting non halal meat to SE Asian countries in violation of federal law. Please see Midamar Statement http://www.midamar.com/News/20141025/49/Midamar-Statement-on-Indictment-of-Founder-Bill-Aossey.aspx and also see: http://youtu.be/sAT7LJKEYsU for some history on Bill Aossey and Midamar.

The indictment alleges that Aossey certified that meat came from a slaughterhouse that was Halal-certified when in fact, it is alleged, it came from another slaughterhouse that was not Halal-certified. The point being made by Midamar’s statement above appears to be that the meat was still Halal even if it came from a slaughterhouse that was not Halal-certified. We have slightly amended the sentence in question to read that Mr. Aossey is accused of “of violating federal law by exporting meat from a slaughterhouse not certified as halal to Indonesia and Malaysia.”

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Oct

20

Did Ron Jeremy Save This Export Defendant From Jail?


Posted by at 6:31 pm on October 20, 2014
Category: BISCriminal PenaltiesIran Sanctions

Touraj Ghavidel and Ron Jeremy via Ghavidel's Twitter Feed https://twitter.com/MrTouraj [Fair Use]
ABOVE: Touraj Ghavidel and Ron
Jeremy


The Bureau of Industry and Security just released settlement documents resolving allegations that Borna Faizy, Touraj Ghavidel and Signal Microsystems, Inc., illegally exported computer equipment from the United States to Iran. According to the BIS charges, Faizy, Ghavidel and Signal Microsystems transshipped the items through Dubai (where else?), used coded language in emails with Iranian customers to hide their customer’s identities and locations, and falsely stated on their Electronic Export Information filings that the ultimate end users were in Dubai. As a result, over at least 2 years, more than $1 million in computer equipment was shipped by the three to Iran. Under the settlement agreement, no fine is being imposed; rather the three exporters have agreed to a ten-year denial order.

The settlement agreement comes on the heels of a plea agreement entered by Faizy and Ghavidel where they plead to making false statements to federal agents in violation of 18 U.S.C. § 1001. Under the plea, the government and the defendants agree that a fine and one year probation would be an adequate sentence. The basis for the charge under 18 U.S.C. § 1001 is that Faizy and Ghavidel, when questioned by federal investigators, swore up and down that they were absolutely not doing any business with Iran and would never ever even think of doing so, cross their hearts and hope to, etc., etc.

It is hard to tell why such a favorable plea deal was reached here. The false EEIs and the coded emails certainly suggest that the defendants knew that they were breaking the law. And they also managed to ship a boat load, almost literally, of computers to Iran. All I can figure is that the prosecutors saw the picture of Ghavidel with Ron Jeremy, which Ghavidel put on his own Twitter feed, and decided that Ghavidel was too cool to go to jail.

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Oct

7

De Minimis Rule? What De Minimis Rule?


Posted by at 10:40 pm on October 7, 2014
Category: BISCriminal PenaltiesSyria

Robbins & Myers Belgium HQ via Google Maps http://goo.gl/P9oIwo [Fair Use]
ABOVE: Robbins & Meyers Belgium


Robbins & Myers Belgium, a Belgian subsidiary of Robbins & Myers, Inc., which was recently acquired by National Oilwell Varco, pleaded guilty last week to charges that it violated U.S. sanctions on Syria when it exported stators that it manufactured in Belgium to Syria. According to the Bureau of Industry and Security (“BIS”) press release, the Belgian company was charged with violating U.S. criminal law because of the following:

The guilty plea stemmed from actions by Robbins & Myers Belgium that, in 2006, caused four illegal exports, reexports and/or transshipments of stators—important components of oil extraction equipment—that had made [sic] from steel that had been milled in the United States to a customer operating oil fields in Syria.

Say what? Is it really criminal for a foreign company to export an item just because it has some U.S. content in it? What happened to the de minimis rule? How hard would it be to say that the item consisted of more than 10 percent U.S.-origin steel to avoid suggesting that the export was illegal if there was any U.S. content?  Even though BIS used up three paragraphs in the press release patting itself on the back, it could not manage to add a sentence somewhere, anywhere, to correct this misstatement of the law?

The factual proffer that served as a basis for the guilty plea, which is supposed to contain facts sufficient to support the plea, is no better on this issue.

At all times pertinent to this case, the stators shipped by RMB to Company A in Syria were made from steel tube that Company B had milled in the United States.

Nope, being “made from steel tube … milled in the United States” is not enough to support the plea. Section 746.9(a) of the BIS rules forbids exports to Syria of items “subject to the EAR.” And section 734.3(c)(1), otherwise known as the de minimis rule, states that foreign-made items destined for Syria are not “subject to the EAR” if they contain “controlled U.S.-origin commodities … valued at 10% or less of the total value of the foreign-made commodity.” Although the rule is not clear, BIS takes the position that “controlled” here means “controlled for Syria” under section 746.9 and therefore includes any EAR99 item other than food or medicine.  Under that reading the EAR99 steel tubes would be controlled U.S.-origin commodities for purposes of the de minimis rule. We just don’t know if the tubes were more than 10 percent of the value of the foreign-made stators. And we don’t know this because the supposedly completely proffer leaves out this crucial element of the crime.

I do not doubt that in fact the U.S.-origin content here was in excess of de minimis as required by the rule for foreign-made products. My point is, however, that the BIS press release and the proffer incorrectly and misleadingly state that a criminal violation occurred because the stators contained any amount of U.S. origin goods. That is simply not a correct statement of the law, and those charged with enforcing the law should also correctly state it.

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Sep

24

Get Smart: Chinese Spy Edition


Posted by at 4:51 pm on September 24, 2014
Category: Arms ExportCriminal PenaltiesDDTCTechnical Data Export

By General Artists Corporation-GAC-management. [Public domain], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ADonAdams.jpgMeet Charlie and Alice, two self-professed PRC spies who branched out from smuggling crystal meth into the United States to attempting to export airplanes and military technology from the United States to the PRC. Things did not turn out so well for Charlie and Alice who probably should have stuck with drug trafficking. So, find a comfortable chair, grab a bag of popcorn, and prepare to be entertained by the story that unfolds in the Criminal Complaint filed against them and to which they just pleaded guilty.

It was a dark and stormy evening in Manila when a counterfeit cigarette smuggler introduced two undercover agents working for the United States to Hui Sheng Shen, a/k/a “Charlie,” and Huan Ling Chang, a/k/a “Alice.” According to Mr. Counterfeit Cigarette Guy, Alice and Charlie could help the UCs obtain methamphetamine.

Alice and Charlie, explaining to the UCs that email was insecure, set up a drop email account, gave the UCs the credentials for the account, and said that they should communicate via messages left in the draft folder. (This method is not particularly effective in hiding communications from the government when you’re dealing with undercover agents but, whatever, it’s the trendy spycraft du jour.) Using this method, a deal for a kilo of meth was consummated and shipped to the UCs in tea bags hidden in computer towers. (Of course, no customs inspector would ever be suspicious of tea bags in computer towers so this is yet another example of top notch spycraft by Charlie and Alice.)

Emboldened by their world-class narcotics deal, Charlie and Alice decided to move on to bigger things and just kinda casually dropped into a subsequent conversation with the UCs that they would, oh, by the way, like to buy a military aircraft. Because, naturally, guys who buy drugs normally have a warehouse of military aircraft that they can sell to the people they buy drugs from.  And Charlie and Alice wanted not just any airplane but a honking huge E-2 Hawkeye reconnaisance aircraft. “Sure, Charlie, I’ll leave one for you at the front desk of your hotel after you wire me $100 million dollars.”

Of course, knowing the sensitivity of such an operation, Charlie and Alice wanted to refer to the Hawkeye in code as the “Big Toy.” That way, they could always claim, if caught, that they were really talking about a 12-ton toy Tonka truck. At this point, one of the UCs hits comedy gold when he says to Charlie and Alice:

“Do you guys realize what this thing is?.. . This thing is like a um 757 plane — it’s on aircraft carriers. Those things don’t just disappear.”

Undeterred, Charlie and Alice still kept negotiating to buy the “big toy,” stating that their buyer, which they described as the “Chinese C.I.A.,” could afford it. The UCs, however, managed to steer them to something more manageable, something that could fit in a backpack, namely, a Raven RQ 11B UAV. Charlie and Alice explained that they could smuggle the UAV out of the United States by having scuba divers or remote-controlled submersible vehicles carry the items to an off-shore Chinese ship. They also planned to get the manuals out by taking pictures of the manuals, deleting the pictures from the memory cards and then having their friends in China recover the deleted images.

There were, of course, two problems with the deleted image trick. First, everyone (even Customs) knows about it and can easily detect and recover deleted images on digital camera memory cards. Second, Charlie and Alice were arrested while taking the pictures.

For those who want to try at home the recovering deleted images trick, here’s a quick guide on how to do that.

 

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Sep

22

Texas Man Charged with Smuggling for Forwarding One Email


Posted by at 10:10 pm on September 22, 2014
Category: Criminal PenaltiesIran SanctionsOFAC

BlackBerry email on the BB 8330 by Ian Lamont(Own work) [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/ilamont/4329363938/A criminal information was filed last week against Patrick Jean Zuber, a U.S permanent resident and former Weatherford International Vice-President, charging him with conspiracy to violate the anti-smuggling statute, 18 U.S.C. § 554. How did he get into such trouble? Actually, he didn’t do anything more than push the forward button to send an email from a company in Thailand seeking to purchase equipment for an oil project in Iran. That’s right: he is being charged not with sending any equipment to Iran; he is being charged with sending an email forwarding that inquiry from the potential customer in Thailand.  Zuber forwarded that inquiry to a Canadian employee of Weatherford.  This cold-blooded and heinous act of clicking “forward”  was deemed to be facilitation of an illegal export to Iran. The criminal information is silent as to whether any export actually occurred

Whether the Canadian to whom the email was sent was employed by a U.S. or foreign subsidiary of Weatherford is not made clear by the criminal information. If it was a foreign subsidiary, then at the time Zuber forwarded the email, it would have been perfectly legal, under section 560.205 of OFAC’s Iranian Transactions and Sanctions Regulations, for the Canadian citizen at a foreign company to export EAR99 items to Iran even if they were originally manufactured in the United States. In that case, showing criminal intent by Zuber, who may well have thought that Canada could legally fulfill the order he forwarded, is going to be extremely difficult.

Of course, there may be other facts not mentioned in the criminal information which justify this prosecution. But if the basic crime here is forwarding an email to someone that Zuber thought could legally fulfill the order, this really seems more suited for a civil, rather than a criminal, penalty. After all, section 560.205 of OFAC’s requlations does prohibit a U.S. person from facilitating a transaction by a foreign person that would be illegal if done by a U.S. person and so OFAC would clearly have the authority to fine Mr. Zuber for pushing the forward button.

Photo Credit: In 30 Minute Guides

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