Archive for the ‘Criminal Penalties’ Category


Mar

30

Brotherly Love Only Goes So Far


Posted by at 1:15 pm on March 30, 2015
Category: Arms ExportCriminal Penalties

Ariel Maralit[Fair Use]I’ll admit it and apologize in advance.  The main reason for this story and for this link to Britain’s worst newspaper is so that I can run the picture of Ariel Maralit. Ariel, the guy in the photo on the right brandishing the weapons and wearing the moronic grin, is the brother of former NYPD officer Rex Maralit and former U.S. customs agent Wilfredo Maralit.  Both former law enforcement brothers have now pleaded guilty to violations of the Arms Export Control Act in connection with a little business they ran with brother Ariel in the Philippines.   Seems Ariel would take orders from customers in the Philippines for AR-15s, semi-automatic weapons and assault rifles and would then send these orders on to brothers Rex and Wilfredo in the United States.  The brothers would use their law enforcement discounts to buy the weapons cheaply and then pack them up and ship them to Ariel for a tidy profit.  Rex is quoted as saying he just thought he was “avoiding red tape.”   Wilfredo’s lawyer said he was just in it for the money.

And now for the best part.  Rex and Wilfredo

were told they would receive a lighter sentence if they could convince their brother Ariel to come to the United States and face charges, but the brothers were unsuccessful.

Allegedly Ariel replied to his brothers’ pleas to give himself up by sending them a recording of “Baretta’s Theme.”  You remember: “Don’t do the crime if you can’t do the time.” Okay, I made up this last part about sending the song, but once you start linking to the Daily Mail, it’s hard not to follow their example.

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Mar

23

Feds Indict Man For Mistakes on Discontinued Forms


Posted by at 1:00 pm on March 23, 2015
Category: AESCriminal PenaltiesSEDs

Lamp, Typewrite and Specs by John Levanen[CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/54814530@N00/8314704680/[cropped]

As most readers of this blog know, the venerable Shipper’s Export Declaration was discontinued in 2008. Instead, exporters now file the Electronic Export Information using the Automated Export System.

Apparently the news of this change has yet to make its way into the Justice Department, which recently indicted a California man, Pavel Flider, and his company, Trident International, for “false and misleading export information … in an SED” with respect to fifteen exports made between 2011 and 2013, long after said “SED” had been definitively retired.

Oh, and because those statements on the non-existent form were false, the DOJ charged him with violating the anti-smuggling statute, 18 U.S.C. § 554, which covers any export made “contrary to any law or regulation of the United States.” I’ve criticized this ridiculously overbroad statute before, noting that it turns a trucker on his way to Canada who drives 10 hours and 1 second in a day into a smuggler and a felon. Here the rule violation that turned the defendant into a smuggler was the false statement “in an SED.”

The DOJ press release contains allegations not included in the indictment, namely that “many” (but not all) of the items at issue were “controlled dual-use programmable computer chips capable of operating in austere environments making them useful in both civilian and military applications.” If that truly is the case, you have to wonder why they are just charging the defendant with false SED statements rather than a simple export violation.

Of course, I can imagine that there will be plenty of fun in the courtroom when the prosecutors, who don’t even know which forms are filed with exports, accuse the defendants of making mistakes when they filed their export documentation.

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Mar

19

Export Car to China: Go Directly to Jail


Posted by at 12:41 am on March 19, 2015
Category: ChinaCriminal Penalties

Porsche Panamera via http://files2.porsche.com/filestore.aspx/normal.jpg?pool=multimedia&type=image&id=rd-2014-homepage-teaser-ww-panameraturbos-kw43&lang=none&filetype=normal&version=b51309d8-552d-11e4-99aa-001a64c55f5c&s=4 [Fair Use]

Everybody knows that you can go to jail for exporting a tank to China. But did you know that you can go to jail for exporting a luxury car, classified as EAR99, to China?

Well, it appears that you can. According to an article in the Milwaukee Journal-Sentinel, Mao Peng, a resident of Kenosha, Wisconsin, and his wife were arrested in Los Angeles for exporting luxury vehicles to China and sent back to Wisconsin for trial. Only the terminated criminal proceedings in Los Angeles are in PACER at the moment. The transferred case in Wisconsin has not shown up yet in PACER, so details of the charges are somewhat hard to discern.

But it appears from a number of news sources, like this article in the New York Times, that federal prosecutors have been targeting individuals who purchase luxury vehicles in the United States and then export them to China for resale. Apparently, there is a substantial price differential between the price of luxury vehicles in the U.S. and China creating an attractive arbitrage opportunity for ambitious entrepreneurs. And the auto manufacturers have some how enlisted the DOJ to help them preserve their high margins in China.

At the behest of luxury car manufacturers, the U.S. Government has been seizing cars and bank accounts, but at least one federal judge has called foul. The opinion in that case gives some clue as to the prosecutors’ theories in the luxury car export cases. In that case, the Secret Service seized bank accounts alleged to contain funds derived from an auto broker’s export business. Because luxury auto dealers are prohibited by their manufacturers from selling cars for export, dealers require purchasers to sign, in the purchase documentation, a representation that the cars are for their own use and not for export. The export brokers pay straw purchasers to buy the vehicles for them. The government’s theory is that the brokers are conspiring with the straw purchasers to commit wire fraud in connection with the personal use representations by the straw purchasers. The district court held, relying on the “convergence” requirement, that the misrepresentation was at most a contractual violation rather than a criminal matter because the auto dealers to whom the misrepresentation were made were not injured by the misrepresentation; only the manufacturers were.

Peng’s case, which appears to be the first criminal prosecution for exporting cars to China, may be somewhat different because it appears that his straw purchasers were Native Americans and that sales taxes were therefore not paid on vehicles delivered to reservations on which they lived.   It also appears that the government is alleging that Peng was continuing to use the names of the straw purchasers for more purchases than they had agreed to and that this was some kind of identity theft.   But, according to the Journal-Sentinel article, it also appears that the government’s case is  primarily based on the non-export representations made by the straw purchasers to the auto dealers.

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Mar

10

Maryland Pizza Shop Owner Pleads to Export Charges


Posted by at 11:06 pm on March 10, 2015
Category: Arms ExportCriminal PenaltiesDDTC

Da Dan Xia Weapons Cache by Colombia Prosecutor's Office [Fair Use]The owner of a Jerry’s Subs and Pizza franchise in Upper Marlboro, Maryland, pleaded guilty to shipping various rifles and rifle parts, including magazines, receivers, and sights, to Pakistan without the required license from the Directorate of Defense Trade Controls. According to the DOJ press release announcing the plea deal, Kamran Malik, the defendant, shipped the goods in packages with false return addresses and false descriptions of the contents. There is no indication as to  the intended recipients of the firearms and parts in Pakistan. As part of the plea deal, the Government has agreed to argue for a reduction in the offense level from 26 to 23, which would reduce the maximum penalty from 78 to 57 months.

Something else is going on here. There is also a sealed plea agreement supplement. That normally means that the defendant will be a cooperating witness and that the sealed supplement contains a cooperation agreement.  The purpose of sealing that information is to protect the cooperating defendant. Of course, since such supplements pretty much signal that the defendant is going to cooperate with the government, that purpose is largely lost. I suspect this means that the recipients of the items in Pakistan are of more than passing interest to the United States Government.

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Mar

3

Might As Well Be Hung for a Sheep as a Lamb


Posted by at 9:58 pm on March 3, 2015
Category: Criminal PenaltiesDDTCTechnical Data Export

Mozaffar Khazaee [Credit: Essex County Mug Shot Catalog]
ABOVE: Mozaffar Khazaee


On February 25, Mozaffar Khazaee, a former employee of various defense contractors, pleaded guilty to illegal export of ITAR-controlled technical data to Iran. The case started with an audacious shipment from Connecticut to a freight forwarder in Long Beach, California, by Khazaee of 44 boxes labelled as household goods that, in fact, contained numerous manuals and other technical documents relating to the F35 Joint Strike Fighter and military jet engines. The boxes were intended for ultimate shipment to Iran. Further investigation revealed that these documents had been taken by Khazaee from defense contractors for which he worked and that taking these documents violated the contractors’ rules requiring return of all documents at the end of employment. Khazaee was initially arrested for charges, set forth in the criminal complaint, of illegally transporting stolen property across state lines.

Khazaee’s ultimate plea was for violation of the Arms Export Control Act. The superseding information that served as the basis for the plea, however, alleged the export of only one document (out of the 44 boxes of documents) which was asserted to contain controlled technical data designated under Category XIX(g) of the United States Munitions List.

Two things stand out about this case. First, the superseding information charged, and Khazaee pleaded guilty to, export of the document and not attempted export of the document. The problem is the document was seized in Long Beach and never left the country. Section 120.17 of the ITAR defines export as “taking a defense article out of the United States.” No matter what your feelings may be about Long Beach, California, it is definitively still in the United States last time I checked. There is some evidence that the boxes may have been loaded onto the Panamanian-flagged NYK Libra. But given the definition of United States in section 120.13, it is hard to argue that the document left the United States until the NYK Libra did.

The second thing of interest were statements made by Khazaee, and cited in the superseding information, to potential employers in Iran that his job advancement in the United States had been hindered by his Iranian nationality even though he was an American citizen.

Even though working industry being very exciting, with best pay salary and high-tech events, my original nationality being Iranian (which I am very proud of), has caused me tremendous issue and hindrances towards my progress and goals. I can’t make any publication in current job (everything is very proprietary and restricted, mostly military projects), I was rejected to participate in the new advance engine program (this is beyond F135 engine, it’s called AETD), purely based on my original nationality. This is the primary … reason for my consideration to move to Iran.

Obviously one wrong does not justify another. However, discrimination against a U.S. citizen based on his national origin,if this is what occurred here, is a violation of federal law. And given the unhealthy obsession of the DoD and DDTC on national origin, at least with respect to dual and third-country nationals, it seems at least possible that this may have occurred. It may well be that the best way to encourage loyalty among American citizens is to treat them all equally without respect to where they were born.

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