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.]

Permalink Comments Off on Don’t Believe Everything You Read in the Newspaper

Bookmark and Share



BIS Amends EAR to Remove Cuba as a State Sponsor of Terrorism

Posted by at 3:59 am on July 23, 2015
Category: BISCuba Sanctions

Cuba Capitole by y.becart(Own work) [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/yoh_59/13697566663[cropped]On Wednesday, the Bureau of Industry and Security amended the EAR to reflect the removal of Cuba from the list of state sponsors of terrorism. Somewhat surprisingly, the impact of this removal is much less than might be imagined.

Of most importance, even though Cuba is no longer on the list of State Sponsors of Terrorism, all items exported to Cuba will still either need a license or an applicable license exception. The biggest change is that, by removing Cuba from the E:1 country group, a few license exceptions relating to countries in that group will no longer apply.

First, certain aircraft (principally private civil aircraft not operating under certain FAA carrier certificates) will be able to use License Exception AVS for temporary sojourns to Cuba. Second, certain encryption items that were excluded from being taken by travelers to Cuba in their luggage will now be covered by License Exception BAG. Third, License Exception RPL can now be used to export replacement parts to Cuba for explosive detection equipment and concealed object detectors lawfully exported to Cuba.

If the change in RPL causes you to raise your eyebrows — explosive detection equipment and concealed object detectors in Cuba?! — settle down and take a deep breath. This is just CCL-ese for the stuff they use in airports to screen you and your luggage before you get on the plane. Nobody wants the real terrorists to target planes flying from Cuba, particularly now that they will have more Americans on them.

Permalink Comments Off on BIS Amends EAR to Remove Cuba as a State Sponsor of Terrorism

Bookmark and Share



Worst. Case. Ever. Seriously

Posted by at 2:27 am on July 22, 2015
Category: General

Fernando Zevallos  [Public Domain]
ABOVE: Fernando Zavellos

After reading the D.C. Circuit Court of Appeals opinion in Zevallos v. Obama, I have to side with the Office of Foreign Assets Control (“OFAC”), something remarkable for me, but, honestly, the case for de-listing made by lawyers for a designated narcotics kingpin, Fernando Zevallos, was, simply put, ridiculous and the D.C. Circuit was overly polite in upholding OFAC’s decision not to delist him.

Zevallos’s lawyer, probably as an early sign of his desperation, argued that the Court of Appeals should review OFAC’s denial of delisting de novo and not under the arbitrary and capricious standard set forth under the Administrative Procedure Act. The court called such a request “extraordinary and rare,” pointed out that the argument was supported by only one case involving demonstrable agency bias, and, with barely muffled contempt, moved on to the merits. Sadly, for Mr. Zevallos, his arguments on the merits were even worse.

Here’s the thing. If you are trying to convince OFAC that you are no longer a narcotics kingpin, it’s best to make the argument while not sitting in a jail cell in Peru serving a twenty-five year sentence for narcotics trafficking and money laundering.

But wait, it get’s worse. It’s also not a good idea to get caught controlling Panamanian bank accounts with drug proceeds through your sister while sitting in that jail cell in Peru.

Now for the real kicker: Zevallos’s lawyers argued, apparently with a straight face, that this evidence relating to the Panamanian drug money accounts was irrelevant and OFAC could not rely on it in justifying its refusal to delist him because “it showed only that his family continued to control assets derived from narcotics trafficking” and that OFAC “may not rely on evidence that he owns such assets because he cannot legally or practically relinquish control of them, given that they are blocked.” No, I’m not making that up; it’s in black and white on page 10 of the slip opinion.

The court, naturally, is sceptical that you can’t renounce blocked assets. And it does not appear from the opinion that Zevallos even tried to do so. It seems to me that a document renouncing any claim to the funds and agreeing to escheat them to the Panamanian government, if unblocked by OFAC, would have worked like a charm.

Permalink Comments Off on Worst. Case. Ever. Seriously

Bookmark and Share



Iran Deal Leaves Many Sanctions Still in Place

Posted by at 12:33 am on July 15, 2015
Category: Iran Sanctions

Imam Khomeini by Kaymar Adl [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/kamshots/515002010/ [cropped]After the deal with Iran was announced today, a colleague asked me whether I’d have any work left to do. At that point, I had not yet read the Joint Comprehensive Plan of Action (“JCPOA”). Now that I have, it seems clear that if you were hoping that the JCPOA would reduce legal compliance costs, you are going to be disappointed.

One key point to realize is that Executive Order 13059, which was signed by President Clinton in 1997 and which banned the exportation of all goods and services to Iran, stays in place. The ban on imports, first adopted in Executive Order 12613, also is not going anywhere. What the JCPOA does is carve out various sectors that will be exempted from this ban, including the energy and petrochemical sector, the shipping, shipbuilding and port sector; gold and other precious metals, raw and semi-finished metals, the automotive sector, and aircraft and parts. In addition, what appears to be most Iranian SDNs, including individuals, companies, ships and aircrafts, will be removed from the SDN List.

None of this is going to happen immediately, of course. To begin with, lifting these sanctions depends on endorsement of the JCPOA by the U.N. Security Council. Additionally, the IAEA will need to verify that Iran has taken the agreed steps with respect to its nuclear program and the U.N. will have to terminate the various Security Council Resolutions relating to Iran, including the arms embargo, subject to their reimposition if Iran does not keep its commitments with respect to its nuclear program.

How long will it take before the sanctions are lifted? It’s hard to say. There is an initial 90-day delay between the endorsement of the JCPOA by the parties involved and the United Nations Security Council and the first steps towards implementing the obligations under the JCPOA. After that, the IAEA needs to verify Iran’s compliance, and there is no way to tell how long that will take. And, of course, OFAC has to adopt new rules which, of course, if history is any guide, might take quite some time.

Permalink Comments (2)

Bookmark and Share



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 http://www.midamarhalal.com/Product/Pizza/Halal-Pizza/166/Halal-Beef-Pepperoni-Pizza-12in-bake-Rise.aspx [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.

Permalink Comments (3)

Bookmark and Share

« Previous posts | Next posts »