For several years now the Bureau of Industry and Security (“BIS”) has had the statutory authority to impose a civil penalty of $250,000 per export violation but has yet impose anything near that fine. So when BIS finally whacks someone with a $2.5 million fine for 10 violations, you might assume that the person paying such a fine did something really terrible like exporting dual-use items to Iran that Iran could use in uranium enrichment facilities. But you would be wrong.

Sirchie Acquisition Company, LLC, agreed to pay a $2.5 million fine for 10 violations arising from acts not committed by SAC but by an acquired company several years before SAC acquired it. And the exports involved included fingerprint equipment that did not require a license to the destinations involved (France and the U.K.).  The exports also included, get this, some magnifying glasses. These exports are detailed in the deferred prosecution agreement with federal prosecutors but the BIS charging documents don’t provide any detail on the exports in question — proof, I suppose, that even BIS was embarrassed about whacking someone with a $250,000 fine for exporting magnifying glasses and fingerprint pads.

These exports were allegedly problematic because the CEO of the company that Sirchie acquired set prices for these exports, which was allegedly a violation of a denial order that BIS had entered against the CEO individually. As I pointed out in my last post on this case, SAC’s actions didn’t violate any of the provisions of the denial order that expressly applied to third parties. And BIS doesn’t claim that they did but claims instead that they constituted “aiding and abetting” the CEO’s violation of his own denial order. The problem here is that the denial order in question doesn’t say that all aiding and abetting activities by third parties are prohibited but instead prohibits particular and specific types of aiding and abetting, none of which occurred in this case.

Other aggravating factors that might justify such a massive fine aren’t mentioned by BIS. There is no claim in the charging papers that SAC, or its predecessor, knew that these activities violated the CEO’s denial order or that SAC, or its predecessor, tried to conceal the exports or that SAC, or its predecessor lied to federal investigators.

Call me old-fashioned, but it seems to me that the highest fines ought to be reserved for the most serious violations and not for exports of magnifying glasses by an acquired company.

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