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Oct

10

You’ll Shoot Your Eye Out, Kid!

Posted by Clif Burns at 2:58 pm on October 10, 2007

Category: BIS

Red Ryder

Oh good grief.

Daisy Manufacturing just agreed to pay $20,400 to settle charges that it exported “rifle scopes” without a license. The Bureau of Industry and Security charged that the “rifle scopes” were classified under ECCN 0A987.

Most guys, particularly guys my age, are quite familiar with Daisy Manufacturing. Hell, anyone who has ever seen A Christmas Story is probably familiar with Daisy. The company makes BB guns and air rifles — like the Official Red Ryder Carbine-Action Two-Hundred-Shot Range Model Air Rifle featured in the film.

And export folks of any age are probably familiar with ECCN 0A987 which controls:

Optical sighting devices for firearms (including shotguns controlled by 0A984); and parts, n.e.s.

That’s right — optical sighting devices for firearms. Now the Export Administration Regulations don’t bother to define firearms, but it would seem reasonable to look at the definition of firearm in the Federal Gun Control Act of 1968. A firearm is defined in that act, at 18 U.S.C. Â§Â§921(a)(3) and (4), to cover only weapons which “expel a projectile by the action of an explosive” or, if expelling the projectile by other means, have a rifle bore of greater than one-half inch in diameter. The Daisy air rifles do not meet either criterion.

And the scopes manufactured by Daisy, like this one, all appear to be made for Daisy’s air rifles and, therefore, not properly classified under ECCN 0A987 as claimed by BIS. The BIS charging and settlement documents don’t provide sufficient detail as to the types or model numbers of scopes being exported. Once again, those documents refer to a schedule of violations which is missing from the documents posted on the BIS website. So there remains the possibility, albeit unlikely, that Daisy was exporting scopes for other rifles that could properly be defined as firearms.

All that notwithstanding, does anyone else feel that a scope on a BB gun is, well, cheating? What next? Laser designators?

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Oct

9

ICE Stings Two Utah Men for Attempted Exports of F-14 Parts

Posted by Clif Burns at 10:31 pm on October 9, 2007

Category: General

Iranian F-14 Sleeve Patch The U.S. Attorney for Utah recently announced that it had filed a Felony Information against Abraham Trujillo and David Waye for attempted export of F-14 and F-4 fighter aircraft parts without a license. According to the press release, Immigration and Customs Enforcement (“ICE”) agents discovered a website run by Trujillo and his business NSN Specialists which listed F-14 and F-4 parts for sale. The ICE agents set up a sting operation and over the next several months the two men, according to the allegations of the Felony Information, attempted to export the parts to Canada without the required export license. Exports of F-14 parts are particularly significant because only Iran is currently flying F-14 aircraft.

The Felony Information contains additional details which, if true, are certainly damning. Count 2 of the Felony Information involves the attempted export of F-14 wiring harnesses and impeller assemblies valued at $39,675. Allegedly the defendants told the undercover ICE agents that the items looked “very military” and that they were therefore repackaging them and assigning them commercial part numbers. Further, the defendants prepared an invoice valuing the items at $600.

Count 3 involves attempted exports of F-4 impeller assemblies which the defendants told the undercover agents were in “very obvious military packaging.” Accordingly, one of the defendants said, “I’m going to have to convert it to commercial.” In order to do that, the defendants allegedly repackaged the goods and prepared an invoice describing the goods as “gear sprockets.”

If those allegations can be proven, somebody is going to jail.

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Oct

8

CSC Lets Iranian Government Employee Subscribe to DHS Mailing List

Posted by Clif Burns at 1:06 pm on October 8, 2007

Category: General

Iranian proliferation Last week, an email news list maintained for the Department of Homeland Security by Computer Sciences Corporation (“CSC”) went awry and started routing any reply that someone sent to another person on the list to every subscriber on the list. Some of the cubicle crowd so this as a social networking opportunity and began to send messages declaring their romantic preferences and astrological signs, supporting their favorite sports team (“Go Hogs!”), and promoting their companies products.

Then this message, from a befuddled Iranian, was sent to everyone on the DHS list:

From: Amir Ferdosi

To: DHS Daily OSIR Distribution List

Sent: Wednesday, October 3, 2007 3:24:28 PM

Subject: Is this being a joke?

why are so many messages today?

Amir Ferdosi

Sazeman-e Sana’et-e Defa’

Qom, Iran

If you’ve let your Farsi get rusty, you might not recognize that “Sazeman-e Sana’et-e Defa'” is Iran’s Defense Industries Organization. You may remember, however, that the Defense Industries Organization is the weapons manufacturing arm of the Iranian Ministry of Defense and which has been designated by the State Department under Executive Order 13382 as materially contributing to Iran’s nuclear proliferation activities. DIO is also designated on the Department of Treasury’s List of Specially Designated Nationals and Blocked Entities.

But more importantly, DIO is an agency of the Iranian government is subject to the Iranian Transactions Regulations. When Computer Sciences Corporation put Mr. Ferdosi on the DHS email list, it arguably violated the Iran sanctions. And before anybody starts yakking about the information exception in section 560.210 of those regulations, let me remind you that the exception only applies to information already in existence at the time Ferdosi subscribed — it does not apply to information sent in future emails. Iranians can order copies of books and magazines, but can’t subscribe to them under current regulations.

It is, of course, possible that CSC had no idea that Mr. Ferdosi was an employee of the Iranian Ministry of Defense, although since his email was probably something like [email protected], that should have been obvious. More likely, Ferdosi was automatically added to the list without human intervention. This, once again, demonstrates the perils of sanctions compliance over the Internet. I would imagine that by now CSC has removed Mr. Ferdosi from the list and has a block on subscriptions coming from emails ending in “.ir”.

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Oct

4

BIS Denies Export Privileges for Dutch Aircraft Parts Company

Posted by Clif Burns at 11:27 pm on October 4, 2007

Category: BIS • Criminal Penalties • Sanctions

We have previously reported on the recent criminal complaint filed against the Dutch company Aviation Services International B.V. and its owner Rob Kraaipoel. The complaint alleged, among other things, that Aviation Services purchased aircraft parts in the United States, exported them to the Netherlands and then later shipped them to Iran. The Bureau of Industry and Security (“BIS”) has now issued an Order temporarily denying export privileges to Aviation Services, Kraaipoel and related entities that had been involved in the transactions subject to the complaint. In this case, it seems to me, the BIS order is both an appropriate remedy and the only remedy in this case.

Nothing in the criminal complaint suggests that Aviation Services or any of its officers or employees, including Rob Kraaipoel, ever set foot in the United States in connection with these transactions. Nor is there even a scintilla of evidence that Kraaipoel or any of the other employees even went to Disneyland or anywhere else in the United States on a family vacation or for any other reason. A basic principle of international law is that a jurisdiction must have some minimum contact with a foreign citizen before it has the right to prosecute that foreign citizen for the laws of the prosecuting jurisdiction. We can be certain that the United States would assert this principle if the Netherlands sought to indict a U.S. citizen for exporting Dutch goods in violation of Dutch Law.

The Export Controls and Economic Sanctions Committee of the American Bar Association Section of International Law took that position quite clearly when it issued a recommendation that U.S. sanctions laws should not be imposed on foreign corporations where the only jurisdictional basis for doing so was that the articles involved are U.S. origin goods. The Committee explained its position as follows:

The most widely accepted basis in international law for prescribing legal rules of conduct is the territorial principle – that a sovereign may prescribe and apply its laws to conduct that takes place within its territory. … Foreign transaction controls that purport to regulate, proscribe or sanction conduct that takes place entirely outside the territory of a state do not satisfy the general formulation of the territorial principle.

Beyond that, of course, is the question as to whether the U.S. can extradite an individual from The Netherlands in connection with this criminal complaint. The Extradition Treaty between the United States and the Netherlands provides that an extradition may occur for conduct occurring outside the territory of the state being asked for extradition only if the party being extradited is a national of the requesting country or

The courts of the Requested State would be competent to exercise jurisdiction in similar circumstances

This provision permits a Dutch court to deny extradition by saying that, due to principles of international law, it would not be competent to exercise jurisdiction over a U.S. citizen who exported Dutch Goods from the United States.

Of course, the BIS order denying export privileges is an exercise of jurisdiction over U.S. companies and individuals and would impose sanctions on such companies and individuals for exporting items to Aviation Services and Mr. Kraaipoel. This is well within the jurisdictional authority of the United States and, it seems to me, is the appropriate course to be taken when foreign individuals, outside the jurisdiction of the United States, re-export U.S. origin items in violation of U.S. law.

I would, however, advise Mr. Kraaipoel to cancel any plans to vacation in the U.S.

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Oct

2

The Mysterious Case of the Missing Medical Devices

Posted by Clif Burns at 9:19 pm on October 2, 2007

Category: BIS • Sanctions

Invitrogen and the Bureau of Industry and Security (“BIS”) recently signed a settlement agreement pursuant to which Invitrogen agreed to pay $30,000 for three shipments and one attempted shipment of human leukocyte antigen tissue typing trays to Syria without a license. The shipments and attempted shipments had been made, and voluntarily disclosed, by Dynal Biotech, which Invitrogen acquired in 2005. The charging documents allege that these shipments and alleged shipments violate General Order No. 2 of Part 736 of the Export Administration Regulations which forbids exports of all items “except food and medicine” to Syria.

HLA tissue typing trays are used, among other things, to determine whether tissue or organs are compatible for transplantation into a particular individual. Clearly this product isn’t food or medicine within the exemptions provided by General Order No. 2.

But the trays are arguably medical devices under the Trade Sanctions Reform Act of 2000 (“TSRA”) which prohibits unilateral sanctions affecting medical devices. TSRA defines “medical devices” by referencing the definition of “medical devices” under the Federal Food, Drug and Cosmetic Act. Section 201 of that Act defines a medical device to include:

an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is … (2) intended for use in the … the cure, mitigation, treatment, or prevention of disease, in man or other animals … .

This, of course, raises the question as to why General Order No. 2 exempts food and medicine but not medical devices. By failing to exempt medical devices it appears to run afoul of TSRA’s prohibition on unilateral sanctions on exports of medical devices. This is even more clear in this case because section 906(a)(2) notes that medical devices can be shipped to Syria notwithstanding any determination that Syria is a state sponsor of terrorism.

Of course, this was not the case to litigate the issue with BIS. Counsel for Invitrogen wisely decided that it would cost much more than the $30,000 agreed fine to litigate the matter. But BIS should know better.

Of course, perhaps there’s a reason I’ve missed for not including medical devices in the General Order No. 2 exemption. I haven’t had the time to fully research the matter, so if you can explain the mysterious case of the missing medical devices, please leave a comment enlightening everyone.

UPDATE: A reader points out that Section 5(a)(2)(A) of the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 permits the President to impose, as one of the sanctions on Syria, a prohibition on “the export of products of the United States (other than food and medicine) to Syria.” However, there is nothing in the legislation that suggests that Congress explicitly intended to overturn the language of TSRA which permits the unlicensed export of medical devices to Syria. There is no reference at all in the Syria Accountability Act to TSRA. In that context, then, “food and medicine” should be seen as referring to the “agricultural commodities,” “medicines,” and “medical devices” as defined in TSRA.

Of course, I am not recommending that this argument be used by anyone as a basis for not applying for a license for a medical device to be exported to Syria, since BIS will certainly seek to penalize such an export. Rather, I am suggesting that BIS should amend General Order No. 2 to make it consistent with TSRA.

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Author Archive

You’ll Shoot Your Eye Out, Kid!

ICE Stings Two Utah Men for Attempted Exports of F-14 Parts

CSC Lets Iranian Government Employee Subscribe to DHS Mailing List

BIS Denies Export Privileges for Dutch Aircraft Parts Company

The Mysterious Case of the Missing Medical Devices

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