Back in 2007, I discussed in two posts (here and here) a criminal complaint filed against Netherlands-based Aviation Services International, B.V., and its owner Rob Kraaipoel, a citizen and resident of the Netherlands. The criminal complaint accused Kraaipoel and his company of exporting U.S.-origin items from the Netherlands to Iran without required U.S. licenses. Given the absence of any contacts by Aviation Services and Kraaipoel with the United States, I stated that the U.S.-origin of the goods was not a sufficient basis for criminal jurisdiction over the two Dutch entities and that an extradition request might not be viewed favorably by Dutch courts. A temporary denial order was later put in place by the Bureau of Industry and Security (“BIS”) against Kraaipoel and his company. That order forbade U.S. entities from exporting any items to Kraaipoel or Aviation Services or participating in any exports to them. And that, I thought, would be the end of the matter.

So I was more than a little surprised to read that Kraaipoel appeared last week before a federal judge here in D.C. entering a plea of guilty, both individually and on behalf of Aviation Services, to charges arising from his exports of U.S.-origin goods from the Netherlands to Iran. Had he foolishly planned a vacation to Disneyland and gotten nabbed at an airport in the United States? Had a Dutch judge actually granted a motion for extradition in this matter? No, according to the government’s motion to quash an arrest warrant issued against Kraaipoel in 2007, Kraaipoel had retained U.S. counsel and had voluntarily agreed to fly to the United States to face the music.

Why on earth would he do that? The plea agreement, after the agreed downward adjustments from the Federal Sentencing Guidelines, calls for a penalty of 46 to 57 months in jail. Of course, we can only speculate here, but it seems that several factors might be in play. Even if a Dutch court was unlikely to entertain an extradition motion, law enforcement authorities in other jurisdictions might enforce the warrant at the request of the United States. Think Roman Polanski. This has been done in at least one export case where a U.K. resident was arrested by Polish authorities based on a U.S. arrest warrant. The BIS denial order would also have probably been hurting Kraaipoel’s business, but the last temporary denial order expired in April 2009, and Kraaipoel and his company are not currently on the Denied Parties List. Even if more TDOs are imposed, nothing in a guilty plea would motivate BIS to lift a denial order but rather would serve more as a basis to extend any existing denial order.

Oddly Kraaipoel was allowed to return to the Netherlands after entering his plea and no date for sentencing was set. An AP report quoted Kraaipoel’s attorney as saying that the defendants were hoping for a sentence of probation only in light of anticipated cooperation with prosecutors. The plea agreement indeed provides that Kraaipoel would be released pending sentencing in light of his anticipated cooperation in further investigations. And it further states provides that in the event that Kraaipoel provides “substantial assistance,” the government would move that the defendant be allowed to argue for a sentence with a lesser period of incarceration. The proffer of proof indicates that Kraaipoel was acting in concert with Iranian individuals operating in Cyprus and the U.A.E. Sounds like they might be the next targets of this investigation.

An excellent article that appeared today on the Bloomberg website indicates that Malaysia may be nudging the U.A.E. out of the position as top transhipment destination for items headed from the U.S. to Iran. According to that article, increasing crackdowns by the U.A.E. on exports to its neighbor across the Strait of Hormuz has caused Iran to increase its usage of middlemen and front companies in Malaysia to source equipment that Iran seeks to acquire from the United States.

One case in particular that is highlighted by the article involves the criminal prosecution of Majid Kavakand, an Iranian citizen who was provisionally arrested in France on March 6, 2009, where he is awaiting a determination by French courts on the United States’ request for extradition. The criminal complaint filed in the case provides interesting details on Kakavand’s modus operandi. Typically Kakavand would receive requests from Iran and then would use his company in Malaysia, Evertop Services, to solicit over the Internet small businesses in the U.S. to ship the items to Evertop, at which point the goods would be shipped to Iran.

Although the complaint doesn’t identify the U.S. companies in question, it provides enough detail (product model numbers, company addresses, etc.) that it was a simple matter for me to ascertain the identity of the companies. I won’t specifically name them here, but suffice it to say that each of the companies was a small business with a website that advertised the companies’ willingness to export items to overseas customers. In other words, they all were companies that Kakavand might suspect lacked the sophistication or motivation to make much inquiry into Kakavand’s purchase orders.

And, inf fact, not one of the companies involved in the charges filed against Kakavand appeared to perform any due diligence on Evertop or Mr. Kakavand other than to ask for confirmation that the end-user was Evertop in Malaysia. And none seemed to have been bothered by a substantial, no, gigantic red flag. In each case, Kakavand asked that the items be shipped to Evertop in care of “K” Line Logistics, it’s freight forwarder in Malaysia. If Evertop was the end user, why on earth would it want the goods sent to a freight forwarder in Malaysia? Needless to say, “K” Line Logistics appeared to have had instructions to ship the goods immediately upon receipt to Tehran.

Another interesting detail from the Kakavand case is that the prosecution made a large part of its case from emails sent by Kakavand from his Yahoo! mail account. Yahoo! coughed up all the emails after it was served a search warrant. Similarly, as Sharon Weinberger recently noted, the case made against Monsieur Monsieur was aided by a search warrant served by the government on Google to obtain emails sent by M. Monsieur through his gmail account. It’s hard to imagine why people busy trying to violate U.S. export laws would use a U.S.-based email provider, but there you have it. It’s not much different, I suppose, from a bank robber writing his demand note on the back of one of his own personal checks.