2. Research the web to find recent examples of companies that have violated U.S.
ID: 362013 • Letter: 2
Question
2. Research the web to find recent examples of companies that have violated U.S. export controls ?
The following are real-life examples of export control violations taken directly from the US Bureau of Industry and (BIs) publication “don’t let this Happen to You
ACE SYSTEMS INC :
(The violation: In July 2006, Ace Systems Inc (Ace) located in Gainesville Georgia
May and Related attempted to violate the General order Concerning ties by to export cards to G Ace ow) n Dubai, United Arab Emirates, without the required license. en cards its with never reached their destination special agents intervened, and the cards of $36,000 to pay an penalty
SPARESGLOBAL, INC.
the violation: Spares Global nc., of Pittsburgh, and company president, om Sharma, conspired to falsify documents and make false in about 2003 illegal export of graphite products to company United up Pakistan. The mi products can be used in nuclear reactors and in the nose of ballistic attempted to mislead federal investigators whhen questioned about the shipment and the documents
The Penalty: On October 4 2007, SparesGlobal Inc., was sentenced t a $40,000 criminal fine
SCP GLOBAL TECHNOLOGIES, INC.
The violation: Between May 2003 and January 2005, SCP Global Technologies Inc. ("SCP") made 45 exports of controlled pumps and to Taiwan, Israel, without the required export licenses. The items are controlled their potential use in chemical and biological weapons and would have required a license shipment to Taiwan, China, or Israel. SCP had previously received a warning letter for the unlicensed export of controlled pumps.
The penalty: SCP agreed to pay a $264,000 administrative penalty Mitigating circumstances: SCP voluntarily self-disclosed these violations and cooperated fully in the investigation
NING WEN AND HAILIN LIN
The violation: Ning Wen and Hailin Lin used a business called Wen Enterprises, which they operated from their home in Wisconsin, to ship semiconductors and other controlled electronic components with radar and satellite applications, both military and civilian, to Jian Guo Qu and Ruo Ling wang at Beijing Rich Linscience Electronic Company in China. For most of these transactions, Lin ob ned the restricted components from a United States manufacturer or based on a request from Wang or Qu, falsified shipping documents by conceal shipments and stating that a license was not require for the shipments, and then shipped the product to wang and/or Qu in China without obtaining the required export license.
The Penalty: 2005, Qu was sentenced to 46 months' imprisonment (later reduced to 22 months based on his cooperation in prosecution of codefendants), a $2,000 criminal fine, and two years' supervised release. Lin was also sentenced in 2005 to 42 in and fine her role in these unauthorized In 2006, Wen was sentenced to five years in s50,000 and two years' supervised release. Additionally, the court ordered the forfeiture of Wen and Lin's home and over $329,000 in cash.
WORLDWIDE SPORTS & RECREATION, INC. BUSHNELL CORPORATION
The violation: Between September 1995 and December 1997, Worldwide Sports e Recreation, Inc., which does business as Bushnell Corporation, exported Night Ranger night vision devices to Japan and 14 other countries without the required BIs export licenses. Bushnell sold the cameras to a Japanese company but trans- ferred them to a U.S. company in Florida, knowing that they were going to be exported to Japan. The foreign company and the domestic intermediary pled guilty and cooperated.
The Penalty: In the criminal case Bushnell was sentenced to a $650,000 criminal fine and five years' probation. In the related administrative case, suspend agreed to pay an administrative penalty of $223,000 and to a one-year suspend denial of export privileges
Explanation / Answer
The U.S. government recently fined a California-based technology company, Barracuda Networks, Inc. (Barracuda), and its wholly owned, UK-based subsidiary, Barracuda Networks, Ltd., more than $1.5 million for transactions relating to sales and servicing of equipment and software to Iran, Syria and Sudan. The products at issue (e.g., Web filters, link balances, firewall products and server backup software) can be used to block or censor Internet activity.
PENALTY: The U.S. Department of Commerce Bureau of Industry and Security (BIS) announced a $1.5 million civil penalty, and the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) announced a $38,930 settlement relating to the alleged violations.
This case highlights the importance of maintaining a robust sanctions compliance program;
On 26 occasions from April 2009 until April 2012, Barracuda sold products to parties in Iran and Sudan and to Specially Designated Nationals (SDN) in Syria, with knowledge of a violation of the Export Administration Regulations (EAR) and therefore in violation of General Prohibition 10 of the EAR. On 11 occasions, Barracuda’s UK subsidiary also sold or serviced devices of U.S. origin in Iran and Syria, also in violation of General Prohibition 10.
OFAC considered the following facts in determining the settlement amount:
Many of these factors relate to failings in Barracuda’s sanctions compliance program. It is telling, therefore, that OFAC considered Barracuda’s remedial actions — including establishing a sanctions and export controls compliance program, creating an office for trade compliance and hiring a general counsel with subject matter expertise — along with the fact that it voluntarily disclosed the alleged violations, as mitigating factors in determining the penalty amount.
Even if the July 2015 nuclear deal with Iran is implemented in 2016, the primary sanctions and export controls at issue in this case will remain in full force and effect.
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