OFAC Posts Information on Recent Civil Penalties

On November 16, 2010, Office of Foreign Assets Controls (OFAC) published recent civil penalty information: 

Pinnacle Aircraft Parts, Inc. (Pinnacle) of Miami, FL, has paid $225,000 to settle allegations of violating OFAC's Reporting, Procedures and Penalties Regulations (the "RPPR"), occurring in November 2007. OFAC alleged that Pinnacle failed to provide documents in response to an administrative subpoena issued by OFAC as part of its investigation of Pinnacle's 2004 sale and delivery of a jet engine, valued in excess of $1 million, that was destined to Iran. 

The subpoena directed Pinnacle to provide a written report regarding the jet engine transaction and "copies of all transactional documents such as invoices, shipping documents, airway bills, correspondence, and all other documents pertaining to the payment or transportation of this shipment." 

According to OFAC, in its November 9, 2007, response to the subpoena, Pinnacle, through its outside counsel, submitted more than 260 pages of responsive documents but failed to submit a copy of a post-sale e-mail - which Pinnacle had provided to its counsel - indicating that the aircraft engine was likely destined for Iran as well as other responsive documents concerning the terms of sale.

Pinnacle did not voluntary disclose the violation to OFAC. OFAC determined that Pinnacle's failure to produce responsive documents constituted an egregious case, resulting in a base penalty amount of $250,000. One of the deciding factors in determining the final penalty amount was that Pinnacle apparently relied in good faith on the advice on legal counsel in deciding not to produce the e-mail with Iran reference and other documents in response to the subpoena. However, OFAC noted that even though Pinnacle relied on the advice of its counsel in deciding not to produce the e-mail and other documents, Pinnacle was the party legally responsible for compliance with OFAC's subpoena and the actions of its counsel were attributable to Pinnacle for purposes of calculating a base penalty and settlement amount.