On May 17, 2010, Wu was convicted of conspiring from 1997 to 2007 to unlawfully export to the PRC military electronics and export restricted electronics components and illegally exporting such parts to the PRC on numerous occasions between 2004 and 2007. At trial, the government proved that the defendants’ illegal enterprise involved the use of Chitron Electronics, Inc. (“Chitron-US&rdquo, a Waltham Massachusetts company Wu owned and controlled. Wu used Chitron-US to procure export restricted equipment from U.S. suppliers and then export the goods to China, through Hong Kong. The exported equipment is used in electronic warfare, military radar, fire control, military guidance and control equipment, missile systems, and satellite communications.
Wu founded and controlled Chitron, including its headquarters in Shenzhen, China, Chitron-Shenzen, and its U.S. office located in Waltham, Massachusetts. Using Chitron, Wu targeted Chinese military factories and military research institutes as customers of Chitron, including numerous institutes of the China Electronics Technology Group Corporation (“CETC&rdquo, which is responsible for the procurement, development, and manufacture of electronics for the Chinese military, including the People’s Liberation Army. Indeed, Wu referred to Chinese military entities as Chitron’s major customer since as early as 2002.
The Department of Defense’s Defense Technology Security Administration has concluded in a report filed with the Court that the defendants’ activities seriously threatened “U.S. national and regional security interests.” According to the Department of Defense, the parts the defendants were convicted of illegally exporting are “vital for Chinese military electronic warfare, military radar, fire control, military guidance and control equipment, and satellite communications.” Further, the illegally exported parts are “precisely the [types of] items ... that the People’s Liberation Army actively seeks to acquire.”
United States Attorney Carmen M. Ortiz said, “This defendant violated U.S. export laws and compromised our national security for more than a decade. He conspired to procure U.S. military products and other controlled electronic components for use in mainland China – for military radar, satellite communications, and guidance systems. Today’s sentence acknowledges the seriousness of those crimes and should send a strong message to anyone considering violating our export laws.”
“This case demonstrates the importance of safeguarding America’s sensitive technology against illicit foreign procurement efforts and should serve as a warning to others who seek to covertly obtain or provide such materials to advance foreign military systems. I applaud the many agents, analysts and prosecutors who helped bring about this successful outcome,” said David Kris, Assistant Attorney General for National Security.
“This sentence reflects the seriousness of the crime and sends a strong message that we will pursue, arrest and prosecute others who flout our laws by diverting sensitive U.S.-origin items through third countries,” said John McKenna, Special Agent in Charge of the Commerce Department’s Office of Export Enforcement Boston Field Office.
Specifically, BIS began implementation of the U.S.-India agreement by revising certain export and reexport controls for India, including removal of nine Indian entities from the Entity List. In addition, BIS amended the EAR to remove India from Country Groups D:2, D:3, and D:4 and instead add India to Country Group A:2.
These changes in the EAR are also a part of the initial steps to implement the export control reform program outlined in the November 8, 2010 U.S.-India bilateral understanding.
The rule is effective January 25, 2011.
Specifically, Census proposes addition of new and modification of some existing data elements in the AES. The elements that will be added or modified are conditional, meaning they will be required only if applicable to the specific shipment being exported. According to Census, this data will support the export control initiative of enforcement agencies by helping to detect and prevent unauthorized exports and to collect complete and accurate export statistics. In addition, Census proposes that AES filing be mandatory for shipments of all used self-propelled vehicles and household goods regardless of value or country of destination.
The additional data elements include name and address of the end user, and ultimate consignee type. It is expected that these conditional data elements will have limited impact on burden response time since entering information for the end user and consignee type is based on the knowledge the exporter has at the time of export. If that information is not known, the filer will not be required to report the information.
Census proposes that license applicant address, license value, and country of origin be other additional required elements. The equipment number field will be revised to require the container number for all containerized cargo. For shipments that require an export license (currently, 6% or records filed require a license), the address of the license applicant will be required. In addition to the value that is currently captured in the AES, the license value per commodity classification will be required to be reported.
For shipments with a foreign country of origin (currently, 17% of records), the country of origin will be required to be reported. For shipments where method of transportation is containerized vessel cargo (currently, 19% of records), the container number will be required to be reported in the equipment number field.
Census expects that individually, completing these conditional fields will not affect exporter burden significantly. Each additional field affects only a percentage of the shipments that are required to be reported in the AES.
Comments to Departmental Paperwork Clearance Office are due on or before March 25, 2011.
Specifically, Census is proposing to require mandatory filing of export information through the Automated Export System (AES) or through AESDirect for all shipments of used self-propelled vehicles, temporary exports and household goods. Census is also proposing to modify the post-departure filing program by changing the filing time from 10 to 5 calendar days and only allowing post-departure reporting for certain approved commodities.
The proposed rule also makes changes to the FTR to improve clarity and to correct errors.
Comments on the proposed rule are due to the Associate Director for Economic Programs with U.S. Census Bureau on or before March 22, 2011.
On September 3, 2008, the Eastern District court of Tennessee at Knoxville, Roth was found to have violated the AECA when he exported data from a defense research project on a trip to China and allowed two foreign nationals in Knoxville to access certain data and equipment in violation of the AECA.
Roth is a published author in the field of plasma technology and a minority owner at Atmospheric Glow Technologies, Inc. (Atmospheric), a Knoxville, TN corporation. In May 2004, Atmospheric was awarded a U.S. Air Force military-purpose contract to develop plasma actuators that could be used to control the flight of small, subsonic, unmanned, military drone aircraft. The project was broken down into Phase I, which entailed developing the design of the actuators, and Phase II, which involved testing the actuators in a wind tunnel and on a non-military aircraft. Roth was told at the beginning of the project, on which he was to work as a consultant, that it was to be paid with “6.2” funds, which Roth knew meant that the research would be subject to export control laws that prohibited access to the research outside the U.S. or to foreign persons unless a license had been obtained.
When Phase I was completed, Roth signed a subcontract between him and Atmospheric acknowledging that Phase II work was subject to export controls. During the project, Roth had two UT graduate students, Xin Dai, a Chinese national and Sirous Nourgostar, an Iranian national, work on the project. The work scope included access to project’s technical data and to a device called Force Stand, which was designed specifically to collect data and to test the plasma actuators.
After meeting with opposition from Daniel Sherman, the principal of Atmospheric, regarding foreign nationals working on the project, Roth sought advice from an the UT and was directed to Robin Witherspoon, UT’s officer in charge of export controls, who notified Roth that the project data was export controlled. After the notification, Dai was removed from the project. In addition, knowing of Roth’s upcoming lecture trip to China, Witherspoon warned Roth not to take any information related to Phase II abroad. Atmospheric also obtained agreement from Roth not to take any project information to China.
When on May 16, 2006, Roth traveled to China to lecture at universities regarding his work, he took with him a paper copy of a Phase II Weekly Report, a flash drive with electronic copies of Phase II reports, and a laptop computer that stored a copy of the Department of Defense Advance Research Projects Agency’s project proposal (Agency Proposal). Roth also told Dai to send to him a copy of a paper containing Phase II data via a Chinese professor’s e-mail address.
On September 3, 2008, the U.S. District Court for the Eastern District of Tennessee convicted Roth with one count of conspiracy to export defense articles in violation of the AECA, fifteen counts of exporting defense articles in violation of the Act, and one count of wire fraud.
Court of Appeals Holding
On appeal, Roth argued that: (1) the Phase II data and the data included in the Agency Proposal were not defense articles or services as a matter of law because they were not developed to put plasma actuators on items identified on the Munitions List; (2) the district court incorrectly instructed the jury as to willfulness and improperly failed to deliver his proposed instruction regarding ignorance of the law; and (3) there was insufficient evidence to support the jury’s conclusion that he willfully exported the Agency Proposal because he never opened the electronic file and could not have known its contents until after he returned to China.
With regard to Roth’s first contention, the Court of Appeals held that “the federal regulations extend export controls to all stages of defense projects that are covered by the [AECA], not just the final stages when military devices are directly involved.” Accordingly, the Court explained, in deciding whether AECA applies to information, articles or services, project stages must not be considered in isolation but, rather, in context of other project stages. The Court stated that it was incorrect to think that “barriers exist between the stages of the project that prevent the defense article qualification from being imputed from one stage to another.” As Phase II involved incorporating plasma actuators on military drone aircraft, all of the project work was correctly held by the district court to be defense articles and services.
With regard to Roth’s second contention as to whether the instruction on “willfulness” issued by the district court was correct, the Court decided that the instruction was proper. Roth had argued in its appeal that the “willfulness” required the defendant to intentionally export defense articles that he specifically knew were on the Munitions List. The Court held that the section 2778 of the AECA does not require a defendant to know that the items being exported are on the Munitions List. Rather, it only requires knowledge that the underlying action is unlawful. Accordingly, the Court held that the instruction given by the district court defining willfulness as doing something intentionally that the defendant knew was unlawful, was proper.
The Court also held that ignorance of the law as a defense instruction, as proposed by Roth, was not a correct statement of the law, and the portion that was correct was substantially covered by another instruction.The Court noted that no circuit court cases have decided whether ignorance of the law was a separate defense to charges under the Act, and in the two Fifth Circuit cases that addressed the issue, neither held that juries must be instructed about ignorance as a separate, affirmative defense. Moreover, in this case the ignorance element was substantially covered by the district court’s instruction regarding willfulness in the “[n]egligent conduct, or conduct by mistake or accident, or with a good faith belief that the conduct was lawful, is not sufficient to constitute willfulness” language. In addition, the Court found that because the district court addressed much of the proposed instruction in the willfulness instruction, failing to deliver Roth’s proposed ignorance of the law instruction to the jury impaired his case only slightly, if at all. As such, the Court held that the district court did not abuse its discretion in declining to deliver Roth’s proposed instruction on ignorance of the law as a separate defense.
On Roth’s final contention, the Court held that the purpose of the Agency Proposal was to build military munitions, and it was premised upon the Phase II technology that UT had told Roth was export controlled and instructed him to not take anything relating to Phase II on his trip to China. In addition, both Roth and the Atmospheric’s principal Sherman had discussed the project information and Roth knew that it was export controlled as the discussions were conducted with Phase II or the Proposal background. Finally, Roth knew that the research he was conducting in Phase II was export controlled, and that it was essentially the same technology used in the Agency Proposal. The Court stated that, “Roth’s conviction could be sufficiently supported by nothing more than circumstantial evidence.” Thus, a rational jury could find beyond a reasonable doubt that Roth knew that the Proposal contained export controlled information and could not be exported out of the U.S. without a license.
Absent a review by the U.S. Supreme Court, Roth must now report to prison to serve the four-year prison sentence imposed by the district court in 2010.
Chun, 66, was a longtime employee at the NASA Glenn Research Center although he is not accused of taking technology or related materials from his work.
Count one of the criminal information specifies that Chun, from March 2000 and November 2005, knowingly exported from the U.S. to the Republic of Korea Infra Red Focal Place Array detectors and Infra Red camera engines which were designated as defense articles on the USML without first obtaining the required export license or authorization from the U.S. Department of State.
Chun is also accused of knowingly making and subscribing a false U.S. individual income tax return for the year 2005, which failed to report over $80,000 of taxable income he earned in 1995.
Through this Final Rule, BIS is removing from the scope of items subject to the Export Administration Regulations (EAR) ‘‘publicly available’’ mass market encryption object code software with a symmetric key length greater than 64- bits, and ‘‘publicly available’’ encryption object code classified under Export Control Classification Number (ECCN) 5D002 on the Commerce Control List when the corresponding source code meets the criteria specified under License Exception TSU. This change is being made pursuant to a determination by BIS that, because there are no regulatory restrictions on making such software ‘‘publicly available,’’ and because, once it is ‘‘publicly available,’’ by definition it is available for download by any end user without restriction, removing it from the jurisdiction of the EAR will have no effect on export control policy. This action will not result in the decontrol of source code classified under ECCN 5D002, but it will result in a simplification of the regulatory provisions for publicly available mass market software and specified encryption software in object code.
U.S. Customs and Border Protection (CBP) issued a notification via Automated Broker Interface (ABI) that importers may continue to apply the GSP special program indicators “A” and “A+” on eligible goods entered or withdrawn from warehouse after December 31, 2010, however, they must pay the applicable Column 1 rate of duty.
It is expected that the GSP program will be reauthorized in the 112th Congress including provision for retroactive recovery of any duties that importers must pay as of January 1, 2011, for goods that would be duty-free if GSP program was in force.
CBP noted that GSP program indicators will enable CBP to liquidate all GSP preference claims with a refund if the program is reauthorized with retroactivity.
According to the plea agreement, Nwankwoala worked as a state probation officer. In February 2008, Nwankwoala was granted a license to export a 12 gauge shotgun to Nigeria for personal use. In February 2009, Nwankwoala applied for an export license to export shotguns to Nigeria, stating that these weapons were to be used in the operation of a newly-opened shooting range in Nigeria. The U.S. Department of Commerce denied the license because Nwankwoala did not provide evidence of that the shooting range existed.
From December 2008 to May 2009, Nwankwoala purchased at least 37 shotguns from a gun shop in Washington, D.C. metro area and ordered 25 more shotguns over the internet from a licensed company in Ogden, Utah, falsely advising the company that he had an export license.
On May 13, 2009, Nwankwoala told an undercover ICE agent that he had made a large profit over 10 years from purchasing shotguns and shipping them to Nigeria in shipping containers with vehicles and hospital beds. Nwankwoala said he knew he needed a license to ship the guns, but had not obtained one because he could not identify the end user as required by federal law. The end user was not licensed to receive the weapons.
In July or August 2009, Nwankwoala prepared a shipping container with 24 shotguns, six pistols and ammunition, all concealed in suitcases and a car. Nwankwoala did not disclose that je was shipping firearms or ammunition. The container was delivered to a ship in Port Elizabeth, in Newark, New Jersey for shipment to Nigeria.
The ship left Porit Elizabeth and arrived in Nigeria on September 15, 2009, but the container was not unloaded based upon a request from law enforcement to have the container returned for inspection. On October 6, 2009, U.S. and Spanish law enforcement inspected the container in Algeciras, Spain, and seized the firearms, ammunition and automobile. Further investigation showed that Nwankwoala had bought five of the pistols and 12 of the shotguns.
From August 2006 through August 2009, eight other shipments were made to Nigeria in an identical manner. Nwankwoala did not have the licenses or authorizations from the Department of State or the DOC to export the firearms and ammunition to Nigeria, nor did he possess a federal license to engage in the business of dealing in firearms.