Prosecution of Export Controls Violations Increased in the Past Year
10/28/08 12:35 AM
On October 28, 2008, the
U.S. Department of Justice issued a statement in which it announced
that the National Export Enforcement Initiative (NEEI), a
multi-agency effort to combat illegal exports of restricted
military and dual-use technology, has led to criminal charges
against more that 145 defendants in the past fiscal year.
The NEEI was established in October 2007 and is designed to increase coordination among agencies involved in export controls, to enhance prosecution of these crimes, and to deter illicit exports. The 145 defendants in export controls and embargo cases in FY 2008 are an increase from the 110 charged in FY 2007. Charges brought in these cases include violations of the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA), the export control provision of the Patriot Reauthorization Act (PRA), the Trading with the Enemy Act (TEA), and other statutes.
About 43 percent of the defendants charged in FY 2008 were charged in export control or embargo cases that involved munitions or other restricted technology that were bound for Iran or China. Iran ranked as the leading destination for illegal exports of restricted technology in the prosecutions brought in both FY 2007 and FY 2008.
The illegal exports bound for Iran have involved such items as missile guidance systems, Improvised Explosive Device (IED) components, military aircraft parts, and night vision systems. The illegal exports to China have involved rocket launch data, space shuttle technology, missile technology, naval warship data, Unmanned Aerial Vehicle or “drone” technology, thermal imaging systems, military night vision systems and other materials. A significant portion of the cases in FY 2007 and FY 2008 involved illegal exports to Mexico. These prosecutions primarily involved illegal exports of firearms and large quantities of ammunition destined for Mexico.
The most recent indictment under the NEEI was returned on October 28, 2008, against three individuals in the District Court of Minnesota, charging them with conspiring to illegally export to China controlled carbon-fiber material with applications in rockets, satellites, spacecraft, and uranium enrichment process.
The U.S. Military items, dual-use equipment, and technological expertise may not be exported without the U.S. government approval. Foreign procurement networks rarely target complete weapons systems, but often focus on components to obtain their own weapons systems.
The NEEI was established in October 2007 and is designed to increase coordination among agencies involved in export controls, to enhance prosecution of these crimes, and to deter illicit exports. The 145 defendants in export controls and embargo cases in FY 2008 are an increase from the 110 charged in FY 2007. Charges brought in these cases include violations of the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA), the export control provision of the Patriot Reauthorization Act (PRA), the Trading with the Enemy Act (TEA), and other statutes.
About 43 percent of the defendants charged in FY 2008 were charged in export control or embargo cases that involved munitions or other restricted technology that were bound for Iran or China. Iran ranked as the leading destination for illegal exports of restricted technology in the prosecutions brought in both FY 2007 and FY 2008.
The illegal exports bound for Iran have involved such items as missile guidance systems, Improvised Explosive Device (IED) components, military aircraft parts, and night vision systems. The illegal exports to China have involved rocket launch data, space shuttle technology, missile technology, naval warship data, Unmanned Aerial Vehicle or “drone” technology, thermal imaging systems, military night vision systems and other materials. A significant portion of the cases in FY 2007 and FY 2008 involved illegal exports to Mexico. These prosecutions primarily involved illegal exports of firearms and large quantities of ammunition destined for Mexico.
The most recent indictment under the NEEI was returned on October 28, 2008, against three individuals in the District Court of Minnesota, charging them with conspiring to illegally export to China controlled carbon-fiber material with applications in rockets, satellites, spacecraft, and uranium enrichment process.
The U.S. Military items, dual-use equipment, and technological expertise may not be exported without the U.S. government approval. Foreign procurement networks rarely target complete weapons systems, but often focus on components to obtain their own weapons systems.
Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components
09/18/08 08:23 AM
On September 17, 2008, the
Department of Justice (DOJ) announced that a federal grand jury in
Miami, Florida, has returned a Superseding
Indictment charging sixteen foreign nationals
and corporations in connection with their participation in
conspiracy to export U.S.-manufactured commodities to prohibited
entities and to Iran.
The Indictment includes charges of conspiracy, violations of the International Emergency Economic Powers Act (IEEPA) and the United States Iran Embargo, and making false statements to federal agencies in connection with the export of thousands of U.S. goods to Iran. Specifically, the Indictment alleges that the defendants purchased, and then caused the export of U.S. dual-use goods to ultimate buyers in Iran through middle countries, including the United Arab Emirates, Malaysia, England, Germany, and Singapore. Dual-use commodities are those that have commercial application, but could potentially be used to further the military or nuclear programs of other nations and thus could be detrimental to the foreign policy or national security of the United States.
The goods at issue are controlled by the Export Administration Regulations (EAR) for missile technology, national security and antiterrorism reasons as well as under the International Traffic in Arms Regulations (ITAR). In this case, the Indictment alleges that the defendants exported 120 field-programmable gate arrays, over 5,000 integrated circuits of varying types, around 345 Global Positioning Systems (GPS), 12,000 Microchip brand micro-controllers, and a Field Communication. These commodities have potential military applications, including as components in construction of improvised explosive devises (IEDs).
The charges announced are the result of a criminal investigation that was initiated in July 2006. Led by the Commerce Department, the investigation also included the efforts of the Departments of Homeland Security, Defense, State and Treasury.
As a result of investigation, the Commerce Department’s Bureau of Industry and Security (BIS) issued a Final Rule in the Federal Register announcing 75 additions to its Entity List because of their involvement in this illegal global procurement network for the benefit of the Iranian Government, and for their relationship to the Mayrow General Trading, one of the procurement front companies.
The Indictment includes charges of conspiracy, violations of the International Emergency Economic Powers Act (IEEPA) and the United States Iran Embargo, and making false statements to federal agencies in connection with the export of thousands of U.S. goods to Iran. Specifically, the Indictment alleges that the defendants purchased, and then caused the export of U.S. dual-use goods to ultimate buyers in Iran through middle countries, including the United Arab Emirates, Malaysia, England, Germany, and Singapore. Dual-use commodities are those that have commercial application, but could potentially be used to further the military or nuclear programs of other nations and thus could be detrimental to the foreign policy or national security of the United States.
The goods at issue are controlled by the Export Administration Regulations (EAR) for missile technology, national security and antiterrorism reasons as well as under the International Traffic in Arms Regulations (ITAR). In this case, the Indictment alleges that the defendants exported 120 field-programmable gate arrays, over 5,000 integrated circuits of varying types, around 345 Global Positioning Systems (GPS), 12,000 Microchip brand micro-controllers, and a Field Communication. These commodities have potential military applications, including as components in construction of improvised explosive devises (IEDs).
The charges announced are the result of a criminal investigation that was initiated in July 2006. Led by the Commerce Department, the investigation also included the efforts of the Departments of Homeland Security, Defense, State and Treasury.
As a result of investigation, the Commerce Department’s Bureau of Industry and Security (BIS) issued a Final Rule in the Federal Register announcing 75 additions to its Entity List because of their involvement in this illegal global procurement network for the benefit of the Iranian Government, and for their relationship to the Mayrow General Trading, one of the procurement front companies.
DOJ Revises Corporate Charging Guidelines with Respect to the Waiving of Attorney-Client Privilege and Cooperation
09/01/08 10:42 PM
On August 28, 2008, the U.S.
Department of Justice (DOJ) announced that it is revising its corporate
charging guidelines for federal prosecutors throughout the nation
with respect to prosecuting corporate fraud. The Department’s
Principles of Federal Prosecution of Business Organizations govern
how all federal prosecutors investigate, charge, and prosecute
corporate crimes.
The revisions will for the first time be included in the United State’s Attorney’s Manual, which is binding on all Department of Justice federal prosecutors. Before the current revisions, the regulations were published in the form of DOJ’s internal legal memorandum, also known as the McNulty Memorandum. The revised Principles will be effective immediately.
The first important revision affects credit for cooperation. The revised guidelines state that credit for cooperation will depend on the disclosure of relevant facts, rather than corporation’s waiver of attorney-client privilege or work product protection. Thus, whether or not a corporation waives attorney-client privilege or work product, it may receive due credit for cooperation if they disclose relevant facts. Conversely, if a corporation fails to disclose relevant facts, it may not receive credit for cooperation.
The second important provision affects the federal prosecution’s ability to receive non-factual attorney-client privileged communications and work product. While under the old regulations federal prosecutors were allowed to request such information, titled “Category II” information, the new guidelines forbid it, with two exceptions well established in existing law.
Among other significant changes, the new guidelines instruct prosecutors not to consider a corporation’s advancement of legal fees to employees when evaluation cooperativeness. Moreover, the new regulations establish that corporation may participate in a joint defense agreement and still be eligible for cooperation credit.
Finally, federal prosecutors will be prohibited to consider whether a corporation sanctioned or retained culpable employees in evaluating whether credit for cooperation should be granted.
The revised "Principles of Federal Prosecution of Business Organizations" can be found here.
The revisions will for the first time be included in the United State’s Attorney’s Manual, which is binding on all Department of Justice federal prosecutors. Before the current revisions, the regulations were published in the form of DOJ’s internal legal memorandum, also known as the McNulty Memorandum. The revised Principles will be effective immediately.
The first important revision affects credit for cooperation. The revised guidelines state that credit for cooperation will depend on the disclosure of relevant facts, rather than corporation’s waiver of attorney-client privilege or work product protection. Thus, whether or not a corporation waives attorney-client privilege or work product, it may receive due credit for cooperation if they disclose relevant facts. Conversely, if a corporation fails to disclose relevant facts, it may not receive credit for cooperation.
The second important provision affects the federal prosecution’s ability to receive non-factual attorney-client privileged communications and work product. While under the old regulations federal prosecutors were allowed to request such information, titled “Category II” information, the new guidelines forbid it, with two exceptions well established in existing law.
Among other significant changes, the new guidelines instruct prosecutors not to consider a corporation’s advancement of legal fees to employees when evaluation cooperativeness. Moreover, the new regulations establish that corporation may participate in a joint defense agreement and still be eligible for cooperation credit.
Finally, federal prosecutors will be prohibited to consider whether a corporation sanctioned or retained culpable employees in evaluating whether credit for cooperation should be granted.
The revised "Principles of Federal Prosecution of Business Organizations" can be found here.
Airlines Plead Guilty to Price Fixing Air Cargo Rates and Agree to Pay Criminal Fines of More than $500 Million
06/30/08 10:54 PM
On June 26, 2008, the United
States Department of Justice (DOJ) announced that five major international
airlines (Air France, Cathay Pacific, KLM Royal Dutch Airlines,
Martinair, and SAS) have agreed to each plead guilty and pay
criminal fines totaling $504 million for participating in a
multi-year conspiracy to fix prices for air cargo rates. Of the
total, Air France-KLM, which now operates under common ownership by
a single holding company, has agreed to pay a $350 million criminal
fine, the second highest ever levied in a criminal antitrust
prosecution, DOJ states.
According to the charges filed on June 26, 2008, the airlines each engaged in a conspiracy to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments. The companies have each agreed to cooperate in the DOJ's ongoing investigation.
The DOJ stated:
According to the charges filed on June 26, 2008, the airlines each engaged in a conspiracy to suppress and eliminate competition by fixing the cargo rates charged to customers for international air shipments. The companies have each agreed to cooperate in the DOJ's ongoing investigation.
The DOJ stated:
The plea agreements are subject to court approval. Along with Air France-KLM’s $350 million fine, Cathay has agreed to pay a $60 million criminal fine, Martinair has agreed to pay a $42 million criminal fine, and SAS has agreed to pay a $52 million criminal fine. If the court accepts the plea agreements, it would bring the total fines imposed in the Antitrust Division’s investigation in the air transportation industry to more than $1.27 billion, marking the highest total amount of fines ever imposed in a criminal antitrust investigation.
Qantas Airways Agrees to Plead Guilty and Pay $61 Million Fine for Cargo Price Fixing
11/29/07 12:26 PM
The DOJ reports that during the time period of the felony charge, Qantas was the largest carrier of cargo between the United States and Australia and earned more than $600 million from its cargo flights to and from the United States. Under the plea agreement, which is subject to court approval, Qantas has agreed to cooperate with the DOJ in the ongoing investigation.
Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division, stated:
Qantas’ guilty plea sends a clear message that those who engage in price fixing and other forms of illegal collusion will pay a heavy price for their crimes. The shipment of consumer products by air transportation is critical to our global economy. Our investigation into this important industry will continue, and we will aggressively pursue those who engage in criminal conduct that harms American consumers.
In August 2007, British Airways Plc and Korean Air Lines Co. Ltd. pleaded guilty and were sentenced to pay separate $300 million criminal fines for their roles in conspiracies to fix the prices of passenger and cargo flights
The ongoing investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Federal Bureau of Investigation.