Category

Export

Jun 05

Dutch Fokker to pay $10.5 Million Export Penalty

By Export, International Business

Dutch Company Agrees to Pay $10.5 Million Civil Penalty to Settle Commerce Department Charges Involving Illegal Exports and Reexports to Iran and Sudan

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS), Office of Export Enforcement (OEE), recently announced that Fokker Services B.V. (“Fokker Services”), a Netherlands-based aerospace services provider, has agreed to a $10.5 million civil settlement agreement in connection with the illegal export and re-export of aircraft parts, technology, and services to Iran and Sudan, both of which are subject to U.S. sanctions, including BIS licensing requirements. The settlement was reached as part of a global settlement involving the U.S. Department of Justice and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

“The scope of today’s global settlement with Fokker Services highlights the egregious nature of the violations and points to the commitment of OEE to pursue and prosecute those responsible no matter where they are located,” said Under Secretary of Commerce Eric L. Hirschhorn. “OEE and our partner law enforcement colleagues will continue to use all means available to ensure that U.S. technology does not fall into the wrong hands.”

The $10.5 million settlement with BIS also in part resolves the OFAC allegations. Under a deferred prosecution agreement entered into with the Department of Justice, the company is forfeiting an additional $10.5 million.

BIS has charged Fokker Services with 253 separate violations of the Export Administration Regulations (EAR), including for the export or reexport of items controlled for national security, missile technology and antiterrorism purposes. The charges include transactions involving Iranian military end users and violations of the terms of a temporary denial order in force at the time against Iran Air. The charges result from an investigation by OEE, along with the Federal Bureau of Investigation, the Defense Criminal Investigative Service, and Homeland Security Investigations, that uncovered numerous violations that occurred between 2005 and 2010. The investigation found that Fokker Services systematically engaged in activity to avoid detection by U.S. investigators by taking steps to conceal the ultimate destination of the transactions.

Fokker Services is based in the Netherlands and is a subsidiary of Fokker Technologies Holding B.V., a manufacturing and technical services company also based in the Netherlands. Fokker Services had three subsidiaries: Fokker Aircraft Services, B.V., based in the Netherlands; Fokker Services Asia Pte. Ltd., based in Singapore; and Fokker Services, Inc., based in Atlanta, Georgia. Since 2010, Fokker Services has ceased all business with sanctioned countries and has implemented a new compliance program. Under the settlement, Fokker Services accepts and acknowledges responsibility for its conduct and that of its employees. The settlement is subject to final review and approval by the Assistant Secretary for Export Enforcement.

BIS controls exports and reexports of commodities, technology, and software for reasons of national security, missile technology, nuclear non-proliferation, chemical and biological weapons non-proliferation, crime control, regional stability, foreign policy and anti-terrorism. Criminal penalties and administrative sanctions can be imposed for violations of the Export Administration Regulations. For more information, please visit www.bis.doc.gov.

SOURCE:   BIS

May 13

New Regulations Remove Most Satellites from ITAR Controls

By Export, International Business, News

US Commerce Department to License Export of Satellites; Move is Key Component of Export Control Reform Initiative

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) recently published regulations that will fundamentally change the nature of U.S. export controls on most commercial, scientific, and civil satellites and their parts and components. Together with a companion rule issued by the Department of State, the action moves the items from Category XV of the State Department’s U.S. Munitions List (USML) to the Commerce Control List (CCL).

Items on the USML are governed by the hyper-strict International Traffic in Arms Regulations (ITAR) and supervised by the State Department.  Most less-sensitive commercial exports on the CCL are governed by BIS, which has significantly fewer restrictions and controls than ITAR.  Thus, this move opens the door to a much broader export market for these items.

“[This] action reflects the cooperation that has made the President’s Export Control Reform Initiative such an extraordinary success story,” said Under Secretary of Commerce Eric L. Hirschhorn. “For the many American businesses that compete in this key technology sector, it means a stronger United States defense industrial base, the ability to focus the government’s limited resources on the technologies and destinations of greatest concern, an increase in the competitiveness of the U.S. satellite industry, and a reduction in the licensing burden on U.S. exporters.”

The items moving to Commerce jurisdiction include communications satellites that do not contain classified components, certain remote sensing satellites, spacecraft parts, components, accessories, attachments, equipment, or systems that are not specifically identified in the revised category, and all radiation-hardened microelectronic microcircuits.

In many instances, the updated regulations also allow the commercial, scientific and civil satellites transferred to Commerce jurisdiction to incorporate parts and components listed on the USML and remain under Commerce licensing authority.

The changes to the controls on radiation-hardened microelectronic microcircuits take effect 45 days after publication of the rule, while the remainder of the changes take effect 180 days after publication.

SOURCE:  BIS

Dec 02

Black-Out Monday: 706 Web Sites Selling Counterfeit Merchandise Seized

By copyright, Customs IP Enforcement, Export, Import, Intellectual Property, International IP, Internet / eCommerce, News, Technology Transactions

U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) teamed with 10 foreign law enforcement agencies to seize hundreds of domain names that were illegally selling counterfeit merchandise online to unsuspecting consumers. Seizures come as US consumers flock to the Web for Cyber Monday shopping deals.

The 706 domain names seized were set up to dupe consumers into unknowingly buying counterfeit goods as part of the holiday shopping season. The operations were coordinated by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington, D.C.

An iteration of “Operation In Our Sites,” Project Cyber Monday IV resulted in the seizure of 297 domain names from undercover operations conducted by HSI offices around the country. This is the fourth year that the IPR Center has targeted websites selling counterfeit products online in conjunction with Cyber Monday. Due to the global nature of Internet crime, the IPR Center partnered with Europol who, through its member countries, seized 393 foreign-based top-level domains as part of Project Transatlantic III. Additionally, Hong Kong Customs coordinated the seizure of 16 foreign-based top-level domains hosted in Hong Kong, enlisting the assistance of the web-hosting companies to suspend the service of related websites.

“Working with our international partners on operations like this shows the true global impact of IP crime,” said ICE Acting Director John Sandweg. “Counterfeiters take advantage of the holiday season and sell cheap fakes to unsuspecting consumers everywhere. Consumers need to protect themselves, their families, and their personal financial information from the criminal networks operating these bogus sites.”

During the weeks leading up to the end of the year, the market is flooded with counterfeit products being sold at stores, on street corners, and online, according to law enforcement officials, not only ripping off the consumer with shoddy products, but also putting their personal financial information at risk. The most popular counterfeit products seized each year include headphones, sports jerseys, personal care products, shoes, toys, luxury goods, cell phones and electronic accessories, according to the IPR Center.

“This operation is another good example of how transatlantic law enforcement cooperation works. It sends a signal to criminals that they should not feel safe anywhere,” said Rob Wainwright, director of Europol. “Unfortunately the economic downturn has meant that disposable income has gone down, which may tempt more people to buy products for prices that are too good to be true. Consumers should realize that, by buying these products, they risk supporting organized crime.”

During the last few weeks, the IPR Center and its international partners received leads from trademark holders regarding the infringing websites. Those leads were disseminated to HSI offices in Denver, Dallas, El Paso, Houston and Salt Lake City as well as the Belgium Economic Inspection, Belgium Customs, Denmark Police, Hungarian Customs, French Gendarmerie, French Customs, Romanian Police, Spanish Guardia Civil, City of London Police, and Hong Kong Customs and Excise Department.

The domain names seized are now in the custody of the governments involved in these operations. Visitors typing those domain names into their Web browsers will now find a banner that notifies them of the seizure and educates them about the federal crime of willful copyright infringement.

During this operation, federal law enforcement officers made undercover purchases of a host of products including professional sports jerseys and equipment, DVD sets and a variety of clothing, jewelry and luxury goods from online retailers who were suspected of selling counterfeit products. Upon confirmation by the trademark or copyright holders that the purchased products were counterfeit or otherwise illegal, law enforcement officers obtained seizure orders for the domain names of the websites that sold these goods.

Operation In Our Sites is a sustained law enforcement initiative that began more than three years ago to protect consumers by targeting the sale of counterfeit merchandise on the Internet. The 297 domain names seized under Project Cyber Monday IV bring the total number of In Our Sites domain names seized to 2,550 since the operation began in June 2010. In that time, the seizure banner has received more than 122 million individual views.

U.S. Attorney’s Offices in the District of Utah, Western District of Texas, Southern District of Texas, Northern District of Texas, and the District of Colorado issued the warrants for U.S. seizures. Significant assistance was provided by the Department of Justice’s Computer Crime and Intellectual Property Section.

The HSI-led IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. Working in close coordination with the Department of Justice Task Force on Intellectual Property, the IPR Center uses the expertise of its 21-member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to intellectual property theft. Through this strategic interagency partnership, the IPR Center protects the public’s health and safety and the U.S. economy.

SOURCE:  U.S. ICE (www.iprcenter.gov)

 

Sep 09

US Exports Reach $189.4B in July

By Export

The United States exported $189.4 billion in goods and services in July 2013, according to data released earlier by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department. July’s exports came in just shy of June’s all-time record high of $190.5 billion.

“These numbers demonstrate that President Obama’s National Export Initiative continues to help American businesses thrive in international markets,” said Export-Import Bank Chairman Fred P. Hochberg. “Exports are a critical component of our nation’s economic success, and I look forward to seeing more ‘Made in the USA’ labels on shelves around the world.”

 Exports of goods and services over the last twelve months totaled $2.2 trillion, which is 41.7 percent above the level of exports in 2009. Over the last twelve months, exports have been growing at an annualized rate of 10.2 percent when compared to 2009.

Over the last twelve months, among the major export markets, the countries with the largest annualized increase in U.S. goods purchases, when compared to 2009, occurred in Panama (28.6 percent), Russia (22.1 percent), United Arab Emirates (21.9 percent), Peru (21.3 percent), Chile (20.9 percent), Colombia (19.7 percent), Hong Kong (19.5 percent), Argentina (18.3 percent), Ecuador (18.0 percent), and South Africa (17.7 percent).

SOURCE: Export-Import Bank of the United States

Sep 02

Iranian Citizen Sentenced to 48 months for Illegal Export Conspiracy

By Export

An Iranian citizen has been sentenced to 48 months in prison for conspiracy to illegally export more than 3,000 electronic components from the United States to Iran through Hong Kong, following an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Washington, D.C.

Arsalan Shemirani, 30, was also sentenced to forfeiture in the amount of $187,305.

Shemirani pleaded guilty Jan. 25 in the U.S. District Court for the District of Columbia to conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and to defraud the United States.

He was sentenced by Richard J. Leon Aug. 15 and the sentence was unsealed by the court and made public late Thursday.

According to court documents filed in the case, beginning as early as January 2010 and continuing through at least November 2011, Shemirani, with his brother in Iran and a coconspirator in Hong Kong, exported electronic parts from the United States to Iran, via Canada and Hong Kong, without first obtaining a license or authorization from the Office of Foreign Assets Control, Department of Treasury.

The defendant, who was residing in Canada during the time of the conspiracy, received purchase orders from his brother, who operated an electronics supply business in Tehran, Iran.

The items purchased by the defendant on behalf of the conspiracy included high performance electronic power equipment such as field programmable microchips, acceleration sensor semiconductors, analog converters, and other testing and power equipment. During the course of the conspiracy, the defendant purchased approximately 3,695 electronic components that were then illegally exported to his brother in Iran.

The prosecution was handled by Assistant U.S. Attorney Courtney Spivey Urschel and former Assistant U.S. Attorney Robert Bowman, from the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney Brandon Van Grack from the Counterespionage Section of the Justice Department’s National Security Division.

SOURCE: ICE

Aug 19

Modernization of Export Process and Full Deployment of Automated Commercial Environment

By Export

U.S. Customs and Border Protection (CBP) presented updates and received valuable feedback from trade stakeholders on a variety of trade facilitation, antidumping enforcement and modernization issues during the Aug. 7 meeting of the Advisory Committee on Commercial Operations (COAC).

“We have a lot of work to do. We need your help in getting people ready for full implementation of ACE,” said CBP Acting Commissioner Thomas S. Winkowski to COAC members. “We are making progress with our partner government agencies toward making a single window, One U.S. Government at the Border (trade processing system).”

Key highlights of the meeting included announcement of a three-year deployment schedule for the completion of the Automated Commercial Environment (ACE) with firm dates for mandatory use of ACE. A COAC subcommittee also gave a detailed analysis and recommendations on how to improve and modernize the export process. Updates were also given regarding ongoing improvement of the Air Cargo Advanced Screening (ACAS) program and recommendations to develop program rules that accommodate various business models. Subcommittee topics also included development of e-bonds, encouraging enforcement and prosecution of anti-dumping/countervailing duty cases and ongoing work toward mutual recognition of trusted trader programs with foreign governments, including Canada, Mexico and Israel.

In his closing remarks, Acting Commissioner Winkowski encouraged CBP, its international partners Canada and Mexico and the trade community to consider collaborating on the development of a North American strategy. He noted that all three countries are working on very similar initiatives and that perhaps this work could be channeled into a larger strategy. The Acting Commissioner also observed that collaborative, inter-customs agency projects remain ongoing on our northern and southern borders and that ultimately these efforts help all three countries move closer toward harmonization of customs documentation.

Source: CBP

Aug 19

Changes to the Foreign Trade Regulations Export Requirements

By Export, International Business

On March 14, 2013, the U.S. Census Bureau (Census) published new export reporting requirements under the Foreign Trade Regulations (FTR) in the Federal Register that become effective January 8, 2014.  Specifically, Census is requiring mandatory filing of export information through the Automated Export System (AES) or through AES Direct for all shipments of used self-propelled vehicles and temporary exports.  In addition to adopting new export reporting requirements and modifying the post-departure filing program, Census is making remedial changes to the FTR to improve clarity and to correct errors.

Changes to the FTR include:

  1. Post-departure filing (Option 4 program) (15 CFR 30.5)
    1. Post-departure (Option 4 Program) filing timeframe to complete the Electronic Export Information (EEI) in AES will be reduced from 10 calendar days to 5 calendar days.
    2. A moratorium on accepting new applications for post-departure filing is still in place.
  2. Household Goods
    1. The definition of household goods has changed to:  Usual and reasonable kinds and quantities of personal property necessary and appropriate for use by the U.S. Principal Party in Interest (USPPI) in the USPPI’s dwelling in a foreign country that are shipped under a bill of lading or an air waybill and are not intended for sale.
    2. The household goods export code can only be used for shipments where the USPPI is the ultimate consignee.
  3. Used Self-Propelled Vehicles
    1. All used self-propelled vehicles must be filed in the AES regardless of value or country of destination (15 CFR 30.2(a)(1)(iv)(H)).
    2. All used self-propelled vehicles must be filed in AES 72 hours prior to export (15 CFR 30.4(b)(5)).
  4. Port of Export (15 CFR 30.6(a)(9))
    1. Clarification of port of export specifies that the port of export for shipments by overland transportation is where the goods cross the U.S. border into Canada or Mexico, including transshipments through Canada or Mexico to other countries.
    2. The language for port of export was revised in 15 CFR 30.6(a)(9) to include FTR 15 CFR 30.6(a)(9)(i) and (ii).
  5. Split Shipments (15 CFR 30.28)
    1. The requirements regarding split shipments will apply to all modes of transportation, not just specific to the air environment as it exists today.
    2. The definition of split shipments has changed to the following:  A shipment booked for export that is divided by the carrier into more than one conveyance and sent on two or more conveyances of the same carrier from the same port within 24 hour for cargo transported by vessel and 7 days for all other modes of transportation.
  6. Exclusions
    1. AES filing is NOT required for licensed goods where the country of ultimate destination is the United States or for goods destined to international waters where the person(s) or entity assuming control of the item(s) is a U.S. citizen or permanent resident alien of the United States (15 CFR 30.2(d)(5)).
    2. The Exclusion legend is required to be reported on the bill of lading, air waybill, export shipping instructions, or other commercial loading documents.
  7. Exemptions (15 CFR 30.37)
    1. The following exemptions were ADDED to the FTR changes:
      1. Exports of technical data and defense service exemptions as defined in 22 CFR 123.22 (b)(3)(iii) are exempt from the EEI filing requirements in AES (15 CFR 30.37(u)).
      2. Reporting vessels, aircraft, cargo vans, and other carriers and containers when shipping as tools of international trade (15 CFR 30.37(v)).
      3. Shipments to Army Post Office, Diplomatic Post Office, Fleet Post Office (15 CFR 30.37(w)).
      4. Shipments exported under License Exception BAG (15 CFR 30.37(x)).
      5. Specific types of shipments destined for a country listed in Country Group E:1 (15 CFR 30.37(y)).  Country Group E:1 are Cuba, Iran, North Korea, Sudan, and Syria. These countries support acts of international terrorism.
    2. The following exemptions were REMOVED:
      1. Temporary shipments: temporary shipments of goods valued over $2,500 per Schedule B or that fall under 15 CFR 30.2(a)(1)(iv) must be filed in the AES.  When reporting temporary exports report the appropriate export information code for temporary goods, such as “TE” export intended for return and “TP” domestic merchandise (§30.37(q) and I).
      2. In-bond (in-transit) shipments (§30.37I). This is covered under the current exclusion (30.2(d)(1)).
  8. International waters
    1. International Waters Change in Definition– waters located outside the U.S. territorial sea, which extends 12 nautical miles measured from the baselines of the United States, and outside the territory of any foreign country, including the territorial water thereof. Note that vessels, platforms, buoys, undersea systems, and other similar structures that are located in international waters, but are attached permanently or temporarily to a country’s continental shelf, are considered to be within the territory of that country.
    2. For licensed shipments to international waters, it will be required that the person designated on the export license must be reported as the ultimate consignee (§30.6).
    3. For Bureau of Industry and Security license exceptions and non-licensed shipments to international waters the filer will be required to report the nationality of the person(s) or entity assuming control of the item(s) subject to the Export Administration Regulations (§30.6(a)(5)(i)).
  9. Data elements (15 CFR 30.6)
    Two data elements were ADDED:

    1. License value – Report the value indicated on the license.
    2. Ultimate consignee –There are four types: Direct Consumer, Government Entity, Reseller, and Other/Unknown. Other/Unknown is an entity that does not fall under one of the other three ultimate consignee types or whose type is not known at the time of export.

Source: U. S. Census Bureau

Jun 03

US Cyber-Sting Catches Chinese National Attempting to Export Sensitive Technology

By Export

A Chinese citizen pleaded guilty last Thursday at the federal courthouse in Brooklyn to violating the International Emergency Economic Powers Act by attempting to export weapons-grade carbon fiber from the United States to China. The guilty plea follows an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Defense Criminal Investigative Service and the U.S. Department of Commerce Office of Export Enforcement.

Lisong Ma, 34, was arrested after attempting to close a deal to acquire and export the specialized materials, which have applications in the defense and aerospace industries and are therefore controlled for export by the United States.

“The defendant tried to circumvent laws that protect our national security by preventing specialized technologies from falling into the wrong hands. The defendant was bent on exporting to China up to five tons of weapons-grade carbon fiber — enough carbon fiber to stretch from Brooklyn to the Pacific Ocean,” stated United States Attorney Loretta E. Lynch. “Today’s conviction should leave no doubt that the United States will use every available technique, including covert cyber operations, to maintain the superiority of our nation’s armed forces.”

During the investigation, federal agents tasked with protecting sensitive technology maintained a covert cyber-presence on web sites related to the brokering, purchase and sale of controlled commodities. In February 2013, the defendant, using the name “Ma Li,” e-mailed an undercover agent and indicated that he was interested in acquiring several different types of high-grade carbon fiber. Then, through various online communications, the defendant attempted to negotiate the purchase of five tons of carbon fiber. Based on a review of Internet Protocol log-in information, investigators discovered that the defendant was communicating from the People’s Republic of China.

On March 12, 2013, the defendant and undercover agents engaged in an online video teleconference session, which was recorded. During the teleconference, the defendant and the undercover agents discussed the license requirement to export certain types of carbon fiber from the United States. One of the agents told the defendant: “We can’t send this to China without an export license, otherwise we risk going to jail.” The defendant then told agents that he would soon be traveling to the United States, and arranged a meeting to further discuss the terms of a deal. On March 27, 2013, the defendant met with undercover agents in the United States. During the meeting, which was covertly recorded, the defendant requested a sample of carbon fiber, because it was “easier” and “safer” to ship, and later commented: “There is a greater chance that the authorities will arrest you if you get a third party involved. That is why it’s better to go directly from the U.S. to China.”

The defendant ultimately decided to ship a sample of weapons-grade, Toray-type T-800 carbon fiber from the United States to China. He paid the undercover agents and placed the material into a plain brown box. Ma falsely indicated on the waybill and invoice that the package contained “clothing.” After the defendant finished packing the box and completing the shipping forms, the package was transported to a courier service, to be shipped to China. The package was thereafter intercepted by agents before it could be exported. Agents also intercepted and arrested the defendant shortly thereafter, as he transited Los Angeles International Airport on his way to Shanghai. He was then removed in custody to Brooklyn.

When sentenced, Ma faces up to 20 years in prison, as well as forfeiture and a fine of up to $1 million.

SOURCE: ICE

May 07

Chinese Man Sentenced for Exporting Sensitive US Military Technology to China

By Customs IP Enforcement, Export, Intellectual Property, International IP

A former employee of a New Jersey-based defense contractor was sentenced Monday for exporting sensitive military technology to China, stealing trade secrets and lying to federal agents. The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), FBI and U.S. Customs and Border Protection.

Sixing Liu, aka Steve Liu, 49, a Chinese national, who had recently lived in Flanders, N.J., and Deerfield, Ill., was sentenced to 70 months in prison. Liu was also ordered to serve three years of supervised release and pay a $15,000 fine. Restitution is to be determined at a later date.

Liu was convicted by a federal grand jury in September 2012 and has remained in federal custody.

The jury convicted Liu of nine of the 11 counts in the second superseding indictment with which he was charged, including: six counts of violating the Arms Export Control Act and the International Traffic in Arms Regulations; one count of possessing stolen trade secrets in violation of the Economic Espionage Act of 1996; one count of transporting stolen property in interstate commerce; and one count of lying to federal agents.

“Today’s sentencing underscores the potential global consequences when sensitive military weapons and technical data come into the wrong hands,” said Andrew McLees, special agent in charge of HSI Newark. “HSI is determined to bring these criminals to justice and prevent criminal organizations from threatening our safety and security.”

According to court documents, in 2010, Liu stole thousands of electronic files from his employer, L-3 Communications, Space and Navigation Division, located in Budd Lake, N.J. The stolen files detailed the performance and design of guidance systems for missiles, rockets, target locators and unmanned aerial vehicles. Liu stole the files to position and prepare himself for future employment in China. As part of that plan, Liu delivered presentations about the technology at several Chinese universities, the Chinese Academy of Sciences and conferences organized by Chinese government entities. However, Liu was not charged with any crimes related to those presentations.

Liu boarded a flight from Newark Liberty International Airport to China Nov. 12, 2010. Upon his return to the United States Nov. 29, 2010, HSI special agents found Liu in possession of a non-work-issued computer found to contain the stolen material. The following day, Liu lied to HSI special agents about the extent of his work on U.S. defense technology, which the jury found to be a criminal false statement.

The U.S. Department of State later verified that several of the stolen files on Liu’s computer contained export-controlled technical data that relates to defense items listed on the United States Munitions List.

Under federal regulations, items and data covered by the USML may not be exported without a license, which Liu did not obtain. The regulations also provide that it is the policy of the United States to deny licenses to export items and data covered by the USML to countries with which the United States maintains an arms embargo, which includes China.

SOURCE: ICE

Dec 12

Taiwanese Woman Pleads Guilty to Attempting to Illegally Export Aerospace-Grade Carbon Fiber

By Export

Yen Ling Chen, a citizen of Taiwan, pled guilty today at the federal courthouse in Brooklyn, New York, before the Honorable Nicholas G. Garaufis to violating the International Emergency Economic Powers Act by attempting to export weapons-grade carbon fiber from the United States to Taiwan. According to the indictment and facts presented today in court, Chen was arrested in the United States after attempting to negotiate a deal to acquire tons of the specialized fiber, which has applications in the defense and aerospace industries and is therefore closely regulated by the United States Department of Commerce.

The plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York; and Sidney Simon, Special Agent-in-Charge, U.S. Department of Commerce (DOC), Office of Export Enforcement, New York Field Office.

On April 25, 2012, the defendant contacted an undercover agent in Brooklyn via the Internet and indicated that she and others were interested in purchasing several tons of carbon fiber. Shortly thereafter, the defendant and an accomplice wired $1,000 to a United States bank account, as a deposit on a sample. In furtherance of the export scheme, and in an effort to secure a source of the controlled commodity, the defendant traveled from Taiwan to the United States on July 5, 2012, for the purpose of obtaining the sample. During a meeting with an undercover agent the following day, the defendant assisted in negotiating the deal and making arrangements for the delivery of the sample to Taiwan for further analysis.

Certain types of carbon fiber, such as the type defendant Chen sought to acquire in this case, are closely controlled for nuclear non-proliferation and anti-terrorism reasons. The regulation of carbon fiber falls under the jurisdiction of the Department of Commerce, which reviews and controls the export of certain goods and technology from the United States to foreign countries. In particular, the Commerce Department has placed restrictions on the export of goods and technology that it has determined could make a significant contribution to the military potential or nuclear proliferation of other nations, or that could be detrimental to the foreign policy or national security of the United States.

Carbon fiber composites are ideally suited to applications where strength, stiffness, lower weight, and outstanding fatigue characteristics are critical requirements. These composites also can be used in applications where high temperature, chemical inertness, and high damping are important. The two main applications of carbon fiber are in specialized technology, which includes aerospace and nuclear engineering, and in general engineering and transportation. In addition, certain carbon fiber-based composites, such as the material sought by the defendant, are used in military aircraft.

When sentenced, Chen faces up to 20 years in prison.

“The defendant tried to circumvent laws that are intended to protect our national security by preventing specialized technologies from falling into the wrong hands,” stated United States Attorney Lynch. “Today’s conviction should leave no doubt that the United States will vigorously prosecute violations of our laws that help maintain the superiority of our armed forces on land, at sea, and in the air.” Ms. Lynch added that the government’s investigation is ongoing.

“In the wrong hands, this sensitive commodity could be used to produce materials that threaten the national security of the United States,” said HSI Special Agent-in-Charge Hayes. “Homeland Security Investigations will continue to remain vigilant in its mission to protect our citizens and residents.”

“Today’s plea demonstrates our resolve to prevent potentially dangerous technologies with both nuclear and missile applications from falling into the wrong hands. We will continue to work hand in hand with our law enforcement partners in the worldwide pursuit of those who flout our export control laws,” stated DOC Special Agent-in-Charge Simon.

The government’s case is being prosecuted by Assistant United States Attorneys Seth DuCharme and David Sarratt, with assistance from Trial Attorney David Recker of the Department of Justice Counterespionage Section. Assistance was also provided by Trial Attorney Dan E. Stigall of the Department of Justice Office of International Affairs.

SOURCE: BUREAU OF INDUSTRY AND SECURITY