Enforcement

Commerce's Bureau of Industry and Security has published an updated version of “Don’t Let This Happen to You ,"  a compendium of case examples highlighting their criminal and administrative enforcement efforts.

A California man was sentanced for attempting to ship firearms and night-vision equipment to the Sultanate of Oman.  He attempted to conceal the firearms by disassembling them, wrapping them in aluminum foil, and then secreting them within automobiles inside the shipping container.

Assistant Secretary for Export Enforcement Matthew Axelrod announced four new Enforcement Initiatives at the 2024 Update Conference on Export Controls and Policy. In his plenary address, Mr. Axelrod introduced new guidance for the Freight Forwarder community, an updated compendium of enforcement examples, an antiboycott blacklist, and enhanced outreach to manufacturers and distributors of restricted good discovered on the battlefield in Ukraine.

The Department of Commerce’s Bureau of Industry and Security (BIS) has published a document containing updated guidance and best practices for freight forwarders and exporters who use freight forwarders to help them ensure compliance with U.S. export controls and regulatory requirements. 

Swiss commodity broker Trafigura pleaded guilty to crimes related to bribing Brazilian officials of the state owned oil company Petrobras, the Justice Department announced March 28. The $126 million settlement noted the firm's extensive prior misconduct, as well that "Trafigura was slow to exercise disciplinary and remedial measures," and  "Trafigura failed to preserve and produce certain documents and evidence in a timely manner and, at times, took positions that were inconsistent with full cooperation."

The Latvian partner of a Kansas avionics distributor has been indicted for his role in a years-long scheme to  sell sophisticated avionics equipment to Russian companies, in violation of U.S. export laws.  The defendant is the third to be arrested and charged in connection with the conspiracy led by a Kansas company and two U.S. nationals, originally reported on March of 2023

A federal grand jury in the Southern District of Florida returned an indictment March 18 charging a former finance director of the Latin America division of Stericycle Inc., an international waste management company headquartered in Lake Forest, Illinois, for his role in an alleged scheme to pay over $10 million in bribes to foreign officials in Brazil, Mexico, and Argentina. According to court documents, between 2011 and 2016, Abraham Cigarroa Cervantes, 51, of Mexico, and others allegedly caused hundreds of bribe payments to be made to government officials in Brazil, Mexico, and Argentina to obtain and retain business and to secure improper advantages for Stericycle, a U.S. securities issuer, in connection with providing waste management services.

A Canadian national was arrested in New York, for conspiring to send to undercover law enforcement officers trade secrets that belonged to his previous employer, Tesla Motors Canada subsidiary Hibar Systems Ltd. Klaus Pflugbeil and Yilong Shao allegedly used stolen confidential information – developed by Hibar – to establish their own Chinese-based competitor.  

March 7th, the Justice Department published its revision of the National Security Division Enforcement Policy,   This Enforcement Policy sets forth the criteria that NSD, in partnership with U.S. Attorneys’ Offices and other Department litigating components, uses in determining an appropriate resolution for organizations that make a voluntary self-disclosure in export control and sanctions matters.

Treasury’s Office of Foreign Assets Control (OFAC) today announced a settlement with EFG International AG, a Switzerland-based global private banking group. EFG has agreed to pay $3,740,442 to settle its potential civil liability for processing 873 securities transactions in apparent violation of the Cuban Asset Control Regulations, the Kingpin Act, and Executive Order 14024. The settlement amount reflects OFAC’s determination that EFG’s apparent violations were voluntarily self-disclosed and were non-egregious.

FinCEN is issuing a proposed rule to require certain persons involved in real estate closings and settlements to submit reports and keep records on identified non-financed transfers of residential real property to specified legal entities and trusts on a nationwide basis.

Deputy Attorney General Lisa O. Monaco delivered remarks on "the Promise and Peril of AI," at Oxford University February 14, calling  an "inflection point with AI." Claiming that "AI is the ultimate disruptive technology," she vowed that the Distruptive Technology Strike Force established last year to coordinate export control activities, will place AI at the "very top" of its enforcement priority list.

A federal criminal complaint was unsealed Monday charging two men with conspiring to purchase and illegally export millions of dollars’ worth of fully automatic rifles, grenade launchers, Stinger missile systems, hand grenades, sniper rifles, ammunition, and other export-controlled items from the United States to South Sudan, in violation of the Arms Export Control Act (AECA) and the Export Control Reform Act (ECRA).

A federal grand jury indicted a Chinese national, charging him with four counts of theft of trade secrets in connection with an alleged plan to steal from Google LLC (Google) proprietary information related to artificial intelligence (AI) technology. According to the indictment, returned on March 5, Linwei Ding, aka Leon Ding, 38, a national of the People’s Republic of China and resident of Newark, California, transferred sensitive Google trade secrets and other confidential information from Google’s network to his personal account while secretly affiliating himself with PRC-based companies in the AI industry. Ding was arrested March 6th.

A California fashion company executive was sentenced today to 48 months in federal prison for undervaluing imported garments in a scheme to avoid paying millions of dollars in customs duties. The Executive's company, Ghacham Inc., which does business under the “Platini” brand name, imported clothing from China and submitted fraudulent invoices to U.S. Customs and Border Protection (CBP) that undervalued the shipments, allowing the company to avoid paying the full amounts of tariffs owed on the imports.

A Russian national based in Hong Kong pleaded guilty to money laundering and smuggling charges for illicitly procuring dual-use, military-grade microelectronics for export to Russia, Members of the conspiracy procured these sensitive microelectronics by falsely representing to the U.S. distributors (who, in turn, are required to report to U.S. agencies) that the Hong Kong shell entity was sending the shipments to end users located in China, Hong Kong, and other countries outside of Russia for use in electron microscopes for medical research. In reality, the OLED micro-displays were destined for end users in Russia.

The Departments of Justice, Commerce, and Treasury’s Office of Foreign Assets Control, have issued a Tri-Seal Compliance Note: Obligations of foreign-based persons to comply with U.S. sanctions and export control laws. The Note highlights the applicability of U.S. sanctions and export control laws to persons and entities located abroad, as well as the enforcement mechanisms that are available for the U.S. government to hold non-U.S. persons accountable for violations of such laws, including criminal prosecution.

Following the lead of its fellow commodity trading firms Vitol, Freepoint, Trafigura and Glencore, Geneva-based Gunvor Group., has pleaded guilty and will pay over $661 million to resolve an investigation by the U.S. Justice Department into violations of the Foreign Corrupt Practices Act (FCPA). Gunvor’s guilty plea stemmed from the company’s corrupt scheme to pay substantial bribes to Ecuadorean government officials to secure business with Ecuador’s state-owned and state-controlled oil company, Petroecuador.

A Florida man pleaded guilty Wednesday to federal criminal charges for conspiring to illegally export thousands of turtles to Germany and Hong Kong, and falsifying documents to conceal his conduct. In other Lacey Act News, a 75 year old lepidopterist in New York pleaded guilty to smuggling rare birdwing butterflies.

The Commerce Department’s Bureau of Industry and Security (BIS) added two entities to the Entity List under seven entries for activities contrary to U.S. national security and foreign policy interests monday. One entity was found to have been involved in supporting online censorship and surveillance to target political actors and human rights activities in Egypt, and the other is being added for diversion of U.S. items to a Chinese Entity Listed party. 

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