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Large Penalty Assessed for Widespread EAR Violations

Thursday, March 16, 2017
Sandler, Travis & Rosenberg Trade Report

The DOC’s Bureau of Industry and Security has assessed a $27 million civil penalty on a Florida company to settle charges that it committed a total of 150 violations of the Export Administration Regulations, although $17 million of that penalty has been temporarily suspended and will subsequently be waived provided certain conditions are met.

BIS states that on 129 occasions beginning on or about April 21, 2011, and continuing through on or about Jan. 7, 2013, the company engaged in transactions or took other actions to evade the EAR. Among other things, the company took actions that enabled foreign customers to purchase items subject to the EAR through the company without U.S. merchants knowing the items were intended for export, with these actions designed, at least in part, to avoid detection by the U.S. government and law enforcement. The actions included mis-describing and undervaluing the items in false export control documents, undervaluing the items improperly to avoid the filing of the required export control documents, allowing foreign customers to place orders through company employees to avoid export scrutiny, destroying or altering export control documents, and failing to maintain records related to export transactions.

Additionally, on 17 occasions between on or about Aug. 23, 2011, and on or about Jan. 24, 2013, the company exported or attempted to export to Argentina, Austria, Hong Kong, Indonesia, Libya, South Africa, and Sweden without the required export licenses items classified under Export Control Classification Number 0A987 and controlled for crime reasons. Lastly, on four occasions between on or about Oct. 17, 2012, and on or about Feb. 15, 2013, the company exported or attempted to export items subject to the EAR to a Finnish company on the Entity List.

BIS has therefore issued an order that assesses a civil penalty of $27 million on the company but suspends $17 million of that penalty for two years (and waives it thereafter) provided it commits no further export violations during that time, makes full and timely payment of the $10 million penalty, complies with all other terms of the settlement agreement, and commits no violation of the non-prosecution agreement.

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