Background

U.S. sellers should be aware that their export compliance programs may be unable to detect potential unlicensed exports and other violations when facing schemes like the one that recently yielded the largest civil penalty ever paid by an individual in the history of the Bureau of Industry and Security.

According to a BIS press release, the man penalized is the former owner and CEO of a company that provided foreign customers with a U.S. address that they used to acquire U.S.-origin items for export without alerting U.S. merchants of the items’ intended destinations. The company would regularly change the values and descriptions of items on export documentation even where it knew the accurate value and nature of the items. The CEO was made aware that such activity violated U.S. export laws but directed it to proceed nonetheless. He also established and/or authorized the company’s personal shopper program, in which employees purchased items for foreign customers from a shopping list while falsely presenting themselves to U.S. merchants as the domestic end-users of the items.

BIS has responded with an order imposing civil penalties of $17 million against the man, with $7 million suspended, and a five-year denial of export privileges, with one year suspended. The company was previously assessed a $27 million penalty in relation to the same violations, with $17 million suspended.

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