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FOR IMMEDIATE RELEASE
May 15, 2009
BILOXI IMPORTER SENTENCED TO JAIL FOR CUSTOMS FRAUD

STAN HARRIS, Acting United States Attorney for the Southern District of Mississippi, and MICHAEL A. HOLT, Special Agent-In-Charge, Immigration and Customs Enforcement, New Orleans Office of Investigations, Department of Homeland Security, announced that PAUL KOTSAKOS of Biloxi was sentenced
today to nine months of imprisonment and was ordered to pay restitution in the amount of $10,403 and $3,000 fine for his part in a customs fraud. Upon release from jail, KOTSAKOS will be required to serve three years of supervised release.
KOTSAKOS was sentenced by United States District Judge Halil Suleyman Ozerden in federal district court in Gulfport, Mississippi. "We will continue to pursue those individuals and companies that circumvent duty requirements on imports," said MICHAEL A. HOLT, Special Agent-in-Charge of ICE’s Office of Investigations in New Orleans. "Those companies that perpetrate commercial fraud pose a serious problem for our country and will continue to be the focus of our enforcement actions."
KOTSAKOS pleaded guilty in January following his being charged in a 16-count indictment voted by the Grand Jury. The indictment charged KOTSAKOS with conspiracy to commit various offenses against the United States, including United States customs violations and wire fraud. The indictment also charged
KOTSAKOS with 14 counts of wire fraud.
According to the indictment, KOTSAKOS operated an import company known as PK Promotions, Inc., in Biloxi. PK Promotions provided promotional items to casinos, restaurants, wholesalers, and sports teams. PK Promotions imported
promotional items, such as bags, cups, beads, lanyards, and shirts, from China. PAUL KOTSAKOS served as president of PK Promotions. As described in the indictment, KOTSAKOS sought to avoid paying the full amount of duty on imported goods by employing various means, such as presenting fraudulent invoices for submission to the United States Customhouse and arranging to
give merchandise a false classification to reduce the import duties. As part of the scheme, both defendants caused invoices received from foreign suppliers to be altered to reflect a lower price of goods sold on the invoices that were sent to customs brokers for submission to United States Customs and Border Protection officials to determine the applicable customs duties. As examples, the indictment lists various overt acts of the conspiracy, detailing how the invoices for imported items were altered to reduce the price of the items so as to lower the customs duties.
As a further part of the scheme, KOTSAKOS communicated with foreign manufacturers via electronic mail to request that the suppliers prepare phony invoices reflecting a lower price for goods sold or a different classification of the goods in order to evade otherwise applicable customs duties, with the understanding that the suppliers would bill defendant PK Promotions separately for the actual price of the goods. For example, KOTSAKOS e-mailed a supplier in China in July 2003, asking to “get the invoice to read half of the amount for the high tariff.” Also in July 2003, KOTSAKOS sent an e-mail to a supplier in China, requesting that an invoice for engraved glassware be classified so as to refer to the glassware as having no engraving. In November 2003, he sent another e-mail to a supplier in China, stating that “we need invoice for the less amount to show the customs.”
As the indictment explains, KOTSAKOS participated in a related scheme to send fraudulent invoices by facsimile to another supplier of promotional items located in Louisiana, for which PK Promotions imported goods and falsely billed the supplier for an inflated amount of the goods. This related scheme involved preparing phony invoices on letterhead of a bogus company called “Taiwan Foreign Trade Co., Ltd.,” that were then faxed to the Louisiana supplier.
Assistant United States Attorney GAINES CLEVELAND was the prosecutor in charge of the case. Mr. HARRIS praised the efforts of the Department of Homeland Security, Immigration and Customs Enforcement for its diligent work in the investigation of this case.

Wednesday, May 20, 2009
Committee Approves Two-Year Authorization Bill Bolstering U.S. Diplomacy, Development Efforts

Washington, DC – The House Foreign Affairs Committee today approved comprehensive legislation to shore up U.S. foreign policy efforts, the Foreign Relations Authorization Act for Fiscal Years 2010 and 2011 (H.R. 2410).

“For far too long, we have failed to provide the State Department with the resources it needs to fill critical overseas posts, provide adequate training, and ensure effective oversight of the programs that it manages,” Committee Chairman Howard L. Berman (D-CA) said. “With the expansion of U.S. diplomatic responsibilities in the 1990’s and the more recent demands of Iraq and Afghanistan, the Foreign Service has been strained to the breaking point. We simply must supply the needed resources now.”

Under this legislation, 1500 additional people could join the Foreign Service over the next two years. The bill also contains provisions on recruitment and training of officers to improve the Foreign Service’s ability to respond to modern challenges. It requires the State Department to conduct a quadrennial review of its policies and programs that defines objectives, budget requirements and how these programs fit into the President’s national security strategy.

Among other significant measures in the bill are provisions that: strengthen the arms control and nonproliferation capabilities of the State Department reform the system of export controls for military technology and improve oversight of U.S. security assistance

U.S. Department of Justice
United States Attorney's Office    
For Immediate Release

Defendant Sentenced in Conspiracy to Export Military Aircraft Parts to Iran

MIAMI, FL. - Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, David Kris, Assistant Attorney General for National Security, Michael Johnson, Special Agent in Charge, U.S. Department of Commerce, Office of Export Enforcement, Anthony V.Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations, and Amie R. Tanchak, Resident Agent in Charge, U.S. Department of Defense, Defense Criminal Investigative Service, announced today that defendant Traian Bujduveanu was sentenced in Miami federal court for his role in a conspiracy to illegally export military and dual use aircraft parts to Iran. Bujduveanu's co-defendant, Hassan Keshari, and his corporation, Kesh Air
International, were sentenced in May 2009.

U. S. District Court Judge Patricia Seitz sentenced Bujduveanu to thirty-five (35) months' imprisonment, followed by three (3) years of supervised release.  Bujduveanu pled guilty on April 2, 2009, to Count 1 of the Indictment, which charged conspiracy to export and cause the export of goods from the U.S. to the Islamic Republic Iran, in violation of the Embargo imposed upon that country by the U.S. and in violation of
the International Emergency Economic Powers Act, Title 50, United States Code, 1705(a), and to export and cause to be exported defense articles, in violation of the Arms Export Control Act, Title 22, United States  Code, Section 2778(b), all in violation of Title 18, United States Code, Section 371.  

As part of his plea, Bujduveanu, a Romanian national and naturalized U.S. citizen, admitted that he used his Plantation, FL, corporation, Orion Aviation, to sell aircraft parts to Keshari for purchasers in Iran and exported the aircraft parts to Iran by way of freight forwarders in Dubai, United Arab Emirates.  Among the aircraft parts illegally exported to Iran through the conspiracy were parts designed exclusively for the F-14 Fighter Jet, the Cobra AH-1 Attack Helicopter, and the CH-53A Military Helicopter.  All of these aircraft are part of the Iranian military fleet, while the F-14 is known to be used exclusively by the Iranian military.  Moreover, all of the parts supplied by Bujduveanu as part of the conspiracy are manufactured in the U.S., are designed exclusively for military use, and have been designated by the U.S. Department of State as "defense articles" on the U.S. Munitions List, thus requiring registration and licensing with the Department of State, Directorate of Defense Trade Controls.  Neither Bujduveanu nor his co-defendants are registered or had the required licenses to ship defense articles to Iran.

According to the Indictment and statements and documents filed with the court, Bujduveanu received orders by email from Keshari requesting specific aircraft parts for buyers in Iran.  Bujduveanu then provided quotes, usually by e-mail, to Keshari.  After the receipt of payment for the parts from Keshari, Bujduveanu then the parts to a company in Dubai through the use of false or misleading shipping document.  From Dubai, the parts were then shipped on to the purchasers in Iran.

Bujduveanu has been in federal custody since his arrest in June 2008.  

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at www.usdoj.gov/usao/fls.  Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

New York Bank Settles Allegations of Antiboycott Violations
WASHINGTON –

The U.S. Department of Commerce today announced that Gulf International Bank (New York), the U S branch of Gulf International Bank, headquartered in Bahrain, has agreed to pay a civil penalty of $49,850 to settle allegations that it violated the antiboycott provisions of the Export Administration Regulations (EAR).

“The Department of Commerce will continue to aggressively enforce its regulations prohibiting U.S. companies from taking any action in support of restrictive trade practices or unsanctioned boycotts,” Kevin Delli-Colli, Acting Assistant Secretary of Commerce for Export Enforcement, said.

The Commerce Department’s Bureau of Industry and Security (BIS), through its Office of Antiboycott Compliance, alleged that, on eight occasions during the years 2002 through 2004, the Bank, in connection with transactions involving the sale and transfer of goods from the United States to Syria, furnished prohibited information about another person’s business relationship with a company known or believed to be restricted from having any business relationship with Syria or in another boycotting country.

BIS also alleged that the Bank, on seventeen occasions during the same time frame, failed to report to the Department of Commerce its receipt of a request to engage in a restrictive trade practice or boycott and, on one occasion, failed to maintain records, as required by the EAR.

The antiboycott provisions of the EAR prohibit U.S. persons from complying with certain requirements of unsanctioned foreign boycotts, including furnishing information about business relationships with or in a boycotted country or with blacklisted persons.  In addition, the EAR requires that persons report their receipt of certain boycott requests to the Department of Commerce.

FOR IMMEDIATE RELEASE    
BUREAU OF INDUSTRY AND SECURITY


Wednesday, May 27th, 2009
Office of Public Affairs
www.bis.doc.gov    
202-482-2721

BIS Amends EAR to Address Security and Competitiveness Issues with Thermal Imaging Cameras

WASHINGTON, D.C. - The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) today published an amendment to the Export Administration Regulations (EAR) that recalibrates controls on uncooled thermal imaging cameras to address security and competitiveness issues.  These cameras have commercial and military applications, including firefighting, predictive/ preventive maintenance, medical, perimeter monitoring, and targeting.
"This revision of the EAR will allow U.S. camera companies to more effectively compete in their major markets with foreign manufacturers while ensuring appropriate U.S. government review and oversight over commercial cameras used for military purposes," said Matthew S. Borman, Acting Assistant Secretary for Export Administration.  

Specifically, the EAR amendment: recognizes the availability of foreign commercial cameras and streamlines controls on exports of certain levels of commercial uncooled thermal imaging cameras to destinations in the European Union and certain other Wassenaar members; establishes a mechanism for streamlining controls on higher-level, civil consumer-ready commercial uncooled thermal imaging cameras; establishes a process for streamlining controls on commercial uncooled thermal imaging cameras to be incorporated into civil products by civil integrators; and controls the reexport of foreign-made military products incorporating U.S. commercial uncooled thermal imaging cameras.
BACKGROUND
BIS works to advance U.S. national security, foreign policy, and economic objectives by ensuring an effective export control and treaty compliance system and by promoting continued U.S. strategic technology leadership.

From The State Department
May 26, 2009

Reminder Regarding License Preparation Guidelines for Transactions Involving Statutorily Debarred Electro-Glass Products and ITT Night Vision Division
 
 All license applications related to the export of U.S. Munitions List Category XII defense articles manufactured by statutorily debarred Electro-Glass Products and/or ITT Night Vision Division of ITT Corporation MUST list these entities as a source or manufacturer on the application or the application will be returned without action for correction.
The export license applications involving these manufacturers must also be supported by a transaction exception letter meeting the criteria found on the DDTC Licensing website (http://www.pmddtc.state.gov/licensing/guidelines_instructions.html) entitled “Electro-Glass Products: Information for Exporters and ITT Night Vision Debarment: Information for Exporters.”

From the State Department- Defense Trade Controls:

Requirement for Full Execution of Agreements/Amendments Prior to Export or Temporary Import
  
This notice is to inform applicants that the format for Agreement and Amendment Approval Letters issued by DTCL has been modified to specifically address the requirement that “No U.S. signatories may export or temporarily import defense articles, technical data or defense services against an agreement until all parties have executed the agreement.”

This modification has been made to the preamble of the approval letter for agreements and amendments issued to the applicant from this office and reads as follows:
 
Dear Applicant:
 
The Department of State approves the request as identified subject to the limitations, provisos and requirements stated below as well as the requirements contained in the International Traffic in Arms Regulation.  This agreement may not enter into force until these requirements have been satisfied.  No U.S. signatories may export or temporarily import defense articles, technical data or defense services against this agreement until all parties have executed the agreement.

Purpose of Modification:
 
On December 12, 2008, Agreement and Amendment Approval Letters issued by DTCL were revised to eliminate redundancy and enhance clarity by minimizing informative and acknowledgement provisos.  As part of that revision, a proviso specifying that exports or temporarily imports against the agreement were not authorized until all parties have executed the agreement was removed, being deemed an informative proviso.
 
Since this revision, DTCL has received numerous queries as to whether a fully executed agreement was still required prior to export or temporary import, noting the requirement is not clearly described within the International Traffic In Arms Regulation (ITAR).  

This modification is necessary to ensure applicants are properly informed of the requirement to fully execute agreements and amendments prior to export or temporary import of defense articles, technical data or defense services in furtherance of the agreement or amendment.

Implementation:
 
Effective March 18, 2009, this revision will be included in all agreement and amendment approval letter issued by DTCL.  Specific revisions to individual approval letters issued between December 12, 2008 and March 18, 2009 will not be published. A copy of this notice should be included with approval letters in cases where a specific revision is desired.

The average processing time for ITAR licenses is now 15 days.  See metric

http://www.pmddtc.state.gov/metrics/index.html
BIS reports increase in company voluntary self-disclosures
Despite the fact that exporters risk increased penalties for wrongdoing, the U.S. Commerce Department?s Bureau of Industry and Security (BIS) has found no shortage of companies making voluntary self-disclosures of U.S. export control violations.   Most of the closed cases involving voluntary self-disclosures resulted only in a warning letter and no penalties, but Kevin Delli-Colli, acting assistant secretary for export enforcement, announced that taking this action doesn?t mean companies avoid penalties altogether. ?Certain cases deserve some consequences.?  < size="2">www.americanshipper.com  (3/11/09)
 
BIS improving Entity List
Recently senior officials with the U.S. Commerce Department?s Bureau of Industry and Security (BIS) noted progress with how the agency is managing its new Entity List regulation.   Matt Borman, acting assistant secretary for export administration, reported to industry members of the Regulations and Procedures Technical Advisory Committee that the regulation is ?working as intended.?  The Entity List provides notice to the public that certain exports and re-exports to parties identified on the Entity List require a license from BIS and that availability of license exceptions in such transactions is limited. The parties on the list are determined by the U.S. government to be acting contrary to the national security or foreign policy interests of the United States.  The current Entity List includes names of shell companies initially set up to illegally procure U.S. exports. Once the agency targets them, the operations tend to disappear.
www.americanshipper.com  (3/11/09)
 
BIS posts major case list
The Bureau of Industry and Security (BIS) issued its March 2009 listing of its most significant cases. Comprised of two sections this case list provides new additions to the List, followed by major cases from the last several years.
BIS List (March 2009) http://www.bis.doc.gov/complianceandenforcement/majorcaselist/mcl032009.pdf< size="2">

March 24th, 2009
3 Irish men charged with exporting military equipment to Iran
Posted: 05:00 PM ET
By Terry Frieden
CNN Justice Producer

WASHINGTON (CNN) — Three Irish men and their arms trading company have been charged with illegally exporting U.S.-made aircraft equipment through other countries to avoid sanctions against selling aircraft parts and equipment to Iran, the Justice Department announced Tuesday.

The 25-count indictment unsealed Tuesday in federal court in Washington says three top corporate officials of Mac Aviation of Ireland had trans-shipped millions of dollars worth of helicopter engines, aircraft components and other military parts through Malaysia and the United Arab Emirates to Iran.

CNN was unable to reach Mac Aviation, in Drumcliffe, Ireland, for comment.

Although the three men are not currently in custody in Ireland, U.S. officials said the charges will come as no surprise to the defendants. U.S. authorities say they intend to seek extradition of the men to face charges, and potentially lengthy prison sentences.

According to the indictment Thomas McGuinn, his son Sean McGuinn and Sean Byrne conspired from 2005 to 2008 to buy parts from Rolls Royce Corp. in Indiana, Pratt & Whitney in Connecticut and other U.S. suppliers and secretly sell them to Iranian entities controlled by Iran’s Ministry of Defense.

U.S. investigators say the equipment was routed through third countries, including Malaysia and the United Arab Emirates, to Iranian companies.

Iranian companies — including the Iran Aircraft Manufacturing Industrial Company, known by its Iranian acronym HESA — received 17 Rolls Royce helicopter engines worth $4.27 million, according to the indictment.

The U.S. Treasury Department designated HESA as a proliferator of weapons of mass destruction last year, saying it was controlled by Iran’s Ministry of Defense and Armed Forces Logistics. The Treasury Department said HESA also has provided support to the Revolutionary Guard Corps.

The engine in question — called the “model 250″ by Rolls Royce — was originally designed for a U.S. Army light observation helicopter, but has since been installed in other helicopters, both civilian and military.

The indictment also alleges that 50 components called “5th stage vanes” — part of an aircraft’s aerodynamic function — were shipped from Pratt & Whitney to Mac Aviation, and from there routed to Iran Aircraft Industries in Tehran. Mac Aviation had claimed that the parts’ final destination was Belgium, the indictment says. The parts were valued at about $140,000.

Finally, the indictment alleges that Mac Aviation had 32 aircraft bolts worth about $2,200 shipped from Texas to Dubai and then on to Kish Island, Iran.

U.S. officials say the indictments are an outgrowth of the ongoing investigation of a larger Iranian procurement network run by Hossein Khoshnevisrad, an Iranian citizen arrested March 14 in San Francisco.

Khoshnevisrad allegedly used Mac Aviation and other firms around the globe to help obtain sensitive U.S. technology destined for Iranian militaries entities.

U.S. sanctions bar the sale of any aircraft parts to Iran, which many analysts believe has led to increasingly unsafe aircraft in the Islamic Republic.

The defendants are charged with two counts each of conspiracy, 19 counts of violating the regulations restricting transactions with Iran and four counts of false statement.

If convicted, they face 10 to 20 years in prison for each of the regulatory violations, five to 20 years for each of the conspiracy counts and five years for each false-statement count.