The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has released an updated version of Don’t Let This Happen to You! ”, which provides a list of cases highlighting BIS’s enforcement efforts, including criminal cases.
Case Highlights:
The publication highlights more than 100 cases involving various violations of export control laws.
military control
The owner of BQ Tree Consulting in Jacksonville, Florida, and the company’s president and manager were indicted for conspiring to illegally export military-grade combat rubber assault craft (CCRC) to China.
The scheme involved providing a U.S. company with false end-use and end-user information from a front company in Hong Kong, which was used to complete transactions ultimately destined for China. The purpose is to reverse engineer the CRRC and engine for mass production for the Chinese People’s Liberation Army (PLA) Navy.
The company owner was sentenced to 16 months in prison, two years of supervised release, mandatory mental health screening and a $200 special assessment. The company president was sentenced to 42 months in prison, three years of probation, a $50,000 criminal fine and a $200 special assessment. The company manager was sentenced to 17 months in prison, one year of supervised release pending deportation, a ban on employment at any company that deals with the military, and a $100 special assessment.
national security controls
GlobalFoundries US Inc., a Malta, N.Y.-based semiconductor wafer manufacturing company, violated the Export Administration Regulations (EAR) by sending 74 shipments of semiconductor wafers, valued at approximately $17.1 million, to SJ Semiconductor (SJS), a BIS entity. Without permission from BIS.
GlobalFoundries proactively disclosed the violations and fully cooperated with the investigation, resulting in reduced penalties.
On November 1, 2024, GlobalFoundries agreed to a civil penalty of $500,000.
Weapons of mass destruction control
Chinese citizen Zheng Zaosong conducts cancer cell research at Beth Israel Deaconess Medical Center in Boston. Zheng stole some biological research samples and attempted to take them out of the United States and onto a flight to China.
Zheng was arrested at Boston’s Logan International Airport. Zheng pleaded guilty to making false, fictitious or fraudulent statements in connection with the theft of 19 vials and was sentenced to prison, three years of supervised release, a $100 special assessment and deportation from the United States.
Unlicensed export
USGoBuy, LLC, of Portland, Oregon, entered into a settlement agreement with BIS to resolve two alleged violations of the EAR related to the unlicensed export of rifle scopes to China and the United Arab Emirates. As part of the settlement, USGoBuy, LLC agreed to a three-year moratorium on denials, which BIS can initiate if the company fails to meet the terms of the settlement or commits other violations.
A subsequent audit found significant continuing deficiencies in USGoBuy, LLC’s export compliance program and revealed new EAR violations, including 176 failures to submit electronic export information (EEI) and failure to maintain adequate records.
BIS initiated the previously agreed-upon probation penalty – a three-year denial order.
Main points
The Bank for International Settlements noted in the publication that export controls have never been more important to U.S. security interests, and export enforcement agencies have taken decisive action to prioritize enforcement efforts.
The BIS also urges businesses to invest in compliance up front to avoid becoming one of the key case studies.
Exporters should develop a robust compliance program that not only prevents violations of the EAR but also detects violations when they occur.
Diaz Trade Law can provide assistance with many EAR-related matters, including the development of compliance plans, export compliance training, transaction reviews, voluntary self-disclosures, and more.
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