President of Company and Employee Arrested


Export Control Violation

I don't like sensations, however, some news in our world is sensational. For us who follow legal developments closely the above news comes from the Department of Justice. Recently, the President of a company and one employee, a sales representative, were arrested on charges of conspiracy to violate Export Controls Reform Act of 2018, conspiracy to commit wire fraud and bank fraud, and conspiracy to launder money.

As a matter of background, the two individuals on a first attempt had exported items without a license. The international trade community knows that dual use and military use items cannot be exported outside of United States without a license or license exception. The two individuals were not novices in trade, they had been engaged in trade for a while. They had shipped electronic and telecommunications items to Hong Kong, for those items to then be re-exported elsewhere, including China.


Fast forward to the time after the items had been stopped by law enforcement - sidebar: no transaction will go forward unless a license is secured - the individuals then it seems to have lost all judgment and sense because they not only decided to ship items without a license but worse they also tried falsify their invoices, to falsify the labels with different part numbers, circumvented security by transshipping items to South Korea, and formed another entity in New Jersey to ship from that entity or make that entity the exporter of record. All these actions ended up with the charges I mentioned above. The maximum sentence for each count is from 20 years in prison to 30 years in prison.


Here's the take away although self evident: verify your items' jurisdiction, if controlled make sure to do the due diligence and follow the necessary steps, including applying for licenses and license exceptions (or exemptions) where applicable, before exporting, do what's right, and when in doubt call or consult with someone who knows the law that can guide you. Now, the individuals knew what they were doing, and no person can save you and me from ourselves, however, even in those moments of doubts when temptation gets the best of you, phone someone, call your advisor so they can prevent you from doing harm to yourself and to your company. Remember in cases like this the corporation doesn't provide a shield to individual wrongdoing. Last, create processes in place for your business to make sure that whoever is working for your or with you follows your rules to do what's right.


#exportcontrols #electronicequipment #ECRA


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