By: John Black
BIS announced that is have imposed an administrative $300,000 fine ($275,000 suspended) on Patrick Gaillard, President of Oyster Bay Pump Works of Hicksville, New York. In 2007, Mr. Gaillard pleaded guilty to criminal charges for the same actions for which BIS just now penalized him. As a result of his guilty plea, he got 30 days in prison, a $25,000 fine, 3 years of probation, and a $300 special assessment. But, all in all, it seems like Gaillard got off fairly easy, if you ask me. But, then again, I am not the guy who spent 30 days in prison.
BIS charged Gaillard and Oyster Bay, in separate charging letters. This shows that in cases where BIS thinks one person in a company acted intentionally to violate the regulations, BIS will go after that person as an individual in addition to going after the company.
Even though there was one charging for Gaillard and another for Oyster Bay for essentially the same actions. I will discuss them as if there were one charging letter. Here are the charges:
Charge 1: Illegally exported microplate processing equipment via Germany to Cuba
Charges 2 & 3:Sold microplate processing equipment (Charge 2) and 3 power supplies (Charge 3) via Germany to Iran. At least twice Oyster Bay staff told Gaillard the sale required an export license. Gaillard told his staff to export the items without an export license. The items were classified as EAR99.
Charge 4: Sold microplate processing equipment for export to Iran via the UAE. Initially, a representative of the Iranian buyer approach Oyster Bay to buy the equipment and Oyster Bay said it could not export the items to Iran due to the US embargo. Then the Iranian rep arranged with Gaillard to export the items to the Iranian company’s trading arm in the UAE for ultimate delivery to Iran. The US Government seized the items before the export took place. The items were classified as EAR99.
Charge 5: Destroying and altering records related to Charges 1-3 involving Cuba. Around the time he learned that the US Government seized the items destined for Iran, Gaillard told his staff to remove references to Cuba from certain document and to destroy other documents related to the Cuba activities.
Charge 6: Destroying and altering records related to Charge 4 involving Iran. When he learned that the US Government seized the items destined for Iran, Gaillard told his staff to remove references to Iran from certain document and to destroy other documents related to the Iran activities.
According to BIS Gaillard intentionally violated the regulations and tried to destroy and alter documents to cover his tracks. BIS typically goes after an individual in addition to the company when it thinks an individual has done such things. In the end, Gaillard got these combined criminal and administrative penalties: Combined fines of $50,300 (plus another $275,000 suspended penalty if he stays clean), 30 days in prison, and a 3 year period on the Denied Persons List (all of the 3 years on the List is suspended if he stays clean). Plus Oyster Bay got a $300,000 fine ($275,000 suspended) and 3 years on the Denied Persons List (all of which is suspended).
As I said above, having not spent the 30 days in prison myself, it seems to me that Gaillard got off relatively easy. The fines certainly could have been higher on him and his company. Let’s run through some aggravating and mitigating factors to see if we can find any reason for the easy treatment. This was not a voluntary disclosure, so that mitigating factor does not enter into the equation. Cuba and Iran normally are aggravating factors. Intentionally violating the regulations normally is an aggravating factor. The fact that this was EAR99 stuff and not sensitive is mitigating—but these products are not medical equipment eligible for a relatively favorable license approval policy. I just can’t figure it out.
Maybe I am just selfish and wish that BIS would have fined the guy a million dollars so export compliance people could tell other people in their company about the harsh penalties imposed on an individual.
Or maybe it’s just my unquenched desire to see an intentional violator tazed in a youtube.com video.
BIS did not say how it learned about these activities. Wait, a second, what is that I hear? Is that a whistle blowing?
