Archive for the ‘Denied & Restricted Parties’ Category

BIS Renews Temporary Denial Order for Mahan Airways, Skyco and Many Others

Tuesday, August 9th, 2016 by Danielle McClellan

On July 7, 2016 BIS extended the Temporary Denial Order (TDO) on the basis of preventing an imminent violation of the EAR for 180 days for the following entities:

  • Mahan Airways
  • Pjman Mahmood Kosarayanifard
  • Mahmoud Amini, Kerman Aviation
  • Sirjanco Trading LLC
  • Ali Eslamian
  • Mahan Air Gernal Trading LLC
  • Skyco (UK) Ltd.
  • Equipco (UK) Ltd.
  • Mehdi Bahrami
  • Al Naser Airlines
  • Ali Abdullah Alhay
  • Bahar Safwa General Tradeing
  • Sky Blue Bird Group
  • Issam Shammout


China Telecomm Giant ZTE Gets Another Temporary Reprieve from US Export Denial List

Tuesday, July 12th, 2016 by Danielle McClellan

By: John Black

The Commerce Department’s Bureau of Industry and Security (BIS) announced that it is extending the temporary general license for ZTE to effectively suspend ZTE’s denial list status until August 30, 2016.  BIS originally put ZTE on its Entity List on March 8, 2016, based on BIS’ allegations that ZTE, including its senior management, established a complex network as part of its efforts to illegally transfer US technology to Iran and other prohibited destinations.  The original denial prohibited all transfers from anywhere in the world of US origin items to ZTE as well as exports from outside the United States of non-US origin items with more than 25% US controlled content and certain foreign items produced directly from using US technology.  The original listing was clearly the biggest EAR penalty ever imposed in my 32 years in this field.

As previously reported in this newsletter, on March 24, 2016 BIS announced a general license that effectively temporarily suspended until June 30, 2016, the denial  against:

  • Zhongxing Telecommunications Equipment (ZTE) Corporation (also referred to as ZTEC)
  • ZTE Kangxun Telecommunications Ltd.

Now BIS has extended that general license for these two entities through August 31, 2016.  It is easy to infer from this that ZTE must have originally refused to cooperate with BIS regarding the diversions to prohibited destinations, but after being placed on the Entity List ZTE rounded up a hoard of Washingotn lawyers and came crawling on its knees to BIS promising to cooperate and take decisive remedial actions.  The extension indicates that ZTE is continuing to cooperate with BIS, at least as much as is necessary to get the suspension of its denial extended until the end of August.

These two ZTE entities remain on the EAR Entity List:

  • Beijing 8 Star International Co.
  • ZTE Parsian

For more information go to:

Export Business Manager Pleads Guilty to Attempted Illegal Exports to Iran

Friday, May 27th, 2016 by Danielle McClellan

By: Danielle McClellan

Asim Fareed (age 51) of North Brunswick, NJ operated an export business in Somerset, NJ that agreed to ship items purchased by customers in Iran. Fareed provided false documentation to the US Department of Commerce for export purposes between 2013 and 2015. He created invoices that contained false information related to the identity and geographic location of the purchasers of the goods. The items were supposed to be shipped from the US to the UAE and then onto Iran. The items never were actually shipped.

Asim Fareed agreed to enter a plea to conspiracy to provide false statements in connection to the illegal export of goods to Iran. “The Office of Export Enforcement vigorously pursues violators of our nation’s export control laws, which are in place to further and protect our national security and foreign policy.  As in this instance, we work closely with our colleagues at HSI and other law enforcement agencies in prosecuting this case,” said Jonathan Carson, Special Agent in Charge, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office.
“This case demonstrates how far individuals will go to circumvent U.S. export laws to export goods to countries like the Islamic Republic of Iran,” said Angel M. Melendez, special agent in charge of HSI in New York. “The Iran Trade Embargo prohibits Americans from supplying goods, technology and services to Iran directly or indirectly. HSI is committed to aggressively pursuing those who conduct illegal business with Iran.”
The case was investigated by the Department of Commerce, Office of Export Enforcement and U.S. Immigration and Custom Enforcement’s (ICE), Homeland Security Investigations (HSI).  Assistant U.S. Attorney Todd K. Hinkley is prosecuting the case.
More information:

BIS Partially Reverses Historic EAR Penalty on ZTE—Red Flags Remain for All ZTE Transactions

Wednesday, April 6th, 2016 by Danielle McClellan

By: John Black

In the March 24, 2106 Federal Register the Bureau of Industry and Security  temporarily reversed part of the most significant export control penalty in at least 32 years (i.e., as long as I have been in export compliance) which BIS imposed when it placed Chinese telecommunications giant ZTE in the EAR Entity List on March 8, 2016. The result of that action was to prohibit all exports and reexports of all items subject to the EAR to four named ZTE entities—this penalty far exceeds the multi-million dollar penalties BIS has imposed on others who have violated the EAR. For me, the only EAR action that approaches the significance of the ZTE penalty is the addition of 20 plus Delft companies to the Denial List back in the 1980s.

Please see Doug Jacobson’s excellent article on the original BIS action against ZTE after this article.

On March 24, 2016, BIS announced a temporary general license authorizing the use of EAR license exceptions and No License Required (NLR) according to the EAR in place prior to BIS adding these two ZTE entities that were put on the Entity List on March 8, 2016:

  • Zhongxing Telecommunications Equipment (ZTE) Corporation (also referred to as ZTEC)
  • ZTE Kangxun Telecommunications Ltd.
  • These two ZTE entities remain on the EAR Entity List:
  • Beijing 8 Star International Co.
  • ZTE Parsian

By creating a temporary general license that is valid through June 30, 2016, BIS gives some relief to companies all over the world who do business with these two important entities which are critical companies that contribute significantly to ZTE’s global sales of over $16 billion. No doubt, in response to BIS’ addition of ZTE to its Entity List, ZTE and its lawyers flooded into a wide range of US Government entities requesting some sort of relief from the historically significant penalty.  I would have to guess that many non-ZTE companies expressed their concern to the US Government about how they were being harmed by the listing of ZTE.

Of course,  BIS may at any time cancel the temporary general license. Not only that, but the general license expires at the end of June if BIS takes no further action.   If you do business with ZTE, you should prepare for the worst even if you benefit now from the temporary general license.

Your Compliance Challenge Now:  Red Flags When Dealing with ZTE

Many exporters and reexporters have overlooked the fact that it may be prudent to consider that there is a Red Flag indicating a high risk of illegal diversion of EAR items any time you do business with any ZTE company. In its original action against ZTE, BIS published documents showing how ZTE constructed a network of entities to hide illegal shipments to Iran. In the case of ZTE, the illegal diversion scheme was not limited to the actions of a few unscrupulous sales people but involved senior ZTE officials creating a complex system, which may demonstrate that ZTE policy has been to make significant efforts to hide intentional violations of US trade controls.

It is unusual for BIS to publish such documents that show the evidence and background of illegal actions.  Without a doubt, everyone now knows that ZTE, at a high level, has taken extensive actions both to intentionally violate US trade controls and to hide its violations. So, now that you know it, thanks to BIS publishing evidence, it can be argued that you should presume there is a significant risk of ZTE illegally diverting the items it gets from you to unauthorized countries or recipients (e.g., the two ZTE entities that remain on the Entity List).  If there is a Red Flag that indicates a risk that ZTE will illegally divert the items it gets from you, that means that you should exercise more than average due diligence for your transfers of items controlled by the EAR to any ZTE entity. That does not mean that you may not do business with ZTE, but it does mean it would be prudent to ask additional questions or obtain additional assurances in writing from ZTE to give you confidence that ZTE will not illegally transfer your items.

If OFAC Denies Your License Application…Stop!

Friday, September 11th, 2015 by Danielle McClellan

By: Danielle McClellan

Great Plains Stainless Co. (GPS) of Tulsa, Oklahoma has agreed to pay $214,000 to settle allegations that it violated the Office of Foreign Assets Controls (OFAC) regulations in 2009. GPS sold goods that its Chinese vendor shipped from Shanghai to GPS’s customer in Dubai via MN Sahand, a vessel that is considered blocked property (EO 13382). GPS also created new bogus trade documents, with references to the blocked vessel to be removed and then transferred these altered documents to its Dubai customer to facilitate the release of the goods that were held at the port in Dubai.

GPS did not voluntarily disclose these violations to OFAC, the maximum penalty could have been $500,000. The settlement amount is reflective of the following:

  • GPS acted willfully since they altered the bill of lading
  • They disregarded verbal and written guidance from OFAC stating that the company should consult with OFAC’s Licensing Division before engaging in the transaction
  • GPS had submitted a license application to OFAC seeking authorization for this transaction and was denied but followed thru with the transaction
  • They did not have a compliance program in place at the time of the alleged violations.
  • The company has not received a penalty notice or Finding of Violation from OFAC in the past five years
  • GPS had no reason to know that the blocked vessel was to be used for the shipment until the vessel’s sailing date
  • They are a small company
  • GPS took remedial measures to prevent future violations

Read the full document at:

$500,000 Penalty for Illegal Pump Exports

Friday, September 11th, 2015 by Danielle McClellan

By: Danielle McClellan

Lewis Pumps Division d/b/a Weir Minerals Lewis Pumps (Envirotech) has been fined $500,000 for exporting globe, gate, and butterfly valves (ECCN 2B350) to China, Russia, and other illegal destinations without licenses. The charging letter indicates that between December 2007 and July 2011 the company exported these items on 32 occasions at an approximate value of $1.4 million.

The $500,000 fine isn’t as bad as it may seem. Envirotech must pay $150,000 up front and the remaining $350,000 will be suspended and waived after two years as long as the company doesn’t commit any violations during those two years. What may be much more painful than the $150,000 fine, the company has agreed to two audits of their export compliance program. The results of the audit must be submitted to the Department of Commerce. The first audit will cover the 12 month period prior to the Order (July 2015) and must be received by BIS no later than 3 months from the Order. That’s a quick turnaround for a comprehensive audit not to mention that the Order states that the audit will be, “substantial with the Export Management and Compliance Program (ECMP) sample audits module, and shall include an assessment of Envirotech’s compliance with the regulations.”

Order and Charging Letter:

No More Oil from Yuzhno-Kirinskoye Field

Friday, September 11th, 2015 by Danielle McClellan

By: Danielle McClellan

The Bureau of Industry and Security (BIS) has added the Russian oil and gas field, the Yuzhno-Kirinskoye Field to the Entity List. This field is located in the Sea of Okhotsk and has been reported to contain substantial reserves of gas and oil. Due to this information the US Government has decided that exports, reexports, and transfers (in-country) of items subject to the EAR to Yuzhno-Kirinskoye will require a BIS license.

This field will be listed on the Entity List under the destination of Russia effective August 7, 2015. The rule will also change the following:

Clarify the introductory text of the Entity List to specify that the embargoes and other special controls part of the EAR is also used to add entities to the Entity List

  • The first sentence of the introductory text of the Entity List to add a reference to part 746. This clarification to the introductory text will make it clear that this Supplement lists certain entities subject to license requirements for specified items under this part 744 and part 746 of the EAR.

Change the Russian industry sector sanctions by clarifying the additional prohibition on those informed by BIS also includes end-uses that are within the scope of the Russian Industry sector sanctions.

  • In § 746.5 (Russian industry sector sanctions), this final rule revises the second sentence of paragraph (a)(2) for the additional prohibition on those informed by BIS to add the term ‘‘end- use’’ after the term ‘‘end-user.’’ This change clarifies that the additional prohibition described in this paragraph (a)(2), as part of the BIS ‘‘is informed’’ process, may be based on an end-user or end-use when BIS determines there is an unacceptable risk of use in, or diversion to, the activities specified in paragraph (a)(1) of this section in Russia. This clarification does not change the scope of § 746.5, but rather clarifies the cases in which BIS will use the ‘‘is informed’’ process to assist exporters, reexporters, and transferors to ‘‘know’’ when an export, reexport, or transfer (in-country) is subject to the license requirements specified in § 746.5.

Federal Register Notice:

US and EU Impose Economic Sanctions in Response to the Crisis in Ukraine

Tuesday, May 6th, 2014 by Brooke Driver

By: A. Esslinger, L. Grove & L. Van Buren
(Source: Anita Esslinger,

As part of the broad and ongoing international response to the crisis in Ukraine, the United States, the European Union and other countries have imposed or announced economic sanctions against persons involved in the crisis. While not explicit, the US sanctions include measures that will allow the United States to impose sanctions on persons that threaten peace and security in Ukraine, including those who are asserting governmental authority in the Crimean region. As yet, however, no person has been identified as a target of the sanctions. In contrast, the European Union’s sanctions specifically target former Ukrainian President Viktor Yanukovych and seventeen other members of his former regime, but at this time avoid targeting the Russian Federation.

Persons and entities that are engaging in business involving Ukraine and Russia should keep a close eye on these sanctions and future developments in order to comply with the law.

United States:

On March 6, President Obama signed an Executive Order imposing sanctions against and prohibiting entry into the United States by persons determined to be involved in the Ukrainian crisis. Persons targeted by these sanctions include those who (a) are involved in the breakdown of or threats to democratic processes or institutions, peace, security, stability, sovereignty, territorial integrity, or the proper disposition of assets in Ukraine; (b) have been determined “to have asserted governmental authority over any part or region of Ukraine without the authorization of the Government of Ukraine;” or (c) are either leaders of entities involved in such activities, have provided assistance or support for such activities or for a person sanctioned for such activities, or are owned or controlled by or acting on behalf of a person sanctioned for such activities.

Among other things, the Executive Order freezes sanctioned persons’ property and interests in property in, or that come into, the United States or that are in the control or possession of US persons (including persons in the United States, US citizens and permanent resident aliens, and US entities and their foreign branches). The Executive Order also prohibits the contribution or provision of funds, goods, or services by, to, or for the benefit of any sanctioned person-including donations of humanitarian articles-and the receipt of any funds, goods, or services from any sanctioned person.

The Executive Order does not yet list any person designated as a target of the sanctions. Administration officials have said that about a dozen persons are now subject to the travel ban although the list is being withheld for privacy reasons. Officials also have said that more people would be added to the travel ban over the coming days.

The United States had previously taken softer actions to protest Russia’s involvement with Ukraine, such as suspending trade, military, and multilateral engagement with Russia (including the G-8 summit). By including those asserting governmental authority over any part of Ukraine without the authority of the Ukrainian government the U.S. sanctions also target officials of Crimea who are cooperating with the Russian invasion. The Executive Order also provides the US Government sufficient latitude to designate officials of the Russian Federation who, in the US Government’s view, engage in such actions, threaten the peace or territorial integrity of Ukraine or provide material assistance for such activities.

US Secretary of State John Kerry has reportedly characterized the Executive Order as merely providing a tool. The US Congress is also considering legislation to deal with the crisis.

European Union:

On March 5, the Council of the European Union adopted a Regulation directly applicable in all the EU Member States, imposing sanctions against former Ukrainian president Viktor Yanukovych and seventeen other members of his former regime. Notably, these sanctions did not include any Russian nationals or entities. The former Ukrainian leaders are under investigation by the new Ukrainian government for embezzlement of state funds and the illegal transfer of those funds outside of Ukraine.

The Regulation applies with immediate effect. With limited exceptions, it requires funds and economic resources of the designated persons to be frozen and prohibits making available, directly or indirectly, funds or economic resources to or for the benefit of the designated persons. The term “economic resources” means all kinds of assets, including goods. Thus, supply of goods to designated persons is prohibited. The Regulation also requires certain reporting to competent authorities in the relevant EU Member States, such as with respect to information on accounts and amounts frozen in accordance with the Regulation.

The reach of the Regulation is broad, applying: 1) within the EU; 2) to individuals who are nationals of an EU member state, wherever located; 3) to all EU legal persons (companies and organizations incorporated or constituted under the laws of an EU member state), wherever they are in the world; and 4) to any legal person in respect of any business done in whole or in part within the EU.

Notably, while talk of travel and visa restrictions against the former regime was mentioned in previous European Council talks, no official announcement of such restrictions has yet been made, although they may be applied without public notice.

Meanwhile, the Council continued to meet in emergency session on March 6 and voted to suspend talks with Russia on a wide-ranging economic pact and a visa agreement. Further sanctions in line with the US asset freeze and travel ban aimed directly at Moscow will be held in reserve pending the outcome of diplomatic efforts.

Other Nations:

So far, the US remains the only nation to announce that it may impose sanctions against Russia. Several non-EU European nations, including Switzerland, Lichtenstein and Norway, have also announced asset freezes and travel bans on former Yanukovych regime members, but stopped short of sanctions on Russia. US neighbor Canada has also moved swiftly to follow the sanctions on the former Ukrainian president; but, although it has suspended participation in the Russian-Canadian Intergovernmental Economic Commission and recalled its ambassador to Russia, it too has taken no further steps against Russia.

Events in Ukraine continue to move quickly. Great vigilance is the order of the day.

Maryland Man Imprisoned for 8 Years for Participating in Conspiracy to Help Iran Launch First Satellite

Thursday, January 30th, 2014 by Brooke Driver

By: Brooke Driver

Nader Modanlo, a born Iraqi and naturalized U.S. citizen living in Potomac, Maryland, was recently sentenced to eight years in prison, three years of probation and a whopping $10,000,000 fine for violating the International Emergency Economic Powers Act, money laundering and obstructing bankruptcy proceedings. A number of government agencies were involved in constructing the case against Modanlo, including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Internal Revenue Service’s Criminal Investigation and the Defense Criminal Investigative Service.

The 53-year-old took part in a complex conspiracy (that took place between the years of 2000 and 2007) to illegally provide satellite related services to Iran. According to the evidence presented at trial, Modanlo used his expertise as a mechanical engineer and his background in finance and strategic policy as they relate to space-based telecommunications to facilitate the creation and launch of Iran’s first satellite.

In 1994, as the principal owner and president of Final Analysis, Inc., Modanlo began a working relationship with POLYOT, an aerospace company owned by the Russian government. Between the years 1995 and 2000, Final Analysis provided POLYOT with telecommunication satellites. Modanlo filed for and received the required licenses for these transactions.

However, in 2001, after Final Analysis was forced into bankruptcy, Modanlo founded New York Satellites Industries, running the company out of his own home. While working for Final Analysis, Modanlo began his illegal contract with POLYOT to construct and launch a remote sensing and telecommunications satellite for Iran, an agreement he honored under the name of his new company. Knowing that direct financial transactions would be difficult due to the sanction against the country, Modanlo and a number of other interested parties, including a former Iranian ambassador, met in Switzerland to discuss the details of the launch and the money exchange. To solve the problem, they formed a fake company called Prospect Telecom and opened a Swiss bank account under that name. Investors transferred funds to this account for the project, including $10,000,000 that was almost immediately sent to Modanlo’s New York Satellite Industries bank account as payment for his help in the launch, which took place October 2005. In the two years following the launch, Modanlo made false statements and withheld information regarding the ownership and aim of Prospect Telecom in bankruptcy proceedings.

Chinese National Sentenced to Nearly 5 Years in Prison for Attempting to Illegally Export Aerospace-Grade Carbon Fiber

Tuesday, December 31st, 2013 by Brooke Driver

By: Brooke Driver

On December 10, 2013, Chinese citizen Ming Suan Zhang was sentenced to 57 months in prison for violating the International Emergency Economic Powers Act by attempting to export high-grade carbon fiber from the United States to China, which is controlled due to its applications in the defense and aerospace industries. Thankfully, Zhang’s attempt to negotiate a long-term contract for large amounts of the product to aid a Chinese company involved in the development of a military aircraft was intercepted by an undercover agent working with the Department of Commerce.

Federal authorities were first alerted to Zhang’s illegal activities when two Taiwanese buyers—at Zhang’s guidance—attempted to purchase several tons of specialized carbon fiber, including Toray type M60-JB-3000-50B (“M60”) on the Internet. Zhang intended to export the fiber to a Chinese customer. In their search for an entity selling the fiber, the two buyers contacted the UC, who informed them that a license was required to export the M60 outside the U.S. After the UC refused to do business with them without the necessary license, Zhang contacted him directly, claiming that one of his clients, an employee of a Chinese military company, required the fiber for a test flight of a “jet fighter plane.” Zhang emphasized that this “client” required the product as soon as possible, implying that the need for urgency outweighed licensure:

“Hello! Please find time to send me an email or call me to explain the situation, because the customer over here is rushing me. . . . On the 5th, [he] is handling the site of a new fighter aircraft test flight. He will return between the 10th and the 20th of next month. That’s why he requested that be done this month. . . . Thank you for your cooperation!”

Zhang was captured when he traveled to the United States to meet with the UC in order to obtain a sample of the specialized fiber. United States Attorney Lynch said of the case,

“The defendant brazenly disregarded U.S. law in an attempt to procure a highly sought after commodity and provide it to a foreign power. Foreign governments are willing to go to great lengths to acquire potentially dangerous materials such as specialized carbon fiber composites, which are of high value in the development of advanced weapons programs. We and our law enforcement partners will continue to use all of the tools in our arsenal to protect our technology and maintain the national security of the United States and its allies.”