Archive
Five Individuals and Four Companies Indicted in Fraud Conspiracy Involving Exports to Iran
The DOJ recently reported that five individuals and four of their companies have been indicted as part of a conspiracy to defraud the United States that allegedly caused thousands of radio frequency modules to be illegally exported from the United States to Iran, at least 16 of which were later found in unexploded improvised explosive devices (IEDs) in Iraq. Some of the defendants are also charged in a fraud conspiracy involving exports of military antennas to Singapore and Hong Kong.
Authorities in Singapore arrested Wong Yuh Lan (Wong), Lim Yong Nam (Nam), Lim Kow Seng (Seng), and Hia Soo Gan Benson (Hia), all citizens of Singapore, in connection with a U.S. request for extradition. The United States is seeking their extradition to stand trial in the District of Columbia. The remaining individual defendant, Hossein Larijani, is a citizen and resident of Iran who remains at large.
The indictment alleges that the defendants conspired to defraud the U.S. and defeat export controls by sending U.S.-origin components to Iran rather than to their stated final destination of Singapore. The government has stated that this case undescores the continuing threat posed by Iranian procurement networks seeking to obtain U.S. technology.
The indictment, which was returned in DC on Sept. 15, 2010, and unsealed on October 25, 2011, includes charges of conspiracy to defraud the U.S., smuggling, illegal export of goods from the United States to Iran, illegal export of defense articles from the U.S., false statements, and obstruction of justice.
The charged defendants are Iranian national Larijani, 47, and his companies Paya Electronics Complex, based in Iran, and Opto Electronics Pte, Ltd., based in Singapore. Also charged is Wong, 39, an agent of Opto Electronics who was allegedly supervised by Larijani from Iran. The indictment also charges NEL Electronics Pte. Ltd., a company in Singapore, along with NEL’s owner and director, Nam, 37. Finally, the indictment charges Corezing International Pte. Ltd., a company in Singapore that maintained offices in China, as well as Seng, 42, an agent of Corezing, and Hia, 44, a manager, director and agent of Corezing.
Wong, Nam, Seng and Hia allegedly conspired to defraud the United States by impeding U.S. export controls relating to the shipment of 6,000 radio frequency modules from a Minnesota company through Singapore to Iran, some of which were later found in unexploded IEDs in Iraq. Seng and Hia are also accused of conspiring to defraud the United States relating to the shipment of military antennas from a Massachusetts company to Singapore and Hong Kong. Singapore has agreed to seek extradition for Wong and Nam on the charge of conspiracy to defraud the United States relating to the components shipped to Iran, and to seek extradition for Seng and Hia on the charge of conspiracy to defraud the United States relating to the military antenna exports.
In coordination with the criminal actions taken, the Commerce Department Bureau of Industry and Security announced the addition of 15 persons located in China, Hong Kong, Iran and Singapore to the Commerce Department’s Entity List. In addition to the five individual defendants in this case, the Commerce Department named additional companies and individuals associated with this conspiracy. In placing these parties on the Entity List, the Commerce Department is imposing a licensing requirement for any item subject to Commerce regulation with a presumption that such a license would be denied.
The United States aggressively enforces its export control and national security laws to ensure continued compliance with regulations expounding U.S. national security and foreign policy interests. Criminal prosecutions such as the ones announced in this indictment usually denote willful violations of the regulations. By lying to investigators and regulators, these individuals and companies find themselves in the unenviable position being charged with crimes that put them at direct odds with the stated national security and foreign policy goals of the United States.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
FinCEN Implements New Rule Requiring U.S. Banks to Seek Information from Foreign Banks on Iranian Financial Ties
On October 5, 2011 the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) delivered to the Federal Register a final rule to implement section 104(e) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) to complement Treasury’s ongoing efforts to protect the international financial system from abuse by Iran. The rule becomes law upon its publication in the Federal Register.
The new rule will be published in 31 C.F.R. Section 1060.300 and is entitled “Reporting obligations on foreign bank relationships with Iranian-linked financial institutions designated under IEEPA and IRGC-linked persons designated under IEEPA.”
The goal of this new rule is to further separate the U.S. financial system from Iran by ensuring that no foreign banks with which U.S. institutions have corresponding accounts with have any ties to suspect Iranian financial institutions. The outcome of this rule will be to further isolate the Government of Iran, disrupt its ability to develop weapons of mass destruction or support terrorism, and encourage the broader international financial system to isolate Iran if it wants to benefit from doing business with the United States.
The rule accomplishes these goals by requiring a U.S. bank, upon a request from FinCEN, to inquire into whether any of the foreign banks with which it holds a correspondent account has dealings or accounts associated with the Government of Iran, blocked Iranian banks, or the Revolutionary Guards (IRGC). The rule also requires, upon request, inquiries into a foreign bank’s transfers of funds for or on behalf of, directly or indirectly, an Iranian-linked financial institution or IRGC associated entity designated under IEEPA within the preceding 90 calendar days.
The new rule also requires that the U.S. bank request from the foreign bank a notification if the foreign bank subsequently establishes an account for an Iranian-linked financial institution designated under IEEPA at any time within 365 calendar days from the date of the foreign bank’s initial response. A laundry list of requirements is listed in the new regulation dictating the specific disclosures a bank must report to Treasury with regards to financial dealings involving Iranian entities designated pursuant to IEEPA and any of the foreign banks with which the U.S. bank has a correspondent account. U.S. banks have 45 days after a request from FinCEN to file their initial report. A U.S. bank will also have 10 days to file a report to FinCEN if they are subsequently informed that a foreign bank they hold an account with opens an account with an Iranian-linked financial institution.
This line of inquiry will ultimately determine whether or not that foreign financial institution itself will be prohibited from maintaining or opening, in the United States, a correspondent account or payable-through account. As authorized by Congress in CISADA, if the Secretary of the Treasury determines that the foreign financial institution knowingly engages in certain specified activities, that foreign financial institution will not be allowed to maintain or open such accounts with U.S. financial institutions. Those specified activities include facilitating a significant transaction or transactions or providing significant financial services for a financial institution whose property or interests in property are blocked pursuant to IEEPA. This prohibition is specifically aimed at disrupting Iran’s proliferation of weapons of mass destruction or delivery systems for weapons of mass destruction, or in connection with Iran’s support for international terrorism, or for the IRGC or any of its agents or affiliates whose property or interests in property are blocked.
Failure of a U.S. bank to comply with FinCEN’s request for inquirt into the Iranian-linked affairs of a foreign financial institution will subject the U.S. bank to both civil and criminal penalties as enumerated in 31 U.S.C. Sections 5321(a) and 5322.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Disadvantaged Defendants: Federal Conspiracy and U.S. Economic Sanctions
Conspiracy is frequently charged in federal criminal cases. In the simplest terms possible, a conspiracy exists whenever two or more people agree to commit a criminal offense. Since most white collar crimes involve multiple actors, U.S. Attorney’s commonly utilize conspiracy charges when indicting white collar defendants. For example, the federal government has recently indicted individuals and firms in the United Arab Emirates, France, U.S., and Iran for violating and conspiring to violate the Iran embargo and various U.S. export laws and fraud laws. Because the federal conspiracy law does not merge with the underlying offense being conspired, these defendants can serve sentences for both the underlying offenses and the overarching conspiracy charge. This is unlike other inchoates crime like attempt or solicitation, which merge into the underlying offense if the offense is actually completed. However, for many of the defendants in this case the possibility of serving time for a separate conspiracy charge is probably not the worst consequence of being charged with conspiracy.
The defendants in this case are most disadvantaged by the conspiracy charge because the government can now bring together at a single trial all defendants who were allegedly part of the conspiracy, including minor participants and those with little direct evidence against them. In a case as complex and far reaching as this one, a co-conspirator who served as a shipping clerk with little knowledge as to the scope of the conspiracy he was involved in can be tried alongside the sophisticated corporate officer who designed the entire scheme.
Another key disadvantage to defendants implicated in a large conspiracy is the expanded scope of evidence that can be used against them. First, the nature of a conspiracy charge expands the scope of relevant evidence that can be used against the defendants. For example, evidence as to any co-conspirators’ acts in furtherance of the conspiracy may be admissible in the trial that includes all the defendants. Second, co-conspirator statements made during and in furtherance of a conspiracy are admissible under the “co-conspirators exception” to the hearsay rule.
Additionally, a defendant charged with a conspiracy such as this one faces significantly expanded liability. This is because co-conspirators are often vicariously liable for the substantive offenses committed by other co-conspirators. In this case, the shipping clerk who signed forms with the understanding that the parts sent to France would end up in Iran would not only be liable for his own actions, but will also be liable for the actions of every other participant in the conspiracy, including any unlicensed money transfers, other willful evasions of the sanctions, frauds, etc.
The conspiracy also allows the government to bring the case in any district where the conspiratorial agreement was entered into or where any co-conspirator committed any act in furtherance of the conspiracy. This means that the government can choose to bring the case where it is most advantageous to the prosecutors or where it is least convenient for the defendants. In a global case such as this one, the government’s ability to choose from a long list of eligible sites for venue can be powerful.
Lastly, conspiracy also extends the the statute of limitations because the time does not begin to run until all the goals of the conspiracy have been accomplished or abandoned. For example, the statute of limitations for violations of IEEPA or the Iranian Transactions Regulations is five years, but as long as any one co-conspirator commits a single overt act every five years the conspiracy is considered ongoing and every co-conspirator remains indefinitely liable.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
