Last week, the United States Department of Justice ("DOJ") announced the sentencing of Intertech Trading Corporation ("Intertech") on fourteen felony counts under 13 U.S.C. § 305 for failure to file export information regarding shipments of "lab equipment" to both Russia and Ukraine. The DOJ initially brought these charges against Intertech in June 2022, and Intertech pled guilty to all of the charges on July 11, 2022. Intertech was ordered to pay a fine of $10,000 per count, totalling $140,000, and is subject to a two-year term of corporate probation and monitoring.
Intertech is a laboratory equipment distributor located in Atkinson, New Hampshire, that works with its local offices in Russia, Ukraine, Kazakhstan, and Belarus to sell analytical instrumentation, online instrumentation, and environmental monitoring systems to customers located all throughout the former Soviet Union. Per Intertech's plea agreement, Intertech engaged in a complex scheme to evade U.S. export controls for fourteen shipments made between October 2016 and March 2019. Each shipment of regulated items was mailed to a family member of an oversees employee using the U.S. Postal Service's Express Mail Service, and Intertech entered false information regarding both the nature and value of the items on both the U.S. Postal Service shipping confirmation form and the commercial invoice. Intertech also failed to file required Electronic Export Information for multiple shipments worth more than $2,500.
The disparity in the declared value of the shipments and the actual value of the shipments was significant. For example, a shipment declared to contain "spare parts for multimedia systems" sent to Ukraine was declared to be worth $135, while the true value of the items was $20,145. Likewise, sophisticated equipment declared as "spares for welding system" was declared at $95, while its true value was $7,573.88.
13 U.S.C. §305 states that "[a]ny person who knowingly fails to file or knowingly submits false or misleading export information" through either the Shippers Export Declaration or the Automated Export System "shall be subject to a fine not to exceed $10,000 per violation or imprisonment for not more than 5 years, or both." In this case, Intertech was sentenced to the maximum fine for each individual felony count, alongside various probation measures for the next two years. Both this prosecution and the recent indictment of multiple Russian individuals indicate that the DOJ is increasing the enforcement of criminal sanctions and export control laws. In order to reduce the risk of criminal sanctions liability, corporations, financial institutions, and other entities operating with the U.S. should prioritize the review of their export compliance policies and procedures and make any necessary upgrades as soon as possible.
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