The Department of Commerce's Bureau of Industry and Security (BIS) published an updated version of Don't Let This Happen to You!, a list of case examples highlighting BIS enforcement efforts including criminal cases.
Case highlights:
The publication highlights over 100 cases covering various violations of export control laws.
Military Controls
The owner of BQ Tree Consulting in Jacksonville, Florida, along with the President and Manager of the company were indicted for conspiring to illegally export military-grade combat rubber raiding craft (CCRC) to China.
The scheme involved providing a U.S. company with false end-use and end-user information for a front company in Hong Kong, which was used to complete the transaction ultimately destined for China. The intention was to reverse engineer the CRRC and engines to mass produce them for the Chinese People's Liberation Army (PLA) Navy.
The company owner was sentenced to 16 months in prison, two years of supervised release, mandatory mental health screening, and a $200 special assessment. The company President was sentenced to 42 months confinement, three years of probation, a $50,000 criminal fine, and a $200 special assessment. The company manager was sentenced to 17 months in prison, one year of supervised release pending deportation, a prohibition on employment with any company that deals with the military, and a $100 special assessment.
National Security Controls
GlobalFoundries U.S. Inc., a semiconductor wafer manufacturing company headquartered in Malta New York violated the Export Administration Regulations (EAR) by sending 74 shipments of semiconductor wafers, valued at approximately $17.1 million, to SJ Semiconductor (SJS), a company on the BIS Entity List, without a license from BIS.
GlobalFoundries voluntarily disclosed the violations and cooperated fully with the investigation, which resulted in a reduction in the penalty.
On November 1, 2024, GlobalFoundries agreed to a $500,000 civil penalty.
WMD Controls
Chinese national Zaosong Zheng conducted cancer-cell research at Beth Israel Deaconess Medical Center in Boston. Zheng stole vials of biological research and attempted to take them out of the United States aboard a flight to China.
Zheng was arrested at Logan International Airport in Boston. Zheng pled guilty to making false, fictitious or fraudulent statements in connection with his theft of 19 vials and was sentenced to time served in prison, three years of supervised release, a $100 special assessment, and removal from the United States.
Unlicensed Exports
USGoBuy, LLC of Portland, Oregon entered into a settlement agreement with BIS to resolve two alleged violations of the EAR involving unlicensed exports of riflescopes to China and the UAE. As part of the settlement agreement, USGoBuy, LLC agreed to a three-year suspended denial order, which BIS could activate if the company failed to meet the terms of the settlement agreement or committed additional violations.
A subsequent audit identified significant continued deficiencies in USGoBuy, LLC's export compliance program and revealed new violations of the EAR including 176 failures to make Electronic Export Information (EEI) filings and failures to maintain adequate records.
BIS activated the previously agreed upon suspended penalty – a three-year denial order.
Takeaways
In the publication, BIS noted that export controls have never been more important to the U.S.'s security interests and that Export Enforcement has taken decisive action to prioritize its enforcement efforts.
BIS also urged companies to invest in compliance upfront to avoid becoming one of the highlighted case studies.
Exporters should have a robust compliance program in place not only to prevent violations of the EAR but to detect them if and when they do occur.
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