[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Notices]
[Pages 61540-61542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-28112]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[17-BIS-0002]
In the Matter of: Saeid Yahya Charkhian, Villa 5, Street 1,
Arabian Ranches, Dubai, United Arab Emirates, and Caspian Industrial
Machinery Supply LLC, No. 2509 Churchill Executive Tower, Business Bay,
Dubai, United Arab Emirates, Attention: Saeid Yahya Charkhian;
Respondents; Order Relating to Saeid Yahya Charkhian and Caspian
Industrial Machinery Supply LLC
The Bureau of Industry and Security, U.S. Department of Commerce
(``BIS''), has notified Saeid Yahya Charkhian, of Dubai, United Arab
Emirates (``Charkhian''), and Caspian Industrial Machinery Supply LLC
of Dubai, United Arab Emirates (``Caspian'') (collectively the
``Respondents''), that it has initiated an administrative proceeding
against Respondents pursuant to Section 766.3 of the Export
Administration Regulations (the ``Regulations''),\1\ and Section 13(c)
of the Export Administration Act of 1979, as amended (the ``Act''),\2\
through the issuance of a Charging Letter to Respondents that allege
that Charkhian committed four (4) violations of the Regulations and
Caspian committed three (3) violations of the Regulations.
Specifically, the charges are:
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\1\ The Regulations are currently codified in the Code of
Federal Regulations at 15 CFR parts 730-774 (2017). The violations
alleged occurred in 2012-2013. The Regulations governing the
violations at issue are found in the 2012-2013 version of the Code
of Federal Regulations, 15 CFR parts 730-774 (2012-2013). The 2017
Regulations govern the procedural aspects of this case.
\2\ 50 U.S.C. 4601-4623 (Supp. III 2015). Since August 21, 2001,
the Act has been in lapse and the President, through Executive Order
13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which has
been extended by successive Presidential Notices, the most recent
being that of August 15, 2017 (82 FR 39005 (Aug. 16, 2017)), has
continued the Regulations in effect under the International
Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (2012).
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As to both Charkhian and Caspian:
Charges 1-3 15 CFR 764.2(e)--Acting With Knowledge
1. On at least three occasions between on or about March 27,
2012, and on or about October 5, 2013, Charkhian and Caspian
(collectively, the ``Respondents'') transferred,
[[Page 61541]]
forwarded, ordered, bought and/or sold items subject to the
Regulations and exported or to be exported from the United States to
Iran, via the Netherlands and the United Arab Emirates (``UAE''),
with knowledge \3\ that a violation of the Regulations had occurred
or was about or intended to occur in connection with the items.
Specifically, the Respondents acted with knowledge of a violation of
the Regulations when they sold, transferred and/or forwarded to,
and/or ordered or bought for, end users in Iran items that the
Respondents procured from the United States through an intermediary
company located in the Netherlands. These U.S.-origin items,
including masking wax, lithium batteries, and zirconia crucibles,
were designated EAR99 under the Regulations \4\ and valued in total
at nearly $190,000.
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\3\ Title 15 CFR 772.1 defines ``knowledge'' as ``[k]nowledge of
a circumstance (the term may be a variant, such as ``know,''
``reason to know,'' or ``reason to believe'') includes not only
positive knowledge that the circumstance exists or is substantially
certain to occur, but also an awareness of a high probability of its
existence or future occurrence. Such awareness is inferred from
evidence of the conscious disregard of facts known to a person and
is also inferred from a person's willful avoidance of facts.
\4\ ``EAR99'' is a designation for items subject to the
Regulations but not listed on the Commerce Control List. 15 CFR
734.3(c).
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2. The Respondents' actions violated the long-standing and
widely-known U.S. embargo against Iran. Under Section 746.7 of the
Regulations, BIS prohibits the export or reexport to Iran of any
item subject to both the Regulations and the Iranian Transactions
and Sanctions Regulations (``ITSR''), if the transaction is
prohibited by the ITSR and has not been authorized by the U.S.
Department of the Treasury's Office of Foreign Assets Control
(``OFAC''), which administers the ITSR.\5\ At all times pertinent
hereto, the ITSR prohibited, inter alia, the unauthorized
exportation, reexportation, sale or supply, directly or indirectly,
from the United States to Iran of any goods, technology, or
services. This broad prohibition included restrictions on the
exportation, reexportation, sale or supply of any goods, technology,
or services from the United States to a third country, such as the
Netherlands or the UAE, undertaken with knowledge or reason to know
that they were intended for supply, transshipment, or reexportation,
directly or indirectly, to Iran. 31 CFR 560.204. As set further
below, the Respondents knew that the items at issue were ultimately
destined for Iran and they knew of the U.S. embargo against Iran,
but they did not seek or obtain the required U.S. Government
authorizations in connection with any of the exports or reexports
described herein.
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\5\ 31 CFR part 560 (2012-2013). The ITSR formerly were known as
the Iranian Transactions Regulations (``ITR''). On October 22, 2012,
OFAC renamed the ITR as the ITSR and reissued them in relevant part.
See 77 FR 64664 (Oct. 22, 2012).
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3. Charkhian, an Iranian national, personally participated in
each of the transactions at issue and, in addition, was Managing
Director and part owner of Caspian, a UAE trading company, at all
times pertinent hereto. Upon information and belief, Charkhian has,
in fact, been Managing Director of Caspian since in or about May
2001, when Caspian was formed in the UAE. Through the Respondents'
many years of business in the UAE, they were aware of the U.S.
embargo against Iran at the times of the transactions at issue in
2012-2013. Moreover, the Respondents had specifically acknowledged
the existence of the embargo, for example, when they completed an
end-user agreement with a European subsidiary of a U.S. company that
included statements related to the need for compliance with ``U.S.
Export Administration Regulations.''
4. Despite this knowledge, the Respondents sought to procure for
and supply to customers in Iran U.S.-origin items without the
required U.S. Government authorization and did so through
transactions that they structured to conceal from U.S. suppliers the
Respondents' actual role in the transactions and that the items were
ultimately destined for Iran. On or about March 27, 2012, the
Respondents transferred or forwarded masking wax, an item subject to
the Regulations and the ITSR and valued at $2,570, from the UAE to
Iran without the required U.S. Government authorization. The events
leading to this knowing violation began in or about November 2011,
when the Respondents received an inquiry from an Iranian entity
seeking masking wax, a protective, strippable coating used in
electroplating, for capping ends of tubing, and for sealing the ends
of electric cables. The Respondents provided the request to a
company in the Netherlands, which indicated that it ``only [had a]
source in USA for this product'' but that the product was ``on stock
in the U.S.'' and could be delivered in about two weeks. The
Respondents' Iranian customer Mavadkaran Jahed Noavar Company
(``Mavadkaran''), which is part of the Iran-based conglomerate the
MAPNA Group, subsequently issued a purchase order on or about
February 13, 2012, to the Respondents for 100 lbs. of masking wax,
which the Respondents then purchased from the United States through
the Dutch reseller. Payment information indicates that the
Respondents sold the items to Mavadkaran on or about February 21,
2012. The items were exported from the United States on or about
February 23, 2012. After arriving in the Netherlands, the items were
transshipped on or about March 14, 2012, to the Respondents in the
UAE. On or about March 27, 2012, the Respondents then transferred or
forwarded the items to Iran.
5. On a second occasion, between in or about July 2012, and in
or about October 2012, the Respondents similarly ordered and bought
lithium batteries from the United States through the same Dutch
intermediary company and then sold, transferred and/or forwarded the
batteries to an end user in Iran. The lithium batteries were subject
to the Regulations and the ITSR and were valued in total at $75,000.
In or about January 2012, the Respondents had asked the Dutch
company to provide a quote for six orders of 1,000 batteries which
the Respondents' customer had tested and sought for a pending
project in Iran. After receiving pricing information from the Dutch
company, the Respondents bought or ordered the 1,000 lithium
batteries on or about July 15, 2012, which was followed by a pro
forma invoice from the Dutch company to the Respondents for the
1,000 batteries about one month later. On or about October 3, 2012,
the U.S. supplier, which had not been informed that the items were
to be transshipped to Iran, filed an Automated Export System
(``AES'') record indicating that 1,000 lithium batteries were being
exported from the United States for the ultimate destination of the
Netherlands. As part of email correspondence between on or about
October 15-17, 2012, following the transshipment of the items from
the Netherlands to the Respondents in the UAE, the Dutch company
provided the Respondents a certificate of origin from the U.S.
company confirming the items were of U.S.-origin, as well as an
invoice identifying the items as manufactured in the United States.
A Caspian invoice and packing list dated October 17, 2012, indicated
that the Respondents were selling, transferring and/or forwarding
1,000 lithium batteries to a buyer in Tehran, Iran, that was related
to the Iran National Oil Company \6\ and Iran National Drilling
Company,\7\ both of which are Iranian-Government owned corporations.
The invoice also confirmed that the items were of U.S.-origin. A few
days later, in an email dated on or about October 29, 2012, an
Iranian party confirmed that it had received the 1,000 lithium
batteries from the Respondents.
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\6\ Also known as National Iranian Oil Company or ``NIOC.'' NIOC
was designated a Specially Designated National (``SDN'') by OFAC on
December 4, 2008, but was removed from the SDN List on January 16,
2016, as part of the Joint Comprehensive Plan of Action (``JCPOA'').
\7\ Also known as the National Iranian Drilling Company or
``NIDC.''
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6. Finally, on a third occasion, between in or about August
2013, and in or about October 2013, the Respondents ordered and
bought approximately 196 flat bottom zirconia crucibles from the
United States through the same Dutch intermediary company and then
sold, transferred or forwarded the crucibles to an end user in Iran.
The crucibles are subject to the Regulations and the ITSR, can be
used in nuclear material casting, such as casting uranium, and were
valued at $112,000. The events leading up to this knowing violation
began when the Respondents received an order request from Iranian
company Mavadkaran on or about April 23, 2013. Mavadkaran requested
that the purchase order be issued to Mapna International F.Z.E.
(``Mapna''), a related company in the UAE, which was listed as the
buyer instead of Mavadkaran. The Respondents' pro forma invoice
dated April 23, 2013, indicated that the items would be of U.S.-
origin. On or about May 9, 2013, the Respondents forwarded the order
request to the Dutch company, and approximately one week later the
Respondents received a price quote for the items. On or about June
3, 2013, Mapna issued a purchase order to the Respondents stating
that the items were to be delivered by vessel to Iran and that the
Respondents should provide a certification of origin confirming the
items were of U.S.-origin, certified by the local chamber of
commerce. After the Dutch company placed a
[[Page 61542]]
corresponding order with a U.S. supplier at the Respondents'
request, the zirconia crucibles were exported from the United States
to the Netherlands on or about August 20, 2013. The Dutch company
transshipped the items to the UAE on or about September 17, 2013. An
email dated on or about October 5, 2013, from Charkhian to a customs
broker indicated that the Respondents had forwarded or transferred
the items for delivery to Iran.
7. In so doing, the Respondents committed three (3) violations
of Section 764.2(e) of the Regulations and are jointly and severally
liable for those violations.
As to Charkhian only:
Charge 4 15 CFR 764.2(g)--False or Misleading Statement
8. On or about December 16, 2014, Charkhian made a false or
misleading statement to BIS and other U.S. Government officials in
connection with an action subject to the Regulations and/or in
connection with effecting an export, reexport or other activity
subject to the Regulations. While being interviewed by BIS on that
date as part of a post-shipment verification (unrelated to Charges
1-3 above), Charkhian represented that he had never conducted any
business with Iran at any time since 2001, and had not purchased
anything from the United States during that time period. These
statements contradicted the transactions and related transaction
documents and correspondence detailed in Charges 1-3 above, which
clearly indicate that at least on three occasions during 2012-2013,
Charkhian and his company, Caspian, knowingly procured items from
the United States or of U.S.-origin for Iranian customers through an
intermediary party in the Netherlands.
9. Pursuant to Section 764.2(g) of the Regulations, no person
may make any false or misleading representation or statement, or
falsify or conceal any material fact, either directly or indirectly
to BIS or any official of any other U.S. Government agency in
connection with an action subject to the Regulations as set forth in
(g)(1)(i) or in connection with effecting an export, reexport or
other activity subject to the Regulations as set forth in
(g)(1)(iii).
10. In so doing, Charkhian committed one (1) violation of
Section 764.2(g) of the Regulations.
Whereas, BIS and Respondents have entered into a Settlement
Agreement pursuant to Section 766.18(b) of the Regulations, whereby
they agreed to settle this matter in accordance with the terms and
conditions set forth therein; and
Whereas, I have approved of the terms of such Settlement Agreement;
it is therefore ordered:
FIRST, that for a period of twelve (12) years from the date of this
Order, Saeid Yahya Charkhian, with a last known address of Villa 5,
Street 1, Arabian Ranches, Dubai, United Arab Emirates, and Caspian
Industrial Machinery Supply LLC, No. 2509 Churchill Executive Tower,
Business Bay, Dubai, United Arab Emirates, and when acting for or on
their behalf, their successors, assigns, directors, officers,
employees, representatives, or agents (each a ``Denied Person'' and
collectively the ``Denied Persons''), may not, directly or indirectly,
participate in any way in any transaction involving any commodity,
software or technology (hereinafter collectively referred to as
``item'') exported or to be exported from the United States that is
subject to the Regulations, or in any other activity subject to the
Regulations, including, but not limited to:
A. Applying for, obtaining, or using any license, license
exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying,
receiving, using, selling, delivering, storing, disposing of,
forwarding, transporting, financing, or otherwise servicing in any way,
any transaction involving any item exported or to be exported from the
United States that is subject to the Regulations, or engaging in any
other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item
exported or to be exported from the United States that is subject to
the Regulations, or from any other activity subject to the Regulations.
SECOND, that no person may, directly or indirectly, do any of the
following:
A. Export or reexport to or on behalf of a Denied Person any item
subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted
acquisition by a Denied Person of the ownership, possession, or control
of any item subject to the Regulations that has been or will be
exported from the United States, including financing or other support
activities related to a transaction whereby a Denied Person acquires or
attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition
or attempted acquisition from a Denied Person of any item subject to
the Regulations that has been exported from the United States;
D. Obtain from a Denied Person in the United States any item
subject to the Regulations with knowledge or reason to know that the
item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the
Regulations that has been or will be exported from the United States
and which is owned, possessed or controlled by a Denied Person, or
service any item, of whatever origin, that is owned, possessed or
controlled by a Denied Person if such service involves the use of any
item subject to the Regulations that has been or will be exported from
the United States. For purposes of this paragraph, servicing means
installation, maintenance, repair, modification or testing.
THIRD, that, after notice and opportunity for comment as provided
in Section 766.23 of the Regulations, any person, firm, corporation, or
business organization related to a Denied Person by affiliation,
ownership, control, or position of responsibility in the conduct of
trade or related services may also be made subject to the provisions of
the Order.
FOURTH, all licenses issued pursuant to the Act or Regulations in
which any of the Respondents had an interest as of the date of this
Order are revoked.
FIFTH, Respondents shall not take any action or make or permit to
be made any public statement, directly or indirectly, denying the
allegations in the Charging Letter or the Order. The foregoing does not
affect Respondents' testimonial obligations in any proceeding, nor does
it affect its right to take legal or factual positions in civil
litigation or other civil proceedings in which the U.S. Department of
Commerce is not a party.
SIXTH, that the Charging Letter, the Settlement Agreement, and this
Order shall be made available to the public.
SEVENTH, that this Order shall be served on Respondents, and shall
be published in the Federal Register.
This Order, which constitutes the final agency action in this
matter, is effective immediately.
Issued this 21st day of December, 2017.
Richard R. Majauskas,
Deputy Assistant Secretary of Commerce for Export Enforcement
performing the non-exclusive functions and duties of the Assistant
Secretary of Commerce for Export Enforcement.
[FR Doc. 2017-28112 Filed 12-27-17; 8:45 am]
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