Every Monday we post the highlights out of last week’s FCC Export/Import Daily Update (“The Daily Bugle”). Send out every business day to approximately 7,500 readers of changes to defense and high-tech trade laws and regulations, The Daily Bugle is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III, and Alexander Witt.
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Last week’s highlights of The Daily Bugle included in this edition are:
- DHS/CBP Releases Harmonized System Update 1915; The Daily Bugle; Tuesday, 3 September 2019, Item #4;
- Justice: “Turkish Businessman Sentenced to 27 Months Imprisonment for Conspiracy to Violate U.S. Sanctions by Exporting Marine Equipment from the United States to Iran”; The Daily Bugle; Tuesday, 3 September 2019, Item #6;
- Treasury/OFAC Issues Nicaragua Sanctions Regulations; The Daily Bugle; Wednesday, 4 September 2019, Item #1;
- State: “U.S. Government Guidance for the Export of Hardware, Software, and Technology with Surveillance; The Daily Bugle; Wednesday, 4 September 2019, Item #5;
- Justice: “Defense Contractor Sentenced to Three Years in Prison for Conspiracy to Defraud U.S. DoD, Conspiracy to Violate AECA, and Income Tax Evasion”; The Daily Bugle; Friday, 6 September 2019, Item #6;
- Treasury/OFAC Amends Cuban Assets Control Regulations (CACR) Publishes Corresponding FAQs and Fact Sheet; The Daily Bugle; Friday, 6 September 2019, Item #7;
1. DHS/CBP Releases Harmonized System Update 1915
(Source: DHS/CBP, 3 Sep 2019.)
Harmonized System Update (HSU) 1915 was created on September 3, 2019 and contains 64 ABI records and 12 harmonized tariff records.
System modifications were made to support the Office of the United States Trade Representative’s (USTR) Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology, Transfer, Intellectual Property and Innovation. The Notice was published on August 20, 2019 in the Federal Register, Vol. 84, No. 161, page 44304, and can be retrieved via the link.
Changes also include those made to support the Office of the United States Trade Representative’s (USTR) Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology, Transfer, Intellectual Property and Innovation issued on Friday August 30, 2019. The Notice can be found in the Federal Register, Vol. 84, No. 169, page 45821 or by using the link.
Modifications were made to support the PGA Message Set functionality as well.
Adjustments required by the verification of the 2019 Harmonized Tariff Schedule (HTS) are also included.
The modified records are currently available to all ABI participants and can be retrieved electronically via the procedures indicated in the CATAIR. For further information about the retrieval process, please contact your client representative.
All other questions regarding this message, please contact Jennifer Keeling via email at Jennifer.L.Keeling@cbp.dhs.gov.
2. Justice: “Turkish Businessman Sentenced to 27 Months Imprisonment for Conspiracy to Violate U.S. Sanctions by Exporting Marine Equipment from the United States to Iran”
(Source: Justice, 3 Sep 2019.) [Excerpts.]
Resit Tavan, a Turkish Businessman and owner of the Istanbul-based Turkish business Ramor Dis Ticaret Ltd. (also known as the “Ramor Group”) was sentenced on Thursday, Aug. 29, 2019, in Federal District Court in Milwaukee, Wisconsin, to 27 months imprisonment in connection with his conviction for conspiracy to violate U.S. sanctions by exporting specialized marine equipment from the United States to Iran between 2013 to 2015.
On April 2, 2019, Tavan, a Turkish citizen, had pleaded guilty to a conspiracy to violate U.S. sanctions on Iran under the International Emergency Economic Powers Act by using his Turkish based company, the Ramor Group, to acquire a range of marine related equipment that had been manufactured in Wisconsin by U.S. companies, including high powered outboard engines, marine power generators and power boat propulsion equipment known as surface drives, on behalf of the Iran-based Qeshm Madkandalou Shipbuilding Cooperative (Madkanadalou). Evidence introduced in Court showed that Tavan had worked in cooperation with Iranian officers associated with Madkandalou to use some of this U.S. origin marine equipment to support the construction and development of a prototype high-speed missile attack boat for the Iranian military or naval forces. From early 2013 through 2015, Tavan and the Ramor Group had worked in concert with Iranian officials to procure U.S. origin marine equipment and illegally export it to Iran by using the Ramor Group in Turkey to receive the goods and thereafter re-export it to Madkandalou in Iran, in violation of U.S. sanctions.
At the sentencing hearing, the District Court Judge indicated that this conspiracy to violate U.S. sanctions by procuring marine equipment for military purposes represented a serious threat to U.S. national security. The Judge also found that Tavan’s role in the offense should be considered in connection with the overall direction and control of the project by higher ranking Iranian officials. …
3. Treasury/OFAC Issues Nicaragua Sanctions Regulations
(Source: Federal Register, 4 Sep 2019.) [Excerpts.]
84 FR 46440-46448: Nicaragua Sanctions Regulations
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Final rule.
* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is adding regulations to implement Executive Order 13851 of November 27, 2018 (“Blocking Property of Certain Persons Contributing to the Situation in Nicaragua”). OFAC intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy.
* DATES: Effective: September 4, 2019.
* FOR FURTHER INFORMATION CONTACT: OFAC: Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; or Assistant Director for Sanctions
* SUPPLEMENTARY INFORMATION: …
On November 27, 2018, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (IEEPA), issued Executive Order 13851 (83 FR 61505, November 29, 2018) (E.O. 13851).
In E.O. 13851, the President determined that the situation in Nicaragua, including the violent response by the Government of Nicaragua to the protests that began on April 18, 2018, and the Ortega regime’s systematic dismantling and undermining of democratic institutions and the rule of law, its use of indiscriminate violence and repressive tactics against civilians, and its corruption leading to the destabilization of Nicaragua’s economy, constitute an unusual and extraordinary threat to the national security and foreign policy of the United States, and declared a national emergency to deal with that threat.
OFAC is issuing the Nicaragua Sanctions Regulations, 31 CFR part 582 (the “Regulations”), to implement E.O. 13851, pursuant to authorities delegated to the Secretary of the Treasury in E.O. 13851. A copy of E.O. 13851 appears in appendix A to this part.
The Regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part 582 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy. The appendix to the Regulations will be removed when OFAC supplements this part with a more comprehensive set of regulations. …
4. State: “U.S. Government Guidance for the Export of Hardware, Software, and Technology with Surveillance Capabilities and/or Parts/Know-How”
(Source: Jenny Stein, SteinJL@state.gov, 4 Sep 2019.)
The U.S. Department of State is developing guidance for exporters of items with intended and unintended surveillance capabilities. The guidance seeks to provide insight to exporters on considerations to weigh prior to exporting these items. It also offers businesses greater understanding of the human rights concerns the U.S. government may have with the export.
We are posting the draft guidance – entitled, “U.S. Government Guidance for the Export of Hardware, Software and Technology with Surveillance Capabilities and/or Parts/Know-How” – for the next 30 days to solicit feedback from the public to help strengthen the document. The draft guidance can be found here. We encourage you to be as specific as possible in your suggested input (e.g. line edits, and accompanying rationale, are welcome). On October 4, 2019, we will remove the draft guidance from this website and will work to finalize the draft. For those interested, please send your feedback to IFBHR@state.gov. We thank you in advance!
Jenny Stein, Special Advisor, Business and Human Rights and Internet Freedom, Bureau of Democracy, Human Rights and Labor, U.S. Department of State, SteinJL@state.gov, (202) 663-2652
5. Justice: “Defense Contractor Sentenced to Three Years in Prison for Conspiracy to Defraud U.S. DoD, Conspiracy to Violate AECA, and Income Tax Evasion”
(Source: Justice, 4 Sep 2019.) [Excerpts.]
The owner of two defense contracting firms was sentenced to 36 months in prison for providing non-conforming parts for military equipment, illegally sharing sensitive technical information and evading income taxes Assistant Attorney General John Demers and U.S. Attorney Craig Carpenito announced today.
Roger Sobrado, 49, of Marlton, New Jersey, previously pleaded guilty before U.S. District Judge Noel L. Hillman to an information charging him with one count each of conspiracy to commit wire fraud, conspiracy to violate the Arms Export Control Act, and income tax evasion. Judge Hillman imposed the sentence on Sept. 4, 2019, in Camden federal court.
According to documents filed in this case and statements made in court:
Sobrado was the owner of two companies: Tico Manufacturing Inc. (TICO), a purported manufacturing company, and Military and Commercial Spares Inc. (MCS), a defense contracting company, both in Berlin Township, New Jersey.
Sobrado admitted that between January 2011 and December 2015, MCS obtained contracts with the U.S. Department of Defense (DoD) by falsely claiming that the military parts it contracted to provide would be exactly as described and provided by authorized manufacturers. The DoD contracts specified that the parts were critical application items for military equipment, including fighter jets and helicopters. Sobrado recruited various family members to participate in the scheme by establishing companies that contracted with the DoD. Those companies also obtained contracts with the DoD by falsely claiming that the military parts they contracted to provide would be the exact product described and would be provided by authorized manufacturers. In fact, Sobrado used TICO to contract with local manufacturers to supply non-conforming parts to MCS and his family members’ companies at a significantly reduced cost. The non-conforming parts supplied by Sobrado were shipped from New Jersey to various DoD locations around the country.
DoD paid Sobrado and his family members’ companies for the non-conforming parts. The family members then paid Sobrado for the non-conforming parts. Sobrado admitted that he deposited some of his business receipts into his personal bank account and that he paid for personal items from his business account without telling his accountant. For tax years 2011 through 2014, Sobrado reported a total taxable income of $1,608,372. He failed to report additional income of $1,182,405, which caused a loss to the United States of $509,962.
Sobrado also admitted that in August 2005 and in November 2010 he submitted to the DoD a fraudulent application for access to export controlled drawings and technical data on behalf of a family member’s company. Sobrado acknowledged that access to the controlled drawings and technical data was limited to citizens of the United States and to those lawfully in the United States. Sobrado said he submitted the application because his family member told him that he needed access to drawings and that he could not get them because he was not a U.S. citizen.
Sobrado agreed that on July 28, 2011, and at various times between January 2013 and November 2015, the family member, who is illegally in the United States, accessed or downloaded hundreds of drawings that were sensitive in nature and that required special access.
In addition to the prison term, Judge Hillman sentenced Sobrado to three years of supervised release and ordered him to pay $8,043,977 in restitution. …
6. Treasury/OFAC Amends Cuban Assets Control Regulations (CACR) Publishes Corresponding FAQs and Fact Sheet
(Source: Treasury/OFAC, 6 Sep 2019.)
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR), to further implement portions of the President’s foreign policy toward Cuba. In accordance with announced changes related to remittances and certain kinds of financial transactions, OFAC is amending the CACR to: i) revise certain authorizations for remittances to Cuba to impose new requirements and limitations; and ii) revise the authorization commonly known as the “U-turn” general license to eliminate the authorization for banking institutions subject to U.S. jurisdiction to process certain kinds of financial transactions. The CACR amendment will be published in the Federal Register on Monday, September 9, 2019 and will take effect on October 9, 2019. OFAC is also publishing a number of updated Frequently Asked Questionsand a Fact Sheetpertaining to this regulatory amendment.
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