[Federal Register Volume 75, Number 250 (Thursday, December 30, 2010)]
[Notices]
[Pages 82464-82487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32563]
[[Page 82463]]
-----------------------------------------------------------------------
Part III
Department of Commerce
-----------------------------------------------------------------------
Bureau of Industry and Security
-----------------------------------------------------------------------
Yuri I. Montgomery, Respondent; Final Decision and Order; Notice
Federal Register / Vol. 75 , No. 250 / Thursday, December 30, 2010 /
Notices
[[Page 82464]]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[Docket No. 08-BIS-0004]
Yuri I. Montgomery, Respondent; Final Decision and Order
This matter is before me upon a Recommended Decision and Order
(``RDO'') issued by the Administrative Law Judge (``ALJ''), and a
settlement proposal subsequently submitted by the parties.
In a charging letter filed on July 1, 2008, the Bureau of Industry
and Security (``BIS'') alleged that Respondent Yuri I. Montgomery
(``Respondent'' or ``Montgomery'') \1\ had committed fourteen
violations of the Export Administration Regulations (currently codified
at 15 CFR parts 730-774 (2010) (``Regulations'')), issued pursuant to
the Export Administration Act of 1979, as amended (50 U.S.C. app. 2401-
2420) (the ``EAA'' or ``Act''),\2\ by participating in transactions
involving the export or attempted export from the United States of
items subject to the Regulations, while knowing that he was subject to
a BIS order denying his export privileges. On January 15, 2010, BIS
unilaterally withdrew Charge 10, leaving thirteen charges for
consideration by the ALJ.
---------------------------------------------------------------------------
\1\ Montgomery is also known as ``Yuri Malinkovski.''
\2\ Since August 21, 2001, the Act has been in lapse, and the
President, through Executive Order 13,222 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 12, 2010
(75 FR 50681 (Aug. 16, 2010)), has continued the Regulations in
effect under the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq. (2000)). The unlawful conduct at issue here
occurred in 2003. The Regulations governing the violations at issue
are found in the 2003 version of the Code of Federal Regulations (15
CFR parts 730-774 (2003)). The 2010 Regulations govern the
procedural aspects of this case.
---------------------------------------------------------------------------
Charges 1-7 of the Charging Letter allege that:
As described in further detail in the attached schedule of
violations, which is incorporated herein by reference, on seven
occasions between on or about July 2, 2003, and on or about October
8, 2003, Montgomery took actions prohibited by a BIS order denying
export privileges under Sec. 766.25 of the Regulations (Denial
Order). Specifically, Montgomery carried on negotiations concerning,
ordered, bought, sold and/or financed various items exported or to
be exported from the United States that are subject to the
Regulations, and/or benefited from transactions involving items
exported or to be exported from the United States that are subject
to the Regulations. At the time Montgomery engaged in the described
actions, his export privileges had been denied under the Regulations
by a Denial Order dated September 11, 2000, and published in the
Federal Register on September 22, 2000 (65 FR 57,313). Under the
terms of the Denial Order, Montgomery ``may not directly or
indirectly, participate in any way in any transaction involving any
[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 * * * [c]arrying 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 in any other activity subject to the Regulations; or
* * * [b]enefiting 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 in any other activity subject to the
Regulations.'' That Denial Order is effective until January 22,
2009, and continued in force at the time of the aforementioned
actions taken by Montgomery. In so doing, Montgomery committed seven
violations of Section 764.2(k) of the Regulations.
Charges 8-9, and 11-14 allege that Montgomery acted with knowledge
of violations of the Denial Order in connection with the items exported
or to be exported from the United States to Macedonia, as follows:
As described in further detail in the attached schedule of
violations, on seven occasions between on or about July 2, 2003, and
or about October 8, 2003, Montgomery carried on negotiations
concerning, ordered, bought, sold and on or financed various items
subject to the Regulations with knowledge that a violation of an
Order issued under the Regulations had occurred, was about to occur,
or was intended to occur in connection with the items. Specifically,
Montgomery carried on negotiations concerning, ordered, bought, sold
and/or financed various items that were exported from the United
States to a Macedonian company with knowledge that he was or would
be violating a Denial Order imposed against him dated September 11,
2000, and published in the Federal Register on September 22, 2000
(65 FR 57,313). Montgomery knew that he was the subject of the
Denial Order because, inter alia, he had been provided notice of the
Denial Order when it issued in September 2000, and he had on October
24, 2000, written to then-BIS Under Secretary for Export Enforcement
Reinsch to request reinstatement of his ``export privileges denied
on September 11, 2000 * * *.'' That request for reinstatement had
been denied by the Under Secretary on December 21, 2000, and the
Denial Order continued in force at the time of aforementioned
actions taken by Montgomery. In so doing, Montgomery committed seven
violations of Sec. 764.2(e) of the Regulations.
The schedule of violations attached to the Charging Letter provided
additional detail as to each of the seven transactions involved,
including the dates of the transactions, the items involved and their
values, and the consignee.
On October 28, 2010, the ALJ issued an RDO in accordance with Sec.
766.17 of the Regulations. The RDO provides a detailed summary of the
procedural background and pre-RDO case activity, including the seven
stays or extensions of time sought or stipulated to by Respondent
during the course of the litigation below. Montgomery filed his answer
to the Charging Letter on April 2, 2009, and pursuant to part 766 of
the Regulations was permitted to take discovery during the litigation
and to present evidence and rebuttal evidence concerning the charges
and the defenses he raised. Because no party had demanded a hearing as
provided in Sec. 766.6(c) of the Regulations, the RDO issued on the
record by the ALJ in accordance with Sec. 766.6(c) and Sec. 766.15.
The ALJ served the RDO on the parties as required in Sec.
766.17(b)(2). On November 10, 2010, however, the ALJ issued a
Supplemental Certificate of Service, stating that the RDO initially
served on the Respondent on October 28, 2010, via overnight carrier,
had been returned as undeliverable, and that he was attempting service
of the RDO a second time. On November 17, 2010, I received a delivery
confirmation from the ALJ showing that Respondent received a copy of
the RDO on November 11, 2010.
The delivery confirmation that I received on November 17, 2010,
demonstrated that the ALJ had fulfilled his obligation under Section
766.17(b)(2) of the Regulations to certify the full record for my
review in accordance with Section 766.22. As such, and in the interest
of avoiding confusion and ensuring that the parties had the full time
allotted to them by the Regulations to make any submissions, I ordered
that the deadlines for the parties' various filings be established
using the November 17, 2010 date as the date the RDO was issued.
Thereafter, Respondent Montgomery retained new legal counsel and
subsequently filed, and I granted, three unopposed motions seeking a
stay of the proceedings to allow the parties to conduct settlement
negotiations.
As part of the settlement agreement, Respondent Montgomery admits
to the violations of the Regulations alleged in Charges 1-9 and 11-14
of the Charging Letter. In addition, Montgomery has consented to my
affirming the RDO, as modified with regard to the RDO's Recommended
Sanction in order, instead, to impose the sanctions agreed
[[Page 82465]]
to by Montgomery and set forth in the parties' settlement proposal.
I have the authority, pursuant to Sec. 766.22(c) of the
Regulations, to affirm, modify or vacate the RDO. Where a case is
pending before me pursuant to Sec. 766.22, I also have the authority,
under Sec. 766.18(b)(2), to approve or reject a settlement proposal
submitted to me by the parties.
Based on my review of the record, including the RDO and the
settlement proposal submitted by the parties, I hereby affirm the RDO,
including its findings of fact and conclusions of law concerning
Respondent Montgomery's seven violations of Section 764.2(k) of the
Regulations and his six violations of Section 764.2(e); except that I
hereby modify the RDO's recommended sanctions such that the sanctions
imposed against Montgomery are consistent with the parties' settlement
proposal, which I hereby approve.
Accordingly, it is therefore ordered:
First, that a civil penalty of $340,000.00 is assessed against
Montgomery. Of this civil penalty, $17,500 shall be paid by Montgomery
to the U.S. Department of Commerce in 12 installments as follows:
$1,458 no later than January 1, 2011; $1,458 no later than the first
day of each month from February, 2011 through and including November,
2011; and $1,462 shall be due no later than December 1, 2011. Payment
of the remaining $322,500 shall be suspended for a period of ten (10)
years from the date of this Order, provided that during the period of
suspension, Montgomery has committed no violation of the Act, or any
regulation, order, or license issued thereunder, and has made full and
timely payment of the $17,500 as set forth above. If any of the twelve
installment payments is not fully and timely made, any remaining
scheduled installment payments and the remaining $322,500 shall become
due and owing immediately.
Second, pursuant to the Debt Collection Act of 1982, as amended (31
U.S.C. 3701-3720E (2000)), the civil penalty owed under this Order
accrues interest as more fully described in the attached Notice, and,
if payment is not made by the due dates specified herein, Montgomery
will be assessed, in addition to the full amount of the civil penalty
and interest, a penalty charge and administrative charge.
Third, for a period of thirty (30) years from the date of this
Order, Yuri I. Montgomery, a/k/a Yuri Malinkovski, with a last known
address of 2912 10th Place West, Seattle, WA 98119, and when acting for
or on behalf of Montgomery, his representatives, assigns, agents or
employees (hereinafter collectively referred to as ``Denied Person''),
may not participate, directly or indirectly, 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 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 in any other activity subject to the Regulations.
Fourth, that no person may, directly or indirectly, do any of the
following:
A. Export or reexport to or on behalf of the Denied Person any item
subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted
acquisition by the 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 the 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 the Denied Person of any item subject to
the Regulations that has been exported from the United States;
D. Obtain from the 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 the Denied Person, or
service any item, of whatever origin, that is owned, possessed or
controlled by the 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.
Fifth, that, after notice and opportunity for comment as provided
in Sec. 766.23 of the Regulations, any person, firm, corporation, or
business organization related to the 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.
Sixth, that this Order does not prohibit any export, reexport, or
other transaction subject to the Regulations where the only items
involved that are subject to the Regulations are the foreign-produced
direct product of U.S.-origin technology.
Seventh, that Montgomery shall have an opportunity to request that
the Under Secretary reinstate his export privileges after a period of
ten (10) years from the date of the Order, provided that Montgomery has
committed no violation of the Act, or any regulation, order, or license
issued thereunder prior to the submission of his request for
reinstatement. BIS shall in its sole unreviewable discretion determine
whether to grant, or deny, in whole or in part Montgomery's request for
reinstatement of his export privileges.
Eighth, that the final Decision and Order shall be served on
Montgomery and on BIS and shall be published in the Federal Register.
In addition, the ALJ's Recommended Decision and Order, except for the
section related to the Recommended Order, shall also be published in
the Federal Register.
This Order, which constitutes the final agency action in this
matter, is effective immediately.
Dated: December 21, 2010.
Eric L. Hirschhorn,
Under Secretary of Commerce for Industry and Security.
Certificate of Service
I hereby certify that, on this 21st day of December, 2010, I have
served the foregoing DECISION AND ORDER signed by Eric L. Hirschhorn,
Under Secretary of Commerce for Industry and Security, in the matter of
Yuri I. Montgomery (Docket No: 08-BIS-0004) to be sent via United
Parcel Service postage pre-paid to:
Douglas N. Jacobson, Esq., Law Offices of Douglas N. Jacobson, PLLC,
1725 I Street, NW., Suite 300, Washington, DC 20006. Facsimile: 202-
688-2782.
[[Page 82466]]
(By Facsimile and United Parcel Service.)
Eric Clark, Joseph Jest, John Masterson, Attorneys for Bureau of
Industry and Security, Office of Chief Counsel for Industry and
Security, U.S. Department of Commerce, Room HCHB 3839, 14th Street and
Constitution Ave., NW., Washington, DC 20230. Facsimile: 202-482-0085.
(Served via hand delivery.)
ALJ Docketing Center, Attention: Hearing Docket Clerk, 40 S. Gay
Street, Room 412, Baltimore, MD 20212-4022. (By United Parcel Service.)
A copy of this Order has also been sent via United Parcel Service
to:
Yuri I. Montgomery, 2912 10th Place West, Seattle, WA 98119. (By United
Parcel Service.)
Andrea A. Monroe,
Office of the Under Secretary for Industry and Security.
Recommended Decision and Order \3\
---------------------------------------------------------------------------
\3\ For proceedings involving violations not relating to Part
760 of the Export Enforcement Regulations, 15 CFR 766.17(b) and
(b)(2) prescribe that the Administrative Law Judge's decision be a
``Recommended Decision and Order.'' The violations alleged in this
case are found in Part 764. Therefore, this is a ``Recommended
Decision and Order.'' That section also prescribes that the
Administrative Law Judge make recommended findings of fact and
conclusions of law that the Under Secretary for Export
Administration, Bureau of Industry and Security, U.S. Department of
Commerce, must affirm, modify or vacate. 15 CFR 766.22. The Under
Secretary's action is the final decision for the U.S. Commerce
Department. 15 CFR 766.22(e).
---------------------------------------------------------------------------
Issued by: Hon. Walter J. Brudzinski, Administrative Law Judge.
Issued: October 28, 2010.
On behalf of Bureau of Industry and Security:
John T. Masterson, Esq., Chief Counsel for Industry and Security,
Joseph V. Jest, Esq., Chief of Enforcement and Litigation, Parvin R.
Huda, Esq., Senior Counsel, Eric Clark, Esq., Attorney Advisor,
Attorneys for Bureau of Industry and Security, Office of Chief Counsel
for Industry and Security, United States Department of Commerce, Room
H-3839, 14th Street & Constitution Avenue, NW., Washington, DC 20230.
On behalf of Respondent:
Yuri I. Montgomery, Pro se, 2912 10th Place West, Seattle, WA 98119.
Table of Contents
Preliminary Statement
Charging Letter
Schedule of Violations--Yuri Montgomery
Denial Order of September 11, 2000
Jurisdiction of U.S. Coast Guard Administrative Law Judges.
Pre-Decisional Motion Practice
Outstanding Motion
Determination of Respondent's Failure To Comply with Discovery
Authority for Sanction for Failure To Comply With Discovery
Sanction on Respondent's Refusal to Disclose Discovery Materials
Paragraph IV of the Denial Order
Time for Decision
Recommended Findings of Fact
General Findings and Background
Charges 1 and 8, 61 pairs of Magnum boots
Charges 2 and 9, firing range clearing devices
Charge 3
Charges 4 and 11
Charges 5 and 12
Charges 6 and 13
Charges 7 and 14
Discussion
Burden of Proof
Respondent's Prior Criminal Conviction
Denial Order
Law
Applying the Denial Order and the Law to the Findings of Fact
Ultimate Findings of Fact and Conclusions of Law
Affirmative Defenses
Respondent's Two Objections
Respondent's Remaining Affirmative Defenses
Recommended Sanction
Recommended Order
Attachment A--Summary of Pre-Decision Motion Practice
Activity Prior To Respondent's Answer to Charging Letter--Case
to be Adjudicated on the Record
The November 10, 2009 Memorandum and Order
Attachment B--Lists of Exhibits
Attachment C--Rulings on Proposed Findings of Fact
Attachment D--Notice to the Parties Regarding Review by the Under
Secretary
Certificate of Service
Preliminary Statement
On July 1, 2008, the Bureau of Industry and Security (BIS) charged
Respondent, Yuri Montgomery, with 14 counts of violating two (2)
separate code sections of the Export Administration Regulations
(EAR).\4\ The EAR is issued under the authority of the Export
Administration Act (EAA) of 1979.\5\
---------------------------------------------------------------------------
\4\ The Regulations are currently codified in the Code of
Federal Regulations at 15 CFR parts 730-774 (2008). The violations
charged occurred in 2003. The Regulations governing the violations
here are found in the 2003 version of the Code of Federal
Regulations (15 CFR parts 730-774 (2003)). The 2008 Regulations
govern the procedural aspects of this case.
\5\ Title 50 U.S.C. app. 2401-2420 (2000). 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, 2007, 72 FR 46137 (Aug. 16, 2007),
has continued the Regulations in effect under the Emergency Economic
Powers Act (50 U.S.C. 1701-1706 (2000)) (``IEEPA'').
---------------------------------------------------------------------------
Charging Letter
The fourteen (14) Count Charging Letter alleges seven (7)
violations of EAR code section 764.2(k), ``Acting Contrary to the Terms
of a Denial Order,'' and seven (7) violations of EAR code section
764.2(c), ``Acting with Knowledge of a Violation'' as follows:
Charges 1-7, 15 CFR 764.2(k): Acting Contrary to the Terms of a Denial
Order
As described in further detail in the attached schedule of
violations, which is incorporated herein by reference, on seven
occasions between on or about July 2, 2003, and on or about October
8, 2003, Montgomery took actions prohibited by a BIS order denying
export privileges under Section 766.25 of the Regulations (Denial
Order). Specifically, Montgomery carried on negotiations concerning,
ordered, bought, sold and/or financed various items exported or to
be exported from the United States that are subject to the
Regulations, and/or benefitted from transactions involving items
exported or to be exported from the United States that are subject
to the Regulations. At the time Montgomery engaged in the described
actions, his export privileges had been denied under the Regulations
by a Denial order dated September 11, 2000, and published in the
Federal Register on September 22, 2000 (65 FR 57,313). Under the
terms of the Denial Order, Montgomery: May not directly or
indirectly, participate in any way in any transaction involving an
(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 * * * [c]arrying 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 * * * [b]enefitting in any way from any transaction
involving any item exported or to be exported from the United States
that is subject to the Regulations.'' That Denial Order is effective
until January 22, 2009, and continued in force at the time of the
aforementioned actions taken by Montgomery. In so doing, Montgomery
committed seven violations of Section 764.2(k) of the Regulations.
Charges 8-14, 15 CFR 764.2(e): Acting with Knowledge of a Violation
As described in further detail in the attached schedule of
violations, on seven occasions between on or about July 2, 2003, and
[on] or about October 8, 2003, Montgomery carried on negations
concerning, ordered, bought, sold and/or financed various items
subject to the Regulations with knowledge that a violation of an
Order issued under the Regulations had occurred, was about to occur,
or was intended to occur in connection with the items. Specifically,
Montgomery carried on negotiations concerning, ordered, bought, sold
and/or financed various items that were
[[Page 82467]]
exported from the United States to a Macedonian company with
knowledge that he was or would be violating a Denial Order because,
inter alia, he had been provided notice of the Denial Order when it
issued in September 2000, and he had on October 24, 2000, written to
then-BIS Under Secretary for Export Enforcement Reinsch to request
reinstatement of his ``export privileges denied on September 11,
2000 * * * .'' That request for reinstatement had been denied by the
Under Secretary on December 21, 2000, and the Denial Order continued
in force at the time of aforementioned actions by Montgomery. In so
doing, Montgomery committed seven violations of Section 764.2(e) of
the Regulations.
The Charging Letter further detailed Charges 1-7 as violations of
15 CFR 764.2(k) and Charges 8-14 as violations of 15 CFR 764.2(e) as
follows:
---------------------------------------------------------------------------
\6\ BIS withdrew Charge Ten on January 15, 2010.
Schedule of Violations--Yuri Montgomery
----------------------------------------------------------------------------------------------------------------
Date Charges Items Value Violation Consignee
----------------------------------------------------------------------------------------------------------------
7/2/03.......................... 1, 8 61 prs Magnum $3,355 764.2(k); Micei, Int'l
boots. 764.2(e)
7/18/03......................... 2, 9 2 firing range $1,136 764.2(k); Micei, Int'l
clearing Devices. 764.2(e)
8/5/03.......................... 3, 10 \6\ 10,800 pairs of RFQ 764.2(k); Micei, Int'l
boots. 764.2(e)
8/5/03.......................... 4, 11 45 pairs Oxford $2,562 764.2(k); Micei, Int'l
shoes, 5 Remote 764.2(e)
strobe tubes.
8/13/03......................... 5, 12 150 shirts........ $1,744 764.2(k); Micei, Int'l
764.2(e)
9/9/03.......................... 6, 13 2 load binder,1 $147.53 764.2(k); Micei, Int'l
ratchet strap, 1 764.2(e)
binder chain, 1
safety shackle.
10/8/03......................... 7, 14 Items in Order $5,723.31 764.2(k); Micei, Int'l
25473620/ 764.2(e)
017.
----------------------------------------------------------------------------------------------------------------
The Charging Letter advised the maximum civil penalty is up to the
greater of $250,000 per violation or twice the transaction value that
forms the basis of the violation, plus a denial of export privileges
and/or exclusion from practice before BIS. The Charging Letter
concluded that failure to answer the charges within thirty (30) days
will be treated as a default, and, although Respondent is entitled to
an agency hearing, he must file a written demand for one with his
answer.
Denial Order of September 11, 2000
The pleadings, discovery, and affidavits in the administrative
record reflect that on January 22, 1999, Respondent, Yuri I.
Montgomery, also known as Yuri I. Malinskovski, was convicted in U.S.
District Court for the District of Columbia of knowingly and willfully
exporting and causing the export of prohibited items to Macedonia and
Slovenia without applying for and obtaining the required export
licenses in violation of the International Emergency Economic Powers
Act and the Export Administration Act of 1979.
Pursuant to Section 11(h) of the Export Administration Act and 5
CFR 766.25 (2000) the Director, Office of Exporter Services, Bureau of
Export Administration, issued an order (Denial Order) on September 11,
2000 denying Respondent export privileges effective through January 22,
2009.\7\
---------------------------------------------------------------------------
\7\ Through an internal organizational order, the Department of
Commerce changed the name of Bureau of Export Administration to
Bureau of Industry and Security. See, Industry and Security
Programs: Change of Name, 67 FR 20,630 (Apr. 26, 2002). Pursuant to
the Savings Provision of the Order, ``Any actions undertaken in the
name of or on behalf of the Bureau of Export Administration, whether
taken before, on, or after the effective date of this rule, shall be
deemed to have been taken in the name of or on behalf of the Bureau
of Industry and Security.'' Id. at 20,631.
---------------------------------------------------------------------------
The Denial Order states, in pertinent part, Respondent ``may not,
directly or indirectly, participate in any way in any transaction
involving any * * * [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, or in any other activity subject to the
Regulations.'' The Denial Order detailed non-exclusive examples of
conduct included in the broad prohibition including ``[c]arrying 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
an 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.'' (65 FR 57,313 (Sept. 22, 2000)). Paragraph IV of the
Denial Order states, ``[t]his Order does not prohibit any export,
reexport, or other transaction subject to the Regulations where the
only items involved that are subject to the Regulations are the
foreign-produced direct product of U.S.-origin technology.'' (Id.).
Respondent's pleadings claim that the exported items in question fall
into this exception.
Jurisdiction of U.S. Coast Guard Administrative Law Judges
The Charging Letter states the U.S. Coast Guard is providing
Administrative Law Judge services for these proceedings. Accordingly,
BIS forwarded the Charging Letter to the U.S. Coast Guard
Administrative Law Judge Docketing Center for adjudication. The ALJ
Docketing Center subsequently issued its Notice of Docket Assignment to
the Respondent and BIS. The administrative file reflects that at the
time of the Charging Letter and continuing to the present, Memoranda of
Agreement (MOA) and Office of Personnel Management letters issued in
accordance with 5 U.S.C. 3344 and 5 CFR 930.230 authorize the detail of
U.S. Coast Guard Administrative Law Judges to adjudicate BIS cases
involving export control regulations on a reimbursable basis.
Pre-Decisional Motion Practice
Throughout the course of this proceeding, Respondent filed dozens
of motions, including numerous motions to stay. Respondent eventually
filed his Answer ``under protest, duress, and compulsion of the Order
Denying Respondent's Motion for More Definite Statement.'' Respondent's
Answer included 19 affirmative defenses. Neither Respondent nor BIS
demanded a hearing. Therefore, the undersigned
[[Page 82468]]
issued an Order stating the matter will be adjudicated on the record in
accordance with 15 CFR 766.6(c). A summary of Respondent's motions,
BIS' replies, and the undersigned's decisions on those motions is
detailed in Attachment A.
Outstanding Motion
Respondent filed his Declaration in Support of Defenses on
September 22, 2010, seven (7) months after the February 24, 2010
deadline for filing his evidence in support of his defenses. The
Declaration included 43 attachments and a letter dated April 29, 2010
stating Respondent has suffered severe mental stress as a result of
these proceedings. Respondent's Declaration explained his relationship
with Micei International, summarized the events that occurred prior to
the issuance of the Denial Order, and explanations of the attached
exhibits. The majority of the evidence submitted supported Respondent's
assertion that he did not violate the EAR because the country of origin
for some of the items in question was China.
BIS filed its response on October 7, 2010, objecting to
Respondent's Declaration. Specifically, the Agency argues that the
submission of this Declaration along with its attachments are in direct
violation of this court's discovery orders; that all exhibits except
Ex. 7 are dated prior to the discovery deadline and are thus untimely
and should not be considered. BIS also argues that several of the
exhibits submitted by Respondent raise authenticity and accuracy
concerns, including the fact that two of the e-mails sent by separate
people contained identical wording and grammatical mistakes.
Furthermore, the exhibits in question do not provide any probative
value because the items' country of origin is not the issue because the
items were exported from the United States. BIS requests the
undersigned disregard Respondent's Declaration and the attached
exhibits because the filling further demonstrates Respondent's refusal
to comply with the ALJ's orders and the rules that govern this
proceeding.
After careful review of Respondent's Declaration and BIS' response,
the undersigned rejects Respondent's Declaration as untimely because it
was filed approximately 7 months after his evidence was due and
violates discovery procedures. Respondent was repeatedly accorded stays
and additional time to file evidence and submissions. Respondent
repeatedly ignored these deadlines. Even if the undersigned accepted
Respondent's Declaration and exhibits, they would carry no probative
value. As discussed in detail below, all items in question were shipped
from the United States in violation of the EAR. Accordingly,
Respondent's Declaration in Support of Defenses and its attached
exhibits is rejected.
Determination on Respondent's Failure To Comply With Discovery
On June 19, 2009, BIS served all discovery requests on Respondent
but Respondent replied only to BIS's Requests for Admission on July 6,
2009. He did not respond to BIS's Interrogatories and Requests for
Production of Documents. Instead, Respondent asserted preliminary
objections on June 30, 2009 and renewed objections on September 3,
2009. In my Order of August 20, 2009, Respondent was again ordered to
respond to the interrogatories and document requests. To date, he has
not replied to BIS's Interrogatories and Requests for Production of
Documents, nor did he submit copies of his discovery requests as
previously ordered to determine if enforcement is appropriate.
Authority for Sanction for Failure To Comply With Discovery
The Discovery Rules at 15 CFR 766.9 (d) provide as follows:
Enforcement. The administrative law judge may order a party to
answer designated questions, to produce specified documents or
things or to take any other action in response to a proper discovery
request. If a party does not comply with such an order, the
administrative law judge may make a determination or enter any order
in the proceeding as the judge deems reasonable and appropriate. The
judge may strike related charges or defenses in whole or in part or
may take particular facts relating to the discovery request to which
the party failed or refused to respond as being established for
purposes of the proceeding in accordance with the contentions of the
party seeking discovery. [Emphasis added.] In addition, enforcement
by a district court of the United States may be sought under section
12(a) of the EAA.
On October 26, 2009, BIS filed its Supplemental Submission in
Response to the October 15, 2009 Order that the parties submit copies
of their respective discovery requests to the undersigned to determine
if enforcement pursuant to Section 766.9(d) of the Regulations is
appropriate. In its Supplemental Submission, BIS claims, among other
things, that Respondent's Answer to BIS's Motion for Summary Decision
contained information and references to documents upon which Respondent
is relying that should have been disclosed in BIS's discovery requests
but were not disclosed. BIS avers that Respondent ``should be barred
from offering as evidence or otherwise seeking to make use of this
material, as well as any other responsive material that he failed to
produce, whether responsive documents or information that is responsive
to any interrogatory.'' (BIS's October 26, 2009 Supplemental Submission
in Response to October 15, 2009 Order, at 3.)
Specifically, the information in question is a Declaration from
Sanja Milic of Micei and a purported e-mail from Range Systems. BIS
argues that the e-mail contains information that was responsive to its
discovery requests pertaining to Respondent's Defense No. 16 found in
on page 3 of ``Declaration of Yuri Montgomery in Opposition to Bureau
of Industry and Security's Motion for Summary Decision as to Charges
Two, Six, Nine, and Thirteen'' dated October 12, 2009. Defense No. 16
states, ``[w]hen I contacted Maintenance Products, Inc. to inquire of
the availability of the products which are listed in the [sic] charges
6 and 13 of the Charging Letter herein, I was informed by Maintenance
Products, Inc. that all of the products Micei was interested in
purchasing were made in China and were very cheap and I did not even
inquire of their prices.'' BIS further averred that the Court should
strike Respondent's defense number 16 and any argument or purported
evidence related to that defense. BIS ended with the recommendation
that the Court postpone ruling on any discovery sanction until after
ruling on the Motion for Summary Decision because that Motion can be
resolved without discovery sanctions. The undersigned also notes that
Respondent's Affirmative Defense No. 16 filed on April 2, 2009 with his
Corrected Answer to Charging Letter avers ``[t]he goods subject to the
Charging Letter are of foreign origin and are therefore not subject to
the prohibitions of the purported Denial Order.'' Respondent's
affirmative defense no. 11, filed in his original Answer, reads ``[t]he
goods subject to the Charging Letter are of foreign origin and are
therefore not subject to the Charging Letter.''
The undersigned denied BIS's Motion for Partial Summary Decision.
BIS asked in its January 15, 2010 ``Memorandum on Evidence Submitted in
Support of Charges'' that Respondent be barred from offering as
evidence or otherwise seeking to make use of any responsive material
that he failed to produce, whether the information is a responsive
document or answer to an interrogatory. In addition, BIS asks the Court
to strike Respondent's Defense No. 16 and any argument or purported
evidence related
[[Page 82469]]
to that defense pursuant to 15 CFR 766.9(d).
The November 10, 2009 memorandum and Order stated that the
undersigned will make a determination or enter an Order deemed
reasonable and appropriate in accordance with 15 CFR 766.9(d) on the
issue of Respondent's continued refusal to comply with BIS's
Interrogatories and Requests for Production of Documents despite
previous Orders to do so. That determination follows:
Sanction on Respondent's Refusal To Disclose Discovery Materials
Respondent's arguments, e-mail, and Declaration contain information
that should have been disclosed during discovery. Respondent failed to
disclose this information despite being ordered to do so and then used
those undisclosed discovery materials in his defense against BIS's
Motion for Summary Decision. His arguments that the items in question
are foreign made and therefore excluded from the Denial Order still
remain in his affirmative defense filed with his Answer. Therefore, in
consideration of the forgoing and in accordance with 15 CFR 766.9(d),
the following are stricken from the record: (1) Respondent's Defense
No. 16 in his ``Declaration of Yuri Montgomery in Opposition to Bureau
of Industry and Security's Motion for Summary Decision as to Charges
Two, Six, Nine, and Thirteen'' dated October 12, 2009; (2) the
Declaration from Sanja Milic of Micei; (3) the e-mail from Range
Systems; (4) Affirmative Defense No. 16 in Respondent's Corrected
Answer to Charging Letter which states ``[t]he goods subject to the
Charging Letter are of foreign origin and are therefore not subject to
the prohibitions of the purported Denial Order;'' (5) Affirmative
Defense No. 11 which states, ``[t]he goods subject to the Charging
Letter are of foreign origin and are therefore not subject to the
Charging Letter;'' and (6) any argument related to that basic defense.
Paragraph IV of the Denial Order
Even if Respondent complied with discovery as previously ordered,
and if the arguments and documents were found credible and give
appropriate weight, they do not show that the items in question fall
into the Paragraph IV exception to the Denial Order based only on their
purported foreign origin. Paragraph IV of the Denial Order states,
``[t]his Order does not prohibit any export, reexport, or other
transaction subject to the Regulations where the only items involved
that are subject to the Regulations are the foreign-produced direct
product of U.S.-origin technology.'' This language does not amend the
specific language in Paragraph I of the Denial Order which prohibits
any participation of any kind in the export from the United States of
any items subject to the Regulations.
Paragraph I prohibits participation in transactions involving items
exported or to be exported from the United States. Items located in the
United States are subject to the Regulations, regardless of where they
are produced. See, 15 CFR 734.3(a). Since the items in this case were
located in the United States at the time of Respondent's transactions
and were not subject to the exclusive jurisdiction of another agency,
Respondent was prohibited from participating in those transactions. The
items in question are subject to the EAR as shown below:
Respondent claims that the Paragraph IV exemption applies if the
items in question were manufactured abroad. As shown above, items
subject to the EAR include items located in the United States
regardless of where they have been manufactured or produced. In this
case, jurisdiction is based on the fact that the items in question were
located in the United States at the time of the transactions or the
attempted or intended transactions, regardless of their origin. Once
jurisdiction of the items in question is established based on the
location of the items in the United States, such as in this case, it is
not necessary to consider any other basis. The origin of an item must
be determined only if the item happens to be located abroad at the time
of the transaction. In this case, the items were located in the United
States.
In summary, Paragraph IV of the Denial Letter provides a narrow
exception to transactions involving only items subject to the
Regulations by reason of the foreign direct product rule which does not
apply here because the items in question were not located abroad. In
this case, jurisdiction over these items exists under Section 734.3.
The items were subject to the Regulations and were exported or
attempted or intended to be exported from the United States. Therefore,
Respondent's affirmative defense that foreign origin of the goods
exempts them from the Regulations is rejected even in the absence of
sanction.
Time for Decision
Title 15 CFR 766.17(d) provides that administrative enforcement
proceedings not involving Part 760 of the EAR shall be concluded within
one year from submission of the Charging Letter unless the
Administrative Law Judge extends such period for good cause shown. In
light of the attached detailed activity in these proceedings evidencing
several stays, the time consumed to adjudicate disputed discovery
issues, and the additional time consumed to adjudicate numerous
motions, the undersigned finds that good cause exists for not
concluding these proceedings within the time prescribed and that these
proceedings are extended to October 28, 2010. This matter is now ripe
for decision.
As detailed in Attachment A, the parties have raised many issues
and the undersigned has ruled on most of them in previously issued
Orders. This Recommended Decision and Order also rules on the
affirmative defenses and any outstanding issues. As noted above, BIS
filed its Notice of Withdrawal of Charge 10, concerning the 10,800
pairs of boots described in the charging Letter's Schedule of
Violations. Therefore, seven (7) counts of section 764.2(k) and six (6)
counts of Section 764.2(e) of the Regulations remain for decision.
After careful review of the entire record, I find that BIS has proved,
by the preponderance of reliable, probative, and credible evidence, on
seven (7) occasions, from July 2, 2003 and October 8, 2003, that
Respondent violated EAR code Section 764.2(k), ``Acting Contrary to the
Terms of a Denial Order,'' and on six (6) occasions that Respondent
violated EAR code Section 764.2(e), ``Acting with Knowledge of a
Violation.''
Recommended Findings of Fact
The Findings of Fact and Conclusions of Law are based on a thorough
and careful analysis of the documentary evidence, exhibits, and the
entire record as a whole.
General Findings and Background
1. Respondent Yuri I. Montgomery, also known as Yuri I. Malinkovski
was convicted in the U.S. District Court for the District of Columbia
of violating the International Emergency Economic Powers Act (50 U.S.C.
1701-1706 (1991 & Supp. 2000) and the Export Administration Act of
1979, as amended (currently codified at 50 U.S.C. app. 2401-2420 (1991
& Supp. 2000)). (BIS Ex. B)
2. Specifically, Respondent's conviction was for knowingly and
willingly exporting and causing the export of U.S.-origin stun guns to
Macedonia and U.S. origin laser gun sights to Slovenia without applying
for and obtaining the required export licenses from the Department of
Commerce, and of knowingly and willfully exporting and causing the
[[Page 82470]]
export of U.S.-origin PAGST military helmets to Slovenia and U.S.-
origin handcuffs, laser gun sights, and laser mountings to Macedonia
without applying for and obtaining the required export licenses from
the Department of Commerce. (BIS Ex. B)
3. Section 11(h) of the Export Administration Act of 1979 provides
that, at the discretion of the Secretary of Commerce, no person
convicted of violating the International Emergency Economic Powers Act
or the Export Administration Act, or certain other provisions of the
U.S. Code, shall be eligible to apply for or use any export license
issued pursuant to, or provided by, the Export Administration Act or
the Export Administration Regulations for a period of up to 10 years
from the date of the conviction. (BIS Ex. B)
4. Pursuant to Sections 766.25 and 750.8(a) of the Regulations and
upon notification that a person has been convicted of violating the
International Emergency Economic Powers Act or the Export
Administration Act, the Director, Office of Exporter Services, in
consultation with the Director, Office of Export Enforcement, shall
determine whether to deny that person's export privileges for a period
up to 10 years from the date of conviction and shall also determine
whether to revoke any license previously issued to such person. (BIS
Ex. B)
5. Having received notice of Respondent's conviction and after
providing Respondent with notice and opportunity to make written
submission before issuing an Order denying his export privileges, the
Director, Office of Exporter Services, Bureau of Export Administration,
issued an Order (Denial Order) on September 11, 2000 denying Respondent
export privileges effective through January 22, 2009 and publishing it
in the Federal Register.\8\ (65 FR 57,313 (Sept. 22, 2000) (BIS Ex. B))
---------------------------------------------------------------------------
\8\ Through an internal organizational order, the Department of
Commerce changed the name of Bureau of Export Administration to
Bureau of Industry and Security. See, Industry and Security
Programs: Change of Name, 67 FR 20,630 (Apr. 26, 2002). Pursuant to
the Savings Provision of the Order, ``Any actions undertaken in the
name of or on behalf of the Bureau of Export Administration, whether
taken before, on, or after the effective date of this rule, shall be
deemed to have been taken in the name of or on behalf of the Bureau
of Industry and Security.'' Id. at 20,631.
---------------------------------------------------------------------------
6. Paragraph I of the Denial Order states that ``Until January 22,
2009, Yuri I. Montgomery, also known as Yuri I. Malinkovski, [home
address redacted] 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 * * *. '' (BIS Ex. B,
at paragraph I)
7. The Denial Order specifically listed as non-exclusive examples
of prohibited participation, ``[c]arrying 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 in any other activity subject to the Regulations * * *.'' (BIS Ex.
B)
8. The Denial Order also provided that Respondent was prohibited
from ``[b]enefiting 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 in any other activity subject to the Regulations.
(BIS Ex. B)
9. Respondent received actual notice of the Denial Order by letter
on or about September 13, 2000 from BIS that included a copy of the
Denial Order. (BIS Ex. E, page 4, Request/Response 3; BIS Ex. F)
10. On October 24, 2000, Respondent wrote to then Under Secretary
William Reinsch requesting reinstatement of his ``export privileges
denied on September 11, 2000.'' (BIS Ex. E, page 4, Request/Response 5;
BIS Ex. G)
11. Under Secretary Reinsch denied the request on Dec. 21, 2000.
(BIS Ex. H)
12. Respondent had notice of the Denial Order no later than October
24, 2000. (BIS Ex. E, pages 4-16, Requests/Responses Nos. 2, 5, 7m, 8m,
9h, 10m, 11m, 12m, and 13m)
13. Respondent knew that the Denial Order was in effect at all
times from September 11, 2000 until January 22, 2009. (BIS Ex. E, page
4, Request/Response 2)
14. Respondent knew that he was subject to the Denial Order at the
time of each transaction at issue. (BIS Ex. E, pages 4-16, Requests/
Responses Nos. 2, 5, 7m, 8m, 9h, 10m, 11m, 12m, and 13m)
15. Respondent encouraged Micei ``to use my credit card for Micei
purchases as much as possible as it would allow me to accumulate United
Airline miles through the use of my United Visa credit card * * *''
(October 12, 2009 Declaration of Yuri Montgomery in Opposition to BIS's
Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen,
at paragraph 12)
16. On several occasions, Respondent ``made inquiries for Micei of
the availability on some of the products purchased for Micei.'' (Id. at
paragraph 14)
17. Respondent benefited from all the purchases by stating, ``[t]he
charges made with my credit card directly attribute to the `violations'
alleged Micei in the Charging Letter herein amount to approximately
$15,000, which allowed me to accumulate approximately $15,000 [sic]
miles with United Airlines.'' (BIS Ex. J, page 3, paragraph 18; BIS Ex.
E, page 6, admission 7j)
The preceding Findings of Fact are incorporated in the following,
specific Findings of Fact as set for below:
Charges 1 and 8, 61 Pairs of Magnum boots
18. On or about June 9, 2003 Respondent placed an order for 61
pairs of Magnum boots with the Modesto, California Division of Hi-Tec
Retail, Inc., manufacturer and retailer of footwear. (BIS Exhibit E,
page 4, admission 7a; BIS Exhibits L and M)
19. The issuing bank declined Hi-Tec's initial attempt to charge
Montgomery's credit card for the order which caused R. Uber at Hi-Tec
to seek assistance from Respondent. (BIS Ex. O).
20. Micei employee Sanja Milic advised Hi-Tec via e-mail that
according to Respondent, VISA had put a security block on its payment
which he had already removed so that Hi-Tec can charge the amount
without any problem. (BIS EX. P)
21. With the payment issue resolved, Respondent paid for the boots
with his credit card. (BIS Ex. Q; BIS Ex. 5 at page 4, admission 7b)
22. Micei reimbursed Respondent for purchasing the boots. (BIS Ex.
E, page 5, admission 7i(iii))
23. Respondent intended the boots, which are subject to the
Regulations, to be exported to Macedonia. (BIS Ex. E at page 7,
admission 7e; BIS Exhibits N, R, and S; BIS Ex. I, 15 CFR 734.3(a))
24. The boots were exported from the United States to Macedonia on
or about July 2, 2003. (BIS Exhibits R and S)
25. The boots are items subject to the Regulations. (15 CFR
734.3(a); BIS Ex. I)
26. At the time of the transaction, Respondent knew he was subject
to the Denial Order. (BIS Ex. E at Request/Response 7m)
Charges 2 and 9, Firing Range Clearing Devices
27. At Micei's request, Respondent telephonically contacted Range
Systems, a New Hope, Minnesota manufacturer of firing range equipment,
``to inquire of the availability and price
[[Page 82471]]
for their product * * *.'' (October 12, 2009 Declaration of Yuri
Montgomery in Opposition to BIS's Motion for Summary Decision as to
Charges Two, Six, Nine, and Thirteen, paragraph 20)
28. In a July 8, 2003 e-mail inquiry sent to Range Systems
describing himself as Micei's regional office, Respondent stated that
``currently we have one [bid] which calls for various products
including 5-10 clearing traps such as your RRI Guardian (GDN) model * *
*. Please quote the price of your RRR GUARDIAN (GDN) model and e/m me a
complete price list if possible * * *.'' (BIS Ex. T, page 2)
29. Range Systems provided the requested price quote in a reply e-
mail sent on July 11, 2003. (BIS Ex. T, page 1)
30. Respondent placed an order for two of the gun clearing devices
via e-mail sent on July 15, 2003. (BIS Ex. E, page 6, admission 8a; BIS
Exhibits T, U, and V)
31. Respondent paid Range Systems, Inc. for the gun clearing
devices with his VISA credit card. (BIS Ex. T; BIS Ex. E, page 6,
admission 8b)
32. Respondent directed Ranges Systems to export the gun clearing
devices to Micei in Macedonia via their freight forwarder, requesting
that he be advised of the weight and size of the boxes via e-mail with
a copy to Micei representatives. (BIS Ex. T, page 1)
33. Micei reimbursed Respondent for the purchase of the gun
clearing devices. (BIS Ex. E, page 7, admission 8i)
34. On or about July 18, 2003, Range Systems exported the gun
clearing devices from the United States to Macedonia. (BIS Ex. E, page
7, admission 8e; BIS Ex. T; X, and W)
35. The gun clearing devices were manufactured in the United
States. (BIS Ex. Y, Z, and AA)
36. The gun clearing devices are items subject to the Regulations.
(BIS Ex. I; 15 CFR 734.3(a))
37. At the time of the transaction, Respondent knew he was subject
to the Denial Order. (BIS Ex. E, page 8, admission 8k and 8m)
38. Respondent benefited from the purchase of the gun clearing
devices. (BIS Ex. E, page 7, admission 8j)
Charge 3
39. On August 5, 2003, Respondent sent an e-mail to Galls, Inc., a
Lexington, Kentucky based distributor of police equipment, military
equipment, and apparel, identifying himself as ``Micei Int'l U.S.
Operations'' and requesting a price quotation for 10,800 pairs of shoes
and boots. (BIS Ex. E, page 8, admission 9a; BIS Ex. BB, EE, and FF)
40. Respondent intended to export the boots and shoes from the
United States to Macedonia. (BIS Ex. E, page 8, admission 9d; BIS Ex.
BB)
41. Respondent carried on negotiations concerning the shoes and
boots, stating in an e-mail to Galls ``our [Micei] HQ will be putting
up the performance bond at 20% in cash. Therefore, please make sure you
quote the best possible price so you can so we can win this one, too.''
(BIS Ex. BB)
42. The boots and shoes are items subject to the Regulations (BIS
Ex. I; 15 CFR 734.3(a))
43. Respondent knew he was subject to the Denial Order on or about
August 5, 2003, at or about the time he requested a quotation. (BIS Ex.
E, page 9, admission 8f)
Charges 4 and 11
44. Micei's account number at Galls is 2547320. (BIS Ex. CC)
45. On or about August 5, 2003, Respondent contacted Galls to pay
for order 25473620/016, previously placed. (BIS Ex. DD)
46. The items in that order number consist of shoes and remote
strobe tubes.\9\ (BIS Ex. EE and FF)
---------------------------------------------------------------------------
\9\ Remote strobe tubes are components of the flashing emergency
lights found on vehicles such as police cars.
---------------------------------------------------------------------------
47. In Respondent's August 5, 2003 e-mail to Galls, he provided his
credit card account information to pay for the $2,562.44 order, stating
that Micei advised him to pay for the items with his VISA card. (BIS
Ex. DD and BIS Ex. E, page 9, admission 10b)
48. Micei reimbursed Respondent for purchasing the shoes and remote
strobe tubes. (BIS Ex. E, page 10, admission 10i(iii))
49. Respondent intended to export the shoes and strobe tubes from
the United States to Macedonia. (BIS Ex. E, page 9, admission 10e; BIS
Exhibits EE, FF, and GG)
50. The shoes and remote strobe tubes were exported from Galls's
Inc. in Lexington, Kentucky, United States to Macedonia on or about
September 5, 2003. (BIS Exhibits EE and GG)
51. The shoes and remote strobe tubes are items subject to the
Regulations. (BIS Ex. I; 15 CFR 734.3)
52. At the time of the transaction, Respondent knew he was subject
to the Denial Order. (BIS Ex. E, page 11, admission 10m)
53. Respondent benefited from the VISA card purchase of the shoes
and remote strobe tubes from Galls by earning credit towards the
purchase of airline tickets. (BIS Ex. E, page 10, admission j and
finding of fact 17 above)
Charges 5 and 12
54. On July 31, 2003, Respondent placed on order for 150 golf/polo
shirts from Save On Promotional Products of Sandy, Oregon. (BIS Ex. HH
and II)
55. Upon receiving Respondent's order, Save On ordered the shirts
from its supplier, Tri-Mountain Gear Corp. of Baldwin Park, California.
(BIS Ex. LL)
56. Respondent ordered the shirts for or on behalf of Micei and
intended them to be exported from the United States to Macedonia. (Ex.
E at Request/Response 11e); BIS Ex. HH: BIS Ex. II; BIS Ex. KK; BIS Ex.
LL; BIS Ex. MM; BIS Ex. BIS NN)
57. Respondent paid for the order with his credit card. (BIS Ex.
JJ; BIS Ex. E at Request/Response 11b)
58. Micei reimbursed Respondent for purchasing the shirts. (BIS Ex.
E, page 12, admission 11i(iii))
59. The shirts were exported from the United States to Macedonia on
or about August 13, 2003. (BIS Ex. MM; BIS Ex. NN)
60. The shirts are items subject to the Regulations. (BIS Ex. I;
(15 CFR 734.3(a))
61. At the time of the transaction, Respondent knew he was subject
to the Denial Order. (BIS Ex. E, page 12, admission 11m)
62. Respondent benefited from purchasing the shirts from a U.S.
supplier using his VISA card by earning credit towards the purchase of
airline tickets. (BIS Ex. E, page 12, admission 11j; Finding of Fact
17, above)
Charges 6 and 13
63. Respondent ordered two load binders, one ratchet strap, one
binder chain, and one safety shackle from Maintenance Products, Inc. of
Lowell, Indiana, on or about September 9, 2003. (BIS Ex. E, page 13,
admission 12a; BIS Ex. OO and QQ)
64. Respondent paid Maintenance Products, Inc. for the load
binders, ratchet strap, binder chain, and safety shackle, including
freight charges of $21.52, with his VISA credit. (BIS Ex. E, page 13,
admission 12b; BIS Ex. PP and QQ)
65. Micei reimbursed Respondent for purchasing the binder, ratchet
strap, binder chain, and safety shackle. (BIS Ex. E, page 14, admission
12i(iii))
66. As Respondent intended, the load liners, ratchet strap, binder
chain, and safety shackle exported from the United States to Macedonia
on or about September 15, 2003. (BIS Ex. E, page 13, admission e; BIS
Ex. RR and SS)
67. The load binders, binder chain, and safety shackle were
manufactured
[[Page 82472]]
in the United States. (BIS Ex. TT and UU)
68. The load binders, ratchet strap, binder chain and safety
shackle are items subject to the Regulations. (BIS Ex. I and 49 CFR
734.3(a))
69. At the time of the transaction, Respondent knew he was subject
to the Denial Order. (BIS Ex. E, page 14, admission 12m; BIS Ex. B,
paragraph I and BIS Ex. F, paragraph I on page 3 of the Order Denying
Export Privileges)
70. By charging the purchase from the U.S. supplier of the load
binders, ratchet strap, binder chain and safety shackle on his VISA
card, Respondent benefitted by earning credit towards the purchase of
airline tickets. (BIS Ex. E, page 14, admission 12j; see also, Finding
of Fact 17, above)
Charges 7 and 14
71. In October 2003, Respondent, describing himself as ``Micei
Int'l (N/America Op's), placed an order for uniform pants with Galls
(Galls 5473720/017). (BIS Ex. VV)
72. Again describing himself as representing Micei, Respondent paid
for the order with his VISA credit card. (BIS Ex. E, page 14, admission
13b; BIS Ex. WW)
73. The uniform pants were to be shipped from Galls' supplier,
Liberty Uniform of Spartanburg, South Carolina, to Micei in Macedonia.
(BIS Ex. E, page 15, admission 13e; BIS Ex. XX)
74. Micei reimbursed Respondent for purchasing the uniform pants.
(BIS Ex. E, pages 15 and 16, admission 13i(iii))
75. The uniform pants are items subject to the Regulations. (BIS
Ex. I; 15 CFR 734.3(a))
76. At the time of the transaction, Respondent knew he was subject
to the Denial Order. (BIS Ex. E, page 16, admission 13m)
77. Respondent benefitted from his purchase of the uniform pants
with his VISA credit card by earning airline frequent flier miles. (BIS
Ex. E, page 16, admission 13j; see also, Finding of Fact 17, above)
Discussion
Burden of Proof
The burden in this proceeding lies with the Bureau of Industry and
Security to prove the charges instituted against the Respondents by a
preponderance of reliable, probative, and substantial evidence.
Steadman v. SEC., 450 U.S. 91, 102 (1981); In the Matter of Abdulmir
Madi, et al, 68 FR 57406 (October 3, 2003). In the simplest terms, the
Agency must demonstrate that the existence of a fact is more probable
than its nonexistence. Concrete Pipe & Products v. Construction
Laborers Pension Trust, 508 U.S. 602, 622 (1993).
Respondent's Prior Criminal Conviction
The evidence shows that on January 22, 1999, Respondent, Yuri I.
Montgomery, also known as Yuri I. Malinkovski, was convicted in the
U.S. District Court for the District of Columbia of knowingly and
willingly exporting and causing the export of U.S. origin stun guns to
Macedonia and U.S. origin laser gun sights to Slovenia without applying
for and obtaining the required export licenses from the Department of
Commerce, and of knowingly and willfully exporting and causing the
export of U.S. origin PAGST military helmets to Slovenia and U.S.
origin handcuffs, laser gun sights, and laser mountings to Macedonia
without applying for and obtaining the required export licenses from
the Department of Commerce, in violation of the International Emergency
Economic Powers and the Export Administration Act of 1979.
Denial Order
The Export Administration Act of 1979 provides that no person
convicted of violating the International Emergency Economic Powers Act
or the Export Administration Act, among other provisions of the U.S.
Code, shall be eligible for any export license for a period of up to 10
years from the date of the conviction. Therefore, pursuant to the
Regulations at Sections 766.25 and 750.8(a) and upon notification to
Respondent and an opportunity to be heard, the Director, Office of
Exporter Services, Bureau of Export Administration, issued an Order
(Denial Order) on September 11, 2000 denying Respondent export
privileges effective through January 22, 2009.
In pertinent part, the Denial Order states at paragraph I that
``Until January 22, 2009, Yuri I Montgomery, also known as Yuri I.
Malinkovski * * * may not, directly or indirectly, participate in any
way in any transaction involving any * * * [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.'' The Denial Order
detailed that Respondent may not, directly or indirectly, participate
in any way in any transaction involving any * * * [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 or * * *
[b]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.''
The Denial Order detailed non-exclusive examples of conduct
included in the broad prohibition including ``[c]arrying 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
an 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.''
On October 24, 2000, Respondent requested that his exporting
privileges be reinstated; the Under Secretary denied his request on
December 21, 2000. Therefore, Respondent had notice of the Denial Order
no later than October 24, 2000. He also knew it was in effect at all
times from September 11, 2000 until January 22, 2009, which covers each
transaction at issue.
Law
The Regulations define ``Acting contrary to be terms of a denial
order'' at 15 CFR 764.2(k) as follows: ``No person may take any action
that is prohibited by a denial order. See Sec. 764.3(a)(2) of this
part.'' This is a strict liability offense.
The Regulations define ``Acting with knowledge of a violation'' at
15 CFR 764.2(e) as follows: ``No person may order, buy, remove,
conceal, store, use, sell, loan, dispose of, transfer, transport,
finance, forward, or otherwise service, in whole or in part, any item
exported or to be exported from the United States, or that is otherwise
subject to the EAR, with knowledge that a violation of the EAA, the
EAR, or any order, license or authorization issued thereunder, has
occurred, is about to occur, or is intended to occur in connection with
the item.''
The Regulations define Knowledge at 15 CFR 772.1 under
``Definitions of terms as used in the Export Administration Regulations
(EAR).''
* * * * *
``Knowledge. Knowledge 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.
This definition does not apply to part 760 of the EAR
[[Page 82473]]
(Restrictive Trade Practices or Boycotts).''
Applying the Denial Order and the Law to the Findings of Fact
As detailed in the Findings of Fact, Charges 1 and 8 reflect that
Respondent placed an order with Hi-Tec Retail, Inc. of Modesto,
California Division, for 61 pairs of Magnum boots. He paid for the
boots with his VISA credit card and had the boots, which are subject to
the Regulations, exported from the United States to Micei, Inc. in
Macedonia on July 2, 2003. Micei, Inc. reimbursed Respondent for the
purchase of the boots. Respondent's purchase and reimbursement amounted
to buying, selling or financing. Respondent benefited from the purchase
of the boots by accumulating frequent flier miles with United Airlines.
The Denial Order which prohibited these activities was in effect at the
time and Respondent had knowledge of the Denial Order.
These activities show, by the preponderance of reliable, probative,
and credible evidence that Respondent ordered the boots, carried on
negotiations concerning the boots, bought, sold, and/or financed the
boots, and benefited from the transactions for the boots, and that
those actions violated the terms of his Denial Order, in violation of
15 CFR 764.2(k). Therefore, Charge 1 is proved.
These activities also show, by the preponderance of reliable,
probative, and credible evidence that Respondent ordered the boots,
carried on negotiations concerning the boots, bought, sold, and/or
financed the boots with knowledge that a violation of his Denial Order
had occurred, or was about to occur, or was intended to occur in
connection with the boots, in violation of 15 CFR 764.2(e). Therefore,
Charge 8 is proved.
As detailed in the Findings of Fact, Charges 2 and 9 reflect that
at Micei's request, Respondent contacted Range Systems, a New Hope,
Minnesota manufacturer of firing range equipment, to inquire of the
availability and price for their product. In a July 8, 2003 e-mail
inquiry sent to Range Systems describing himself as Micei's regional
office, Respondent stated that ``currently we have one [bid] which
calls for various products including 5-10 clearing traps such as your
RRI Guardian (GDN) model * * *. Please quote the price of your RRR
GUARDIAN (GDN) model and e/m me a complete price list if possible * *
*.'' Range Systems provided the requested price quote in a reply e-mail
sent on July 11, 2003. Respondent placed an order for two of the gun
clearing devices via e-mail sent on July 15, 2003. Respondent paid
Range Systems, Inc. for the gun clearing devices with his VISA credit
card. Respondent directed Range Systems to export the gun clearing
devices to Micei in Macedonia via their freight forwarder and Micei
reimbursed Respondent for the purchase of the gun clearing devices.
Range systems exported the gun clearing devices from the United States
to Macedonia on or about July 18, 2003. The gun clearing devices were
also manufactured in the United States and subject to the Regulations.
At the time of the transaction, Respondent knew he was subject to the
Denial Order. Respondent also benefited from the purchase of the gun
clearing devices.
These activities show, by the preponderance of reliable, probative,
and credible evidence, Respondent ordered the gun clearing devices,
carried on negotiations concerning the gun clearing devices, bought,
sold, and/or financed the purchase of the gun clearing devices, and
that those actions violated the terms of his Denial Order, in violation
of 15 CFR 764.2(k). Therefore, Charge 2 is proved.
These activities also show, by the preponderance of reliable,
probative, and credible evidence, Respondent ordered the gun clearing
devices, carried on negotiations concerning the gun clearing devices,
bought, sold, and/or financed the purchase of the gun clearing devices,
with knowledge that a violation of his Denial Order had occurred, was
about to occur, or was intended to occur, in connection with the gun
clearing devices, in violation of 15 CFR 764.2(e). Therefore, Charge 9
is proved.
As detailed in the Findings of Fact, Charge 3 shows that on August
5, 2003, Respondent sent an e-mail to Galls, Inc., a Lexington,
Kentucky based distributor of police and military equipment and apparel
identifying himself as ``Micei Int'l (U.S. Op's and requesting a price
quotation for 10,800 pairs of shoes and boots. Respondent intended to
export the boots and shoes from the United States to Macedonia.
Respondent carried on negotiations concerning the shoes and boots,
stating in an e-mail to Galls ``our [Micei] HQ will be putting up the
performance bond at 20% in cash. Therefore, please make sure you quote
the best possible price so you can so we can win this one, too.'' The
boots and shoes are items subject to the Regulations and he knew that
he was subject to the Denial Order at the time he requested the
quotation on or about August 5, 2003. Therefore, Respondent violated 15
CFR 764.2(k).
These activities show, by the preponderance of reliable, probative,
and credible evidence, that Respondent carried on negotiations
concerning the 10,800 pairs of shoes and that those actions violated
the terms of his Denial Order which Respondent knew was in effect, in
violation of 15 CFR 764.2(k). Therefore, Charge 3 is proved.
As detailed in the Findings of Fact, Charges 4 and 11 reflect that
on August 5, 2003, Respondent contacted Galls to pay for order
25473620/016, previously placed. The first eight (8) digits
of that number is Micei's account number at Galls. The items in that
order number consist of shoes and remote strobe tubes. Respondent
provided his credit card account information to pay for the $2,562.44
order, stating that Micei advised him to pay for the items with his
VISA card. Micei reimbursed Respondent for purchasing the shoes and
remote strobe tubes. Respondent intended to export the shoes and strobe
tubes from the United States to Macedonia and the shoes and remote
strobe tubes were exported from Galls' Inc. in Lexington, Kentucky,
United States to Macedonia on or about September 5, 2003. The shoes and
remote strobe tubes are items subject to the Regulations. At the time
of the transaction, Respondent knew he was subject to the Denial Order.
Respondent benefited from the VISA card purchase of the shoes and
remote strobe tubes from Galls by earning credit towards the purchase
of airline tickets.
These activities show, by the preponderance of reliable, probative,
and credible evidence, that Respondent, bought, sold, and/or financed
the purchase of shoes and remote strobe tubes, and that those actions
violated the terms of his Denial Order, in violation of 15 CFR
764.2(k). Therefore, Charge 4 is proved.
These activities also show, by the preponderance of reliable,
probative, and credible evidence, that Respondent, bought, sold, and/or
financed the purchase of shoes and remote strobe tubes with knowledge
that a violation of his Denial Order had occurred, was about to occur,
or was intended to occur in connection with the shoes and remote strobe
tubes, in violation of 15 CFR 764.2(e). Therefore, Charge 11 is proved.
As detailed in the Findings of Fact, Charges 5 and 12 reflect that
on July 31, 2003, Respondent placed an order for 150 golf/polo shirts
from Save On Promotional Products of Sandy, Oregon. Upon receiving
Respondent's order, Save On ordered the shirts from its supplier, Tri-
Mountain Gear Corp. of Baldwin Park, California. Respondent
[[Page 82474]]
ordered the shirts for or on behalf of Micei to be exported from the
United States to Macedonia. Respondent paid for the order with his
credit card. Micei reimbursed Respondent for purchasing the shirts. The
shirts were exported from the United States to Macedonia on or about
August 13, 2003. The shirts are items subject to the Regulations. At
the time of the transaction, Respondent knew he was subject to the
Denial Order. Respondent benefited from purchasing the shirts from a
U.S. supplier using his VISA card by earning credit towards the
purchase of airline tickets.
These activities show, by the preponderance of reliable, probative,
and credible evidence, that Respondent ordered the shirts, carried on
negotiations concerning the shirts, bought, sold, and/or financed the
shirts, and benefited from the transactions while his Denial Order was
in effect, in violation of 15 CFR 764.2(k). Therefore, Charge 5 is
proved.
These activities also show, by the preponderance of reliable,
probative, and credible evidence, that Respondent ordered the shirts,
carried on negotiations concerning the shirts, bought, sold, and/or
financed the shirts, and benefited from the transactions with knowledge
that a violation of his Denial Order had occurred, was about to occur,
or was intended to occur in connection with the shirts, in violation of
15 CFR 764.2(e). Therefore, Charge 12 is proved.
As detailed in the Findings of Fact, Charges 6 and 13 reflect that
Respondent ordered two load binders, one ratchet strap, one binder
chain, and one safety shackle from Maintenance Products, Inc. of
Lowell, Indiana, on or about September 9, 2003. Respondent paid
Maintenance Products, Inc. for these items, including freight charges
of $21.52, with his VISA credit card. Micei reimbursed Respondent for
purchasing these items. As per Respondent's intent, these items were
exported from the United States to Macedonia on or about September 15,
2003. The load binders, binder chain, and safety shackle were
manufactured in the United States. The load binders, ratchet strap,
binder chain and safety shackle are items subject to the Regulations.
At the time of the transaction, Respondent knew he was subject to the
Denial Order. By charging the purchase from the U.S. supplier of the
load binders, ratchet strap, binder chain and safety shackle on his
VISA card, Respondent benefited by earning credit towards the purchase
of airline tickets.
These activities show, by the preponderance of reliable, probative,
and credible evidence, that Respondent ordered two load binders, one
ratchet strap, one binder chain, and one safety shackle, bought, sold,
and/or financed them, and benefited from the transactions while his
Denial Order was in effect, in violation of 15 CFR 764.2(k). Therefore,
Charge 6 is proved.
These activities also show, by the preponderance or reliable,
probative, and credible evidence, that Respondent ordered two load
binders, one ratchet strap, one binder chain, and one safety shackle,
bought, sold, and/or financed them, and benefitted from the
transactions with knowledge that a violation of his Denial Order had
occurred, was about to occur, or was intended to occur, in connection
with the two load binders, one ratchet strap, one binder chain, and one
safety shackle, in violation of 15 CFR 764.2(e). Therefore, Charge 13
is proved.
As shown in Findings of Fact, Charges 7 and 14 reflect that in
October 2003, Respondent, describing himself as ``Micei Int'l (N/
America Op's), placed an order for uniform pants with Galls (Galls
number 2547320/017). Again describing himself as representing Micei,
Respondent paid for the order on October 8, 2003 with his VISA credit
card. The uniform pants were to be shipped from Galls' supplier,
Liberty Uniform of Spartanburg, South Carolina, to Micei in Macedonia.
Micei reimbursed Respondent for purchasing the uniform pants. The
uniform pants are items subject to the Regulations. At the time of the
transaction, Respondent knew he was subject to the Denial Order.
Respondent benefited from his purchase of the uniform pants with his
VISA credit card by earning airline frequent flier miles.
These activities show, by the preponderance of reliable, probative,
and credible evidence, that Respondent ordered the uniform pants,
bought, sold, and/or financed them, and benefited from the transactions
while his Denial Order was in effect, in violation of 15 CFR 764.2(k).
Therefore, Charge 7 is proved.
These activities also show, by the preponderance of reliable,
probative, and credible evidence, that Respondent ordered the uniform
pants, bought, sold, and/or financed them, and benefited from the
transactions, with knowledge that a violation of his Denial Order had
occurred, was about to occur, or was intended to occur, in connection
with the uniform pants, in violation of 15 CFR 764.2(e). Therefore,
Charge 14 is proved.
Ultimate Findings of Fact and Conclusions of Law
1. Respondent and the subject matter of these proceedings are
properly within the jurisdiction vested in BIS under the EAA, and the
EAR, as extended by Executive Order and Presidential Notices.
2. At all times relevant in these proceedings, Coast Guard
Administrative Law Judges have jurisdiction to adjudicate export
control cases for the Bureau of Industry and Security.
3. The exhibits that BIS submitted are relevant and material to the
charges in the Charging Letter.
4. At all times relevant, The Denial Order was in effect.
5. At all times relevant, Respondent was subject to the terms of a
Denial Order.
6. At all times relevant, Respondent knew he was subject to the
Denial Order.
7. All items in question were subject to the Regulations at Section
734.3(a).
8. All items in question were subject to the prohibitions in the
Denial Order.
9. As detailed in the Findings of Fact, from on or about July 2,
2003 to on or about October 8, 2003, on seven occasions as described in
Charges 1 through 7 in the Schedule of Violations, Respondent took
actions specifically prohibited by the Denial Order in violation of 15
CFR 7343.2(k).
10. As detailed in the Findings of Fact, from on or about July 2,
2003 to on or about October 8, 2003, on six occasions as described in
Charges 8, 9 and 11-14 in the Schedule of Violations, Respondent took
actions prohibited by the Denial Order with knowledge that a violation
of his Denial Order had occurred, were about to occur, or were intended
to occur, in violation of 15 CFR 764.2(e).
Affirmative Defenses
In his February 24, 2010 Memorandum in Defense to Evidence
Submitted by BIS in Support of the Charges in its Charging Letter,
Respondent offers eleven (11) affirmative defenses. Affirmative Defense
number one claims ``that subject matter jurisdiction is lacking herein
* * * because the general Denial Order * * * was ``null, void, and of
no effect ab initio because BIS did not have statutory authority to
impose such an order * * *.''
This affirmative defense is the same as affirmative defenses
numbered two, nine, and fourteen filed with his Answer, affirmative
defenses numbered 2, 4, 14, and 19 filed in the Corrected
[[Page 82475]]
Answer, and objection number 5 in Respondent's Opposition to BIS's
Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen.
It is also essentially the same as Objection 5 raised in his ``Renewed
Objections to BIS's Interrogatories and Request for Production of
Documents filed on September 3, 2009 and Point numbered 1 and 10 raised
in Respondent's Memorandum of Points and Authorities in Opposition to
BIS' Motion for Summary Decision as to Charges Two, Six, Nine, and
Thirteen filed October 12, 2009.
The undersigned previously ruled Respondent's claim that BIS had no
statutory authority to issue the Denial Order because the EAA was in
lapse is without merit. BIS had authority to issue the Denial Order and
is still operating under that authority. See, November 10, 2009,
Memorandum and Order disposing of numerous motions that the parties
submitted on pre-decisional issues at 13. As noted in the charging
Letter and subsequent filings, subsequent Presidential Notices have
extended the EAA's provisions and regulations up to the present. The
Agency and the Courts have held that continuing the operation and
effectiveness of the EAA and its regulations by issuing Executive
Orders by the President is a valid exercise of authority. In the Matter
of Micei International, 74 FR 24,788, 24,790 (May 26, 2009); Wisconsin
Project on Nuclear Arms Control v. U.S. Dep't of Commerce, 317 F. 3d
275, 278-79, 282 (DC Cir. 2003). Therefore, affirmative defense number
one is rejected as being without merit.
In affirmative defense number two, Respondent claims ``[t]his Court
lacks jurisdiction to adjudicate this proceeding because the purported
assignment of the Administrative Law Judge herein has been made in
violation of the statute and regulations regulating the assignment of
administrative law judges to BIS's civil penalty proceedings.'' This
defense is essentially the same as affirmative defense number one filed
with his Answer and affirmative defenses numbers one (1) and three (3)
in his ``Corrected Answer to Charging Letter.'' It is also essentially
the same as his ``Objection 6, raised in his ``Renewed Objections to
BIS's Interrogatories and Request for Production of Documents filed on
September 3, 2009 and essentially the same as Point Number 2 raised in
Respondent's Memorandum of Points and Authorities in Opposition to
BIS's Motion for Summary Decision as to Charges Two, Six, Nine, and
Thirteen filed October 12, 2009. The undersigned has previously ruled
that at all relevant times in these proceedings, Memoranda of Agreement
and an Office of Personnel Management authorization letters properly
establish jurisdiction for U.S. Coast Guard Administrative Law Judges
to adjudicate export control cases for BIS. See, November 10, 2009,
Memorandum and Order disposing of numerous motions that the parties
submitted on pre-decisional issues at 3, 13, and 14. Therefore,
affirmative defense number two is rejected as being without merit.
In affirmative defense number three, Respondent claims ``[t]his
proceeding is defective and should be dismissed because it has been
filed in violation of the prohibition against Double Jeopardy in the
Constitution of the United States.'' This defense is the same as
Respondent's affirmative defense number eight (8) raised in his Answer
and affirmative defense number thirteen (13) raised in his Corrected
Answer. It is also the same as Points numbered 3 and 6 in Respondent's
Memorandum of Points and Authorities in Opposition to BIS's Motion for
Summary Decision as to Charges Two, Six, Nine, and Thirteen filed
October 12, 2009. The undersigned has previously found that double
jeopardy does not apply to these administrative proceedings in the
November 18, 2009 Order Denying Respondent's Objections to
Qualifications of Administrative Law Judge at 3, 4, but further
clarification is necessary.
Respondent's double jeopardy argument is found on pages 15-17 of
his Memorandum of Points and Authorities in Opposition to BIS's Motion
for Summary Decision as to Charges Two, Six, Nine, and Thirteen filed
October 12, 2009 and his factual basis is found in his October 12, 2009
``Declaration of Yuri Montgomery in Opposition to BIS' Motion for
Summary Decision as to Charges Two, Six, Nine and Thirteen'' at
paragraphs 32 to 38, and 50 to 54. He also includes this argument in
his ``Declaration of Yuri Montgomery in Support of Objection to
Qualifications of ALJs and all Other Members of BIS' Decision making
Body'' of October 20, 2009 scattered throughout various paragraphs.
He states that in May 2005, criminal charges were initiated against
him in the U.S. District of Columbia for alleged violations of this
Denial Order. In 2006 that criminal action was dismissed and he was re-
indicted on substantially identical charges in the U.S. District Court
for the Western District of Washington at Seattle, and on April 30,
2008. The Second Superseding Indictment was filed in the same court.
Respondent claims the criminal prosecution was based on his alleged
violations of this Denial Order and that his subsequent trial resulted
in a mistrial because the jurors could not agree. Respondent further
claims that following the mistrial, he filed a motion for judgment of
acquittal which the district judge granted. Respondent's statement is
incorrect. Attached to his Declaration is the Second Superseding
Indictment dated April 30, 2008, a Notice of Dismissal DATED October
10, 2008, dismissing the Indictment with prejudice against this
Respondent, and the October 20, 2008 Order of Dismissal, signed by U.S.
District Judge Ricardo S. Martinez, dismissing the Indictment with
prejudice against this Respondent. The Order references Federal Rule of
Criminal Procedure 48a which states ``The government may, with leave of
court, dismiss an indictment, information, or complaint. The government
may not dismiss the prosecution during trial without the defendant's
consent.'' The District Judge did not enter an order of acquittal.
In his Memorandum of Points and Authorities in Opposition to BIS's
Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen
at 16, Respondent claims ``[t]he charges brought forth in this
proceeding are based on the same facts of which respondent has already
prevailed and obtained dismissal with prejudice, which is the
equivalent to acquittal, after undergoing a trial in the criminal
proceeding.'' In support of this claim, Respondent cites Hudson v.
United States, 522 U.S. 93 (1997) as authority. In Hudson, the Office
of the Comptroller of the Currency imposed civil monetary penalties and
debarment on the defendants for causing two banks in which they were
officials to make certain loans in a manner that unlawfully allowed
them to receive the loans' benefits, in violation of the banking
statutes. The government later indicted the defendants for essentially
the same conduct so they moved to dismiss on double jeopardy grounds.
The Supreme Court held that the double jeopardy clause of the Fifth
Amendment is not a bar to the later criminal prosecution because the
administrative proceedings were civil, not criminal. 522 U.S. at 95,
96. The Supreme Court found that the double jeopardy clause protects
only against the imposition of multiple criminal punishments for the
same offense. Moreover, Respondent was neither acquitted nor convicted.
Therefore, affirmative defense number three is rejected as being
without merit.
In affirmative defense number four, Respondent claims ``[s]ubject
matter
[[Page 82476]]
jurisdiction is lacking over [Respondent] because the BIS's claims are
not colorable, i.e., they are both, immaterial and made solely for the
purpose of obtaining jurisdiction over [Respondent] and are wholly
insubstantial and frivolous.'' This affirmative defense is essentially
the same as affirmative defense number 10 in his Answer, affirmative
defense number 15 in his Corrected Answer, and those raised in argument
number 4 in his Memorandum of Points and Authorities in Opposition to
BIS's Motion for Summary Decision as to Charges Two, Six, Nine, and
Thirteen of October 12, 2009. The undersigned previously ruled that
``Respondent and the subject matter of these proceedings are properly
within the jurisdiction vested in BIS under the EAA, and the EAR, as
extended by Executive Order and Presidential Notices. See, November 10,
2009, Memorandum and Order disposing of numerous motions that the
parties submitted on pre-decisional issues at 3. Therefore,
Respondent's affirmative defense number four is rejected as being
without merit.
In affirmative defense number five, Respondent claims ``[t]he
charges sought by BIS to be adjudicated by the instant Motion should be
dismissed as barred by the doctrine of collateral estoppel.'' This
affirmative defense is the same as affirmative defense number 5 in
Respondent's Answer, affirmative defense number 8 and 9 in his
Corrected Answer, and argument number 7 in his Memorandum of Points and
Authorities in Opposition to BIS's Motion for Summary Decision as to
charges Two, Six, Nine, and Thirteen of October 12, 2009. Simply put,
collateral estoppel would prevent a party from relitigating an issue
previously decided against the party. Respondent claims that the
dismissal of his criminal case is the same as an acquittal. According
to Black's Law Dictionary, 8th ed. (2004), an acquittal is a legal
certification, usually by jury verdict, that an accused person is not
guilty of the charged offense. According to Respondent, the jury could
not agree on a verdict, and the proceedings ended in mistrial. On
application of the government, the District Judge dismissed with
prejudice. There there were no findings of ``not guilty'' of the counts
in the Indictment and therefore no acquittal. Similarly, Black's
defines estoppel, as raised by Respondent in his Answer at affirmative
defense number 5 and in his Corrected Answer at affirmative defense
number 8, as a bar that prevents one from asserting a claim or right
that contradicts what one has said or done before or what has been
legally established as true. Respondent was not convicted in the
criminal case. Therefore, Respondent's affirmative defense number five
is rejected as being without merit.
In affirmative defense number six, Respondent claims ``[t]he
charges sought by BIS to be adjudicated by the instant Motion should be
dismissed as barred by the doctrine of res judicata.'' This is the same
as affirmative defense number 4 in his Answer, affirmative defense
number 7 in his Corrected Answer, and Argument number 8 in his
Memorandum of Points and Authorities in Opposition to BIS's Motion for
Summary Decision as to charges Two, Six, Nine, and Thirteen of October
12, 2009. Black's Law Dictionary, 8th ed. (2004), defines res judicata
as an affirmative defense barring the same parties from litigating a
second lawsuit on the same claim, or any other claim arising from the
same transaction or series of transactions and that could have been--
but was not--raised in the first suit. The three essential elements are
(1) an earlier decision on the issue, (2) a final judgment on the
merits, and (3) the involvement of the same parties, or parties in
privity with the original parties. As stated in the above discussion on
collateral estoppel, there was no decision in the criminal case.
Therefore, further analysis of the elements is unnecessary.
Respondent's affirmative defense number six is rejected as being
without merit.
In defense number seven, Respondent claims ``[t]he monetary penalty
proposed by BIS should not be applied as violative of the
Constitutional prohibition against cruel and unusual punishments.''
This affirmative defense is the same as affirmative defense number 9 in
Respondent's October 16, 2009 ``Memorandum of Points and Authorities in
Opposition to BIS' Motion for Summary Decision as to Charges Two, Six,
Nine, and Thirteen.'' These proceedings are civil administrative
proceedings and not criminal proceedings. Under the Eighth Amendment of
the Constitution of the United States, ``[e]xcessive bail shall not be
required, nor excessive fines imposed, nor cruel and unusual
punishments inflicted.'' U.S. Const. amend. VIII. Assuming Respondent
is referring to the excessive fines clause, Congress has set the
maximum penalty per violation in these civil proceedings at $250,000.
International Emergency Economic Powers Enhancement Act of 2007, Public
Law 110-96, 121 Stat. 1011 (Oct. 16, 2007). The criminal penalties were
also raised from $50,000 and ten years of imprisonment to $1,000,000
and twenty years of imprisonment. Here, BIS proposes a civil monetary
penalty in the amount of $340,000 for all thirteen violations. If the
maximum civil penalty of $250,000 were assessed for each of the
remaining 13 violations, Respondent would face civil penalties totaling
$3,250,000. He has not offered any argument or case law supporting the
notion that assessed civil penalties amounting to less than 10.5% of
the congressionally established maximum violate the Eighth Amendment.
Therefore, the monetary penalty BIS proposes does not violate the
Constitutional prohibition against cruel and unusual punishments and
affirmative defense number seven is rejected as being without merit.
In affirmative defense number eight, Respondent claims ``[n]o
denial order may be imposed upon Respondent, as IEEPA provides no
statutory authorization for such penalty.'' This affirmative defense is
the same as argument number 10 in Respondent's Memorandum of Points and
Authorities in Opposition to BIS's Motion for Summary Decision as to
charges Two, Six, Nine, and Thirteen of October 12, 2009. The
undersigned previously ruled that BIS has the statutory authority to
issue a Denial Order. See, November 10, 2009, Memorandum and Order
disposing of numerous motions that the parties submitted on pre-
decisional issues at 13. Therefore, affirmative defense number eight is
rejected as being without merit.
In affirmative defense number nine, Respondent claims ``[t]he
charges of `acting with knowledge of violations' should be dismissed
because they are (a) duplicitous as interpreted by BIS and (b)
unauthorized by IEEPA as amended in 2007.'' This is the same as
argument number 11 in Respondent's Memorandum of Points and Authorities
in Opposition to BIS's Motion for Summary Decision as to charges Two,
Six, Nine, and Thirteen of October 12, 2009.
Concerning part (b) of Respondent's argument, the Regulations are
maintained in force pursuant to the International Emergency Economic
Powers Act. This Court's previous ruling that the Regulations are, in
fact, maintained in force supports the validity of the knowledge
charges. See Order of November 10, 2009 at 13. See also, In the Matter
of Ihsan Medhat Elashi, 71 FR 38,843 (July 10, 2006) imposing a civil
monetary penalty of $330,000 and a 50 year denial of export privileges
for selling items with knowledge of a denial order. That case cites the
IEEPA as statutory authority and 15 CFR 764.2(e) as regulatory
authority. Therefore, Respondent's
[[Page 82477]]
affirmative defense that the charges of acting with knowledge of
violations should be dismissed because they are unauthorized by IEEPA
as amended in 2007, affirmative defense nine ``b'' is rejected as being
without merit.
Concerning Respondent's claim that ``acting with knowledge of
violations should be dismissed because they are (a) duplicitous as
interpreted by BIS is also rejected as being without merit. Under the
Elashi case, ``if an individual has a denied export license, violating
the denial order is one violation and the act of knowingly violating
the EAR is a separate violation.'' Elashi at 38,849. Therefore,
Respondent's affirmative defense nine ``a'' that ``[t]he charges of
`acting with knowledge of violations' should be dismissed because they
are (a) duplicitous as interpreted by BIS'' is rejected as being
without merit.
In defense number ten, Respondent claims ``[t]he penalty
enhancement under IEEPA, as retroactively amended in 2007, cannot be
applied herein because it is violative of the Ex Post Facto clause of
the Constitution of the United States.'' This is the same as argument
number 12 in Respondent's Memorandum of Points and Authorities in
Opposition to BIS' Motion for Summary Decision as to charges Two, Six,
Nine, and Thirteen of October 12, 2009.
Congress added the enhanced civil penalty as part of Section 206(b)
of the International Emergency Economic Powers Act of 2007, Public Law
110-96, 121 Stat. 1011 (Oct. 16, 2007). Section 2 of that Act reads as
follows:
(a) IN GENERAL.--Section 206 of the International Emergency
Economic Powers Act (50 U.S.C. 1705) is amended to read as follows:
``SEC. 206. PENALTIES.
``(a) UNLAWFUL ACTS.--It shall be unlawful for a person to
violate, attempt to violate, conspire to violate, or cause a
violation of any license, order, regulation, or prohibition issued
under this title.
``(b) CIVIL PENALTY.--A civil penalty may be imposed on any
person who commits an unlawful act described in subsection (a) in an
amount not to exceed the greater of--
``(1) $250,000; or
``(2) an amount that is twice the amount of the transaction that
is the basis of the violation with respect to which the penalty is
imposed.
``(c) CRIMINAL PENALTY.--A person who willfully commits,
willfully attempts to commit, or willfully conspires to commit, or
aids or abets in the commission of, an unlawful act described in
subsection (a) shall, upon conviction, be fined not more than
$1,000,000, or if a natural person, may be imprisoned for not more
than 20 years, or both.''.
(b) EFFECTIVE DATE.--
(1) CIVIL PENALTIES.--Section 206(b) of the International
Emergency Economic Powers Act, as amended by subsection (a), shall
apply to violations described in section 206(a) of such Act with
respect to which enforcement action is pending or commenced on or
after the date of the enactment of this Act.
(2) CRIMINAL PENALTIES.--Section 206(c) of the International
Emergency Economic Powers Act, as amended by subsection (a), shall
apply to violations described in section 206(a) of such Act with
respect to which enforcement action is commenced on or after the
date of the enactment of this Act.
The above language shows that Congress intended to establish
separate penalties for civil and criminal proceedings. Once it is
established that Congress intended to enact a civil enforcement scheme,
only the clearest proof will override that intent and transform what is
clearly a civil penalty into what amounts to a criminal penalty. See,
Smith v. Doe, 538 U.S. 84, 92 (2003). Respondent has not presented any
evidence such proof.
The enhanced civil penalties apply to violations with respect to
which enforcement action is pending or commended on or after the date
of the enactment of the Act. The effective date of the Act was October
17, 2007. Since this enforcement proceeding commenced on July 1, 2008,
a civil penalty of up to $250,000 per violation applies to this case
since. Therefore, Respondent's affirmative defense ten that the penalty
enhancement violates the Ex Post Facto clause of the United States
Constitution is rejected as being without merit.
In defense number eleven, Respondent claims ``[a]ll of the charges
in the Amended Charging Letter should be dismissed because BIS has
failed to allege in said Charging Letter and prove that any of the
subject products were not `the foreign-produced direct product of
U.S.--origin technology' which has been expressly exempted from the
prohibitions of the Denial Order.'' The undersigned has previously
rejected this argument as stated in this Recommended Decision and
Order. Therefore, affirmative defense number eleven is rejected as
being without merit.
Respondent's Two Objections
In his February 24, 2010 Objections to Evidence Submitted by BIS in
Support of the Charges in its Charging Letter, Respondent offers two
Objections: (1) ``Respondent hereby Objects to unsworn, unverified,
unsubstantiated, and unauthenticated `evidence' supporting its
charges;'' (2) ``Objection is hereby made to the letter submitted by
BIS as Exhibit I, as such letter does not constitute evidence but is
inadmissible self-serving legal opinion.''
Concerning objection 1, Respondent does not address any
specific exhibit or show why they are not admissible under BIS's
procedural rules at 15 CFR 766.13(b). BIS's exhibits are declarations
provided under penalty of perjury; however, that section provides
``[t]he rules of evidence prevailing in courts of law do not apply, and
all evidentiary deemed by the administrative law judge to be relevant
and material to the proceeding and not unduly repetitious will be
received and given appropriate weight.'' Having so found, Respondent's
objection 1 is Overruled.
Concerning objection 2, BIS routinely determines what
items are subject to its regulations. Absent a showing that this
Exhibit is not a valid exercise of BIS's authority and how it is not
relevant or material to the Charges in the Charging Letter and
therefore inadmissible under 15 CFR 766.13(b), this objection cannot be
sustained. Therefore, Respondent's objection 2 is Overruled.
Respondent's Remaining Affirmative Defenses
The remaining affirmative defenses from Respondent's original
nineteen (19) not included in his February 24, 2010 ``Memorandum in
Defense to Evidence Submitted by BIS in Support of the Charges in its
Charging Letter'' are addressed as follows:
6. ``The Charging Letter herein and any of its allegations fail to
state facts constituting a valid claim against Respondent herein.'' The
undersigned previously ruled on this defense in the March 23, 2009
Order Denying Respondent's Motion for More Definite Statement. After
detailing the parties' arguments, the undersigned held, ``[t]he
Charging Letter, together with the Schedule of Violations provides
notice to Respondent sufficient to formulate his answer. To the extent
Respondent requests additional information he may avail himself of the
Discovery procedures under 15 CFR 766.9 after he files his Answer.
Therefore, Respondent's motion for a more definite statement is
denied.'' In consideration of the foregoing, Respondent's defense
6 is rejected as being without merit.
10. ``This proceeding is barred by the doctrine of waiver. Waiver
is a voluntary relinquishment or abandonment, either express or
implied, of a legal right or advantage. Black's Law Dictionary, (8th
ed. 2004). However, Respondent offers no evidence or authority on this
defense. Therefore, this defense is rejected as being without merit.
[[Page 82478]]
11. ``This proceeding is barred by the doctrine of release.''
Release is a liberation from an obligation, duty, or demand or the act
of giving up a right or claim to the person against whom it could have
been enforced. Black's law Dictionary, (8th ed. 2004). However,
Respondent presents no evidence or authority on this defense.
Therefore, Respondent's defense of ``release'' is rejected as being
without merit.
12. ``This proceeding is barred by settlement agreement.''
Respondent offers no evidence of a previous settlement agreement or
authority in support of this defense. He apparently is referring to the
criminal charges that resulted in a hung jury and subsequent dismissal
in October 2008. In paragraph 24 of the ``Declaration of Yuri
Montgomery in Support of Objection to Qualifications of Administrative
Law Judges and All Other Members of BIS Decisionmaking Body''
Respondent states, ``[s]hortly prior to July 3, 2008, my attorney
apparently informed the prosecutor in said criminal action of my
intention to file a motion to suppress my testimony given without the
presence of counsel during my meetings and telephone interviews with
BIS personnel and prosecutors in said criminal matter, as well as a
motion to suppress some of my records obtained by BIS pursuant to a
search warrant illegally obtained by BIS.'' He mentions ``plea
agreement'' in the following paragraph 25 in which he states, ``[o]n
July 3, 2008, I filed a motion to suppress said testimony on the ground
that I shared said information with the government based on my
understanding that it was part of my obligation to cooperate with the
government in exchange for immunity given to me pursuant to a plea
agreement I entered into [on] or about 1999 and which resulted in the
issuance of said Denial Order, as well as a motion to suppress
evidence, including but not limited to copies of my e-mails, obtained
under said search warrant, on the grounds that said warrant was stale
and was obtained as a result of misleading statements made my BIS
agents to a U.S. magistrate judge in eh affidavit in support of said
search warrant.'' This is an affirmative defense in which Respondent
bears the burden of going forward with producing the evidence in
support of it. Respondent has not produced any plea agreement.
Therefore, Respondent's claim is rejected as being without merit.
15. ``The Charging letter herein is invalid as it alleges claims
which are frivolous and insubstantial and made for the sole purpose of
obtaining jurisdiction over Respondent herein.'' Defense 15 is
rejected as being without merit for the reasons set forth in the ruling
on defense 6, above.
17. ``This administrative proceeding is barred by laches due to
BIS's excessive delay in bringing the Charging Letter herein.'' Black's
Law Dictionary 8th ed., 2004 defines ``laches'' as ``unreasonable delay
in pursuing a right or claim--almost always an equitable one--in a way
that prejudices the party against whom relief is sought. ``Section 2462
of Title 28 of the United States Code imposes a five-year statute of
limitation on the commencement of enforcement proceedings brought by
BXA [now BIS] under the Export Administration Act.'' In the Matter of
MK Technology Associates, Inc., Decision and Order (Dept. of Commerce),
64 FR 69,478, 69,481 (Dec. 13, 1999). Title 28 U.S.C. 2462 reads as
follows:
Sec. 2462. Time for commencing proceedings
Except as otherwise provided by Act of Congress, an action, suit
or proceeding for the enforcement of any civil fine, penalty, or
forfeiture, pecuniary or otherwise, shall not be entertained unless
commenced within five years from the date when the claim first
accrued if, within the same period, the offender or the property is
found within the United States in order that proper service may be
made thereon.
28 U.S.C. 2462
The Charging Letter of July 1, 2008 shows the claim first accrued
on July 2, 2003, within the five-year year Statute of Limitations.
Further, Respondent has not shown how the passage of time within the
five-year statute of limitations has disadvantaged or prejudiced him.
Therefore, Respondent's defense 17 is rejected as being
without merit.
18. ``This proceeding is barred as it violates the Due process
clause of the Constitution of the United States.'' In the Memorandum
and Order of November 10, 2009, the undersigned Overruled Respondent's
objection 1 that the previous scheduling orders for discovery
violated his due process rights. Here, Respondent makes no specific
showing of due process violations but it is assumed that he objects to
the entire proceedings. As the above detailed record of these
proceedings shows, Respondent has been accorded reasonable notice and
more than reasonable opportunity to be heard as provided for within the
framework of BIS's procedural rules. Therefore, Respondent's defense
18 is rejected as being without merit.
Recommended Sanction
Under Section 764.3 of the Regulations, the applicable sanctions
are: (1) A monetary penalty; (2) a denial of export privileges under
the Regulations; and (3) exclusion from practice before BIS. Pursuant
to the International Emergency Economic Powers Enhancement Act of 2007,
Public Law 110-96, 121 Stat. 1011 (Oct. 16, 2007), as amended, ``an
amount not to exceed the greater of * * * $250,000; or * * * an amount
that is twice the amount of the transaction that is the basis of the
violation with respect to which enforcement action [was] pending or
commenced on or after the date of the enactment of [the] Act.'' Since
BIS initiated this enforcement action after October 16, 2007, the
maximum penalty in this case is $250,000 per violation.
The Agency recommends a civil monetary penalty in the amount of
$340,000 and a denial of export privileges for thirty (30) years. The
undersigned agrees. This sanction is consistent with prior cases,
including, In the Matter of: Ishan Medhat Elashi, 71 FR 38,843 (July
10, 2006). Elashi violated a Denial Order against him and acted with
knowledge of these violations by exporting and conspiring to export
computer equipment to Syria. For Elashi's thirty (30) violations, he
received the maximum available civil monetary penalty available at the
time ($11,000 per violation for a total civil monetary penalty of
$330,000) as well as a denial of his export privileges for fifty (50)
years.
The record is devoid of any acknowledgement of or acceptance of
responsibility by Respondent for his actions. Respondent's conduct
reflects a serious disregard for export compliance responsibilities.
Wherefore,
REDACTED SECTION (PAGES 55-58)
Accordingly, I am referring this Recommended Decision and Order to
the Under Secretary for review and final action for the agency, without
further notice to the Respondent, as provided in 15 CFR 766.22.
Done and dated October 28, 2010, in New York, New York.
Walter J. Brudzinski,
Administrative Law Judge.
Attachment A
Summary of Pre-Decision Motions Practice; Activity Prior to
Respondent's Answer to Charging Letter
On July 28, 2008, Peter Offenbecher, Esq., of Skellenger Bender,
PS, entered his appearance on behalf of Respondent and requested an
extension of time to file Answer. On August 5, 2008, the Chief
Administrative Law Judge granted Respondent's request and extended the
time to file Answer until August 18, 2008.
[[Page 82479]]
On August 14, 2008, Respondent filed an unopposed motion to stay
the instant proceedings pending a parallel criminal trial in U.S.
District Court for the Western District of Washington.\10\
---------------------------------------------------------------------------
\10\ Out of the eleven Counts in the Indictment, four Counts
concerned conduct corresponding to Charges in the Charging Letter.
The Charging Letter alleged violations of 15 CFR 764.2(e) and (k).
The Indictment alleged violations of 15 CFR 764(a) and (b), as well
as 18 U.S.C. 2 and 50 U.S.C. 1705.
---------------------------------------------------------------------------
On August 15, 2008, the Chief Administrative Law Judge assigned
this case to the undersigned for adjudication and on August 18, 2008,
the undersigned granted Respondent's unopposed motion to stay.
On October 28, 2008, BIS filed a Stipulated Motion to Stay
Proceedings for 30 Days Due to Settlement Negotiations. The Motion
advised that the parallel criminal action concluded on October 21, 2008
and that counsel for Respondent and counsel for BIS desire to engage in
settlement negotiations.\11\ Accordingly, on October 30, 2008, the
undersigned issued an Order Granting the Motion to Stay until December
1, 2008. Counsel for Respondent filed his Notice of Attorney Withdrawal
on December 2, 2008, since that time Respondent has been self-
represented.
---------------------------------------------------------------------------
\11\ Respondent was neither convicted nor acquitted. The
criminal trial ended in mistrial due to ``hung jury'' and the
District Judge granted leave to dismiss the Indictment with
prejudice.
---------------------------------------------------------------------------
On January 7, 2009, Respondent filed his Notice to Stay
Administrative Proceeding advising that he and counsel for BIS have
agreed to extend the date for his responsive Answer until January 31,
2009. On January 9, 2009, the undersigned issued an Order Granting
Respondent's request staying the proceedings until January 31, 2009 at
which time the Respondent shall file his Answer. Respondent did not
file his Answer on January 31, 2009. Instead, on February 3, 2009, the
undersigned received via facsimile Respondent's Motion for More
Definite Statement and Demand for Hearing on the Motion for More
Definite Statement, which he dated January 31, 2009. BIS received that
Motion via facsimile on February 18, 2009.
On March 9, 2009, BIS filed its opposition to Respondent's Motion
averring, among other things, that the mutually agreed upon extension
of time to file Answer did not include any extension of time to file a
motion for more definite statement. Moreover, the regulations do not
provide for the filing of a more definite statement.
On March 23, 2009, the undersigned denied Respondent's Motion for
More Definite Statement and ordered Respondent to Answer the Charging
Letter and Any Demand for Hearing [emphasis added] by April 2, 2009.
Respondent filed his Answer ``under protest, duress, and compulsion
of the Order Denying Respondent's Motion for More Definite Statement.''
He denied each and every allegation in the Charging Letter but did not
demand a hearing. He also asserted fourteen (14) Affirmative Defenses:
1. Neither this Court nor any of the administrative law judges
herein have jurisdiction to adjudicate the instant administrative
proceeding.
2. The Department of Commerce, Bureau of Industry and Security,
has no jurisdiction over this administrative proceeding.
3. The Charging Letter herein and any of its allegations fail to
state facts constituting a valid claim against Respondent.
4. This administrative proceeding is barred by the doctrine of
res judicata.
5. This administrative decision is barred by the doctrine of
estoppel.
6. This administrative proceeding is barred by the doctrine of
waiver.
7. This administrative proceeding is barred by the doctrine of
release.
8. This administrative proceeding is barred by the double
jeopardy clause of the Constitution of the United States.
9. This administrative proceeding is unauthorized in that the
Export Control Regulations used as a basis for the Charging Letter
herein lack proper statutory authorization and are thus invalid.
10. The Charging Letter herein is invalid as it alleges claims
which are frivolous and insubstantial and made for the sole purpose
of obtaining jurisdiction over Respondent.
11. The goods subject to the Charging Letter are of foreign
origin and are therefore not subject to the Charging Letter.
12. This administrative proceeding is barred by laches due to
BIS's excessive delay in bringing the Charging Letter.
13. This administrative proceeding is violative of the Due
Process clause of the Constitution of the United States.
14. This administrative proceeding is unauthorized by law in
that the statute under which the pertinent Export Control
Regulations have been promulgated has expired.
Respondent subsequently filed a ``Corrected Answer to Charging
Letter,'' again denying each allegation and also objecting to among
other things, the form of the Charging Letter. He did not demand a
hearing but included the following amended affirmative defenses:
1. This Court and any and all of the administrative law judges
herein have no subject matter jurisdiction over this proceeding.
2. The Department of Commerce, Bureau of Industry and Security,
has no subject matter jurisdiction over this proceeding.
3. This Court and any and all of the administrative law judges
herein have no personal jurisdiction over Respondent herein.
4. The Department of Commerce, Bureau of Industry and Security,
has no personal jurisdiction to adjudicate this proceeding.
5. This Court and any and all of the administrative law judges
herein lack statutory authorization to adjudicate this proceeding.
6. The Charging Letter herein and any of its allegations fail to
state facts constituting a valid claim against Respondent herein.
7. This proceeding is barred by the doctrine of res judicata.
8. This proceeding is barred by the doctrine of estoppel.
9. This proceeding is barred by the doctrine of collateral
estoppel.
10. This proceeding is barred by the doctrine of waiver.
11. This proceeding is barred by the doctrine of release.
12. This proceeding is barred by settlement agreement.
13. This proceeding is barred by the double jeopardy clause of
the Constitution of the United States.
14. This proceeding is unauthorized by law in that the
Regulations used as a basis for the Charging Letter herein lack
statutory authorization and are thus invalid.
15. The Charging Letter herein is invalid as it alleges claims
which are frivolous and insubstantial and made for the sole purpose
of obtaining jurisdiction over Respondent herein.
16. The goods subject to the Charging Letter are of foreign
origin and are therefore not subject to the prohibitions of the
purported Denial Order;
17. This administrative proceeding is barred by laches due to
BIS's excessive delay in bringing the Charging Letter herein;
18. This proceeding is barred as it violates the Due Process
clause of the Constitution of the United States;
19. This proceeding is unauthorized by law in that the statute
under which the Regulations have been promulgated has expired.
Activity After Respondent's Answer to Charging Letter; Case To Be
Adjudicated on the Record
Since neither party filed a demand for hearing, the undersigned
issued a Scheduling Order on June 5, 2009 stating the matter will be
adjudicated on the record in accordance with 15 CFR 766.6(c). The Order
set July 6, 2009 as the deadline to complete discovery; August 5, 2009
as the deadline for the Agency to file evidence in support of charges;
September 2, 2009 as the deadline for Respondent to reply and file
evidence in support of his defenses; and September 16, 2009 as the
deadline for the Agency to file rebuttal.
On June 19, 2009, BIS served its ``Requests for Admissions and
Interrogatories'' and ``Requests for Production of Documents'' on
Respondent and on June 30, 2009, Respondent filed his ``Preliminary
Objections to BIS's Interrogatories and Requests for Production of
Documents''
[[Page 82480]]
as well as his ``Objections to BIS's Interrogatories and Requests for
Production of Documents,'' the latter of which contained Respondent's
Answers to BIS's Requests for Admission.
On July 6, 2010 Respondent filed his ``Requests for Admissions and
Requests for Production of Documents.'' These requests were followed by
the parties' ``Stipulation to Stay Discovery Response Deadlines and
Extending Remaining Deadlines'' and on July 30, 2010, the undersigned
issued an Amended Scheduling Order extending the deadlines.
That Order was followed by another Order on August 20, 2009 setting
September 3, 2009 as the deadline for BIS to respond to Respondent's
``Requests for Admission and Request for Production of Documents'' and
for Respondent to respond to BIS's ``Interrogatories and Requests for
Production of Documents.''
Respondent did not file responsive pleadings pursuant to the August
20, 2009 Order but instead filed ``Renewed Objections to BIS's
Interrogatories and Requests for Production of Documents'' on September
3, 2009. Respondent's Objections are as follows:
1. The Order Setting Deadlines and Compelling Discovery
Responses on BIS' Motion to Set Deadline and Compel Discovery
Responses is null, void, and of no effect because it was issued by
the Administrative Law Judge in manifest violation of Respondent's
constitutional right to due process, as it was issued on the same
day said motion was served on Respondent and even before Respondent
received said motion which deprived Respondent of notice and
opportunity to be heard required by the due process clause of the
Constitution of the United States.
2. The Order Setting Deadlines and Compelling Discovery
Responses on BIS's Motion to Set Deadline and Compel Discovery
Responses is null, void, and of no effect because it was issued by
the Administrative Law Judge in violation of the pertinent
responses.
3. The Order Setting Deadlines and Compelling Discovery
Responses on BIS's Motion to Set Deadline and Compel Responses is
null, void, and of no effect because it implicitly required that
responses be sent ``via facsimile and mail'', while pursuant to 15
CFR 766.5(b) service by facsimile is deemed acceptable but could be
in no way required by the Regulations.
4. The Order Setting Deadlines and Compelling Discovery
Responses on BIS's Motion to Set Deadline and Compel Discovery
Responses is null, void, and of no effect because it implicitly
required that responses be ``produced * * * to Eric Clark'' at a
specified address, while 15 CFR 766.9(b) provides for ``requests for
production of documents for inspection and copying'', and has no
provision for such responses to be provided by other means.
5. The Order Setting Deadlines and Compelling Discovery
Responses on BIS's Motion to Set Deadline and Compel Discovery
Responses is null, void, and of no effect because this tribunal has
no subject matter jurisdiction over respondent, as the general
denial order imposed against Yuri Montgomery was void because BIS
did not have statutory authority to impose such an order against
Yuri Montgomery due to EAA being in lapse when said denial order was
issued and/or when the alleged violations by Yuri Montgomery
occurred.
6. The Order Setting Deadlines and Compelling Discovery
Responses on BIS's Motion to Set Deadline and Compel Discovery
Responses is null, void, and of no effect because this
Administrative Law Judge had no jurisdiction to issue said Order, as
his assignment in this matter was made in violation of the
Administrative Procedure Act, 5 U.S.C. Section 3344, and the
regulations issued under said statute, 5 CFR 930.213.
Therefore, on September 4, 2009, the undersigned issued an Order
for BIS to file its evidence in support of charges by September 30,
2009 as previously provided. The undersigned overruled the above
Objections in the Memorandum and Order of November 10, 2009.
On September 18, 2009, BIS requested a temporary stay in the
Scheduling Order and proposed a revised Scheduling Order and, on the
same day, filed a ``Motion for Summary Decision on Charges Two, Six,
Nine, and Thirteen.''
On September 23, 2009, the undersigned issued an Order temporarily
staying the July 30, 2009 Scheduling Order pending resolution of the
Agency's ``Motion for Summary Decision on Charges Two, Six, Nine, and
Thirteen.'' The Order also set October 16, 2009 for Respondent to
Answer the Agency's Motion for Summary Decision and fifteen (15) days
thereafter as the date for the BIS to Reply.
On October 13, 2009, Respondent filed his ``Motion for an Immediate
Temporary Stay of Further Running of the Court's Scheduling Order
Issued on September 23, 2009, Pending the Outcome of Respondent's
Motion that Requests for Admission be Deemed Admitted and that the
Matters Therein Be Conclusively Established and Motion to Compel
Production of Documents.'' He also filed his ``Motion That Requests for
Admission be Deemed Admitted and That the Matters Therein be
Conclusively Established,'' and his ``Memorandum of Points and
Authorities in Support of Respondent's Motion That Requests for
Admission be Deemed Admitted and That the Maters Therein be
Conclusively Established.'' Further, he filed ``Respondent's Motion to
Compel Production of Documents,'' and ``Memorandum of Points and
Authorities in Support of Respondent's Motion to Compel Production of
Documents.''
On October 15, 2009, BIS filed its Opposition to Respondent's above
motions and on the same day the undersigned issued an Order Denying
Respondent's Motion for Immediate Stay and further ordered Respondent
to Answer the Motion for Summary Decision on Charges Two, Six, Nine,
and Thirteen by October 16, 2009, as previously ordered. The Order
further stated that the parties are to submit copies of their
respective discovery requests by October 26, 2009 so that the Judge can
determine if enforcement pursuant to Section 766.9(d) of the
regulations is appropriate.
On October 16, 2009 the undersigned received the ``Declaration of
Yuri Montgomery in Opposition to BIS's Motion for Summary Decision as
to Charges Two, Six, Nine, and Thirteen,'' his ``Memorandum of Points
and Authorities in Opposition to BIS's Motion for Summary Decision as
to Charges Two, Six, Nine, and Thirteen,'' and ``Declaration of Sanja
Milic in Opposition to BIS's Motion for Summary Decision as to Charges
Two, Six, Nine, and Thirteen,'' all dated October 12, 2009.
Respondent's ``Memorandum of Points and Authorities in Opposition to
BIS's Motion for Summary Decision as to Charges Two, Six, Nine, and
Thirteen'' contain twelve (12) affirmative defenses, some of which are
the same as Respondent's affirmative defenses included with his Answer,
Corrected Answer, and ``Renewed Objections to BIS's Interrogatories and
Requests for Production of Documents'' of September 3, 2009. His
objections and affirmative defenses to BIS's Motion for Summary
Decision as to Charges Two, Six, Nine, and Thirteen are as follows:
1. Subject matter jurisdiction is lacking herein over Yuri
Montgomery because the general Denial Order imposed against Yuri
Montgomery which he is alleged to have violated was null, void, and
of no effect ab initio because BIS did not have statutory authority
to impose such an order against Yuri Montgomery.
2. This Court lacks jurisdiction to adjudicate this proceeding
because the purported assignment of the Administrative Law Judge has
been made in violation of the statute and regulations regulating
assignment of administrative law judges to BIS's civil penalty
proceedings.
3. This proceeding is defective and should be dismissed because
it has been filed in violation of the prohibition against Double
Jeopardy in the Constitution of the United States.
[[Page 82481]]
4. Subject matter jurisdiction is lacking herein over Yuri
Montgomery because the BIS's claims are not colorable, i.e., they
are both, immaterial and made solely for the purpose of obtaining
jurisdiction over Yuri Montgomery and are wholly insubstantial and
frivolous.
5. Summary adjudication as to each of the charges should be
denied because, based on the evidence presented by Respondent,
disputed issues of material fact are present as to each of the
issues presented by the Motion for Summary Adjudication.
6. The charges sought by BIS to be adjudicated by the instant
Motion should be dismissed as barred by the Double Jeopardy
provision in the Constitution of the United States.
7. The charges sought by BIS to be adjudicated by the instant
Motion should be dismissed as barred by the doctrine of collateral
estoppel.
8. The charges sought by BIS to be adjudicated by the instant
Motion should be dismissed as barred by the doctrine of res
judicata.
9. The monetary penalty proposed by BIS should not be applied as
violative of the Constitutional prohibition against cruel and
unusually punishments.
10. No denial order may be imposed upon Respondent, as IEEPA
provides no statutory authorization for such penalty.
11. The charges of ``acting with knowledge of violation'' should
be dismissed because they are a) duplicitous as interpreted by BIS
and b) unauthorized by IEEPA as amended in 2007.
12. The penalty enhancement under IEEPA, as retroactively
amended in 2007, cannot be applied herein because it is violative of
the Ex Post Facto clause of the Constitution of the United States.
On October 20, 2009, the undersigned received Respondent's
``Objections to Qualifications of Administrative Law Judges and All
Members of the Bureau of Industry and Security Decisionmaking Body.''
Among other things, Respondent claims that he has filed a civil suit
against various BIS officials and members of this Court. To date, the
undersigned has not been served with the Complaint nor has any other
Coast Guard Administrative Law Judge. The undersigned also received
``Respondent's Declaration in Support of Objections to Qualifications
of ALJs and all Other Members of Bureau of Industry and Security
Decisionmaking Body.''
On October 26, 2009, BIS submitted its response to the Order of
October 15, 2009 directing the parties to submit copies of their
respective discovery requests by October 26, 2009 so that the Judge can
determine whether enforcement pursuant to Section 766.9(d), noted
above, is appropriate. BIS claimed that Respondent did not answer or
produce any documents in response to BIS's Interrogatories and Requests
for Production of Documents despite being ordered to do so. BIS also
filed a Supplemental Submission on October 26, 2009 in response to the
October 15, 2009 Order stating Respondent's reply papers to BIS's
Motion for Summary Decision on Charges Two, Six, Nine, and Thirteen
included material that ``clearly is responsive to BIS's discovery
requests and thus should have been, but was not, provided to BIS, first
in response to its discovery requests and then, most importantly, in
response to the Court's Order of August 20, 2009.'' The items in
question that Respondent did not disclose in response to BIS's Request
for Production of Documents is a Declaration from Sanja Milic of Micei
and a purported e-mail from Range Systems.
On November 2, 2009, BIS filed its Reply to Respondent's Opposition
to Motion for Summary Decision and on November 6, 2009, filed its
Response to Respondent's Objection to the Qualifications of
Administrative Law Judges and All Other Members of Bureau of Industry
and Security Decisionmaking Body.
The November 10, 2009 Memorandum and Order
On November 10, 2009, the undersigned issued a Memorandum and Order
disposing of numerous motions that the parties submitted on pre-
decisional issues. In summary, the Memorandum and Order found that U.S.
Coast Guard Administrative Law Judges have jurisdiction to adjudicate
cases for BIS involving export control regulations; that Respondent is
not entitled to 20 days notice prior to service of a discovery request;
that the deadline to complete discovery is not the deadline to make
discovery requests; that documents are due on the dates specified, not
simply mailed on the due dates; that Respondent's Requests for
Admissions to BIS which he claims were mailed on July 6, 2009 but not
received until July 13, 2009, are Not Timely; and that BIS timely filed
its Answers to Respondent's Requests for Admission and Requests for
Production of Documents on September 3, 2009.
The November 10, 2009 Memorandum and Order further Overruled the
following numbered Respondent's objections: (1) That the undersigned's
Order Setting Deadlines and Compelling Discovery Responses is null,
void, and of no effect; (2) that the above-referenced Order is null,
void, and of no effect because it was issued by the Administrative Law
Judge in violation of minimum notice provisions required by 15 CFR
766.9(b) which is reasonably interpreted by Respondent to require at
least a 20 day notice for service of the pertinent responses; (3) that
the above-referenced Order is null, void, and of no effect because it
implicitly requires that responses be sent via facsimile and mail while
pursuant to 15 CFR 766.5(b) service by facsimile is deemed acceptable
but could not be required by the Regulations; (4) that the above-
referenced Order is null, void, and of no effect because it implicitly
requires that responses be produced to Eric Clark at a specified
address, while 15 CFR 766.9(b) provides for requests for production of
documents for inspection and copying; (5) that the above-referenced
Order is null, void, and of no effect because this tribunal has no
subject matter jurisdiction; (6) that the above-referenced Order is
null, void, and of no effect because the Administrative Law Judge had
no jurisdiction to issue said Order as his assignment in this matter
was made in violation of the Administrative Procedure Act, 5 U.S.C.
Section 3344, and the regulations issued under said statute, 5 CFR
930.213.
The November 10, 2009 Memorandum and Order stayed the previous
Order of September 4, 2009 directing BIS to submit its evidence in
support of its charges by September 30, 2009 pending adjudication of
BIS's Motion for Summary Decision on Charges Two, Six, Nine, and
Thirteen. The November 10, 2009 Memorandum and Order Denied
Respondent's October 13, 2009 Motion that Requests for Admission be
Deemed Admitted and That Matters Therein be Conclusively Established.
The November 10, 2009 Memorandum and Order also Granted Respondent's
request for production of certain Memoranda of Agreement and Office of
Personnel Management letters of authorization establishing the
jurisdiction of U.S. Coast Guard Administrative Law Judges. It further
stated that the undersigned will make a determination or enter an Order
deemed reasonable and appropriate in accordance with 15 CFR 766.9(d) on
the issue of Respondent's continued refusal to comply with BIS's
Interrogatories and Requests for Production of Documents despite
previous Orders to do so.
The November 10, 2009 Memorandum and Order referenced BIS's October
26, 2009 Response to the October 15, 2009 Order wherein it claimed
Respondent's Answer to BIS's Motion for Summary Decision on Charges
Two, Six, Nine, and Thirteen contained information and references to
documents that Respondent is relying on which should have been
disclosed in BIS's discovery requests but were not disclosed. BIS's
Response requested
[[Page 82482]]
Respondent's defense number 16 and any argument or purported evidence
related to that defense be stricken in accordance with 15 CFR 766.9(d)
but recommended that the decision be postponed until after ruling on
the Motion for Summary Decision on Charges Two, Six, Nine, and Thirteen
because that Motion can be resolved without discovery sanctions.\12\
Therefore, the undersigned ruled that any decision on discovery
sanctions will be made after the decision on BIS's Motion for Summary
Decision.
---------------------------------------------------------------------------
\12\ Respondent's defense number 16 in his ``Declaration of Yuri
Montgomery in Opposition to BIS's Motion for Summary Decision as to
Charges Two, Six, Nine, and Thirteen'' states, ``[w]hen I contacted
Maintenance Products, Inc. to inquire of the availability of the
products which are listed in the [sic] charges 6 and 13 of the
Charging Letter herein, I was informed by Maintenance Products, Inc.
that all of the products Micei was interested in purchasing were
made in China and were very cheap and I did not even inquire of
their prices.'' Affirmative defense No. 16 in Respondent's
``Corrected Answer'' is, ``[t]he goods subject to the Charging
Letter are of foreign origin and are therefore not subject to the
prohibitions of the purported Denial Order.'' Affirmative defense
No. 11 in his original Answer is, ``[t]he goods subject to the
Charging Letter are of foreign origin and are therefore not subject
to the Charging Letter.''
---------------------------------------------------------------------------
On November 16, 2009, the undersigned Denied the Motion for Summary
Decision on Charges Two, Six, Nine, and Thirteen finding that a genuine
issue of material fact exists concerning whether the items in the
Charging Letter are ``the foreign-produced direct product of U.S.-
origin technology.'' The undersigned also found Respondent's claim that
BIS had no statutory authority to issue the Denial Order because the
EAA was in lapse is without merit.
On November 18, 2009, the undersigned issued an ``Order Denying
Objections to Qualifications of Administrative Law Judges and All Other
Members of Bureau of Industry and Security Decisionmaking Body''
finding that Respondent's bare claims and use of other, unrelated and
unsubstantiated allegations pertaining to another agency fail to
overcome the presumption of honesty and integrity that accompanies
administrative adjudicators. Among those arguments the undersigned
rejected as being unsupported by any evidence was Respondent's bare
claim that the undersigned and BIS initiated this administrative
proceeding in retaliation for Respondent's prevailing in a BIS criminal
proceeding.
On November 20, 2009, the undersigned issued a Scheduling Order
setting January 15, 2010 as the deadline for BIS to file evidence in
support of charges; February 16, 2010 as the deadline for Respondent to
reply and file evidence in support of his defenses; and March 3, 2010
as the deadline for BIS to file its rebuttal.
On January 15, 2010, BIS filed its Notice of Withdrawal of Charge
Ten citing Section 766.3(a) of the regulations which provides that
``BIS may unilaterally withdraw charging letters at any time, by
notifying the respondent and the administrative law judge.'' The Notice
further states, ``[i]n authorizing BIS to unilaterally withdraw all of
the charges in a charging letter, Section 766.3(a) also at least
impliedly authorizes BIS to unilaterally withdraw fewer than all of the
charges in a charging letter by providing notice to the presiding
administrative law judge and the respondent in the matter.'' The
undersigned views this interpretation as reasonable and consistent with
procedures followed by other agencies.
The undersigned received BIS's ``Submission of Evidence in Support
of Charges'' on January 15, 2010 and its separate ``Memorandum on
Evidence Submitted in Support of Charges.''
On February 16, 2010, Respondent filed his ``Application for
Extension of Time to File a Reply and Evidence in Support of his
Defenses'' and on February 19, 2010, Respondent filed his ``Emergency
Application for Extension of Time to File a Reply and Evidence in
Support of his Defenses'' asking that the deadline be extended from
February 16, 2010 to February 24, 2010.
On February 22, 2010, BIS filed its ``Response to Respondent's
Applications for Extension of Time to File a Reply and Evidence in
Support of his Defenses.'' In its Response, BIS noted that it has been
five (5) months since Montgomery was ordered to respond to BIS's
discovery requests and, as noted in the September 4, 2009 Order,
Respondent's intentional refusal to comply is evident. BIS asked that
if Respondent's request is extended to February 24, 2010, then the time
for BIS to file its reply ought to be extended to March 16, 2010.
On February 23, 2010, the undersigned issued an ``Order Granting
Respondent's Request for an Extension of Time to File Reply and
Evidence in Support of His Defenses'' to February 24, 2010 and that
BIS's reply is due March 16, 2010.
On February 24, 2010, Respondent filed his ``Objections to Evidence
Submitted by BIS in Support of the Charges in its Charging Letter'' and
on February 25, 2010, he filed his ``Memorandum in Defense to Evidence
Submitted by BIS in Support of the Charges in its Charging Letter.''
Also on February 25, 2010 Respondent filed his ``Motion for Immediate
Stay of This Civil Penalty.'' His reason for an immediate stay was to
await a decision from the DC Circuit in Micei International v. United
States, Nos. 09-1155 and 09-1186, and ``Respondent's intention to file
suit in U.S. District Court to enjoin this civil penalty proceeding and
transfer this matter to the U.S. District Court due to futility of this
proceeding and institutional bias as has been continuously demonstrated
throughout this proceeding and the proceeding before this tribunal in
the matter of Micei International.''
Respondent's ``Objections to Evidence Submitted by BIS in Support
of the Charges in its Charging Letter'' lists two Objections: (1) That
he objects to BIS's unsworn, unverified, unsubstantiated, and
unauthenticated ``evidence'' supporting its charges; and (2) that he
objects to the letter submitted to BIS as Exhibit I, as such letter
does not constitute evidence but is inadmissible self-serving legal
opinion.
Respondent's ``Memorandum in Defense to Evidence Submitted by BIS
in Support of the Charges in its Charging Letter'' lists the following
eleven (11) affirmative defenses:
1. Subject matter jurisdiction is lacking herein over Yuri
Montgomery because the general Denial Order imposed against Yuri
Montgomery which he is alleged to have violated was null, void, and
of no effect ab initio because BIS did not have statutory authority
to impose an order against Yuri Montgomery at the time said Denial
Order was issued.
2. This Court lacks jurisdiction to adjudicate this proceeding
because the purported assignment of the Administrative Law Judge
herein has been made in violation of the statute and regulations
regulating assignment of administrative law judges to BIS's civil
penalty proceedings.
3. This proceeding is defective and should be dismissed because
it has been filed in violation of the prohibition against Double
Jeopardy in the Constitution of the United States.
4. Subject matter jurisdiction is lacking herein over Yuri
Montgomery because the BIS's claims are not colorable, i.e., they
are both immaterial and made solely for the purpose of obtaining
jurisdiction over Yuri Montgomery and are wholly insubstantial and
frivolous.
5. The charges sought by BIS to be adjudicated by the instant
Motion should be dismissed as barred by the doctrine of collateral
estoppel.
6. The charges sought by BIS to be adjudicated by the instant
Motion should be dismissed as barred by the doctrine of res
judicata.
7. The monetary penalty proposed by BIS should not be applied as
violative of the Constitutional prohibition against cruel and
unusual punishments.
[[Page 82483]]
8. No denial order may be imposed upon Respondent, as IEEPA
provides no statutory authorization for such penalty.
9. The charges of ``acting with knowledge of violation'' should
be dismissed because they are a) duplicitous as interpreted by BIS
and b) unauthorized by IEEPA as amended in 2007.
10. The penalty enhancement under IEEPA, as retroactively
amended in 2007, cannot be applied herein because it is violative of
the Ex Post Facto clause of the Constitution of the United States.
11. All of the charges in the Amended Charging Letter should be
dismissed because BIS has failed to allege in said Charging Letter
and prove that any of the subject products were not ``the foreign-
produced direct product of U.S.-origin technology'' which has been
expressly exempted from the prohibitions of the Denial Order.
On March 5, 2010, BIS filed its Opposition to Respondent's Motion
for Immediate Stay and on the same day the undersigned issued an Order
denying Respondent's Motion. However, Respondent eventually received
his requested Stay on March 16, 2010 when the parties submitted their
``Stipulation to Stay Proceedings and Extend Time so that the Parties
Can Engage in Settlement Negotiations.'' Among other things, the
parties asked for a thirty (30) day stay. On that same day, the
undersigned issued an Order Granting the Stipulated Motion for a thirty
(30) day stay and also directed BIS to file its rebuttal to
Respondent's evidence in support of his defenses ten (10) days after
the stay terminates.
On April 22, 2010, BIS filed its ``Rebuttal to Respondent's
Objections to Evidence and His Memorandum in Defense to Evidence
Submitted by BIS.''
As previously ordered on June 5, 2009, this matter is adjudicated
on the record since neither party has demanded a hearing in writing.
BIS has submitted its evidence in support of the charges in the
Charging Letter consisting of approximately fifty (50) exhibits as well
as its ``Memorandum on Evidence Submitted in Support of Charges.''
Respondent submitted his ``Memorandum in Defense to Evidence Submitted
by BIS in Support of its Charges in the Charging Letter,'' and BIS
submitted its ``Rebuttal to Respondent's Objections to Evidence and His
Memorandum in Defense to Evidence Submitted by BIS.''
Attachment B
List of Exhibits
Agency Exhibits
Exhibits Supporting All Charges
A. Charging Letter of July 1, 2008 with copy of signed and dated
certified mail receipt.
B. Denial Order of September 11, 2000 as published in the Federal
Register of September 22, 2000, 65 FR 57,313, 57314.
C. BIS Requests for Admission.
D. Respondent's Response to BIS Requests for Admission.
E. Copy of BIS's Requests for Admission combined with Respondent's
corresponding responses.
F. September 13, 2000 Letter to Respondent from Eileen Albanese,
Director, Office of Exporter Services, Bureau of Export Administration
(subsequently renamed Bureau of Industry and Security).
G. October 24, 2000 Letter from Respondent to under Secretary
Reinsch.
H. December 21, 2000 Letter from Under Secretary Reinsch to
Respondent.
I. August 21, 2009 Certified BIS Licensing Determination.
J. Respondent's Declaration filed In the Matter of Micei
International (Docket No. 08-BIS-0005).
K. [Blank].
Exhibits Supporting Charges 1 and 8
L. June 9, 2003 e-mail message from Respondent to R. Uber at Hi-Tec
Retail, Inc. with the subject line ``New Order (received today).''
M. June 18, 2003 invoice from Hi-Tec Retail, Inc.
N. June 17, 2003 e-mail message from Respondent to R. Uber at Hi-
Tec Retail, Inc. with the subject line ``Fw: Attn: Regina.''
O. June 24, 2003 e-mail message from R. Uber to Respondent with the
subject line ``RE: C/C Info for Orders.''
P. June 24, 2003 e-mail message from S. Milic at Micei
International to R. Uber at Hi-Tec Retail, Inc. with the subject line
``Order status.''
Q. June 24, 2003 Hi-Tec receipt.
R. July 2, 2003 Kuehne & Nagel invoice for the shipment of ``Magnum
boots'' from Hi-Tec Sports to Micei International.
S. July 2, 2003 Kuehne & Nagel air waybill for the shipment of
``Magnum boots'' from Hi-Tec Sports to Mecei International.
Evidence Supporting Charges 2 and 9
T. Series of 3 e-mail messages, the first on July 8, 2003 from
Respondent to Steve Thomas at Range Systems, the second on July 11,
2003 from Steve Thomas to Respondent, and the third on July 15, 2003
from Respondent to Steve Thomas and Mitch Petrie at Range Systems.
U. July 15, 2003 Range Systems invoice from the sale of two gun
clearing devices to Micei International, Inc./Yuri Montgomery.
V. July 15, 2003 Range systems sales order billing Respondent for
the purchase of two gun clearing devices.
W. July 18, 2003 air waybill issued to Range Systems by Kuehne and
Nagel.
X. July 18, 2003 Kuehne & Nagel invoice for the shipment of
``Guardian Clearing'' from Range Systems to Micei International.
Y. October 24, 2008 facsimile from Range Systems to Special Agent
Poole of annotated e-mail stating that the gun clearing devices were
manufactured in the United States.
Z. November 2, 2009 Declaration of Steve Thomas.
AA. October 29, 2009 Declaration of Tiffany Godfrey.
Evidence Supporting Charge 3
BB. August 5, 2003 e-mail message from Respondent to F. Corsi at
Galls, Inc., with the subject ``Fw: Shoe/Boot Request (Attn: Francesca
Corsi).''
Evidence Supporting Charges 4 & 11
CC. February 24, 2003 e-mail message from K. Taylor at Galls, Inc.
with the subject ``Lead for you * * *''
DD. August 5, 2003 e-mail message Respondent to F. Corsi at Galls,
Inc. with the subject ``Payment of $2562.44.''
EE. September 5, 2003 Kuehne & Nagel air waybill for the shipment
of ``Oxford athletic shoes'' and ``Remote strobe tubes'' from Galls,
Inc. to Micei International.
FF. August 8, 2003 Ekopak invoice for the shipment of ``Oxford
athletic shoes'' and ``Remote strobe tubes'' from Galls, Inc. to Micei
International.
GG. September 5, 2003 Kuehne & Nagel invoice for the shipment of
``Oxford athletic shoes'' from Galls, Inc. to Micei International.
Evidence Supporting Charges 5 & 12
HH. July 31, 2003 e-mail message from Respondent to A. McCabe at
Save On Promotional Products, Inc. with the subject ``Fw: Polo/golf
Shirts by TriMountain 138 Navy Blue (ATTN: MS. ANNE).''
II. August 1, 2003 Save On Promotional Products, Inc. invoice.
JJ. August 1, 2003 Save On Promotional Products, Inc. credit card
authorization form completed by Respondent.
KK. August 4, 2003 e-mail message from Respondent to A. McCabe Art
Save On Promotional Products, Inc. with the subject ``info for text on
boxes/paperwork.''
LL. August 4, 2003 Mountain Gear Corp. sales order.
MM. August 13, 2003 Kuehne & Nagel air waybill for the shipment of
``accessories'' from Mountain Gear Corp. to Micei International.
[[Page 82484]]
NN. August 13, 2003 Kuehne & Nagel invoice for the shipment of
``accessories'' from Mountain Gear Corp. to Micei International.
Evidence Supporting Charges 6 & 13
OO. September 9, 2003 picking ticket from Maintenance Products,
Inc.
PP. September 9, 2003 credit card receipt from Maintenance
Products, Inc.
QQ. September 9, 2003 invoice from Maintenance Products, Inc.
RR. September 15, 2003 air waybill issued to first Chain Supply
Company, a Division of Maintenance Products, Inc. by Kuehne and Nagel.
SS. September 15, 2003 invoice from Kuehne and Nagel, Inc./from Elk
Grove Village, IL, to Kuehne and Nagel D.O.O.E.L. in Skipje, Macedonia.
TT. August 27, 2009 Affidavit of Gary Jones.
UU. October 28, 2003 declaration of Gary Jones.
Evidence Supporting Charges 7 & 15
VV. October 8, 2003 e-mail message from Respondent to F. Corsi at
Galls, Inc. with the subject line ``Payment for order
25473620/017--pls release/ship ASAP.''
WW. October 8, 2003 e-mail message from Respondent to F. Corsi to
F. Corsi at Galls, Inc. with the subject ``VISA Authorisation.''
XX. October 16, 2003 Estes Express Lines bill of lading.
Respondent's Exhibits
Respondent offered the Declaration from Sanja Milic of Micei and a
purported e-mail from Range Systems. Since Respondent had not complied
with Discovery, the Administrative Law Judge struck both proposed
exhibits from the record in accordance with 15 CFR 766.9(d).
Attachment C
Rulings on Proposed Findings of Fact
Agency's Proposed Findings of Fact
Since neither party filed a demand for hearing, the Administrative
Law Judge adjudicated this matter on the record in accordance with 15
CFR 766.6(c). The Respondent offered no proposed findings of fact and
conclusions of law and did not dispute any of the Agency's proposed
findings. Instead, Respondent offered many affirmative defenses which
the Administrative Law Judge ruled on in this Recommended Decision and
Order.
The Agency's proposed findings of fact submitted in support of the
Charges in the Charging Letter are reliable, probative, and credible.
They prove by the preponderance of the evidence that Respondent
committed the violations alleged in the Charging Letter. Therefore,
they are all Accepted and Incorporated into the Recommended Decision.
The footnotes are accepted but not necessarily incorporated herein. The
Agency's Proposed Findings of Fact are as follows:
Facts Relating to All Charges
1. The Denial Order issued against Montgomery on Sept. 11, 2000.
Exh. B.
2. The Denial Order was in effect at all times from September 11,
2000 through and including January 22, 2009. Exh. B; Exh. E at Request/
Response No. 2.
3. Montgomery received actual notice of the Denial Order via a
letter on or about September 13, 2000 from BIS informing him of, and
including a copy of, the Denial Order. Exh. F; see also Exh. E at
Request/Response No. 3.
4. The Denial Order was published in the Federal Register on
September 22, 2000 (65 FR 57,313). Exh. B.
5. The following month, by letter dated October 24, 2000,
Montgomery wrote to then-Under Secretary William Reinsch requesting
reinstatement of his ``export privileges denied on September 11,
2000.'' Oct. 24, 2000 Letter, attached as Exh. G hereto; see also Exh.
E at Request/Response No. 5.
6. Montgomery's request to reinstate his export privileges was
denied by Under Secretary Reinsch on December 21, 2000. Dec. 12, 2000
Letter, attached as Exh. H hereto.
7. Montgomery had notice of the Denial Order no later than October
24, 2000, he knew that it was in effect at all times from September 11,
2000 until January 22, 2009, and he knew that he was subject to the
Denial Order at the time of each of the transactions at issue. Exh. E
at Requests/Responses Nos. 2, 5, 7m, 8m, 9h, 10m, 11m, 12m, and 13m.
8. Paragraph I of the Denial Order states that ``Until January 22,
2009, Yuri I. Montgomery, also known as Yuri I. Malinkovski, 518 Howard
Avenue, N.E., Olympia, Washington 98506, 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 * * *.'' Exh. B, at Paragraph I.
9. The Denial Order specifically listed as non-exclusive examples
of prohibited participation, ``[c]arrying 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 in any other activity subject to the Regulations * * *.'' Exh. B.
(Emphasis added.)
10. The Denial Order similarly provided specifically that
Montgomery was prohibited from ``[b]enefiting 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 in any other
activity subject to the Regulations.'' Exh. B.
11. Montgomery encouraged Micei ``to use my credit card for Micei
purchases as much as possible as it would allow me to accumulate United
Airline miles through the use of my United Visa credit card * * *.''
Oct. 12, 2008 Montgomery Declaration, at ] 12.
12. On several occasions, Montgomery ``made inquiries for Micei of
the availability on some of the products'' purchased for Micei. Id., at
] 14.
Additional Facts Relating to Charges 1 and 8
13. On or about June 9, 2003, Montgomery placed an order with the
Modesto, CA, division of Hi-Tec Retail, Inc. (``Hi-Tec''), a
manufacturer and retailer of footwear, for 61 pair of Magnum boots. See
June 9, 2009 e-mail message from Montgomery to Hi-Tec, attached as Exh.
L hereto; June 18, 2003 invoice from Hi-Tec, attached as Exh. M hereto;
Exh. E at Request/Response No. 7a.
14. Hi-Tec's initial attempt to charge Montgomery's credit card for
the order was declined by the issuing bank, causing R. Uber at Hi-Tec
to seek assistance from Montgomery. See June 24, 2003 e-mail message
from R. Uber to Montgomery, attached as Exh. O hereto.
15. Because Montgomery had just arrived in Macedonia, he
subsequently informed Hi-Tec through Sanja Milic (an employee of Micei)
that the issue with his credit card had been resolved. June 24, 2003 e-
mail message from S. Milic to R. Uber, attached as Exh. P hereto.
16. With the payment issue resolved, Montgomery paid for the boots
with his credit card. Hi-Tec receipt, attached as Exh. Q hereto; Exh. E
at Request/Response No. 7b.
17. Montgomery was reimbursed by Micei for the purchase of the
boots. See Exh. E at Request/Response No. 7i.
18. The boots were intended to be exported to Macedonia. See June
17, 2003 e-mail from Montgomery to R. Uber, attached as Exh. N hereto;
freight forwarder Kuehne & Nagel invoice, attached as Exh. R hereto;
Kuehne &
[[Page 82485]]
Nagel air waybill, attached as Exh. S hereto; Exh. E at Request/
Response No. 7e.
19. The boots were exported from the United States to Macedonia on
or about July 2, 2003. See Exh. R; Exh. S.
20. Montgomery benefitted from the purchase of the boots, stating
that, ``[t]he charges made with my credit card directly attributable to
the `violations' alleged against Micei in the Charging Letter herein
amount to approximately $15,000, which allowed me to accumulate
approximately $15,000 miles with United Airlines.'' \13\ Montgomery
Declaration attached as Exh. J hereto, at ] 18; see also Exh. E at
Request/Response No. 7j.
---------------------------------------------------------------------------
\13\ Montgomery's statement concerning the $15,000 in airline
frequent flier miles relates to all seven transactions alleged in
the Charging Letter.
---------------------------------------------------------------------------
21. The boots are items subject to the Regulations. Section
734.3(a); see also BIS Licensing Determination, attached as Exh. I
hereto.
22. At the time of the transaction, Montgomery knew he was subject
to the Denial Order. See Exh. E at Request/Response No. 7m.
Additional Facts Relating to Charges 2 and 9
23. At Micei's request, Montgomery contacted Range Systems, a New
Hope, MN-based manufacturer of firing range equipment, by telephone
``to inquire of the availability and price for their product * * *.''
Oct. 12, 2008 Montgomery Declaration, at ] 20.
24. In a July 8, 2003 e-mail inquiry Montgomery sent to Range
Systems, Montgomery, describing himself as Micei's regional office,
stated that ``Currently we have one [bid] which calls for various
products including 5-10 clearing traps such as your RRI Guardian (GDN)
model. * * * Please quote the price of your RRR GUARDIAN (GDN) model
and e/m me a complete price list if possible * * *'' Series of e-mail
messages between Montgomery and S. Thomas at Range Systems, attached as
Exh. T hereto.
25. Range Systems provided the requested price quote in a reply e-
mail sent on July 11, 2003. Id.
26. Montgomery placed an order for two of the gun clearing devices
via an e-mail sent on July 15, 2003. Id.; see also Range Systems
invoice, attached as Exh. U hereto; Range Systems sales order, attached
as Exh. V hereto; Exh. E at Request/Response No. 8a.
27. Montgomery paid Range Systems, Inc. for the gun clearing
devices with his VISA credit card. Exh. T; see also Exh. E at Request/
Response No. 8b.
28. In his e-mail, Montgomery directed Range Systems to export the
gun clearing devices to Micei in Macedonia and also requested that
Range Systems e-mail shipping information concerning the weight and
size of the boxes to him, and to two representatives (Iki Malinkovski
and Sanja Milic) of Micei. Exh. T.
29. Montgomery was reimbursed by Micei for the purchase of the gun
clearing devices. Exh. E at Request/Response No. 8i.
30. The gun clearing devices were intended to be, and were in fact,
exported from the United States to Macedonia on or about July 18, 2003.
See Exh. T; see also Air waybill issued to Range Systems, attached as
Exh. W hereto; Kuehne and Nagel invoice, attached as Exh. X hereto;
Exh. E at Request/Response No. 8e.
31. The gun clearing devices were manufactured in the United
States. See Oct. 24, 2008 facsimile from Range Systems, attached as
Exh. Y hereto. Range Systems' director of sales, who sent the Oct. 2008
facsimile to BIS, emphatically confirmed the country of origin for the
gun clearing devices in a subsequent declaration, stating that each of
the components used to manufacture the devices are of U.S. origin and
that ``[t]he Guardian clearing device has always been manufactured by
Range Systems in Minnesota.'' Nov. 2, 2009 declaration of S. Thomas,
attached as Exh. Z hereto; see also Oct. 29, 2009 declaration of T.
Godfrey, attached as Exh. AA hereto.
32. The gun clearing devices are items subject to the Regulations.
Section 734.3(a); see also BIS Licensing Determination, attached as
Exh. I hereto.
33. At the time of the transaction, Montgomery knew he was subject
to the Denial Order. See Exh. E at Request/Response No. 8m.
34. Montgomery benefitted from the purchase of the gun clearing
devices. See supra text accompanying note 8; See also Exh. E at
Request/Response No. 8j.
Additional Facts Relating to Charge 3
35. On August 5, 2003, Montgomery sent an e-mail to Galls, Inc.
(``Galls''), a Lexington, KY-based distributor of police and military
equipment and apparel, identifying himself as Micei's U.S. operations
and requesting a price quotation for 10,800 pair of shoes and boots.
See Aug. 5, 2003 e-mail message from Montgomery to Francesca Corsi at
Galls, attached as Ex. BB hereto; Exh. E at Request/Response 9a.
36. The boots and shoes were intended for export from the United
States to Macedonia. In the e-mail requesting a quotation, Montgomery
states that ``the samples need to have arrived at our HQ in Macedonia
by [August 14].'' Exh. BB; see also Exh. E at Request/Response 9d.
37. Montgomery carried on negotiations concerning the shoes and
boots, stating in an e-mail to Galls that Micei ``will be putting up
the performance bond at 20% in cash. Therefore, please make sure you
quote the best possible price you can so we can win this one, too.''
Exh. BB.
38. The boots and shoes are items subject to the Regulations.
Section 734.3(a); see also BIS Licensing Determination, attached as
Exh. I hereto.
39. At the time the request for quotation was made, Montgomery knew
he was subject to the Denial Order. See Exh. E at Request/Response No.
9m.
Additional Facts Relating to Charges 4 and 11
40. Micei's account number at Galls is 25473620. Feb. 24, 2003 e-
mail from K. Taylor at Galls to F. Corsi, attached as Exh. CC hereto.
41. On or about August 5, 2003, Montgomery contacted Galls to pay
for a previously-placed order--order number 25473620/016. See Aug. 5,
2003 e-mail from Montgomery to F. Corsi, attached as Exh. DD hereto.
42. The items in that order number consist of shoes and remote
strobe tubes.\14\ See Kuehne & Nagel air waybill, attached as Exh. EE
hereto; see also Ekopak invoice, attached as Exh. FF hereto.
---------------------------------------------------------------------------
\14\ Remote strobe tubes are components of the flashing
emergency lights found on vehicles such as police cars.
---------------------------------------------------------------------------
43. In Montgomery's August 5, 2003 e-mail to Galls, Montgomery
stated that he was advised to pay for the items with his credit card by
Micei and he provided his credit card information to pay $2,562.44 for
the order. Exh. DD; see also Exh. E at Request/Response No. 10b.
44. Montgomery was reimbursed by Micei for the purchase of the
shoes and remote strobe tubes. See Exh. E at Request/Response No. 10i.
45. The shoes and remote strobe tubes were intended to be exported
from the United States to Macedonia. See Exh. EE; Exh. FF; Exh. GG;
Exh. E at Request/Response No. 10e.
46. The shoes and remote strobe tubes were exported from the United
States to Macedonia on or about September 5, 2003. See Exh. EE; Exh.
GG.
47. The shoes and remote strobe tubes are items subject to the
Regulations. Section 734.3(a); see also BIS Licensing Determination,
attached as Exh. I hereto.
48. At the time of the transaction, Montgomery knew he was subject
to the
[[Page 82486]]
Denial Order. See Exh. E at Request/Response No. 10m.
49. Montgomery benefitted from the purchase of the oxford shoes and
remote strobe tubes. See supra text accompanying note 8; See also Exh.
E at Request/Response No. 10j.
Additional Facts Relating to Charges 5 and 12
50. On July 31, 2003, Montgomery placed an order for 150 shirts
from Save On Promotional Products (``Save On''), located in Sandy, OR.
See July 31, 2003 e-mail from Montgomery to A. McCabe at Save On,
attached as Exh. HH hereto.
51. Upon receiving Montgomery's order, Save On, in turn, ordered
the shirts from its supplier, Tri-Mountain/Mountain Gear Corp., located
in Baldwin Park, CA. Mountain Gear sales order, attached as Exh. LL
hereto.
52. Montgomery ordered the shirts for or on behalf of Micei and the
shirts were intended for export from the United States to Macedonia.
See Exh. HH; Exh. LL; Aug. 4, 2003 e-mail message from Montgomery to A.
McCabe at Save On, attached as Exh. KK hereto; Save On invoice,
attached as Exh. II hereto; Kuehne & Nagel air waybill, attached as
Exh. MM hereto; Kuehne & Nagel invoice attached as Exh. NN hereto; see
also Exh. E at Request/Response No. 11e.
53. Montgomery paid for the order with his credit card. Save On
credit card authorization form, attached as Exh. JJ hereto; Exh. E at
Request/Response No. 11b.
54. Montgomery was reimbursed by Micei for the purchase of the
shirts. See Exh. E at Request/Response No. 11i.
55. The shirts were exported from the United States to Macedonia on
or about Aug. 13, 2003. See Exh. MM; Exh. NN.
56. The shirts are items subject to the Regulations. Section
734.3(a); see also BIS Licensing Determination, attached as Exh. I
hereto.
57. At the time of the transaction, Montgomery knew he was subject
to the Denial Order. See Exh. E at Request/Response No. 11m.
58. Montgomery benefited from the purchase of the shirts. See supra
text accompanying note 8; See also Exh. E at Request/Response No. 11j.
Additional Facts Relating to Charges 6 and 13
59. Montgomery ordered two load binders, one ratchet strap, one
binder chain, and one safety shackle, from Maintenance Products, Inc.,
located in Lowell, Indiana, on or about September 9, 2003. See
Maintenance Products picking ticket, attached as Exh. OO hereto and
Maintenance Products invoice, attached as Exh. QQ hereto; see also Exh.
E at Request/Response No. 12a.
60. Montgomery paid Maintenance Products, Inc. for the load
binders, ratchet strap, binder chain, and safety shackle with his VISA
credit card. Credit card receipt, attached as Exh. PP hereto; see also
Exh. E at Request/Response No. 12b.\15\
---------------------------------------------------------------------------
\15\ The invoice states that $21.52 of the $169.05 that
Montgomery paid is for ``freight.'' This fact demonstrates the
inaccuracy of Montgomery's statement that he ``never paid any
shipping charges * * *'' Oct. 12, 2008 Montgomery Declaration, at ]
30. The invoice and credit card receipt also contradict Montgomery's
claim that the total amount charged to his credit card for the
Maintenance Products transaction was $147.53 (which is, not
coincidentally, the total amount minus the freight charge). See Oct.
12, 2008 Montgomery Declaration, at ] 18; Exh. PP; Exh. OO; Exh. K,
at 6.
---------------------------------------------------------------------------
61. Montgomery was reimbursed by Micei for the purchase of the load
binders, ratchet strap, binder chain and safety shackle. See Exh. E at
Request/Response No. 12i.
62. The load binders, ratchet strap, binder chain, and safety
shackle were intended to be, and were in fact, exported from the United
States to Macedonia on or about September 15, 2003. See Air waybill
issued to First Chain Supply Co., attached as Exh. RR hereto; Invoice
from Kuehne and Nagel, attached as Exh. SS hereto; see also Exh. E at
Request/Response No. 12e.
63. The load binders, binder chain, and safety shackle were
manufactured in the United States. Aug. 27, 2009 affidavit of Gary
Jones, attached Exh. TT hereto.\16\ Maintenance Products' owner
subsequently provided a declaration reaffirming that the load binders,
binder chain, and safety shackle were manufactured in the United States
and demonstrating that those items were manufactured in the United
States and marked accordingly. Oct. 28, 2009 declaration of Gary Jones,
attached as Exh. UU hereto.\17\
---------------------------------------------------------------------------
\16\ According to Gary Jones, the ratchet strap was manufactured
in China.
\17\ This declaration demonstrates the inaccuracy of the
assertion made in the Oct. 16, 2009 declaration by Sanja Milic,
filed with Montgomery's opposition to BIS's motion for partial
summary decision, that when the items Micei purchased from
Maintenance Products arrived in Macedonia, all of the items were
marked as being made in China.
---------------------------------------------------------------------------
64. The load binders, ratchet strap, binder chain and safety
shackle are items subject to the Regulations. Section 734.3(a); see
also BIS Licensing Determination, attached as Exh. I hereto.
65. At the time of the transaction, Montgomery knew he was subject
to the Denial Order. Exh. E at Request/Response No. 12m.
66. Montgomery benefited from the purchase of the load binders,
ratchet strap, binder chain and safety shackle. See supra text
accompanying note 8; See also Exh. E at Request/Response No. 12j.
Additional Facts Relating to Charges 7 and 14
67. In October 2003, Montgomery, describing himself as Micei's
North American operations, placed an order for uniform pants with Galls
(Galls number 25473720/017). See Oct. 8, 2003 e-mail message from
Montgomery to F. Corsi at Galls referring to ``payment,'' attached as
Exh. VV hereto.
68. Montgomery, again describing himself as representing Micei,
paid for the order with his credit card. Oct. 8 2003 e-mail message
from Montgomery to F. Corsi at Galls referring to ``VISA
authorization,'' attached as Exh. WW hereto; see also Exh. E at
Request/Response No. 13b.
69. A bill of lading from freight forwarder Estes Express Lines
states that the uniform pants were to be shipped from Liberty Uniform
in Spartanburg, SC (Galls' supplier) to Micei in Macedonia. Estes bill
of lading, attached as Exh. XX hereto; see also Exh. E at Request/
Response No. 13e.
70. Montgomery was reimbursed by Micei for the purchase of the
uniform pants. See Exh. E at Request/Response No. 13i.
71. The uniform pants are items subject to the Regulations. Section
734.3(a); see also BIS Licensing Determination, attached as Exh. I
hereto.
72. At the time of the transaction, Montgomery knew he was subject
to the Denial Order. See Exh. E at Request/Response No. 13m.
73. Montgomery benefited from the purchase of the uniform pants by
earning airline frequent flier miles by making the purchase on his
credit card. See supra text accompanying note 8; See also Exh. E at
Request/Response No. 13j.
[[Page 82487]]
Attachment D
Notice to the Parties Regarding Review by the Under Secretary
TITLE 15--COMMERCE AND FOREIGN TRADE
SUBTITLE B--REGULATIONS RELATING TO COMMERCE AND FOREIGN TRADE
CHAPTER VII--BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE
SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
PART 766--ADMINISTRATIVE ENFORCEMENT PROCEEDINGS
Section 766.22 Review by Under Secretary
(a) Recommended decision. For proceedings not involving violations
relating to part 760 of the EAR, the administrative law judge shall
immediately refer the recommended decision and order to the Under
Secretary. Because of the time limits provided under the EAA for review
by the Under Secretary, service of the recommended decision and order
on the parties, all papers filed by the parties in response, and the
final decision of the Under Secretary must be by personal delivery,
facsimile, express mail or other overnight carrier. If the Under
Secretary cannot act on a recommended decision and order for any
reason, the Under Secretary will designate another Department of
Commerce official to receive and act on the recommendation.
(b) Submissions by parties. Parties shall have 12 days from the
date of issuance of the recommended decision and order in which to
submit simultaneous responses. Parties thereafter shall have eight days
from receipt of any response(s) in which to submit replies. Any
response or reply must be received within the time specified by the
Under Secretary.
(c) Final decision. Within 30 days after receipt of the recommended
decision and order, the Under Secretary shall issue a written order
affirming, modifying or vacating the recommended decision and order of
the administrative law judge. If he/she vacates the recommended
decision and order, the Under Secretary may refer the case back to the
administrative law judge for further proceedings. Because of the time
limits, the Under Secretary's review will ordinarily be limited to the
written record for decision, including the transcript of any hearing,
and any submissions by the parties concerning the recommended decision.
(d) Delivery. The final decision and implementing order shall be
served on the parties and will be publicly available in accordance with
Sec. 766.20 of this part.
(e) Appeals. The charged party may appeal the Under Secretary's
written order within 15 days to the United States Court of Appeals for
the District of Columbia pursuant to 50 U.S.C. app. Sec. 2412(c)(3).
Certificate of Service
I hereby certify that I have served the foregoing recommended
decision & order via overnight carrier to the following persons and
offices:
Under Secretary for Export Administration, Bureau of Industry and
Security, U.S. Department of Commerce, Room H-3839, 14th & Constitution
Avenue, NW., Washington, DC 20230. Telephone: (202) 482-5301.
John T. Masterson, Jr., Esq., Chief Counsel for Industry and Security,
Joseph V. Jest, Esq., Chief, Enforcement and Litigation, Parvin R.
Huda, Esq., Senior Counsel, Eric Clark, Esq., Attorney Advisor,
Attorneys for Bureau of Industry and Security, Office of Chief Counsel
for Industry and Security, U.S. Department of Commerce, Room H-3839,
14th Street & Constitution Avenue, NW., Washington, DC 20230.
Telephone: (202) 482-5301.
Yuri I. Montgomery, 2912 10th Place West, Seattle, WA 98119. Telephone:
(202) 283-4955.
Hearing Docket Clerk, USCG, ALJ Docketing Center, 40 S. Gay Street,
Room 412, Baltimore, Maryland 21202-4022. Phone: 410-962-5100.
Done and dated October 28, 2010, in New York, New York.
Regina V. Maye,
Paralegal Specialist to the Administrative Law Judge.
[FR Doc. 2010-32563 Filed 12-29-10; 8:45 am]
BILLING CODE P