[Federal Register Volume 75, Number 63 (Friday, April 2, 2010)]
[Notices]
[Pages 16732-16735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7439]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Action Affecting Export Privileges; Aqua-Loop Cooling Towers, Co.
In the Matter of: 09-BIS-006, Aqua-Loop Cooling Towers, Co., P.O.
Box 966, Folsom, CA 95763, and 116 Hopper Lane, Folsom, CA 95630,
Respondent.
Order Relating to Aqua-Loop Cooling Towers, Co.
The Bureau of Industry and Security, U.S. Department of Commerce
(``BIS''), initiated this administrative proceeding against Aqua-Loop
Cooling Towers, Co. (``Aqua-Loop'') pursuant to section 766.3 of the
Export Administration Regulations (the ``Regulations''),\1\ and section
13(c) of the Export Administration Act of 1979, as amended (the
``Act''),\2\ through the issuance and tiling of a charging letter as to
Aqua-Loop that alleges that Aqua-Loop has committed five violations of
the Regulations (``Charging Letter''). Specifically, these charges are:
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\1\ The Regulations are currently codified in the Code of
Federal Regulations at 15 CFR parts 730-774 (2009). The violations
occurred in 2004 and 2005. The Regulations governing the violation
at issue are found in the 2004 and 2005 versions of the Code of
Federal Regulations (15 CFR parts 730-774 (2004-2005)). The 2009
Regulations establish the procedures that apply to this matter.
\2\ 50 U.S.C. app. Sec. 240 1-2420 (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. p. 783 (2002)),
which has been extended by successive Presidential Notices, the most
recent being that of August 13, 2009 (74 FR 41.325 (Aug. 14, 2009)),
has continued the Regulations in effect under the International
Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (IEEPA'').
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Charge 1: 15 CFR 764.2(d)--Conspiracy to Export Items From the United
States to Iran Without the Required Licenses
Beginning at least in or about June 2004, and continuing through at
least in or about April 2005, Aqua-Loop conspired or acted in concert
with others, known and unknown, to violate the Regulations or to bring
about an act that constitutes a violation of the Regulations. The
purpose of the conspiracy was to export items subject to the
Regulations from the United States to Iran, via the United Arab
Emirates (``U.A.E.''), without the required U.S. Government
authorization. Pursuant to section 746.7 of the Regulations, no person
may engage in the exportation of an item subject to both the
Regulations and the Iranian Transactions Regulations (``ITR''),\3\
without authorization from the U.S. Department of the Treasury's Office
of Foreign Assets Control (``OFAC''). Pursuant to section 560.204 of
the ITR, an export to a third country intended for transshipment to
Iran is a transaction subject to the ITR.
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\3\ 31 CFR part 560.
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In furtherance of the conspiracy, the conspirators, including Aqua-
Loop, participated in a scheme to have Aqua-
[[Page 16733]]
Loop source or obtain the items from a U.S. distributor, and then to
have AquaLoop export the items to an Iranian customer and co-
conspirator, Parto Abgardan Cooling Towers Co. (``Parto Abgardan''), in
Iran through a U.A.E. entity identified by Parto Abgardan. In
furtherance of the scheme, Aqua-Loop obtained from Parto Abgardan
information regarding items Parto Abgardan sought to have exported from
the United States to Iran. Aqua-Loop then obtained such items and
facilitated their export to Parto Abgardan in Iran. Pursuant to the
conspiracy, various items were exported to Parto Abgardan in Iran,
including the items discussed in Charges 2-5, below, for which no OFAC
authorization was sought or obtained.
In addition, the co-conspirators sought to bring about the export
to Iran of other items subject to the Regulations. On or about December
21, 2004, Parto Abgardan informed Aqua-Loop that it had contacted a
U.S. company regarding the purchase of a filament winding machine,
Parto Abgardan told Aqua-Loop, ``Since they can't sell directly to
Iran, they are OK with selling it domestically and then we can transfer
it from U.S. to Dubai and then to Iran. With your permission we are
going to give Aqua-Loop's information to them so they can send you
their offer'' based on the technical information provided to the U.S.
company by Parto Abgardan. Thereafter, on or about December 23, 2004,
Aqua-Loop's president, writing on Aqua-Loop stationery, responded, that
he would be ``more than happy if I can be of assistance on your
purchase of filament winding machines. Please let me know the detail,
so I can pursue.'' In furtherance of the conspiracy, Parto Abgardan and
Aqua-Loop continued to work together to accomplish this transaction; on
or about January 31, 2005, Parto Abgardan provided Aqua-Loop with Parto
Abgardan's contact at the U.S. filament winding machine company, and
asked that Aqua-Loop contact the U.S. company. On or about February 1,
2005, Aqua-Loop's president again wrote to Parto Abgardan, stating that
he had had a ``long conversation'' with the U.S. company's
representative and that ``I should emphasize that I found this lady a
bit reluctant on the subject of export the unit to Iran. But she sound
OK to work with us, if we do not mention any thing about Iran.''
In so doing, Aqua-Loop committed one violation of section 764.2(d)
of the Regulations.
Charge 2: 15 CFR 764.2(b)--Causing, Aiding or Abetting
Between on or about July 26, 2004, and on or about September 28,
2004, Aqua-Loop caused, aided or abetted the doing of an act prohibited
by the Regulations by facilitating or coordinating the export of
approximately 174 rolls of hog hair filter media, part number HH6O 130
and valued at approximately $11,687.76, items which are subject to the
Regulations and designated as EAR99 items,\4\ through the U.A.E. to
Iran without the required U.S. Government authorization. Pursuant to
section 560.204 of the JTR maintained by OFAC, an export to a third
country intended for transshipment to Iran is a transaction that
requires OFAC authorization. Pursuant to section 746.7 of the
Regulations, no person may engage in the exportation of an item subject
to both the Regulations and the hR without authorization from OFAC. No
OFAC authorization was sought or obtained for the transaction described
herein.
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\4\ EAR99 is a designation for items subject to the Regulations
but not listed on the Commerce Control List. 15 CFR 734.3(c).
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Aqua-Loop took this action after having been asked by Parto
Abgardan, an Iranian company, to arrange for the export of the items to
Iran ``via Dubai.'' Parto Abgardan did not have a location in the
U.A.E., and the address to which Aqua-Loop arranged for the items to be
exported, ``do Parto Abgardan,'' was in fact added to the BIS
Unverified List of entities involved in transactions in which BIS is
unable to verify the existence or authenticity of the end-user or other
party to the transaction, published in the Federal Register on October
19, 2006. 71 FR 61,706 (Oct. 19, 2006).
In so doing, Aqua-Loop committed one violation of section 764.2(b)
of the Regulations.
Charge 3: 15 CFR 764.2(e)--Acting With Knowledge of a Violation
Between on or about July 26, 2004, and on or about September 28,
2004, Aqua-Loop ordered or financed items to be exported from the
United States with knowledge that a violation of the Regulations was
occurring, was about to occur or was intended to occur in connection
with the items. Specifically, between on or about July 26, 2004, and on
or about September 28, 2004, Aqua-Loop ordered or financed
approximately 174 rolls of hog hair filter media, part number HH60130
and valued at approximately $11,687.76, items which are subject to the
Regulations and designated as EAR99, which Aqua-Loop knew would be
exported to Iran via the U.A.E. without the required U.S. Government
authorization. Pursuant to section 560.204 of the ITR, an export to a
third country intended for transshipment to Iran is a transaction that
requires OFAC authorization. Pursuant to section 746.7 of the
Regulations, no person may engage in the exportation of an item subject
to both the Regulations and the ITR without authorization from OFAC.
Aqua-Loop knew that no OFAC authorization was sought or obtained for
the transaction described herein.
Aqua-Loop had knowledge that a violation was occurring, was about
to occur or was intended to occur in connection with the items because
Aqua-Loop was aware of the U.S. embargo of Iran and had knowledge that
exporting items through the U.A.E. to Iran was a violation of U.S. law.
Aqua-Loop's president stated to a BIS Office of Export Enforcement
special agent in an interview on or about October 14, 2005, that
approximately three years earlier he had become aware of sanctions
barring the shipment of items to Iran and that he understood that
knowingly shipping items to Iran through a third country was illegal.
Aqua-Loop's president referred to this type of activity as
``diverting'' items to Iran. Moreover, on or about September 23, 1997,
AquaLoop had issued a letter to Parto Abgardan stating, ``I am trying
to find a way to send the components that I promised to you.
Unfortunately after many unsuccessful attempts, I came to a conclusion
that the only way to open this channel is what you were thinking, and
if I understood correctly, you are going to have some kind of agent or
office in one of the Gulf countries. I tell you this that I would have
no problem getting a container to my place and loading to a steam ship
toward Dubai.* * * Many shipping companies express that you shouldn't
have any major problem getting the goods to Tehran from Dubai.''
In so doing, Aqua-Loop committed one violation of section 764.2(e)
of the Regulations.
Charge 4: 15 CFR 764.2(b)--Causing, Aiding or Abetting
Between on or about February 9, 2005, and on or about April 19,
2005, Aqua-Loop caused, aided or abetted the doing of an act prohibited
by the Regulations by facilitating or coordinating the export of
approximately 185 rolls of hog hair filter media, part number HHB6O 130
and valued at approximately $9,838.30, items which are subject to the
[[Page 16734]]
Regulations and designated as EAR99 items, through the U.A.E. to Iran
without the required U.S. Government authorization. Pursuant to section
560.204 of the ITR maintained by OFAC, an export to a third country
intended for transshipment to Iran is a transaction that requires OFAC
authorization. Pursuant to section 746.7 of the Regulations, no person
may engage in the exportation of an item subject to both the
Regulations and the ITR without authorization from OFAC. No OFAC
authorization was sought or obtained for the transaction described
herein.
Specifically, after exporting certain hog hair filter media to
Parto Abgardan in Iran, as described in Charges 2-3, Aqua-Loop was
informed by Parto Abgardan that the items were not exactly the same as
a sample Aqua-Loop's president had brought to Parto Abgardan before the
transaction described in Charges 2-3 occurred. Aqua-Loop received from
Parto Abgardan a piece of the original sample as well as a piece of the
items described in Charges 2-3. Aqua-Loop then provided both pieces to
the U.S. distributor, and placed a new order for 185 rolls of hog hair
filter media, part number HHB6O 130, with the U.S. distributor. Aqua-
Loop arranged for the U.S. distributor to supply the items, which were
destined for Iran, to a freight forwarder for initial shipment to the
U.A.E., ``c/o Parto Abgardan.'' Parto Abgardan did not have a location
in the U.A.E., and the address to which Aqua-Loop arranged for the
items to be exported, ``do Parto Abgardan,'' was in fact added to the
BIS Unverified List of entities involved in transactions in which BIS
is unable to verify the existence or authenticity of the end-user or
other party to the transaction, published in the Federal Register on
October 19, 2006. 71 FR 61,706 (Oct. 19, 2006).
In so doing, Aqua-Loop committed one violation of section 764.2(b)
of the Regulations.
Charge 5: 15 CFR 764.2(e)--Acting With Knowledge of a Violation
Between on or about February 9, 2005, and on or about April 19,
2005, Aqua-Loop ordered items to be exported from the United States
with knowledge that a violation of the Regulations was occurring, was
about to occur or was intended to occur in connection with the items.
Specifically, between on or about February 9, 2005, and on or about
April 19, 2005, Aqua-Loop ordered approximately 185 rolls of hog hair
filter media, part number HHB6O 130 and valued at approximately
$9,838.30, items which are subject to the Regulations and designated as
EAR99, which Aqua-Loop knew would be exported to Iran via the U.A.E.
without the required U.S. Government authorization. Pursuant to section
560.204 of the ITR, an export to a third country intended for
transshipment to Iran is a transaction that requires OFAC
authorization. Pursuant to section 746.7 of the Regulations, no person
may engage in the exportation of an item subject to both the
Regulations and the ITR without authorization from OFAC. Aqua-Loop knew
that no OFAC authorization was sought or obtained for the transaction
described herein.
Aqua-Loop had knowledge that a violation was occurring, was about
to occur or was intended to occur in connection with the items because
Aqua-Loop was aware of the U.S. embargo of Iran and had knowledge that
exporting items through the U.A.E. to Iran was a violation of U.S. law.
Aqua-Loop's president stated to a BIS Office of Export Enforcement
special agent in an interview on or about October 14, 2005, that
approximately three years earlier he had become aware of sanctions
barring the shipment of items to Iran and that he understood that
knowingly shipping items to Iran through a third country was illegal.
Aqua-Loop's president referred to this type of activity as
``diverting'' items to Iran. Moreover, on or about September 23, 1997,
AquaLoop's president had issued a letter to Parto Abgardan, on Aqua-
Loop stationery, stating, ``I am trying to find a way to send the
components that I promised to you. Unfortunately after many
unsuccessful attempts, I came to a conclusion that the only way to open
this channel is what you were thinking, and if I understood correctly,
you are going to have some kind of agent or office in one of the Gulf
countries. I tell you this that I would have no problem getting a
container to my place and loading to a steam ship toward Dubai. * * *
Many shipping companies express that you shouldn't have any major
problem getting the goods to Tehran from Dubai.''
In so doing, Aqua-Loop committed one violation of section 764.2(e)
of the Regulations.
Whereas, BIS and Aqua-Loop have entered into a Settlement Agreement
pursuant to section 766.18(b) of the Regulations, whereby they agreed
to settle this matter in accordance with the terms and conditions set
forth therein; and
Whereas, I have approved of the terms of such Settlement Agreement;
it is therefore ordered:
First, Aqua-Loop shall be assessed a civil penalty in the amount of
$100,000, the payment of which shall be suspended for a period often
(10) years from the date of this Order, and thereafter shall be waived,
provided that during the period of suspension, Aqua-Loop has committed
no violation of the Act, or any regulation, order, or license issued
thereunder.
Second, that for a period often (10) years from the date of this
Order, Aqua-Loop, his representatives, assigns or agents (``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.
Third, 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
[[Page 16735]]
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.
Fourth, that, after notice and opportunity for comment as provided
in section 766.23 of the Regulations, any person, firm, corporation, or
business organization related to Aqua-Loop 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 this
Order.
Fifth, that the Charging Letter, the Settlement Agreement, and this
Order shall be made available to the public.
Sixth, that this Order shall be served on the Denied Person and on
BIS, and shall be published in the Federal Register.
This Order, which constitutes the final agency action in this
matter, is effective immediately.
Issued this 25th day of March, 2010.
David W. Mills,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2010-7439 Filed 4-1-10; 8:45 am]
BILLING CODE 3510-DT-P