Customs and International Trade Law Blog : International Trade Lawyer & Attorney : Becker & Poliakoff Law Firm : Customs Law, Border Protection

To the dismay of the local international trade community, three international freight forwarding companies and their owners are being criminally prosecuted for illegally exporting merchandise to a company in Paraguay. The company in Paraguay had been designated a "Specially Designated Global Terrorist" by the United States Government.  Exporters and forwarding companies sending any cargo to such a company, even Sony PlayStation video games, would be in violation of the law. 

In an Indictment dated October 1, 2009, Case No. 09-20852-CR-GOLD, the United States Attorneys' Office in Miami charged three Miami freight forwarding companies and their owners with violating the International Emergency Economic Powers Act (IEEPA),50 U.S.C. 1701 et seq., 18 U.S.C. 554 (fraudulently exporting from the United States), 18 U.S.C. 371 (conspiracy), and 13 U.S.C. 305 (knowingly submitting false Shippers Export Declarations or information through the Automated Export System (AES).

In summary, the Government has alleged that the Paraguay company paid an Ohio distributor of Sony PlayStations to ship those items to the freight forwarding companies in Miami. Once in Miami, according to the Indictment, the freight forwarders and their owners allegedly created documents falsely identifying the address of the company in Paraguay because they knew they could not ship the Sony PlayStations to the real address.  The real address of the company in Paraguay, according to the Indictment, had been designated by the Office of Foreign Assets Control (OFAC) as a Specially Designated Global Terrorist.  The designated terrorist was Galeria Page, an office mall in Ciudad del Este, Paraguay.

The case was investigated by the Miami office of the U.S. Immigration and Customs Enforcement (ICE) which issued a Press Release.  According to the Penalty Sheet filed with the Indictment, the maximum penalty for the individual owners of the freight forwarding companies who were arrested for the alleged violations is 20 years imprisonment. 

To obtain a copy of the Indictment which was just unsealed on February 26, 2010, please contact me at pquinter@becker-poliakoff.com or (954) 270-1864.

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Bank accounts are more frequently being frozen or seized by the Federal Government.  The typical allegation by the Federal Government is that the money in those bank accounts were the proceeds of money laundering.  Often, the owners of the seized bank accounts were somehow connected to shipping cargo to, receiving cargo from, or doing business with Colombia.  The owners of the seized bank accounts then typically receive a letter from U.S. Customs and Border Protection advising of the seizure, and the procedure to attempt to get the money back.

Money laundering typically means that the money in the bank account was seized because Immigration and Customs Enforcement (ICE) believes it was generated from the sale of illegal drugs.  ICE refers to this type of financial crime as "Trade-Based Money Laudering."  So, for example, if a company in Colombia received money from the sale of drugs, and then purchased some merchandise from a U.S. company, and paid that U.S. company, the money received by the U.S. company could be seized as the proceeds of certain unlawful activity set forth in the money laundering law at 18 U.S.C. 1956.  The allegation of money laundering is sometimes accompanied by an allegation of filing a false shipper's export declaration or Automated Export System (AES) with U.S. Customs, in violation of 15 CFR section 30.7.

Persons who, or companies which have their bank accounts frozen or seized are entitled to know the reasons for such a severe action by the Federal Government. They are also entitled to challenge the actions by the Federal Government through the administrative petition process with U.S. Customs and Border Protection or by going to Federal Court. Legitimate business persons whose bank accounts have been frozen or seized by ICE or through a Seizure Warrant should contact a knowledgeable attorney to pursue having their money returned to them promptly.

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In the next few weeks, I am giving lectures and doing a webinar on the general topic of export compliance.  In my legal practice over the past 20 years as a Customs and International Trade attorney, I am increasingly involved with clients on export compliance and penalty matters.  The laws and regulations have changed dramatically over the past few years, as has the name and number of Federal agencies enforcing them, plus the penalties for non-compliance are much higher now.

Please call (954) 985-4101 or e-mail (pquinter@becker-poliakoff.com)  to RSVP or with any questions regarding the below seminar/webinar.

(1) On Wednesday, November 18, from 9 to 12 noon at the Doubletree Miami Mart, on behalf of the Florida Customs Brokers and Forwarders Association, I am lecturing on complying with the Bureau of Industry and Security (BIS) requirements.  The seminar is entitled "Export Controls Compliance and Best Business Practices," and it will cover everything from identifying the correct ECCN (Export Commodity Classification Number) in the Export Administration Regulations (EAR), to submitting an export license, to  the decrementing of the license by U.S. Customs and Border Protection, to interacting with Special Agents of the BIS's Office of Export Enforcement conducting an investigation, to negotiating a favorable resolution after a Notice of Proposed Penalty has been issued against the company for an export violation.  I will also cover the various trade embargoes and sanctions with countries and foreign nationals and foreign organizations enforced by the Office of Foreign Assets Control (OFAC).  That means everything from Cuba to Zimbabwe and from Specially Designated Nationals (SDN) to narco-traffickers.   Violations of BIS and OFAC regulations may result in severe criminal punishment or monetary penalties in the millions of dollars, plus individuals have personal liability.

(2) This Thursday, November 19, from 6:30-8:15 p.m, at the University of Phoenix, 11410 NW 20th Street, Miami, on behalf of the South Florida Chapter of the National Association of Purchasing Management (NAPM), I will discuss "Export Controls Compliance and Penalties". 

(3) On December 3, 2009, I will be a speaker in an "AES Compliance Webinar" from 12 noon to 1:30 p.m.  It is sponsored by the National Customs Brokers and Forwarders Association of America (NCBFAA) Educational Institute. To participate, simply go to www.ncbfaa.org and select “AES Compliance Webinar” under “Upcoming Events.” The webinar answers the questions of how, when, and why to file the required Electronic Export Information (EEI) using AESDirect.  U.S. Customs is now regularly issuing penalties against exporters or freight forwarders for not properly filing the EEI.  If you are wondering what happened to the old Shipper's Export Declaration (SED) form, you should participate in this webinar that I am doing in cooperation with the U.S. Census Bureau.

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Lesson of the day -  Don’t make an intentionally false or misleading statement to the U.S. Commerce Department's Bureau of Industry and Security (BIS)! Carol Wilkins apparently did, and will now pay $15,000 to the BIS. Important to note is that this export manager was fined individually. RF Micro Devices, Inc., the company Carol worked for, was fined $190,000 separate and apart from Carol. 

From at least 2002-2003, a responsibility of Carol’s was export control compliance for RF Micro Devices, Inc. The company had exported spread-spectrum modems which are properly classified as ECCN 5A001 to China.  Yet, the company did not obtain the required license from the BIS.

The BIS Charging Letter discussed Ms. Wilkins' false or misleading statement to the BIS. During the course of a BIS investigation, she allegedly told a BIS Special Agent that all product classifications were confirmed by an outside consultant to be EAR99 (no export license required). Apparently the consultant disagreed, and even kept the documentation in which the consultant had specifically advised Carol that the items were not EAR99.  Carol might not have realized how resourceful the BIS Agents could be as she may not have realized that BIS Agents would confirm her statements to them by doublechecking with the consultant. Even I was always taught "trust but verify".  BIS is no different in this case. 

Whenever you are going to be interviewed by a Special Agent of BIS or any other Federal law enforcement agency, always remember two things: (1) tell the truth, and (2) seek the advice of legal counsel. 

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Exporting motor vehicles from the United States to foreign destinations is a common occurrence at many ports around the country, including South Florida’s ports. Whether exporting vehicles for business or personal use, it is important to know the procedures that U.S. Customs (“CBP”) expects you to follow. Not paying attention to the “rules of the road” can result in the seizure of your vehicle(s), and the imposition of hefty penalties.

If you are in the business of exporting cars, or plan to export a car to a foreign country for personal use, it is important to know two different sets of rules. Part 192 of Title 19 of the Code of Federal Regulations (“CFR”) contains the rules for exporting used vehicles. Used vehicles include any vehicle where legal title has been transferred by a manufacturer, distributor, or dealer to the person buying the car. These regulations explain the basic requirements for how to export cars, including the documentation that must be presented to CBP, such as a Power of Attorney, where a company or individual is shipping a motor vehicle on behalf of someone else. The regulations also describe how much it will cost in penalties if a person fails to submit the right documentation, or no documentation at all. The penalties can be severe - up to $10,000 where CBP determines the car was stolen, or the vehicle identification number (“VIN”) has been tampered with.

The second set of rules that you need to know are the port-specific requirements imposed by CBP. This can be tricky because the rules at different ports are not always the same. CBP's Miami Seaport Vehicle Export Section has published a helpful Information Bulletin to assist exporters. The Bulletin describes where, when and how an individual must present documentation for exporting a vehicle from the Port of Miami. The Bulletin also contains a list of the most likely reasons that CBP will reject the export documentation, and prohibit a person from exporting a vehicle.

Anybody who desires to export a motor vehicle should know these rules and follow them carefully. The rejection of documentation by CBP can cause unnecessary delays and additional transactional costs, including storage fees. Failing to follow the rules of the road can even result in seizure of the vehicle(s) by the Government, and the assessment of significant penalties against the exporter.

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