[Federal Register Volume 68, Number 192 (Friday, October 3, 2003)]
[Notices]
[Pages 57406-57423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25076]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 02-BXA-02


In the Matter of: Adbulamir Mahdi, aka Amir Mahdi and aka Jasin 
Khafaf, 20 Huntingwood Drive, Carborough, Ontario, Canada, M1W1A2 and 
Ots Refining Equipment Corporation, 7030 Woodbine Avenue, NE., Suite 
500, Markham, Ontario, Canada L3R 6G2, Respondents

Decision and Order

    On November 22, 2002, the Bureau of Industry and Security (BIS) \1\ 
issued an amended charging letter against the respondents, Abdulamir 
Mahdi, also known as Amir Mahdi and Jasin Khafaf (``Mahdi''), and OTS 
Refining Equipment Corporation (OTS), that alleged six violations of 
the Export Administration Regulations (EAR).\2\ The charges are related 
to the export of U.S.-origin oil filed equipment to Iran through 
Canada. The specific charges as amended were: (1) One charge under 
section 764.2(d) of the EAR of conspiring to export the equipment to 
Iran without the required authorization from the U.S. Government; (2) 
two charges under Sec.  764.2(a) of the EAR of making such unauthorized 
exports to Iran; (3) one charge under Sec.  764.2(c) of the EAR of 
soliciting or attempting an unauthorized export to Iran; (4) one charge 
under Sec.  764.2(g) of the EAR of making a false statement on a 
Shipper's Export Declaration; and (5) one charge under Sec.  764.2(e) 
of the EAR of transferring and forwarding goods to Iran with knowledge 
that the items were exported from the United States in violation of the 
EAR. See BIS Amended Charging Letter of November 22, 2002.
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    \1\ The Bureau of Industry and Security was formerly known as 
the Bureau of Export Administration. The name of the Bureau was 
changed pursuant to an order assigned by the Secretary of Commerce 
on April 16, 2002.
    \2\ The Export Administration Regulations are codified at 15 CFR 
730-799.
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    On September 6, 2002, the ALJ issued an order that granted in part 
BIS's motion for summary decision. That

[[Page 57407]]

order found Mahdi liable on the conspiracy charged based on the 
collateral estoppel effect of his prior criminal conviction for 
conspiracy. BIS's motion for summary decision was denied on other 
charges. See ALJ Order of September 6, 2002.
    On May 13, 2003, the ALJ conducted an evidentiary hearing in this 
matter. On August 26, 2003, the ALJ issued a Recommended Decision and 
Order, in which he found that Mahdi and OTS each committed the six 
violations described above. The ALJ also recommended the denial of the 
export privileges of Mahdi and OTS for 20 years. See Recommended 
Decision and Order of August 26, 2003.
    Pursuant to Sec.  766.22 of the EAR, the ALJ's Recommended Decision 
and Order has been referred to me for final action. Based on my review 
of the entire record, I find that the record supports the ALJ's 
findings of fact and conclusions of law regarding each of the above-
referenced charges. I also find that the penalty recommended by the ALJ 
is appropriate, given the nature of the violations, the scope of the 
respondent's efforts to make unauthorized exports, and the importance 
of preventing future unauthorized exports to Iran, an embargoed 
country. I therefore affirm the findings of fact and conclusions of law 
in the ALJ's Recommended Decision and Order.\3\
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    \3\ There are two minor clarifications to the ALJ's Recommended 
Decision and Order that need to be made:
    (1) The language in paragraph 2 of Part V of the Recommended 
Decision and Order indicates that Canada does not require licenses 
for non-munitions items of Canadian-origin to Iran. However, while 
Canada does not control the oil field equipment exported by Mahdi 
and OTS to Iran, it does in fact control the export of certain other 
non-munitions items of Canadian-origin to Iran.
    (2) The language quoted from the Iranian Transactions 
Regulations at 31 CFR 560.204(a) in Part VII.A of the Recommended 
Order was not in effect until after the conduct at issue in this 
case. However, the language of Sec.  560.204 that was in effect at 
the time of respondents' conduct plainly reached their actions. See 
United States v. Ehsan, 163 F.3d 855, 858-59 (4th Cir. 1998) 
(shipment to the United Arab Emirates ultimately intended for Iran 
``fits the plain meaning of an `exportation'to Iran'' under 31 CFR 
560.204).
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    It is hereby ordered,
    First, that for a period of 20 years from the date on which this 
Order takes effect, Abdulamir Mahdi, also known as Amir Mahdi and Jasin 
Khafaf, 20 Huntingwood Drive, Scarborough, Ontario, Canada, M1W1A2, and 
OTS Refining Equipment Corporation, 7030 Woodbine Avenue, NE., Suite 
500, Markham, Ontario, Canada, L3R6G2, (hereinafter collectively 
referred to as ``Denied Persons'' and individually referred to as ``as 
Denied Person''), and all of their successors or assigns, officers, 
representatives, agents, and employees, 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 EAR, or in any other activity subject to the EAR, 
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 EAR, or in any other activity 
subject to the EAR; or
    C. Benefiting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the EAR, or in connection with any other activity subject to the EAR.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of a Denied Person any item 
subject to the EAR;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by a Denied Person of the ownership, possession, or control 
of any item subject to the EAR that has been or will be exported from 
the United States, including financing or other support activities 
related to a transaction whereby a Denied Person acquires or attempts 
to acquire such ownership, possession, or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from a Denied Person of any item subject to 
EAR that has been exported from the United States;
    D. Obtain from a Denied Person in the United States any item 
subject to the EAR 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 EAR 
that has been or will be exported from the United States and that is 
owned, possessed, or controlled by a Denied Person, or service any 
item, of whatever origin, that is owned, possessed, or controlled by a 
Denied Person if such service involves the use of any item subject to 
the EAR that has been or will be exported from the United States. For 
purposes of this paragraph, ``servicing'' means installation, 
maintenance, repair, modification, or testing.
    Third, that after notice and opportunity for comment as provided in 
Section 766.23 of the EAR, any person, firm, corporation, or business 
organization related to a Denied Person by affiliation, ownership, 
control, or position of responsibility in the conduct of trade or 
related services may also be made subject to the provisions of this 
Order.
    Fourth, that this Order shall be served on the Denied Persons and 
on BIS, and shall be published in the Federal Register. In addition, 
the ALJ's Recommended Decision and Order, except for the section with 
the heading ``Recommended Order,'' shall be published in the Federal 
Register.
    This Order, which constitutes the final agency action in this 
matter, is effective upon publication in the Federal Register.

    Dated: September 29, 2003.
Kenneth I. Juster,
Under Secretary of Commerce for Industry and Security.

Recommended Decision and Order

Before: Hon. Peter A. Fitzpatrick, Administrative Law Judge, United 
States Coast Guard.
Appearances:
    Philip D. Golrick, Esq.--For the Bureau of Industry and Security
    Abdulamir Mahdi--PRO SE

Table of Contents

I. Table of Contents
II. Summary of Decision
III. Preliminary Statement
IV. Applicable Statutes and Regulations
    A. Statutes
    B. Regulations
V. Findings of Fact
    A. Background
    B. Conspiracy to Export Oil Field Equipment from the United 
States to Iran via Canada
    C. The Export of Oil Field Equipment from the United States to 
Iran via Canada
    1. The October 30, 1997 Export from the United States to Iran
    2. The February 2, 1998 Export from the United States to Iran
    D. The Attempt to Export Oil Field Equipment on March 17, 1999
VI. Ultimate Findings of Fact and Conclusions of Law
VII. Discussion
    A. Applicability Of The Export Administration Act And 
Regulations To Respondents
    B. Violations Of The Export Administration Act And Regulations
    1. Conspiracy to Obtain Oil Field Equipment from the United 
States
    2. Unauthorized Export from the United States to Iran
    3. Soliciting or Attempting an Unauthorized Export from the 
United States to Iran

[[Page 57408]]

    4. Making a False Statement on a Shipper's Declaration
    5. Knowingly Violating the Export Administration Regulations
VIII. Reason for the Sanction
IX. Recommended Order
Attachment A: exhibit List
    A. Judge's Exhibit
    B. Government Exhibit
Attachment B: Rulings on Bureau's Proposed Findings
    A. Proposed Findings of Fact and Conclusions of Law
    B. Proposed Ultimate Findings of Fact and Conclusions of Law
Notice to the Parties Regarding Review by Under Secretary
Certificate of Service

II. Summary of Decision

    This case involved covert operations by Respondents Abdulamir Mahdi 
and, his wholly owned company, OTS Refining Equipment Corporation 
(``OTS''), to unlawfully ship oil field equipment from the United 
States to Iran through Canada in violation of the Export Administration 
Act of 1979 (``Act'' or ``EAA'') and the Export Administration 
Regulations (``EAR''). See 50 U.S.C. App. Secs. 2401-2420 (1991), 
amended by Pub. L. 106-508, 114 Stat. 2360 (Supp. 2002) (EAA); 15 CFR 
parts 730-74 (1997-1999) (EAR). The EAA and its underlying regulations 
establish a ``system of controlling exports by balancing national 
security, foreign policy and domestic supply needs with the interest of 
encouraging export to enhance * * * the economic well being'' of the 
United States. See Times Publ'g Co. v. United States Dep't of Commerce, 
236 F.3d 1286, 1290 (11th Cir. 2001); see also 50 U.S.C. App. 2401-
02.\1\
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    \1\ The EAA and all regulations under it expired on August 20, 
2001. See 50 U.S.C. App. 2419. Three days before its expiration, the 
President declared that the lapse of the EAA constitutes a national 
emergency. See Exec. Order. No. 13222, reprinted in 3 C.F.R. at 783-
784, 2001 Comp. (2002). Exercising authority under the International 
Emergency Economic Powers Act (``IEEPA''), 50 U.S.C. 1701-1706 
(2002), the President maintained the effectiveness of the EAA and 
its underlying regulations throughout the expiration period by 
issuing Exec. Order. No. 13222 on August 17, 2001. Id. The 
effectiveness of the export control laws and regulations were 
further extended by Notice issued by the President on August 14, 
2002. See Notice of August 14, 2002: Continuation of Emergency 
Regarding Export Control Regulations, reprinted in 3 CFR at 306 
(2003). Courts have held that the continuation of the operation and 
effectiveness of the EAA and its regulations through the issuance of 
Executive Orders by the President constitutes a valid exercise of 
authority. See Wisconsin Project on Nuclear Arms Control v. United 
States Dep't of Commerce, 317 F.3d 275, 278-79 (D.C. Cir. 2003); 
Times Publ'g Co., supra, 236 F.3d at 1290.
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    Here, six violations of the EAR are alleged and the Bureau of 
Industry and Security, United States Department of Commerce (``Bureau'' 
or ``BIS'') seeks denial of the Respondents' export privileges from the 
United States for a period of 20 years. This case was brought while Mr. 
Mahdi was serving a 4-year and 3-month sentence in Federal prison based 
on a Plea of Guilty to one count of conspiracy to export oil field 
equipment from the United States to Iran and Iraq without 
authorization, and in accordance with the judgment and sentence of the 
United States District Court for Middle District of Florida on November 
22, 1999. See United States v. Mahdi, 99-128-CF0ORL-22B. Charge 1 in 
this administrative proceeding is nearly identical to the conspiracy 
charge before the District Court to which Mr. Mahdi plead Guilty and 
for which the court entered a judgment and sentence. At a preliminary 
stage in this administrative proceeding, the Bureau's Motion for 
Summary Decision with respect to Charge 1 was granted. The undersigned 
found that District Court's judgment collaterally estopped Mr. Mahdi 
from contesting Charge 1 relating to conspiracy. However, the Motion 
for Summary Decision was denied as to the remaining five charges.
    At the administrative hearing, the Bureau presented substantial, 
reliable and probative evidence to support the remaining charges. Mr. 
Mahdi made a brief appearance at the hearing but refused to participate 
in the remainder of these proceedings, Thus, most of the evidence on 
this record is uncontested. Each of the remaining charges (Charges 2-6) 
is found Proved. The Bureau's request for a Denial Order of 20 years is 
well founded in view of the number of violations involved and the 
continuing efforts of Mr. Mahdi and his brother to unlawfully export 
items to Iran.
    Finally, although the regulations require this proceeding to be 
concluded within one year from the filing of the charging letter, the 
undersigned Judge extended the period for issuance of the decision for 
good cause. See 15 CFR 766.17(d). In this case, the period was extended 
until January 17, 2004 to allow Mr. Mahdi to serve his Federal prison 
sentence, and afford him an opportunity to adequately prepare for the 
hearing. See Order dated October 10, 2003, at 9-10.

III. Preliminary Statement

    In an amended charging letter dated November 22, 2002, the Bureau 
alleged that Respondents Mahdi and OTS committed six violations of the 
EAR.\2\ The Agency sought denial of Respondents export privileges for a 
period of 20 years.\3\ The charges were as follows:
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    \2\ The ``Bureau of Export Administration'' or ``BXA'' issued 
the original charging letter on January 17, 2002. Through an 
internal organizational order, the Department of Commerce changed 
the name of BXA to BIS. See Industry and Security Programs: Change 
of Name, 67 FR 20630 (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 20631.
    \3\ Neither the original charging letter, nor the amended 
charging letter specified the exact nature of relief sought by the 
Agency. In the Agency's ``Pre-Hearing Memorandum'' dated February 
26, 2003, BIS revealed that it was seeking a 20-year denial of 
export privileges. The Agency also moved to withdraw the charges 
against a third respondent, Tech-Link Development Corporation 
(``Tech-Link'') because BIS was unable obtain service of the 
charging letter on Tech-Link. The charges were dismissed without 
prejudice in an Order dated March 3, 2003.
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    Charge I alleged that between in or about March 1997, and in or 
about April 1998, the Respondents violated Sec. Sec.  746.7 and 
764.2(d) of the EAR by conspiring and acting in concert with others 
known and unknown to obtain oil field equipment from the United States 
and export it to Iran through Canada.
    Charge 2 and 3 alleged that on or about October 30, 1997, and on or 
about February 2, 1998, the Respondents violated Sec. Sec.  746.7 and 
764.2(a) of the EAR by exporting oil field equipment from the United 
States through Canada to Iran without obtaining prior authorization 
from the Office of Foreign Assets Control (``OFAC''), a division of the 
Treasury Department.
    Charge 4 alleged that on or about April 21, 1998, to on or about 
March 17, 1999, the Respondents violated Sec. Sec.  746.7 and 764.2(c) 
of the EAR by soliciting or attempting to export oil field equipment 
from the United States through Canada to Iran without obtaining prior 
authorization from OFAC.\4\
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    \4\ Charge 4 in the original charging letter alleged that 
Respondents exported oil field equipment from the United States, 
through Canada, to Iran on or about April 21, 1998. Following the 
partial denial of summary decision, BIS filed a Motion for 
Reconsideration or Clarification on September 12, 2002. On September 
18, 2002, BIS filed a Partial Withdrawal of the Motion for 
Reconsideration or Clarification with respect to Charge 4 and moved 
to amend that charge because the Bureau determined that the oil 
field equipment was not exported to Iran as alleged. The motion to 
amend Charge 4 was granted in an Order dated October 10, 2002. The 
Bureau filed a Notice of Filing Amended Charging Letter on November 
22, 2002 and served the amended charging letter on Mr. Mahdi and 
OTS.
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    Charge 5 alleged that on or about October 30, 1997, the Respondents 
violated Sec.  764.2(g) of the EAR by making a false and misleading 
statement of material fact on a Shipper's Export Declaration that the 
country of ultimate destination of the oil field equipment was Iran.

[[Page 57409]]

    Charge 6 alleged that on October 30, 1997, the Respondents violated 
Sec.  764.2(e) of the EAR by transferring and forwarding the oil field 
equipment from Canada to Iran knowing that those goods had been 
exported from the United States in violation of the EAR.
    By Order dated September 6, 2002, summary decision was granted 
against Respondent Mahdi Solely on the conspiracy to export oil field 
equipment to Iran through Canada in violation of 15 CFR 746.7 and 
764.2(d) alleged in Charge 1. Summary decision with respect to the 
remaining charges was denied. The hearing in this matter was continued 
numerous times over 18 months to accommodate Mr. Mahdi who represented 
himself and his company OTS. See Order dated May 9, 2002; Order dated 
October 9, 2002; Transcript of Pre-Hearing Conference dated January 8, 
2003; Order dated January 13, 2003; Order Dismissing, Without 
Prejudice, Charges Against Tech-Link Development Corporation and 
Scheduling Order dated March 3, 2003; see also (Transcript 24-25, 27-
28, 35-47, 56-60, 73-77; Gov't Ex. 1A). The evidentiary hearing was 
held before this Judge in Baltimore, Maryland on May 13, 2003 at 9:30 
a.m., EST. Because of the failure to secure approval of a parole 
application for reentry into the United States in accordance with the 
Immigration and Nationalization Services Regulations codified at 8 CFR 
part 212 (2002), Mr. Mahdi was not able to be physically present at the 
hearing to represent himself and OTS. See Transcript at 7-8, 35-47. 
However, arrangements were made for Mr. Mahdi to call into a telephone 
pool conference number and participate via telephone in the hearing. 
Id. at 5-7.\5\
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    \5\ On November 28, 2002, Mr. Mahdi was released into the 
custody of U.S. Immigration Officials and was subsequently deported 
after serving a 51-month sentence following a plea of guilty to one 
count of conspiracy to export oil field equipment from the United 
States to Iran and Iraq via Canada between March 1997 and March 1999 
without authorization. Mr. Mahdi did not submit a copy of the parole 
application to the undersigned Judge or to BIS even though directed 
to do so. See Transcript of Pre-Hearing Conference dated January 8, 
2003, at 19-20.
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    Although Mr. Mahdi was advised in writing of the exact time and 
date of the hearing, he did not call into the telephone pool conference 
number until nearly 45 minutes into the proceeding. Id. at 3-8, 47-62; 
see also Order Dismissing, Without Prejudice, Charges Against Tech-Link 
Development Corporation and Scheduling Order dated March 3, 2003, at 3; 
Order dated April 14, 2003; Order Denying Request for Continuance dated 
April 15, 2003. At that time, Mr. Mahdi declared that he was mentally 
incompetent and did not want to participate in the hearing: then he 
hung up the telephone. (Transcript at 51-62). Mr. Mahdi only 
participated in these proceedings for a total of 15-20 minutes. 
Following a brief recess, connection to the telephone pool conference 
number was reestablished so that Mr. Mahdi could participate in the 
hearing if he changed his mind. Id. at 63. The telephone pool 
conference number remained open until approximately 12:30 p.m. Id. at 
163-65. Mr. Mahdi did not change his mind and did not participate any 
further in the hearing or these administrative proceeding.\6\
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    \6\ On April 14, 2003, Ms. Lucinda Shinault, Paralegal to this 
Judge, served an Order memorializing a telephonic Pre-Hearing 
Conference by Federal Express to Respondent at the address provided 
by Mr. Mahdi. Respondent Mahdi received the Order, which was signed 
for by J. Khan. On April 15, 2003, Ms. Shinault sent an Order 
Denying Respondent's Request for Continuation of the May 13, 2003 
hearing based on physical and mental incompetence by Federal 
Express. Federal Express attempted to deliver the April 15th Order 
on two occasions. The attempts proved unsuccessful. Federal Express 
also left telephone messages on an answering machine for Respondent 
Mahdi, who failed to return the telephone calls. On April 21, 2003, 
Ms. Shinault directed Federal Express to make a third attempt to 
deliver the April 15th Order. The Order was refused and an 
unidentified person sent a return to sender letter together with the 
Order. Thereafter, Ms. Shinault sent Mr. Mahdi the April 15th Order 
by regular first class mail. (Judge's Ex. 1, 2; Tr. 67-72). In view 
of Mr. Mahdi's brief participation in the hearing there is no doubt 
that he had actual notice of the hearing.
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    At the hearing, one witness, Special Agent Roy Gilfix of the Office 
of Export Enforcement, U.S. Department of Commerce (``OEE'') testified 
for the Agency and thirty-three exhibits were admitted into evidence. 
The exhibit list is provided in Attachment A. Following receipt of the 
transcript, Mr. Golrick also filed a Post-Hearing Submission, including 
proposed findings of fact and conclusion. Ruling on the proposed 
findings of fact and conclusions of law are contained in Attachment B. 
The record is now closed.
    As a general rule, administrative proceedings conducted under the 
EAA are generally excluded from the operation of the Administrative 
Procedure Act (``APA''), as amended and codified in 5 U.S.C. 551-559. 
See 50 U.S.C. App. sec. 2412(a); 15 CFR 766.1. However, in 
administrative enforcement actions seeking impositions of civil 
penalties and/or sanctions, there is an exception to the general 
exclusion if the case involves a violation of sections 2407 or 2410. 
See 50 U.S.C. App. sec. 2412(c). Since this case involves violations of 
sec. 2410, the administrative proceeding was conducted in accordance 
with the APA. This administrative proceeding was also conducted in 
accordance with 50 U.S.C. App. secs. 2410(c)(2)(B) and 2412(c), 5 
U.S.C. 3344, 15 CFR part 766, 5 CFR 930.213. The conduct of this 
proceeding also complies with the provisions of a letter from the 
United States Office of Personnel Management (``OPM'') and an 
interagency reimbursable agreement between the Coast Guard and BIS 
dated December 30, 2002. The OPM letter and the reimbursable agreement 
authorize Coast Guard Administrative Law Judges (``ALJ'') to adjudicate 
cases involving violations of U.S. export laws and regulations.
    After careful review of the facts and applicable laws in this case, 
I find that BIS has proved the allegations in the charging letter by 
substantial evidence of a reliable and probative nature.\7\
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    \7\ While this case was pending, the United States Coast Guard 
transferred from the Department of Transportation to the Department 
of Homeland Security. Pursuant to the Savings Provision of HR 5005 
Sec.  1512 (Pub. L. 107-296), pending proceedings are continued 
notwithstanding the transfer of the Agency.
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IV. Applicable Statutes and Regulations

    The acts constituting violations of the export control laws and 
regulations occurred between October 1997 and March 1999. Thus, the 
export control laws and regulations in effect on October 1997 through 
March 1999 govern resolution of this matter. Those laws and regulations 
are substantially similar to the current export control laws and 
regulations.

A. Statutes

    The relevant statutes read in pertinent part as follows:

50 U.S.C. App. 2404. National Security Controls

    (a) Authority.
    (1) In order to carry out the policy set forth in section 
3(2)(A) of this Act [50 USCS App. 2402(2)(A)], the President may, in 
accordance with the provisions of this section, prohibit or curtail 
the export of any goods or technology subject to the jurisdiction of 
the United States or exported by any person subject to the 
jurisdiction of the United States. The authority contained in this 
subsection includes the authority to prohibit or curtail the 
transfer of goods or technology within the United States to 
embassies and affiliates of controlled countries. For purposes of 
the preceding sentence, the term ``affiliates'' includes both 
governmental entities and commercial entities that are controlled in 
fact by controlled countries. The authority contained in this 
subsection shall be exercised by the Secretary, in consultation with 
the Secretary of Defense, and such other departments and agencies as 
the Secretary considers appropriate, and shall be implemented by 
means of export

[[Page 57410]]

licenses described in section 4(a) of this Act [50 USCS App. 
2403(a)].
* * * * *
    (b) Policy toward individual countries.
    (1) In administering export controls for national security 
purposes under this section, the President shall establish as a list 
of controlled countries those countries set forth in section 620(f) 
of the Foreign Assistance Act of 1961 [22 USCS Sec.  2370(f)], 
except that the President may add any country to or remove any 
country from such list of controlled countries if he determines that 
the export of goods or technology to such country would or would not 
(as the case may be) make a significant contribution to the military 
potential of such country or a combination of countries which would 
prove detrimental to the national security of the United States. In 
determining whether a country is added to or removed from the list 
of controlled countries, the President shall take into account--
    (A) The extent to which the country's policies are adverse to 
the national security interests of the United States;
    (B) The country's Communist or non-Communist status:
    (C) The present and potential relationship of the country with 
the United States;
    (D) The present and potential relationships of the country with 
countries friendly or hostile to the United States;
    (E) The country's nuclear weapons capability and the country's 
compliance record with respect to multilateral nuclear weapons 
agreements to which the United States is a party; and
    (F) Such other factors as the President considers appropriate.

Nothing in the preceding sentence shall be interpreted to limit the 
authority of the President provided in this Act to prohibit or 
curtail the export of any goods or technology to any country to 
which exports are controlled for national security purposes other 
than countries on the list of controlled countries specified in this 
paragraph. The President shall review not less frequently than every 
three years in the case of controls maintained cooperatively with 
other nations, and annually in the case of all other controls, 
United States policy toward individual countries to determine 
whether such policy is appropriate in light of the factors set forth 
in this paragraph.

50 U.S.C. App. 2405. Foreign Policy Controls

    (a) Authority.
    (1) In order to carry out the policy set forth in paragraph 
(2)(B), (7), (8), or (13) of section 3 of this Act [50 USCS Appx. 
Sec.  2402(2)(B), (7), (8), or (13)], the President may prohibit or 
curtail the exportation of any goods, technology, or other 
information subject to the jurisdiction of the United States or 
exported by any person subject to the jurisdiction of the United 
States, to the extent necessary to further significantly the foreign 
policy of the United States or to fulfill its declared international 
obligations. The authority granted by this subjection shall be 
exercised by the Secretary, in consultation with the Secretary of 
State, the Secretary of Defense, the Secretary of Agriculture, the 
Secretary of the Treasury, the United States Trade Representative, 
and such other departments and agencies as the Secretary considers 
appropriate, and shall be implemented by means of export licenses 
issued by the Secretary.

50 U.S.C. App. 2410. Violations

    (a) In general. Except as provided in subsection (b) of this 
section, whoever knowingly violates or conspires to or attempts to 
violate any provision of this Act or any regulation, order, or 
license issued thereunder shall be fined not more than five times 
the value of the exports involved or $50,000, whichever is greater, 
or imprisoned not more than 5 years, or both.
    (b) Willful violations.
    (1) Whoever willfully violates or conspires to or attempts to 
violate any provision of this Act or any regulation, order, or 
license issued thereunder, with knowledge that the exports involved 
will be used for the benefit, or that the destination or intended 
destination of the goods or technology involved is, any controlled 
country or any country to which exports are controlled for national 
security or foreign policy purposes--
    (A) except in the case of an individual, shall be fined not more 
than five times the value of the exports involved or $1,000,000, 
whichever is greater; and
    (B) in the case of an individual, shall be fined not more than 
$250,000, or imprisoned not more than 10 years, or both.
* * * * *
    (3) Any person who possesses any goods or technology--
    (A) with the intent to export such goods or technology in 
violation of an export control imposed under section 5 or 6 of this 
Act [50 USCS Appx. Sec. Sec.  2404, 2405] or any regulation, order, 
or license issued with respect to such control, or
    (B) knowing or having reason to believe that the goods or 
technology would be so exported,

shall, in the case of a violation of an export control imposed under 
section 5 [50 USCS Appx. Sec.  2402] (or any regulation, order, or 
license issued with respect to such control), be subject to the 
penalties set forth in paragraph (1) of this subsection and shall, 
in the case of a violation of an export control imposed under 
section 6 [50 USCS Appx. Sec.  2405] (or any regulation, order, or 
license issued with respect to such control), be subject to the 
penalties set forth in subsection (a).
    (c) Civil penalties; administrative sanctions.
* * * * *
    (1)(A) The authority under this Act to suspend or revoke the 
authority of any United States person to export goods or technology 
may be used with respect to any violation of the regulations issued 
pursuant to section 8(a) of this Act [50 USCS Appx. Sec.  2407(a)].
    (B) Any administrative sanction (including any civil penalty or 
any suspension or revocation of authority to export) imposed under 
this Act for a violation of the regulations issued pursuant to 
section 8(a) of this Act [50 USCS Appx. Sec.  2407(a)] may be 
imposed only after notice and opportunity for an agency hearing on 
the record in accordance with sections 554 through 557 of title 5, 
United States Code [5 USCS Sec. Sec.  554-557].
    (C) Any charging letter or other document initiating 
administrative proceedings for the imposition of sanctions for 
violations of the regulations issued pursuant to section 8(a) of 
this Act [50 USCS Appx. Sec.  2407(a)] shall be made available for 
public inspection and copying.
* * * * *
    (h) Prior convictions.
    (1) No person convicted of a violation of this Act (or any 
regulation, license, or order issued under this Act), any 
regulation, license, or order issued under the International 
Emergency Economic Powers Act [50 USCS Sec. Sec.  1701 et seq.], 
section 793, 794, or 798 of title 18, United States Code [18 USCS 
Sec. Sec.  793, 794, 798], section 4(b) of the Internal Security Act 
of 1950 (50 U.S.C. 783(b)) [50 USCS Sec.  783(b)], or section 38 of 
the Arms Export Control Act (22 U.S.C. 2778) [22 USCS Sec.  2778] 
shall be eligible, at the discretion of the Secretary, to apply for 
or use any export license under this Act for a period of up to 10 
years from the date of the conviction. The Secretary may revoke any 
export license under this Act in which such person has an interest 
at the time of the conviction.
    (2) The Secretary may exercise the authority under paragraph (1) 
with respect to any person related, through affiliation, ownership, 
control, or position of responsibility, to any person convicted of 
any violation of law set forth in paragraph (1), upon showing of 
such relationship with the convicted party, and subject to the 
procedures set forth in section 13(c) of this Act.

50 U.S.C. App. 2415. Definitions

    As used in this Act--
    (1) the term ``person'' includes the singular and the plural and 
any individual, partnership, corporation, or other form of 
association, including any government or agency thereof;
* * * * *
    (3) the term ``good'' means any article, natural or manmade 
substance, material, supply or manufactured product, including 
inspection and test equipment, and excluding technical data;
* * * * *
    (5) The term ``export'' means--
    (A) An actual shipment, transfer, or transmission of goods or 
technology out of the United States;
    (B) A transfer of goods or technology in the United States to an 
embassy or affiliate of a controlled country; or
    (C) A transfer to any person of goods or technology either 
within the United States or outside of the United States with the 
knowledge or intent that the goods or technology will be shipped, 
transferred, or transmitted to an unauthorized recipient;
    (6) The term ``controlled country'' means a controlled country 
under section 5(b)(1) of this Act [50 USCS Appx. Sec.  2404(b)(1)];
    (7) The term ``United States'' means the States of the United 
States, the District of Columbia, and any commonwealth, territory, 
dependency, or possession of the United

[[Page 57411]]

States, and includes the outer Continental Shelf, as defined in 
section 2(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 
1331(a) [43 USCS Sec.  1331(a)]);

B. Regulations

    The applicable regulations read as follows:

15 CFR 746.7 Iran

    The Treasury Department's Office of Foreign Assets Control 
(OFAC) administers a comprehensive trade and investment embargo 
against Iran under the authority of the International Emergency 
Economic Powers Act of 1977, as amended, section 505 of the 
International Security and Development Cooperation Act of 1985, and 
Executive Orders 12957 and 12959 of March 15, 1995 and May 6, 1995, 
respectively. This embargo includes prohibitions on export and 
certain reexport transactions involving Iran, including transactions 
dealing with items subject to the EAR. (See OFAC's Iranian 
Transactions Regulations, 31 CFR part 560.) BXA continues to 
maintain licensing requirements on exports and reexports to Iran 
under the EAR as described in paragraph (a)(2) of this section. No 
person may export or rexport items subject to both the EAR and 
OFAC's Iranian Transactions Regulations without prior OFAC 
authorization.

15 CFR 764.2 Violations

    (a) Engaging in prohibited conduct. No person may engage in any 
conduct prohibited by or contrary to, or refrain from engaging in 
any conduct required by, the EAA, the EAR, or any order, license or 
authorization issued thereunder.
* * * * *
    (c) Solicitation and attempt. No person may solicit or attempt a 
violation of the EAA, the EAR, or any order, license or 
authorization issued thereunder.
    (d) Conspiracy. No person may conspire or act in concert with 
one or more persons in any manner or for any purpose to bring about 
or to do any act that constitutes a violation of the EAA, the EAR, 
or any order, license or authorization issued thereunder.
    (e) Acting with knowledge of a violation. 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.
* * * * *
    (g) Misrepresentation and concealment of facts. (1) No person 
may make any false or misleading representation, statement, or 
certification, or falsify or conceal any material fact, either 
directly to BXA, the United States Customs Service, or an official 
of any other United States agency, or indirectly through any other 
person:
    (i) In the course of an investigation or other action subject to 
the EAR; or
    (ii) In connection with the preparation, submission, issuance, 
use, or maintenance of any export control document or restrictive 
trade practice or boycott request report, as defined in Sec.  760.6 
of the EAR; or
    (iii) For the purpose of or in connection with effecting an 
export, reexport or other activity subject to the EAR.
    (2) All representations, statements, and certifications made by 
any person are deemed to be continuing in effect. Every person who 
has made any representation, statement, or certification must notify 
BIS and any other relevant agency, in writing, of any change of any 
material fact or intention from that previously represented, stated, 
or certified, immediately upon receipt of any information that would 
lead a reasonably prudent person to know that a change of material 
fact or intention has occurred or may occur in the future.

V. Findings of Fact

    The Findings of Fact are based on the documentary evidence, the 
testimony of the Bureau's witness, and the entire record. The facts of 
this case are as follows:

A. Background

    1. In the late 1940s through the 1950s, U.S. multinational 
corporations built the national oil extraction and processing 
infrastructures in Iran, Iraq, and Libya. These corporations 
manufactured oil field parts and equipment. Between 1995 through 
present, replacement parts and equipment were needed for repairs of 
malfunctioning oil field parts and equipment. Maintaining a repair 
inventory was also of interest to Iran, Iraq, and Libya. (Tr. 247-
50).\8\
---------------------------------------------------------------------------

    \8\ The citations in this Recommended Decision are as follows: 
Government Exhibit followed by exhibit number, at page number (Gov't 
Ex. --, at --); Transcript followed by page number, (Tr. --); 
Government Proposed Findings of Fact and Conclusions of Law followed 
by number, (Gov't PFF --); and Government Proposed Ultimate Findings 
of Fact and Conclusions of Law, (Gov't PUFF).
---------------------------------------------------------------------------

    2. Between 1995 through present, the United States imposed an 
embargo that restricted the export of munitions and dual use items of 
U.S. origin to Iran absent consent from the Department of Treasury, 
OFAC. Canada's export controls for Canadian-origin commodities that are 
destined for Iran are minimal compared to those of the United States. 
Canada only requires export licenses for munitions exported to Iran. 
Therefore, oil-field equipment can be exported legally from Canada to 
Iran without a license if the equipment is of Canadian-origin. (Tr. at 
266-69).
    3. Because of the close historical, cultural, geographical, and 
other ties with Canada, the United States has relaxed export controls 
affecting commodities whose ultimate destination is Canada. (Tr. 262-
64). If the commodities are merely transiting Canada or the Canadian 
company plans to transship the commodities to a third country, the 
relaxed export controls do not apply. (Id. at 263-65).
    4. Mr. Mahdi knew of the United States' embargo against Iran, which 
restricted the export of U.S. origin commodities to Iran. (Gov't Ex. 3, 
at 26-27; Gov't PFF 27).
    5. Mr. Mahdi is a naturalized Canadian citizen and resident of 
Ontario, Canada. (Gov't Ex. 2, at 16; Gov't Ex. 3, at 20-21; Gov't Ex. 
6, at 1; Gov't PFF 1).
    6. Mr. Mahdi was born in Iraq. He is formally known as Abdulamir 
Mahdi. However, he commonly uses two different names depending on 
whether he is transacting business with Iran or Iraq. When conducting 
business with Iraq, Mr. Mahdi uses an Iraqi name: Amir Mahdi. When 
transacting business in Iran, he goes by an Iranian name: Jasin Khafaf. 
Tr. 100-01; Gov't Ex. 6, at 1: Gov't PFF 2).
    7. From October 1995 through March 17, 1999, Mr. Mahdi served as 
the sole owner and operator of OTS located in Markham, Ontario, Canada. 
(Gov't Ex. 2, at 16; Gov't Ex. 3, at 20-21; Gov't Ex. 6, at 2; Gov't 
PFF 3).
    8. OTS was a Canadian corporation that served as a broker of spare 
parts for oil field and industrial equipment to Middle Eastern 
countries, including Iran and Iraq. (Gov't Ex. 1, at 6; Gov't Ex. 3, at 
20; Gov't PFF 3). OTS had offices in France, and Dubai, United Arab 
Emirates (U.A.E.). OTS also conducted business in Saudi Arabia. (Gov't 
Ex. 6, at 2).
    9. Mr. Tito DiMarco and Mr. Mahdi's only employee at OTS in Canada. 
(Tr. 188).
    10. Approximately 90% of OTS's sales of equipment were to Iran and 
Iraq, and the remaining 10% of the sales were to Saudi Arabia. (Tr. 
178, 236-238; Gov't Ex. 26; Gov't PFF 44).
    11. Neither Mr. Mahdi nor OTS owns any property or liquid assets in 
the United States. (Entire Administrative Record).
    12. At all relevant times, neither OTS nor Mr. Mahdi under his 
formal name or any of his aliases had an export license issued by the 
Department of Commerce or OFAC authorizing the export of oil field 
equipment from the United States to Iran. The Respondents also had not 
applied for such a license. (Tr. 215-17; Gov't Ex. 20; Gov't PFF 39).
    13. Mr. Mahdi served a 51-month sentence in Federal prison after 
pleading guilty to one count of conspiracy to export oil field 
equipment from the United States to Iran and Iraq between March 1997 
and March 1998 without required export license and

[[Page 57412]]

authorization in violation of the Export Administration Act and the 
Export Administration Regulations. (Gov't Ex. 1-5; Tr. 110-125; Gov't 
PFF 6).
    14. Mr. Mahdi's older brother, Mahdik Mahdi owned and oeprated 
Zawana Trading & Marketing Establishment (``Zawana Trading'') in Amman, 
Jordan. The company imports items into Jordan and exports the items to 
Iraq. (Tr. 143; Gov't Ex. 1, at 6; Gov't Ex. 2, at 1; Gov't Ex 7, at 1; 
Gov't PFF 4).
    15. On February 28, 2003, Special Agent Gilfix of OEE performed a 
search for the name ``Mahdi'' on the Internet. The search revealed that 
on April 9, 2002, Respondent's brother Mahdik Mahdi in Amman, Jordan 
posted an advertisement soliciting bids for 140 tons of Alumina Based 
Catalyst to be delivered to Tartuse, Syria. (Tr. 260-62; Gov't Ex. 29).

B. Conspiracy To Export Oil Field Equipment From the United States to 
Iran via Canada

    16. In late 1996 or early 1997, Mr. Abdulamir Mahdi telephoned 
Brevard International Technical Services (``BITS'') in Membourne, 
Florida. BITS was owned and operated by Dr. John Strome, a Canadian 
citizen, who resided in Florida and who was the co-conspirator. Mr. 
Mahdi advised Dr. Strome that he was an oil field and industrial 
equipment broker with clients in the Middle East and that he was 
seeking a U.S. company to serve as an exclusive supplier. (Tr. 136-38; 
Gov't Ex. 1, at 6; Gov't Ex. 2, at 18; Gov't Ex. 6, at 1; Gov't PFF 5, 
9).
    17. When Mahdi first initiated contact with BITS in late 1996 or 
early 1997, he was working on behalf of Tech-Link. Tech-Link was an oil 
field equipment broker but the company terminated operations in 
September 1997. After Tech-Link closed, Mr. Mahdi continued to transact 
business with BITS on behalf of OTS. (Gov't Ex. 3 at 21; Gov't Ex. 6, 
at 1; Gov't PFF 9-10).
    18. In October 1997, Dr. Strome and Mr. Mahdi met in Toronto, 
Canada to discuss the prospects of BITS serving as OTS's exclusive 
supplier of U.S. origin commodities to the Middle East. Under the 
business proposal, BITS would export to OTS products under the BITS 
brand name, OTS would sell the commodities to offshore end users, and 
the end users would obtain replacement parts from BITS through OTS. 
(Tr. 138, 243-44; Gov't Ex. 6, at 1-2; Gov't PFF 10).
    19. A draft ``Confidentiality and Non-Disclosure Exclusive 
Agreement'' (``Agreement'') dated November 1, 1997 between BITS and OTS 
was prepared. In the Agreement, BITS appointed OTS as its sole agent of 
its products in the Middle East, including Iran, Iraq, and Libya once 
the restrictions were lifted. However, the Agreement was never executed 
or otherwise signed by Mr. Mahdi or Dr. Strome of BITS. (Tr. 251-53; 
Gov't Ex. 28; Gov't PFF 11).
    20. Mr. Mahdi sent a follow-up letter dated November 5, 1997 to Dr. 
Strome of BITS. The follow-up letter was on OTS stationary. The letter 
memorialized their agreement and listed nineteen countries that OTS was 
going to try to sell BITS products. The countries were mostly in the 
Middle East. Iran and Iraq were both included in the list of countries. 
(Tr. 241-242; Gov't Ex. 27; Gov't PFF 12).
    21. Neither BITS nor Dr. Strome applied for or received 
authorization from OFAC to export from the United States to Iran or 
Iraq. (Tr. 215-17; Gov't Ex. 20; Gov't PFF 39).
    22. Although OTS and BITS never finalized their agreement in 
writing, their business relationship proceeded on the basis of a 
handshake and the list of countries provided by Mahdi in the November 
5, 1997 letter. (Tr. 253; Gov't PFF 13).
    23. In late November or early December of 1997, OEE initiated an 
investigation of BITS involving illegal export activities relating to 
Libya. (Tr. 101-04). Special Agent Gilfix of OEE obtained a federal 
search warrant and seized 25 to 35 boxes of business records belonging 
to BITS. (Tr. 105-06; Gov't Ex. 6, at 2). The BITS investigation led 
OEE to later investigate Respondents OTS and Mahdi for export 
violations. (Tr. 103-04).
    24. Dr. Strome contacted Mr. Mahdi and advised him that OEE had 
visited BITS and taken some business records. Mr. Mahdi did not appear 
to be concerned and continued to do business with BITS. (Tr. 106-07; 
Gov't Ex. 6, at 2).
    25. In September 1998, Dr. Strome visited Mahdi and his older 
brother Mahdik Mahdi in Canada. Mr. Mahdik Mahdi advised Dr. Strome 
that the Mahdi family was very affluent and owned homes near Saddam 
Hussein's palace in Baghdad. Mr. Madhik Mahdi further stated that the 
family conducted business with Iraq's elite, including ministerial and 
higher level staff. According to Mr. Mahdik Mahdi, the business 
relationship between OTS and BITS would prove to be prosperous once the 
embargo on Iraq was lifted. In the presence of Mr. Strome, Mr. Mahdik 
and Respondent Mahdi reviewed files and drawings for projects in Iraq. 
The Mahdis also called Iraq to discuss projects. (Tr. 253; Gov't Ex. 6, 
at 2; Gov't PFF 14).
    26. From March 1997 through March 1999, Mr. Mahdi doing business as 
OTS submitted 117 Request for Quotations (``RFQ'') to BITS. Of the 117 
RFQs, a total of 42 requests were made on behalf of customers in Iran. 
Thirty-six requests were made on behalf of Zawana Trading, which OEE 
believes were transshipped by Mr. Mahdi's brother to Iraq. Mr. Mahdi 
requested quotations from numerous U.S. corporations and bought 
equipment from the lowest bidder. Since Dr. Strome was not always the 
lowest bidder, not all RFQs resulted in shipments from BITS through OTS 
to Iran. (Tr. 224-26, 244-47; Gov't Ex. 21, 21A, 25; Gov't PFF 40-41).
    27. The RFQs submitted by OTS to BITS on behalf of customers in 
Iran included: a request for a quotation for parts for a Shaffer 
Agitator Shaft and Turbine submitted on December 8, 1997 under 
reference number 223-127-RSA by Mr. DiMarco of OTS on behalf of Razi 
Petrochemical; a request for quotation for parts for a Coppus Steam 
Turbine submitted on July 14, 1998 by Mr. DiMarco of OTS under 
reference number 463-078-ACT on behalf of Arak Petrochemical; and a 
request for quotation for a Coppus Steam Turbine submitted by Mr. 
DiMarco of OTS under reference number 529-088-ACO on behalf of Arak 
Petrochemical. (Tr. 228-32; Gov't Ex. 22-25; Gov't PFF 42).

C. The Export of Oil Field Equipment From the United States to Iran via 
Canada

    28. The business relationship between OTS and BITS involved Mr. 
Mahdi placing RFQs with BITS on behalf of Middle Eastern customers. Mr. 
Mahdi assigned an alphanumeric reference consisting of ten digits to 
each RFQ. The first letter in the reference identified the end-user/
prospective purchaser. (Tr. 141; Gov't Ex. 7; Gov't PFF 10, 17).
    29. OTS's code for end-user/prospective purchaser was as follows: T 
= Kala Naft, Tehran, Iran (a subsidiary of National Iranian Oil Co.); K 
= Kala Naft, Canada; R = Razi Petrochemical, Iran (an affiliate of 
National Petrochemical Co.); A = Arak Petrochemical, Iran (an affiliate 
of National Petrochemical Co.); N = National Iranian Gas Company Iran; 
S = Saudi Arabia; M = Saudi Arabian medical end-users; and Z = Zawana 
Trading. (Tr. 142-43, 150, 234; Gov't Ex. 7, 9, 25; Gov't PFF 17, 43).
    30. The last two letters represented the manufacturer or commodity. 
For example, GE represented General Electric and WP would represent 
water pumps. (Gov't Ex. 7).

[[Page 57413]]

1. The October 30, 1997 Export From the United States to Iran
    31. On or about July 22, 1997, Mr. Mahdi submitted an irrevocable 
purchase order to Dr. Strome of BITS for $41,695.46 worth of oil field 
equipment for a Halliburton cementing unit on OTS stationery. The 
reference number was 701-1320-TSI. Using OTS's established code, the 
``T'' indicates that the end-user was Kala Naft, Tehran, Iran. The 
``SI'' represents Smith International, a U.S. manufacturer. (Tr. 148, 
152; Gov't Ex. 8; Gov't PFF 19).
    32. A BITS invoice dated July 23, 1997 memorialized the sale of 
$42,356.56 worth of oil field equipment to OTS under reference number 
701-1320-TSI. The equipment was to be shipped on October 29, 1997 to 
Danzas Canada, Limited (``Danzas''), a freight forwarder located in 
Ontario, Canada. (Tr. 151; Gov't Ex. 10; Gov't PFF 21).
    33. On October 30, 1997, Forward Logistics Group, Inc. (``Forward 
Logistics''), a freight forwarder acting on behalf of BITS, shipped the 
equipment purchased by OTS under reference number 701-1320-TSI. The 
equipment was shipped to OTS in care of Danzas. Forward Logistics 
prepared the Shipper's Export Declaration (``SED'') on behalf of BITS. 
Item 7 in the SED indicated that the country of ultimate destination 
was ``Toronto.'' The true country of ultimate destination was Iran. 
Forward Logistics did not know the product would end in Iran. (Tr. 156-
60, 166-69; Gov't Ex. 11, 12; Gov't PFF 22-24).
    34. When Danzas received the comodities that were shipped on 
October 30, 1997, pursuant to Mr. Mahdi's directions, the oil field 
equipment was consolidated with other equipment OTS had purchased from 
another company located in Texas. All of the equipment was then sent to 
Iran via Cypress. In an effort to apply Canadian export law, the 
country of origin for the equipment was falsely identified as Canada. 
(Tr. 153-55, 169-72, 177-78; Gov't Ex. 10; Gov't PFF 25-26).
2. The February 2, 1998 Export From the United States to Iran
    35. On October 23, 1997, Mr. Mahdi submitted an irrevocable 
purchase order to Dr. Strome of BITS for $69,478.20 worth of oil field 
equipment. The purchase order was prepared on OTS stationary. The 
reference number was 702-1360-TSI. (Tr. 180; Gov't Ex. 6, at 4; Gov't 
Ex. 13; Gov't PFF 28).
    36. In January 1998, BITS sold approximately 845 parts for a 
Halliburton cementing unit to OTS under reference number 702-1360-TSI. 
(Tr. 183-84; Gov't Ex. 6, at 4; Gov't Ex. 14).
    37. Mr. Mahdi hired Pars Maritime Cargo, Inc. (``PCMI'') of Quebec, 
Canada to transport the parts via truck from BITS in Florida to 
Ontario, Canada. PCMI is the general sales agent for Iran Air. PCMI 
picked up the parts from BITS on February 2, 1998. (Tr. 185-187; Gov't 
Ex. 6, at 4; Gov't Ex. 14, 15; Gov't PFF 29-30).

D. The Attempt To Export Oil Field Equipment on March 17, 1999

    38. On April 21, 1998, Mr. DiMarco of OTS submitted an irrevocable 
purchase order under reference number 013-077-BTB to Dr. Strome of 
BITS. The reference number contained a typographical error. The true 
reference number was 013-077-TBT. (Tr. 188, 191-93, 197-98; Gov't Ex. 
6, at 4; Gov't Ex. 7, at 4; Gov't Ex. 16, 17; Gov't PFF 32).
    39. OTS ordered $121,082.70 worth of extracting equipment used ot 
remove broken drill heads from oil wells under reference number 013-
077-TBT. The extracting equipment was to be manufactured by Bowen 
Tools, a U.S. manufacturer. Based on Madhi's transaction code, the end-
user was Kala Naft, Tehran, Iran. (Tr. 196-201, 206-208; Gov't Ex. 9, 
16, 18A; Gov't PFF 32-33).
    40. On May 26, 1998, Mr. Mahdi, acting on behalf of OTS, wired 
$16,082 in U.S. currency to BITS account. The money was a deposit for 
the equipment ordered under reference number 013-077-TBT. (Tr. 189-91; 
Gov't Ex. 16, at 3; Gov't Ex. 17; Gov't PPF 34).
    41. In January 1999, Dr. Strome began cooperating with OEE 
investigators. (Tr. 105-107).
    42. On or about March 4, 1999, Mr. Mahdi instructed Dr. Strome to 
export the equipment ordered by OTS under reference number 013-077-TBT 
to Industrial Engineering Inspection Company of Iran (``I.E.I.'') for 
inspection. (Tr. 201, 207, 210-15; Gov't Ex. 18A, at 3; Gov't Ex. 18, 
19; Gov't PFF 35-36).
    43. Dr. Strome advised Special Agent Gilfix of OEE that Respondent 
had telephoned him from Canada and ordered that $120,000 worth of oil 
field equipment be shipped and inspected by an Iranian inspection 
company. At Special Agent Gilfix's behest Dr. Strome advised Mr. Mahdi 
that he would not export the equipment since they were destined for 
Iran. Instead, Mr. Mahdi agreed to meet Dr. Strome in Melbourne, 
Florida where the equipment could be inspected for Iran. (Tr. 107-109).
    44. In the interim, Special Agent Gilfix obtained an arrest warrant 
from a fedral magistrate judge in Orlando, Florida based on a criminal 
complaint alleging that Mr. Mahdi violated U.S. export laws and 
regulations. (Tr. 109).
    45. In mid-March 1999, Mr. Mahdi flew to Florida to inspect the 
equipment for Iran. After inspecting and obtaining the oil field 
equipment ordered under reference number 013-077-TBT, Mr. Mahdi was 
arrested. (Tr. 109, 202; Gov't PFF 37-38).

VI. Ultimate Findings of Fact and Conclusions of Law

    1. Mr. Mahdi, OTS, and the subject matter of this proceeding are 
properly within the jurisdiction of the BIS in accordance with the 
Export Administration Act of 1979 (50 U.S.C. App. Secs. 2401-2420) and 
the Export Administration Regulations (15 CFR parts 730-774).
    2. On the basis of an Order dated September 6, 2002, granting 
summary decision against Mr. Mahdi, Charge 1 relating to the conspiracy 
to export oil field equipment between March 1997 and April 1998 from 
the United States to Iran via Canada is found proved under the doctrine 
of collateral estoppel. (Gov't PUFF 49-50, 56).
    3. BIS has established by a preponderance of the evidence that the 
Respondents violated Sec. Sec.  746.7 and 764.2(a) of the EAR by 
exporting oil field equipment from the United States through Canada to 
Iran on October 30, 1997 and February 2, 1998 without obtaining prior 
authorization from OFAC. (Gov't PUFF 51-53, 56).
    4. BIS has established by a preponderance of the evidence that the 
Respondents violated Sec. Sec.  746.7 and 764.2(c) of the EAR by 
attempting to export oil field equipment from the United States through 
Canada to Iran on March 17, 1999 without obtaining prior authorization 
from OFAC. (Gov't PUFF 54, 56).
    5. BIS has established by a preponderance of the evidence that the 
Respondents violated Sec.  764.2(g) of the EAR by making false and 
misleading statements of material fact on a Shipper's Export 
Declaration on October 30, 1997 that the country of ultimate 
destination of the oil field equipment was Canada, when, in fact, the 
true country of ultimate destination was Iran. (Gov't PUFF 55, 56).
    6. BIS has established by a preponderance of the evidence that the 
Respondents violated Sec.  764.2(e) transferring and forwarding goods, 
on or about October 30, 1997, to Iran knowing the goods had been 
exported from the

[[Page 57414]]

United States in violation of the EAR. (Gov't PUFF 57).
    7. Under the theory of respondeat superior, OTS is liable for the 
actions of Mr. Mahdi and the sole employee, Mr. DiMarco, who were both 
acting on behalf of the corporation and whose actions resulted in 
violations of the EAA and EAR. (Gov't PUFF 49).
    8. BIS has established that denial of export privileges for 20 
years against Mr. Mahdi and OTS is justified and reasonable. (Gov't 
PUFF 58).

VII. Discussion

A. Applicability of the Export Administration Act and Regulations to 
Respondents

    Throughout these proceedings, the Respondents have contended that 
BIS lacks jurisdiction. More specifically, Mr. Mahdi claimed that U.S. 
export laws do not apply to him as a Canadian citizen or OTS operating 
in Canada. This argument is rejected.
    The authority delegated by Congress to the President of the United 
States under the EAA is extensive. The EAA gives the President 
authority to regulate or prohibit the export of goods, technology, and 
information ``to the extent necessary to further the foreign policy of 
the United States or fulfill its international obligation.'' See 50 
U.S.C. App. Sec. 2405(a)(1). The EAA also authorizes the President to 
regulate or prohibit the export of goods or technology in the interest 
of national security. See 50 U.S.C. App. Secs. 2402(2)(A), 2404(a)(1). 
The statute makes clear that ``[a]ny export control imposed under (the 
EAA) shall apply to any transaction or activity undertaken with the 
intent to evade that export control, even if that export control would 
not otherwise apply to that transaction or activity.''
    In 1987, the President invoked import sanctions against Iran to 
``ensure that United States imports of Iranian goods and services will 
not contribute financial support to terrorism.'' Exec. Order. No. 
12613, reprinted in 52 FR 41940 (Oct. 30, 1987). In 1995, the President 
declared a national emergency with respect to the actions and policies 
of the Iranian Government. See Exec. Order No. 12957, reprinted in 60 
FR 14615 (Mar. 15, 1995). The President expanded the sanctions imposed 
against Iran to prohibit both import of Iranian-origin products and 
export of U.S. origin goods, technology, or services to Iran. See Exec. 
Order No. 12959, reprinted in 60 FR 24757 (May 6, 1995).
    Exec. Order No. 12959 and its implementing regulations generally 
prohibit the exportation of any goods, technology or services from the 
United States to Iran without express authorization from OFAC. See 31 
CFR 560.204, 560.501. This prohibition includes the exportation of any 
goods ``to any person in a third country undertaken with knowledge or 
reason to know that such goods * * * are intended specifically for 
supply, transshipment, or reexportation, directly or indirectly, to 
Iran or the Government of Iran.'' See 31 CFR 560.204(a).
    Section 746.7 of the EAR incorporates the OFAC's Iran Transactions 
Regulations by reference. It provides: ``No person may export or 
reexport items subject to both the EAR and OFAC's Iranian Transactions 
Regulations without prior OFAC authorization.'' 15 CFR 7467.7. The term 
``export'' means the ``actual shipment, transfer or transmission of 
goods or technology out of the United States; (the) transfer of goods 
or technology in the United States to an embassy or affiliate of a 
controlled country; or a transfer to any person of goods or technology 
either with the knowledge or intent that the goods or technology will 
be shipped, transferred or transmitted to an unauthorized recipient.'' 
50 U.S.C. App. sec. 2415(5); see also 15 CFR 734.2(b)(1). The term 
``reexport'' means ``an actual shipment or transmission of items 
subject to the EAR from one foreign country to another foreign 
county.'' 15 CFR 734.2(b)(4). BIS has authority to exercise regulatory 
jurisdiction over all items subject to the EAR. 15 CFR 734.2(a)(1). The 
regulations clearly provide that ``[a]ll U.S. origin items wherever 
located'' are subject to the EAR. 15 CFR 734.4(a)(2).
    From the plain language of the export laws and regulations, it is 
clear that the EAA and EAR were intended to apply extraterritorially 
regardless of a person's nationality or locality so long as U.S. origin 
items are involved. Counsel for BIS accurately pointed out that the EAA 
and EAR have an in rem basis, applicable to ``goods * * * subject to 
the jurisdiction of the United States.'' Thus, it is immaterial that 
Mr. Mahdi is a naturalized Canadian citizen, OTS was a Canadian 
corporation, and some of the activities occurred in Canada. To hold 
otherwise would contravene exiting law and regulation, and would 
undermine the effectiveness of the EAA and the EAR.

B. Violations of the Export Administration Act and Regulations

    While Mr. Mahdi refused to participate in much of the hearing and 
did not contest much of the evidence presented, the burden of proof 
remains on the Agency to prove the allegations in the charging letter 
by reliable, probative, and substantial evidence. See 5 U.S.C. 556(d). 
The Supreme Court has held that 5 U.S.C. 556(d) adopts the traditional 
preponderance of the evidence standard of proof. Steam v. S.E.C., 450 
U.S. 91, 102 (1981). To prevail, BIS must establish that it is more 
likely than not that the Respondents commented the violations alleged 
in the charging letter. See Herman & Maclean v. Huddleston, 529 U.S. 
375, 390 (1983). In other words, 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). To satisfy the burden of proof, BIS may rely on direct and/
or circumstantial evidence. See generally Monsanto Co. v. Spray-Rite 
Serv. Corp., 465 U.S. 752, 764-765 (1984).
    Here, the Agency has produced quantum evidence, including witness 
testimony and documentary evidence, which establish that Respondents 
Mahdi and OTS violated the Sec. Sec.  746.7 and 764.2 of the EAR. It is 
well settled that a corporation can be held liable for the actions of 
its officers and employees committed within the scope of employment and 
in furtherance of the employer's business. See Untied States v. BI-Co 
Pavers, Inc., 741 F.2d 730, 737 (5th Cir. 1984); United States v. 
Sherpix, 512 F.2d 1361, 1367 n. 7 (D.C. Cir. 1975). The doctrine of 
respondent superior is applicable in export cases.
1. Conspiracy To Obtain Oil Field Equipment From the United States
    Respondent Mahdi and the corporate respondent, OTS, have been 
charged in Count 1 with conspiracy to export goods to Iran in violation 
of Sec.  746.7 of the EAR. The conspiracy regulations provide: ``No 
person may conspire or act in concert with one or more persons in any 
manner or for any purpose to bring about or to do any act that 
constitutes a violation of the EAA, the EAR, or any other order, 
license or authorization issued thereunder.'' 15 CFR 764.2(d). To 
succeed under Sec.  764.2(d), the Agency must establish that: (1) Two 
or more persons formed an agreement to violate the EAA or EAR; (2) the 
respondent knowingly participated in the conspiracy; and (3) an overt 
act was committed in furtherance of a common scheme. See generally 50 
U.S.C. App. 2410(a). The conspiracy charge with respect to Mr. Mahdi 
has already been found proved on the basis of collateral estoppel.
    On September 6, 2002, summary decision was entered against Mr. 
Mahdi on Charge 1 on the basis of collateral

[[Page 57415]]

estoppel arising from the guilty plea in the criminal proceeding. The 
evidence shows that between March 1997 and April 1998, Mr. Mahdi was 
acting on behalf of OTS when he entered into business arrangements with 
Dr. Strome of BITS to provide U.S. origin oil field equipment to 
customers in Iran. (Tr. 138, 241-44, 251-53; Gov't Ex. 3, at 21; Gov't 
Ex. 6, at 1-2; Gov't Ex. 27-28; Gov't PFF 9-12, 14; Gov't PUFF 49). Mr. 
Mahdi and Mr. DiMarco took several actions in furtherance of the 
conspiracy by submitting approximately 117 RFQs to BITS on behalf of 
customers in Iran. (Tr. 224-26, 244-47; Gov't Ex. 21, 21A, 25; Gov't 
PFF 40-41; Gov't PUFF 49). The mere fact that RFQs submitted to BITS 
did not all result in shipments from BITS through OTS to Iran is not 
crucial. Conspiracy is an inchoate offense that can be committed 
regardless of whether object of the venture is achieved. See United 
States v. Plummer, 221 F.3d 1298, 1306 (11th Cir. 2000); See also 
Iannelli v. United States, 420 U.S. 770, 777 (1975). Since Mr. Mahdi 
and DiMarco's activities were performed within the scope of employment 
and in furtherance of OTS's business, the violations of section 
764.2(d) are attributable to OTS.
2. Unauthorized Export From the United States to Iran
    Charges 2 and 3 allege that the Respondents violated section 
764.2(a) by unlawfully exporting oil field equipment from the United 
States to Iran through Canada without obtaining prior authorization 
from OFAC on October 30, 1997 and February 2, 1998. Both charges are 
found proved. The relevant regulation prohibits any person from 
engaging in ``any conduct prohibited by or contrary to * * * the EAA 
(or) the EAR.'' 15 CFR 764.2(a). As previously stated, Sec.  746.7 
prohibits any person from exporting or reexporting goods to Iran 
without prior OFAC authorization.
    The administrative record clearly establishes that neither BITS, 
nor OTS, nor Mr. Mahdi under any of his names, had applied for or 
received OFAC authorization to export from the United States to Iran. 
(Tr. 215-17; Gov't Ex. 20; Gov't PFF 39). Absent OFAC authorization, 
the export of goods to Iran constitutes a violation of the EAA and its 
underlying regulations.
    The facts show that, in response to an irrevocable purchase order 
containing reference number 701-1320-TSI submitted by Mr. Mahdi, Dr. 
Strome of BIST sold $42,356.56 worth of U.S. manufactured oil field 
equipment to OTS. The oil field equipment was exported to OTS's freight 
forwarder, Danzas, located in Ontario, Canada. (Tr. 148, 152, 156-60, 
166-69; Gov't 8, 11, 12; Gov't PFF 19, 22-24). The ``T'' in the 
reference number indicates that the end-user was Kala Naft, Tehran, 
Iran. (Tr. 148, 152; Gov't 8; Gov't PFF 19). Pursuant to Mr. Mahdi's 
directions, the oil field equipment was consolidated with other OTS 
equipment and exported to Iran via Cypress. (Tr. 153-55, 169-172, 177-
178; Gov't Ex. 10; Gov't PFF 25-26). Further, to evade detection and so 
that Canadian law would apply, the country of origin for the products 
was identified as Canada when the true country of origin was the United 
States. Id.
    The law contemplates that transfer of U.S. origin goods from one 
foreign country to another foreign country falls within the purview of 
the EAA and its underlying regulations. See 50 U.S.C. App. sec. 
2415(5); see also 15 CFR 734.2(b). Thus, Mr. Mahdi's actions constitute 
a violation of Sec.  764.2(a) on October 30, 1997 as described in 
Charge 2. Since the export to Iran was performed in furtherance of 
OTS's business, the corporate respondent is equally liable for the 
violation of Sec.  764.2(a).
    The Respondents are also liable for violating Sec.  764.2(a) on 
February 2, 1998 as described in Charge 3. The evidence shows that, in 
response to purchase 702-1360-TSI, Dr. Strome of BITS sold $69,478.20 
worth of U.S. manufactured oil field equipment to OTS. (Tr. 180-184; 
Gov't Ex. 6, at 4; Gov't Ex. 13, 14; Gov't PFF 28). Mr. Mahdi hired 
Pars Maritime Cargo, Inc., a general sales agent for Iran Air, to pick 
up the equipment from BITS in Florida and export it on February 2, 
1998. (Tr. 185-187; Gov't Ex. 6, at 4; Gov't Ex. 14, 15; Gov't PFF 29-
30). Although no direct evidence was presented showing that the 
equipment was subsequently exported to Iran, there is sufficient 
circumstantial evidence that the equipment was exported to Iran.
3. Soliciting or Attempting an Unauthorized Export From the United 
States to Iran
    Charge 4 is also proved. Section 764.2(c) prohibits any person from 
soliciting or attempting to violate the EAA or the EAR. Solicitation is 
defined as ``asking another person to commit an offense.'' In the 
Matter of the Sound You Company, Ltd. and Yuzo Oshima, 58 FR 60593, 
60597 (Nov. 17, 1993). ``For the offense of solicitation to be 
completed, the (respondent) must entice, advise, incite, order or 
otherwise encourage another to commit an offense.'' Id. Like 
conspiracy, it is not necessary that the unlawful offense to actually 
be completed to order to find the charge of solicitation proved. Id.
    Attempt is another inchoate crime, like conspiracy and 
solicitation, which ``can be committed regardless of whether the 
objective of the venture is achieved.'' Plummer, 221 F.3d at 1306. 
Attempt consists of: (1) An intent to engage in an unlawful activity; 
and (2) an overt act committed in furtherance of the unlawful activity. 
See generally 21 Am. Jur. 2d, Criminal Law Sec.  175 (2003). 
Preparation alone or a mere statement of one's intent to commit an 
unlawful activity is not enough to constitute an attempt; rather the 
respondent must engage in some appreciable overt act. Id. at Sec.  177.
    Here, the activities of Mr. Mahdi and OTS go beyond mere 
preparation. By soliciting Dr. Strome of BITS, on March 4, 1999, to 
export $120,000 worth of oil filed equipment ordered by OTS under 
reference number 013-077-TBT to Industrial Engineering Inspection 
Company of Iran for inspection, Mr. Mahdi and OTS violated section 
764.2(c). (Tr. 107-09, 201, 207, 210-15; Gov't Ex. 18A, at 3; Gov't Ex. 
18, 19; Gov't PFF 35-36). Mr. Mahdi and OTS violated Sec.  764.2(c) 
again in mid-March when Mahdi went to Florida to inspect and obtain the 
oil field equipment ordered under reference 013-077-TBT because Dr. 
Strome refused to export the equipment to Iran. (Tr. 107-09, 202; Gov't 
PFF 37-38). Although the Respondents committed two distinct counts of 
violations of Sec.  764.2(c), BIS has charged them with a single count. 
That count is found proved.
4. Making a False Statement on a Shipper's Declaration
    Charge 5 is also found proved. Section 764.2(g) prohibits any 
person from making a misrepresentation or false statement of any 
material fact on any export control document. See 15 CFR 764.2(1)(ii). 
A SED qualifies as an export control document. See 15 CFR 772.1.
    The Agency charges Respondents Mahdi and OTS with making a false 
and misleading statement of material fact on an SED on October 30, 
1997. The SED falsely stated that the country of ultimate destination 
of the oil field equipment ordered in reference number 701-1320-TSI was 
Toronto. However, the true country of ultimate destination was Iran. 
Neither OTS nor Mr. Mahdi prepared the SED on October 30, 1997. Forward 
Logistics prepared the SED as directed by Dr. Strome. (Tr. 156-60, 166-
69; Gov't Ex. 11, 12; Gov't PFF 22-24). BIS relies on Pinkerton v. 
United States, 328 U.S. 640 (1946), to hold Mr. Mahdi and OTS liable 
for the violation of section 764.2(g).

[[Page 57416]]

    The Agency's argument is well taken. In Pinkerton, the Supreme 
Court held that a participant in a conspiracy is liable for the 
substantive offenses committed by co-conspirators in furtherance of the 
common objective. 328 U.S. at 645-48. In this case, Forward Logistics 
prepared the SED containing false information of material fact 
regarding the country of ultimate destination. Forward Logistics 
prepared the SED as directed by Dr. Strome. The preparation of the 
false SED was within the scope of the conspiracy, and in a manner 
reasonably foreseeable by Respondents OTS and Mahdi as a natural 
consequence of the conspiracy. Accordingly, the violation of Sec.  
764.2(g) is attributable to OTS and Mr. Mahdi even though the 
Respondents did not actually prepare the SED.
5. Knowingly Violating the Export Administration Regulations
    The final charge is also found proved. Charge 6 alleges that Mr. 
Mahdi and OTS violated Sec.  764.2(e) by transferring and forwarding 
goods from Canada to Iran on or about October 30, 1997 knowing those 
goods had been exported from the United States in violation of the EAR. 
Section 764.2(e) prohibits any person from transferring, transporting, 
or forwarding ``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 EAR [or] the EAR * * * has occurred.'' 15 CFR 
764.2(e).
    The evidence shows that Mr. Mahdi knew of the United States' 
embargo against Iran, which restricted the export of U.S. commodities 
to Iran (Gov't Ex. 3, at 26-27; Gov't PFF 27). As a matter of fact, 
during the Change of Plea Proceedings before the United States District 
Court for the Middle District of Florida (Honorable Anne C. Conway) in 
Orlando, Florida on August 24, 1999, Mr. Mahdi testified that he knew 
that Dr. Strome could not lawfully export the goods to Iran without the 
assistance of Mahdi and OTS. (Gov't Ex. 3, at 27-28). This knowledge is 
imputed to OTS, on whose behalf Mr. Mahdi was acting. See generally, In 
re: Hellenic, Inc., 252 F.3d 391, 395 (5th Cir. 2001) (``An agent's 
knowledge is imputed to the corporation where the agent is acting 
within the scope of his authority and where the knowledge relates to 
matters within the scope of that authority * * * (C)ourts generally 
agree that the knowledge of directors or key officers, such as the 
president and vice president, is imputed to the corporation).
    The facts further show that Danzas shipped the oil field equipment 
ordered by OTS under reference number 701-1302-TSI to Iran via Cypress. 
(Tr. 153-55, 169-72, 177-78; Gov't Ex. 10; Gov't PFF 25-26). Moreover, 
so that Canadian export law would apply, the country of origin for the 
equipment was falsely identified as Canada. Id. the true country of 
origin was the United States. These activities constitute a violation 
of Sec.  764.2(e) for which Mr. Mahdi and OTS are liable.

VIII. Reason for the Sanction

    Based on the number and gravity of the offenses and the fact that 
it appears that Mr. Mahdi and OTS may resume efforts to make 
unauthorized exports from the United States, the Agency's proposed 
sanction of denial of U.S. export privileges for 20 years is deemed 
appropriate.
    There is an on-going war against terrorism. The events of September 
11, 2001 reveal that international terrorism is a real threat to the 
national security of the United States. To limit and curtail the 
financial support of terrorism the United States established an embargo 
against Iran. The Respondents circumvention of the embargo by exporting 
goods destined for Iran through Canada cannot be tolerated. The facts 
show that in order to achieve their objective Respondents made false 
statements, or caused false statements to be made, on various export 
documents in the United States and in Canada. The facts also show that 
BITS was not the only U.S. company that had business dealings with OTS. 
Mr. Mahdi and OTS solicited quotations on behalf of customers in Iran 
and other Middle Eastern countries from a number of U.S. companies and 
bought equipment from the lowest bidder. (Tr. 224-25, 244-47; Gov't Ex. 
21, 21A, 25; Gov't PFF 40-41). As Agency counsel correctly points out, 
Respondents efforts were extensive and far-reaching.
    The value of the goods actually exported and those that Respondents 
attempted to export exceeded $232,834. Dr. Strome, Mr. Mahdi, and 
Mahdik Mahdi all perceived that the business venture was lucrative and 
could prove to be prosperous. (Tr. 253; Gov't Ex. 6, at 2; Gov't PFF 
14). As recent as April 2002, BIS learned that Mr. Mahdi's brother in 
Amman, Jordan posted an advertisement soliciting bids for a certain 
type of catalyst. (Tr. 260-62; Gov't Ex. 29). The record shows that Mr. 
Mahdi's brother, owner of Zawana Trading, had been instrumental in 
facilitating the unauthorized export of equipment to Middle Eastern 
countries such as Iraq. (Tr. 178, 224-26, 236-238, 244-47, 253; Gov't 
Ex. 6, at 6; Gov't Ex. 21, 21A, 25, 26; Gov't PFF 14, 40-41, 44). The 
Agency notes that Mr. Mahdi and OTS are well positioned in Canada where 
the export laws are less stringent with respect to Iran. By the same 
token U.S. export laws concerning Canada are minimal. Thus, Respondents 
have an opportunity to resume their efforts if they so choose.
    In order to deter such actions and prevent Respondents from 
committing future violations of the EAA and EAR, a significant denial 
order is not only warranted. It is justifiable. Agency counsel has 
established that a 20-year order denying export privileges is not 
without precedent. See In the Matter of Miguel Angel Fajardo, 66 FR 
30162 (Jun. 5, 2001); In the Matter of Fawzi Mustapha Assi, 64 FR 40816 
(Jul. 28, 1999); In the Matter of Ian Ace, 62 FR 43505 (Aug. 14, 1997).
    The Recommended Decision and Order is being referred to the Under 
Secretary for review and final action. As provided by Sec.  
766.17(b)(2) of the EAR, the recommended decision and order is being 
served by express mail. Because the Under Secretary must review the 
decision in a short time frame, all papers filed with the Under 
Secretary in response to the recommended decision and order must be 
sent by personal delivery, facsimile, express mail, or other overnight 
carrier as provided in Sec.  766.22(a) of the EAR. Submissions by the 
parties must be filed with the Under Secretary for Export 
Administration, Bureau of Industry and Security, U.S. Department of 
Commerce, Room H-3898, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230, within 12 days from the date of issuance of this 
Recommended Decision and Order. Thereafter, the parties have eight days 
from receipt of any response(s) in which to submit replies.
    Within 30 days after receipt of this Recommended Decision and 
Order, the Under Secretary shall issue a written order, affirming, 
modifying or vacating the recommended decision and order. See 15 CFR 
766.22(c).

    Done and dated August 26, 2003, at Norfolk, Virginia.
Peter A. Fitzpatrick,
Administrative Law Judge, Norfolk, Virginia.

Attachment A--Exhibit List

A. Judge's Exhibit

Judge's Ex. 1--Memorandum to File dated 24 April 2003 from Lucinda 
Shinault, Paralegal to the Administrative Law Judge
Judge's Ex. 2--Return to Sender Letter dated April 21st, 2002\9\
---------------------------------------------------------------------------

    \9\ J. Khan signed for the Federal Express package on 4/17/2003. 
Thus, the unidentified correspondent incorrectly dated the return to 
sender letter. The true date is April 21, 2003.

---------------------------------------------------------------------------

[[Page 57417]]

B. Government Exhibit

Gov. Ex. 1A--Canadian Department of Justice (``DOJ'') Facsimile 
Memorializing Shipment of Boxes of Exhibits and Receipt thereof by Mr. 
Mahdi--Ruling on admissibility reserved \10\
---------------------------------------------------------------------------

    \10\ Ruling of admissibility on Government's Exhibits 1A and 1B 
were reserved pending service of those documents on Respondent. 
Notice of Service of those exhibits was sent May 14, 2003 so those 
Exhibits are Admitted.
---------------------------------------------------------------------------

Gov. Ex. 1B--Copy of envelope from Mr. Mahdi d/b/a OTS Refining 
Equipment Corporation addressed to the Bureau of Industry & Security--
Ruling on admissibility reserved
Gov. Ex. 1--Two Count Criminal Indictment Filed in the United States 
District Court, Middle District of Florida, Orlando Division on June 
15, 1999
Gov. Ex. 2--Plea Agreement between U.S. Attorney and Mr. Mahdi Filed in 
the United States District Court, Middle District of Florida, Orlando 
Division on Aug 24, 1999
Gov. Ex. 3--Transcript of Change of Plea Proceedings Before the 
Honorable Anne C. Conway, United States District Judge in the United 
States District Court, Middle District of Florida, Orlando Division on 
August 24, 1999
Gov. Ex. 4--Transcript of Sentencing Proceedings Before the Honorable 
Anne C. Conway, United States District Judge in the United States 
District Court, Middle District of Florida, Orlando Division on 
November 19, 1999
Gov. Ex. 5-- Judgment & Sentencing Order in United States v. Abdulamir 
Mahdi, 99-128-CR-ORL-22B (Filed Nov. 22, 1999)
Gov. Ex. 6--Statement of John Strome, President of Brevard 
International Technical Services, Inc. (BITS) dated 1/29/99
Gov. Ex. 7--Report of Investigative Activity and Miranda Warning/Waiver 
signed by Abdulamir Mahdi dated 04-20-99
Gov. Ex. 8--OTS Irrevocable Purchase Order 701-1320-TSI from Mahdi to 
BITS
Gov. Ex. 9--Description of Kala Naft Company downloaded from Web site 
http://www.kalanaft-tehran.com/Introduction.htm on 02/13/03
Gov. Ex. 10--BITS Invoice Document Number 004325
Gov. Ex. 11--Airway Bill MAWB 014-81327750 dated 10/30/1997
Gov. Ex. 12--Shippers Export Declaration 10/30/1997
Gov. Ex. 13--OTS Irrevocable Purchase Order 702-1360-TSI from Mahdi to 
BITS
Gov. Ex. 14--Bill from PARS Maritime Cargo Inc. to OTS Invoice No. 5285 
dated 02/02/98
Gov. Ex. 15--Information on PARS Maritime Cargo Inc. downloaded from 
Web site http://www.openface.ca/[tilde]pars/main.html on 1/19/99
Gov. Ex. 16--OTS Irrevocable Purchase Order 013-077-BTB to BITS\11\
---------------------------------------------------------------------------

    \11\ The purchase order reference number contains a 
typographical error. The true purchase order reference number is 
013-077-TBT.
---------------------------------------------------------------------------

Gov. Ex. 17--Royal Bank of Canada Funds Transfer dated 27 May 1998
Gov. Ex. 18A--Kala Naft Co. Tehran Purchase Order No. 08-70264575-D01 
dated 19/04/98
Gov. Ex. 18--Notes of Telephone Conversations between Mr. Strome and 
Mr. Mahdi on 3/4/99 at 11:50 a.m. taken by Mr. Strome
Gov. Ex. 19--Website printout with Information about Industrial & 
Engineering Inspection Co. of Iran (``IEI'')
Gov. Ex. 20--Letter dated Aug 24, 2000 from Office of Foreign Assets 
Control (``OFAC'') to Bureau of Export Administration\12\
---------------------------------------------------------------------------

    \12\ Now referred to as the Bureau of Industry & Security 
(``BIS'')
---------------------------------------------------------------------------

Gov. Ex. 21--Report of Investigative Activity dated August 25, 2000 
Containing an Itemized List of Request for Quotations from Mahdi to 
BITS.
Gov. Ex. 21A--Information Extracted from Gov. Ex. 21 According to the 
Explanation Provided by Respondent Mahdi in Gov. Ex. 7
Gov. Ex. 22--OTS Request for Quotation 223-127-RSA to BITS
Gov. Ex. 23--OTS Request for Quotation 463-078-ACT to BITS
Gov. Ex. 24--OTS Request for Quotation 529-088-ACO to BITS
Gov. Ex. 25--Information on National Petrochemical Company downloaded 
from Web site http://www.nipc.net/ on 2/13/03
Gov. Ex. 26--Report of Investigative Activity dated August 30, 2000 
summarizing Request for Quotations
Gov. Ex. 27--OTS Letter to Dr. Strome of BITS dated No. 5, 1997 
Identifying Countries Mahdi Sells To
Gov. Ex. 28--Draft Confidentiality and Non-Disclosure Exclusive 
Negotiations Agreement dated 11/1/97
Gov. Ex. 29--Request for Quotation on Alumina Based Catalyst Posted by 
M.K. Mahdi on 04/09/02 downloaded from Web site http://globallcatalyst.com/forum.mv?command=showthread& 
forum+catalyst&post+000004

Attachment B

Rulings on the Bureau's Proposed Findings of Fact and Conclusions of 
Law and Proposed Ultimate Findings of Fact and Conclusions of Law

    On July 10, 2003 the Bureau of Industry and Security filed a Post-
hearing Submission. That pleading included both Proposed Findings of 
Fact and Conclusions of Law (pp 11-26) and Proposed Ultimate Findings 
of Fact and Conclusion of Law (pp 26-33). The rulings on those 
proposals are set out below.

A. Proposed Findings of Fact and Conclusions of Law

    1. Mr. Abdulamir Mahdi is a Canadian citizen and a resident of 
Ontario, Canada. Govt. Ex. 2 at 16; Govt. Ex. 3 at 20, lines 9-12.
    Ruling: Accepted and Incorporated.
    2. Mr. Abdulamir Mahdi is also known as, and conducts business 
using the names, Amir Mahdi and Jasin Khafaf. Govt. Ex. 2 at 1; May 13 
Tr. at 100-01.
    Ruling: Accepted and Incorporated.
    3. From October 1995 through March 17, 1999, Mr. Mahdi was the sole 
owner and operator of OTS Refining Equipment Corporation (OTS) in 
Markham, Ontario, Canada, the business of which included exporting 
spare parts for oil field equipment to Middle Eastern countries. 
Respondent's Motion for Denial of Bureau of Industry and Security's 
Motion for Summary Decision (``Respondent's Motion for Denial'') at 4; 
Govt. Ex. 2 at 16; Govt. Ex. 3 at 20, lines 20-25.
    Ruling: Accepted and Incorporated.
    4. From at least March 1997 to at least April 2002, a brother, 
Mahdik Mahdi, owned and operated the Zawana Trading and Marketing 
Establishment (Zawana) in Amman, Jordan, which shipped items from 
Jordan to Iraq. Govt. Ex. 2 at 17; Govt. Ex. 7 at 1; Govt. Ex. 6 at 2-
3; May 13 Tr. at 143, line 9 to 144, line 5.

    Ruling: Accepted. Although the cited materials do not support 
the statement, the record as a whole does support the factual 
assertions.

    5. From at least late 1996 to at least March 1999, Brevard 
International Technical Services (BITS), located in Melbourne, Florida, 
and operated by John R. Strome, was a supplier of parts for oil field 
equipment. Respondent's Motion for Denial at 8; Govt. Ex. 2 at 17.
    Ruling: Accepted and Incorporated:
    6. On or about August 24, 1999, Mr. Mahdi pled guilty in the United 
States

[[Page 57418]]

District Court, Middle Division of Florida, No. 6:99-CR-128-ORL-22DAB, 
to a criminal conspiracy to make unauthorized exports of U.S. origin 
oil field and industrial equipment from the United States to Iraq and 
Iran. Judgment was entered against Mr. Mahdi, who was sentenced to 51 
months imprisonment. Govt. Exs. 1-5; May 13 Tr. at 110, line 1 to 120, 
line 11; id. at 124, line 14 to 125, line 9. [Charge 1]
    Ruling: Accepted and Incorporated.
    7. The record of the criminal proceeding against Mr. Mahdi, 
including his admissions therein, shows that OTS was involved in the 
conspiracy to which Mr. Mahdi pled guilty. Govt. Ex. 1 at 5, paragraph 
12 (``It was the purpose of this conspiracy for defendant MAHDI, to 
enrich and benefit himself and others by offering to sell and selling 
United States origin oil field and industrial equipment through Tech-
Link and OTS in Canada to Iran and Iraq''); id. at paragraph 13 (``It 
was further part of the manner and means of this conspiracy that 
defendant MAHDI arranged * * * for OTS to import United States origin 
oil field and industrial equipment'' into Canada); Govt. Ex. 2 at 13, 
paragraph 9, at 18, paragraphs 12 and 13 (in plea agreement, Mr. Mahdi 
certified that these facts were true); May 13 Tr. at 110, line 8 to 
119, line 10. [Charge 1]
    Ruling: Accepted and Incorporated.
    8. The record of the criminal proceeding against Mr. Mahdi, 
including his admissions therein, shows that BITS and Mr. Strome were 
involved in the criminal conspiracy to which Mr. Mahdi pled guilty. In 
a separate proceeding, Mr. Strome also pled guilty to a charge of 
criminal conspiracy. Govt. Ex. 1 at 6-8, paragraphs 15a-1, 151-t, 15v 
(``overt acts'' of the conspiracy involving Mr. Strome or BITS); Govt. 
Ex. 2 at 13, paragraph 9, at 18-22 paragraphs 15-23, 26-34, 36 (in plea 
agreement, Mr. Mahdi certified that these facts were true); May 13 Tr. 
at 125, lines 11-25. [Charge 1]
    Ruling: Accepted and Incorporated.
    9. In late 1996 or early 1997, Mr. Mahdi contacted Mr. Strome to 
discuss whether BITS would supply parts for oil field equipment to Mr. 
Mahdi for him to provide to customers, some of whom were in the Middle 
East. At this time, Mr. Mahdi presented himself to Mr. Strome as doing 
business as Tech-Link Development Corporation (Tech-Link). Respondent's 
Motion for Denial at 8; Govt. Ex. 2 at 18, paragraph 15; Govt. Ex. 6 at 
1; May 13, 2003 Tr. at 136, line 20 to 138, line 1. [Charge 1]
    Ruling: Accepted and Incorporated.
    10. Mr. Strome met with Mr. Mahdi in or about October 1997 in 
Toronto, Canada. By this time, Mr. Mahdi had stopped doing business as 
Tech-Link and was doing business with Mr. Strome as OTS. At this 
meeting, they discussed entering into an arrangement in which BITS 
would serve as OTS's exclusive supplier of United States origin 
commodities. Under the proposed agreement, BITS would ship products 
manufactured under BITS's name brand to OTS in Canada, BITS would sell 
the products to customers overseas, and the customers would be 
obligated to obtain replacement parts from BITS through OTS. In fact, 
the business arrangement that they were able to pursue involved OTS and 
Mr. Mahdi placing requests for quotation and orders with BITS on behalf 
of overseas customers, and BITS supplying products manufactured by 
other suppliers to Mr. Mahdi and OTS. Govt. Ex. 2 at 19, paragraph 18; 
Govt. Ex. 6 at 1-2; May 13 Tr. at 161, lines 6-16; id. at 138, lines 2-
18; id. at 241, line 20 to 245, line 12. [Charge 1]
    Ruling: Accepted and Incorporated.
    11. On or about November 1, 1997, Mr. Mahdi and Mr. Strome exchange 
a draft agreement between BITS and OTS, describing the proposed 
arrangement. Govt. Ex. 28; May 13 Tr. at 250, line 24 to 253, line 7. 
[Charge 1]
    Ruling: Accepted and Incorporated.
    12. On or about November 5, 1997, Mr. Mahdi, on behalf of OTS, sent 
a memorandum to Mr. Strome at BITS, which stated: ``Further to our 
various discussions and meetings in Toronto regarding the agency 
agreement, name (sic) of countries are listed below.'' A list of 19 
countries, mostly in the Middle East, followed. These countries 
included Iraq and Iran. Govt. Ex. 2 at 19, paragraph 21; Govt. Ex. 27; 
May 13 Tr. at 240, line 19 to 241, line 19. [Charge 1]
    Ruling: Accepted and Incorporated.
    13. Although Mr. Strome and Mr. Mahdi did not memorialize their 
agreement in a final document, they proceeded on the basis of a 
``handshake'' agreement. May 13 Tr. at 253, lines 10-19. [Charge 1]
    Ruling: Accepted and Incorporated.
    14. Mr. Strome met with Mr. Mahdi in Canada again in or about 
September 1998. On this occasion, Mr. Strome met Mahdik Mahdi. Mr. 
Strome was told that Mahdik Mahdi was well-connected politically and 
commercially in Iraq. In Mr. Strome's presence, Mahdik Mahdi and 
Abdulamir Mahdi reviewed files and drawings for projects in Iraq and 
called Iraq to discuss such a project. Govt. Ex. 2 at 19, paragraph 20; 
Govt. Ex. 6 at 2-3; May 13 Tr. at 253, line 25 to 256, line 18. [Charge 
1]
    Ruling: Accepted and Incorporated.
    15. Mr. Strome began to cooperate with the investigation of OTS and 
Mr. Mahdi in January of 1999. Throughout 1998, Mr. Strome, through 
counsel, was negotiating with the United States Attorney's Office in 
Orlando, Florida regarding the terms of a possible guilty plea and 
agreement to act as a cooperating witness. During this negotiating 
period in 1998, Mr. Strome continued to do business with Mr. Mahdi and 
OTS. May 13 Tr. at 105, line 25 through 107, line 1. [Charge 1]
    Ruling: Accepted and Incorporated.
    16. Mr. Mahdi has repeatedly admitted shipping United States origin 
items obtained from Mr. Strome and BITS to Iran via Canada. These 
admissions include:
    a. Referring to paragraph 11 on page 17 of his plea agreement 
(Govt. Ex. 2), Mr. Mahdi testified under oath at his change of plea 
proceeding: ``So basically, what I'm trying to say is shipment to Iran, 
yes, we did ship, I did ship to Iran knowingly, that it is going to 
Iran. And I knew there was an embargo, United States embargo against 
Iran.'' Govt. Ex. 3 at 22, lines 22-24. ``Your Honor, we did ship goods 
to Iran. And I knew there was a U.S. embargo.'' Id. at 26, lines 14-15.
    b. Referring to the same paragraph 11 at his sentencing proceeding, 
Mr. Mahdi testified under oath: ``I pled to item 11 and shipping to 
Iran, yes. We did ship to Iran, true. * * * I'm trying to, what I'm 
saying I did ship goods to Iran from Canada.'' Govt. Ex. 4 at 16, lines 
6-7, 11-12. ``[Mr. Strome] was using me to sell to Iran.'' Id. at 61, 
lines 2-3.
    Ruling: Accepted and Incorporated.
    17. OTS and Mr. Mahdi used a system for assigning reference numbers 
to the requests for quotations they placed with BITS and other 
suppliers. This numbering system used the first letter in a reference 
number to identify the customer for whom the request for quotation was 
placed. Specifically, the initial letter T indicated the Kala Naft 
Company (Kala Naft) in Tehran, Iran; the initial letter R indicated the 
Razi Petrochemical Company in Iran; the initial letter A indicated the 
Arak Petrochemical Company in Iran; the initial letter N indicated the 
National Iranian Gas Company in Iran; and the initial letter Z 
indicated Zawana, the firm operated by Mahdik Mahdi in Amman, Jordan. 
The next two letters in the reference number could refer to a specific 
manufacturer or a type of commodity. Govt. Ex. 7; May 13 Tr. at 140, 
line 16 to 143, line 8.
    Ruling: Accepted and Incorporated.
    18. Mr. Mahdi has admitted that items he ordered for customers in 
Iran were intended to go to Iran from the earliest

[[Page 57419]]

stage of the transaction. Respondent's Motion for Denial at 15 (``Mr. 
Mahdi informed his suppliers of the fact that the requested goods were 
destined for Iran right from the inquiry stage'' and disclosed ``to 
John Strome of Brevard in the United States (supplier/manufacturer) 
that the equipment was destined for Iran.'').
    Ruling: Accepted and Incorporated.
    19. On or about July 22, 1997, Mr. Mahdi submitted to BITS and Mr. 
Strome, on behalf of OTS, an irrevocable purchase order for oil field 
equipment valued at approximately $41,695. The OTS reference number on 
this irrevocable purchase order was 701-1320-TSI. The ``T'' in this 
reference number indicates that Mr. Mahdi and OTS were seeking to 
obtain this equipment for Kala Naft in Tehran, Iran. Govt. Ex. 8; May 
13 Tr. at 147, line 6 to 148, line 25. [Charge 2, 6]
    Ruling: Accepted and Incorporated.
    20. Kala Naft in Tehran, Iran, is a subsidiary of the National 
Iranian Oil Company. Govt. Ex. 9; May 13 Tr. at 149, line 9 to 150, 
line 6. [Charge 2, 6]
    Ruling: Accepted and Incorporated.
    21. On or about July 23, 1997, BITS issued a commercial invoice for 
the sale of oil field equipment for approximately $42,356 in response 
to the purchase order with OTS reference number 701-1320-TSI. According 
to this invoice, the equipment was sold to OTS and to be shipped on 
October 29, 1997, to Danzas Canada, Ltd., a freight forwarder in 
Ontario, Canada. Govt. Ex. 10; May 13 Tr. at 150, line 12, to 150, line 
25. [Charge 2, 6]
    Ruling: Accepted and Incorporated.
    22. On or about October 30, 1997, Forward Logistics Group, Inc., a 
freight forwarder acting on behalf of BITS, issued an air waybill for 
the shipment of the oil field equipment purchased by OTS under by OTS 
reference number 701-1320-TSI. According to this air waybill, BITS 
shipped the oil field equipment from Melbourne, Florida, to OTS, care 
of Danzas Canada Ltd., in Ontario, Canada, via Air Canada. Govt. Ex. 
11; May 13 Tr. at 155, line 23, to 157, line 6. [Charge 2, 6]
    Ruling: Accepted and Incorporated.
    23. On or about October 30, 1997, Forward Logistics Group, Inc., 
acting on behalf of BITS, prepared and submitted to the United States 
Customs Service a Shipper's Export Declaration (SED) for the shipment 
of oil field equipment purchased by OTS under OTS reference number 701-
1320-TSI. This SED identified BITS as the exporter, OTS care of Danzas 
Canada Ltd. as the ultimate consignee, Air Canada as the exporting 
carrier, and October 30, 1997, as the date of exportation. This SED 
also identified ``Toronto'' as the country of ultimate destination. 
BITS instructed Forward Logistics Group, Inc. to put this information 
on the SED, including the statement that Toronto was the ultimate 
destination for the exported equipment. Govt. Ex. 12; May 13 Tr. at 
165, line 17 to 169, line 16. [Charges 2, 5]
    Ruling: Accepted and Incorporated.
    24. Mr. Mahdi has admitted that Mr. Strome of BITS caused the 
submission of this SED, which contained the false statement that 
Toronto was the ultimate destination for the exported equipment. 
Respondent's Motion for Denial at 12 (``Mr. Mahdi did not complete the 
Shippers export Declaration (sic), Mr. Strome of `Brevard' in 
Melbourne, Florida completed the form. It was Mr. Strome, not Mr. 
Mahdi, how (sic) indicated that the final destination of the equipment 
was Canada knowing that the final destination was indeed Iran.''). 
[Charge 5]
    Ruling: Accepted and Incorporated.
    25. As shown in records of Danzas Canada Ltd. that were reviewed by 
the Royal Canadian Mounted Police, Danzas Canada, Ltd., received the 
equipment obtained from BITS in the above-described transaction, 
consolidated it with other equipment obtained by OTS, and shipped the 
equipment from Canada to Iran via Cyprus in or about early November of 
1997 on the instruction of Mr. Mahdi. May 13 Tr. at 153, line 12, to 
155, line 18; id. at 169, line 17 to 170, line 15; id. at 176, line 12 
to 178, line 18. [Charge 2, 5, 6]
    Ruling: Accepted and Incorporated.
    26. Mr. Mahdi has admitted that he shipped the oil field equipment 
obtained from BITS under OTS reference number 701-1320-TSI to Iran. 
Govt. Ex. 2 at 13, paragraph 9, at 20-21, paragraph 28 (in plea 
agreement, Mr. Mahdi certified that the following was true: ``In or 
about November, 1997 ABDULAMIR MAHDI, a/k/a Amir Mahdi transshipped 
from Canada to Iran United States origin oil field equipment purchased 
from BITS * * * under OTS 701-1320-TSI.'') [Charges 2, 5, 6]
    Ruling: Accepted and Incorporated.
    27. Mr. Mahdi has repeatedly admitted that he knew Mr. Strome 
violated United States law by exporting from the United States items 
destined for Iran, and that he helped Mr. Strome to make these exports 
to Iran:
    a. At his change of plea proceedings, Mr. Mahdi testified under 
oath as follows:
    ``The Defendant: * * * [Mr. Strome] knew there's embargo on Iran. 
And he asked me if some other orders or shipments can be made through 
Canada to Iran, which we were intending to do.
    ``The Court: And you knew that he couldn't lawfully do it without 
your help?
    ``The Defendant: That's correct, ma'am.
    ``The Court: And knowing that he couldn't lawfully do it, you 
agreed to help him?
    ``The Defendant: That's correct, ma'am.''

Govt. Ex. 3 at 27, lines 17-25.
    b. At this sentencing proceeding, Mr. Mahdi testified similarly: 
``I knew [Strome] was not able to sell, to Iran. And he was using me to 
sell to Iran.'' Govt. Ex. 4 at 61, lines 2-3.
    c. In this proceeding, Mr. Mahdi has stated that he ``knew that it 
was a violation of U.S. law for Mr. Strome, on behalf of a U.S. company 
and acting in the United States, to export the equipment to Iran from 
the United States'' (although Mr. Mahdi contends that he did not know 
``that it was a violation of U.S. law for [Mr. Mahdi] as a Canadian 
citizen and a Canadian company to export the equipment to Iran''). 
Respondent's Motion for Denial at 18. [Charge 6]
    Ruling: Accepted and Incorporated.
    28. On or about October 23, 1997, Mr. Mahdi submitted to BITS and 
Mr. Strome, on behalf of OTS, an irrevocable purchase order for oil 
field equipment valued at approximately $69,478. The OTS reference 
number on this irrevocable purchase order was 702-1360-TSI. The ``T'' 
in this reference number indicates that Mr. Mahdi and OTS were seeking 
to obtain this equipment for Kala Naft in Tehran, Iran. Govt. Ex. 13; 
May 13 Tr. at 178, line 19 to 181, line 4. [Charge 3]
    Ruling: Accepted and Incorporated.
    29. Mr. Mahdi arranged for Pars Maritime Cargo Inc. (Pars) of 
Montreal, Canada, to transport the oil field equipment purchased by OTS 
under OTS reference number 702-1360-TSI in Melbourne, Florida, to 
Montreal, Canada. On or about February 9, 1998, Pars picked up the 
equipment at the BITS facility in Melbourne, Florida. The truck driver 
for Pars gave to Mr. Strome a copy of an invoice, printed on Pars 
letterhead, for this shipment. This invoice, which is dated February 2, 
1998, identifies OTS as both the ``customer'' and the ``shipper.'' 
Documentation provided to BITS by OTS indicated that the equipment 
would be exported from Canada. Govt. Ex. 14; Govt. Ex. 6 at 4; May 13 
Tr. at 181, line 9 to 185, line 1. [Charge 3]
    Ruling: Accepted and Incorporated.
    30. On or about January 19, 1999, Par's Web site identified Pars as 
the general sales agent for Iran Air. The

[[Page 57420]]

name ``Pars'' refers to Persia, i.e., Iran. Govt. Ex. 15; May 13 Tr. at 
185, line 20 to 187, line 14. [Charge 3]
    Ruling: Accepted and Incorporated.
    31. On or about April 19, 1998, Kala Naft sent a purchase order to 
OTS (referencing OTS employee Tito DiMarco) for specified parts for the 
``Overshot Series 70, Short Catch * * * for overshot 4\1/8\ in.,'' 
manufactured by Bowen Tools, Inc. On the first page of this purchase 
order, Kala Naft stated that this purchase order was ``placed in 
accordance with * * * your [OTS's] quotation reference no. 013-077-
TBT'' and specified ``delivery FOB Antwerp packed suitably for export 
shipment.'' On the second page of this purchase order, Kala Naft 
specified ``shipment from Antwerp to B.Emam (Iran) by our nominated 
transport agent.'' On the third page of this purchase order, Kala Naft 
specified: ``our nominated inspection agency for this order is I.E.I.'' 
Govt. Ex. 18A; May 13 Tr. at 200, line 3 to 201, line 13: 206, line 6 
to 208, line 13. [Charge 4]
    Ruling: Accepted and Incorporated.
    32. On or about April 21, 1998, OTS submitted to BITS and Mr. 
Strome an irrevocable purchase order for ``parts for `Bowen' Overshot 
Series 70, Short Catch * * * for Overshot 4\1/8\ in.'' The purchase 
order was signed by OTS employee Tito DiMarco. The specific parts 
ordered by OTS from BITS corresponded with the parts ordered from OTS 
by Kala Naft on or about April 19, 1998. The equipment was ordered for 
approximately $121,082. In its irrevocable purchase order to BITS, OTS 
stated payment terms of ``10% Deposit, Balance net 30 days'' and 
specified packing ``suitable for ocean freight.'' The OTS reference 
number on this irrevocable purchase order was ``013-077-BTB; '' 
however, since other documents related to this transaction bore OTS 
reference number 013-077-TBT, the suffix ``-BTB'' on this document 
appears to be a typographical error for ``-TBT.'' The suffix ``-TBT'' 
indicates that OTS and Mr. Mahdi were seeking to obtain this equipment, 
originally manufactured by Bowen Tools, Inc., for Kala Naft in Tehran, 
Iran. Govt. Ex. 16; May 13 Tr. at 187, line 19 to 188, line 23; id. at 
194, line 2 to 198, line 1. [Charge 4]
    Ruling: Accepted and Incorporated.
    33. Mr. Strome described the equipment ordered under OTS reference 
number 013-077-TBT as extracting equipment used to remove broken drill 
heads from oil wells. Govt. Ex. 6; May 13 Tr. at 194, line 2 to 195, 
line 2. [Charge 4]
    Ruling: Accepted and Incorporated.
    34. On or about May 26, 1998, Mr. Mahdi, acting on behalf of OTS, 
caused the Royal Bank of Canada to make a funds transfer in the amount 
of approximately $16,062 to be made to a bank account held by BITS. The 
document memorializing this funds transfer identifies OTS as the 
``ordering customer'' and BITS as the ``beneficiary customer.'' These 
funds were a partial payment of the purchase order described in 
paragraph 32 above, as reflected in the notation: ``PLS CREDIT BREVARD 
INTERNATIONAL TECHNICAL SERVICES, INC. FOR ORDER 013-077-
TBT.'' Govt. Ex. 17; May 13 Tr. at 189, line 13 to 190, line 10. 
[Charge 4]
    Ruling: Accepted and Incorporated.
    35. On or about March 4, 1999, Mr. Mahdi telephoned Mr. Strome. In 
this conversation, Mr. Mahdi advised Mr. Strome that the customer 
purchasing the equipment ordered under OTS reference number 013-077-TBT 
desired to have the equipment inspected by a firm known as ``I.E.I.'' 
As noted above, Kala Naft's purchase order to OTS dated April 19, 1998, 
and referencing OTS number 013-077-TBT designated ``I.E.I.'' as Kala 
Naft's inspection agent for this order. Govt. Exs. 18, 18A; May Tr. at 
209, line 6 to 211, line 5. [Charge 4]
    Ruling: Accepted and Incorporated.
    36. The ``I.E.I'' in this transaction refers to the Industrial 
Engineering and Inspection Company of Iran, which inspects cargo bound 
for Iran for conformance with documents such as letters of credit and 
invoices. Govt. Ex. 19; May 13 Tr. at 211, line 11 to 214, line 25. 
[Charge 4]
    Ruling: Accepted and Incorporated.
    37. In March of 1999, Mr. Mahdi traveled to Florida to arrange for 
the shipment of the equipment purchased under OTS reference number 013-
077-TBT. Investigating agents observed Mr. Mahdi inspect this 
equipment, and then arrested him. May 13 Tr. at 107, line 2 to 109, 
line 14; id. at 201, line 20 to 202, line 15. [Charge 4]
    Ruling: Accepted and Incorporated.
    38. Mr. Mahdi has admitted that he obtained the oil field equipment 
purchased from BITS under OTS reference number 013-077-TBT ``for the 
National Iranian Oil Company, Tehran, Iran.'' Govt. Ex. 2 at 13, 
paragraph 9, at 21, paragraph 30.\13\ [Charges 2, 5, 6]
---------------------------------------------------------------------------

    \13\ As noted in paragraph 20 above, Kala Naft is a subsidiary 
of the National Iranian Oil Company.
---------------------------------------------------------------------------

    Ruling: Accepted and Incorporated.
    39. None of the following parties applied for or received an export 
license or other export authorization from the U.S. Department of 
Commerce or the Office of Foreign Assets Control (OFAC) of the U.S. 
Department of Treasury: OTS; Mr. Mahdi (including under the names 
``Amir Mahdi'' and ``Jasin Khafaf''); BITS; and Tech-Link. Govt. Ex. 
20; May 13 Tr. at 215, line 1 to 217, line 11. [Charges 1-4]
    Ruling: Accepted and Incorporated.
    40. From 1997 to March of 1999, OTS and Mr. Mahdi (sometimes doing 
business as Tech-Link) submitted approximately 117 requests for 
quotations to BITS. The reference numbers on these requests for 
quotations indicate that approximately 42 of these requests were made 
on behalf of customers in Iran, as follows:

33 on behalf of Kala Naft, Tehran, Iran (indicated by the initial 
letter ``T'')
5 on behalf of Razi Petrochemical, Iran (indicated by the initial 
letter ``R'')
2 on behalf of Arak Petrochemical, Arak, Iran (indicated by the initial 
letter ``A'')
2 on behalf of the National Iranian Gas Company, Iran (indicated by the 
initial letter ``N'')

Govt. Exs. 7, 21, 21A; May 13 Tr. at 220, line 14 to 225, line 13. 
[Charge 1, Penalty]
    Ruling: Accepted and Incorporated.
    41. In addition, approximately 36 of these requests for quotation 
were submitted to BITS on behalf of Zawana, the firm operated by Mahdik 
Mahdi in Jordan, which transshipped to Iraq.
Govt. Exs. 7, 21, 21A; May 13 Tr. at 225, line 14 to 22, [Penalty]
    Ruling: Accepted and Incorporated.
    42. The requests for quotation submitted to BITS by OTS on behalf 
of customers in Iran included:
    a. A request for quotation dated December 8, 1997, and signed by 
OTS employee Tito DiMarco, with OTS reference number 223-127-RSA for 
specified parts for an agitator shaft and turbine. The initial letter 
``R'' indicates that this request for quotation was submitted on behalf 
of Razi Petrochemical in Iran. Govt. Ex. 22, May 13 Tr. at 227, line 11 
to 228, line 12. [Charge 1, Penalty]
    b. A request for quotation dated July 14, 1998, and signed by OTS 
employee Tito DiMarco, with OTS reference number 463-078-ACT for parts 
for a steam turbine. The initial letter ``A'' indicates that this 
request for quotation was submitted on behalf of Arak Petrochemical in 
Iran. Govt. Ex. 23, May 13 Tr. at 228, line 18 to 230, line 3. [Charge 
1, Penalty]
    c. A request for quotation dated August 31, 1998, with OTS 
reference number 529-088-ACO for parts for a steam turbine. Handwritten 
notations on this document indicates that OTS

[[Page 57421]]

quoted prices in response to this request. The initial Letter ``A'' 
indicates that his request for quotation was submitted on behalf of 
Arak Petrochemical in Iran. Govt. Ex. 24; May 13 Tr. at 230, line 8 to 
232, line 9. [Change 1, Penalty]
    Ruling: Accepted and Incorporated.
    43. The Arak Petrochemical Company and the Razi Petrochemical 
Company are affiliates of the National Petrochemical Company of Iran. 
Govt. Ex. 25; May 13 Tr. at 232, line 10 to 234, line 18. [Change 1, 
Penalty]
    Ruling Accepted and Incorporated.
    44. From March 1997 to March 1999, Mr. Mahdi, OTS, and Tech-Link 
received approximately 195 requests for quotation from customers in 
Iran, as follows:

72 from the Razi Petrochemical Company
65 from Kala Naft, Tehran
22 from the National Iranian Gas Company
17 from the Arak Petrochemical Company

In addition, during the same time period, Mr. Mahdi, OTS, and Tech-Link 
received six requests for quotation directly from customers in Iraq and 
1117 requests for quotation from Zawana. Govt. Ex. 26; May 13 Tr. at 
219, line 21 to 220, line 9; id. at 235, line 7 to 238, line 2. [Change 
1, Penalty]
    Ruling: Accepted and Incorporated.
    45. On or about April 9, 2002 Mahdik Mahdi placed on behalf of 
Zawana a request for quotation for the delivery of 140 tons of an 
alumina based catalyst to Syria. Govt. Ex. 29; May 13 Tr. at 260, line 
8 to 262, line 13. [Penalty]
    Ruling: Accepted for Incorporated.
    46. On or about March 10, 2003, Mr. Mahdi received thirteen boxed 
of business records from the Canadian Department of Justice. These 
records had been seized by the Royal Canadian Mounted Police during 
searches of Mr. Mahdi's residence and OTS's business permisses in March 
of 1999 and transferred to the Office of Export Enforcement, U.S. 
Department of Commerce, trough the Office of International Affairs of 
the Criminal Division of the U.S. Department of Justice, had shipped 
these records to the Canadian Department of Justice for return to Mr. 
Mahdi. Govt. Ex. 1A; May 13 Tr. at 73, line 11 to 76, line 11. 
[Penalty]
    Ruling: Accepted and Incorporated.
    47. Mr. Mahdi represented to this Court that he wished to receive 
the above-described business records in order to present a defense in 
this proceeding. May 13 Tr. at 24, line 9 to 25, line 4 (quoting Mr. 
Mahdi; request for continuance dated April 9, 2002). The Court 
postponed the hearing in this matter partly to accommodate Mr. Mahdi's 
stated interest in using these records in the hearing in this case. May 
13 Tr. at 24, line 9 to 26, line 7; id. at 59, line 22 to 60, line 10. 
However, after receiving those records on or about March 10, 2003, Mr. 
Mahdi for the first time asserted that health problems prevented him 
from participating in the hearing. Respondent's Request for 
Continuance, April 14, 2003; May 13 Tr. at 51, line 16 to 5, line 5; 
id. at 60, line 14 to 62, line 4. [Penalty]
    Ruling: Accepted and Incorporated.
    48. Mr. Mahdi used an envelope with the pre-printed logo and 
address of OTS when he served a copy of a pleading in this matter on 
counsel for BIS. This pleading was received by counsel for BIS on or 
about May 5, 2003. Govt. Ex. 1B; May 13 Tr. at 76, line 12 to 78, line 
1. [Penalty]
    Ruling: Accepted and Incorporated.
B. Proposed Ultimate Findings of Fact and Conclusions of Law
    49. By order dated September 6, 2002, this Court granted summary 
decision against Mr. Mahdi on Charge 1, which alleges a conspiracy to 
export oil field equipment to Iran trough Canada in violation of Sec.  
746.7 of the EAR. Mr. Mahdi acted on behalf of OTS when he entered into 
the agreement with BITS and Mr. Strome to make unauthorized exports 
from the United States to Iran. See paragraphs 3, 10-13 above. 
Moreover, OTS, through Mr. Mahdi and another employee, Tito DiMarco, 
took several actions in furtherance of the conspiracy. See paragraphs 
7, 19, 28-29, 32, 34, 42, and 44 above. Accordingly, OTs is liable for 
the conspiracy described in Charge 1.\14\ See, e.g., United States v. 
Bi-Co Pavers, Inc., 741 F.2d 730, 737 (5th Cir. 1984) (``a corporation 
is criminally liable for the unlawful acts of its agents, provided that 
such conduct is within the scope of the agent's authority, actual or 
apparent''); United States v. United States v. Sherpix, 512 F.2d 1361, 
1367 & n.7 (D.C. cir. 1975) (``a corporation is criminally responsible 
for acts of its officers and thus can be charged with their 
conspiracies,'' provided corporation is ``designated as a defendant and 
charged as a conspirator by appropriate factual allegations'').
---------------------------------------------------------------------------

    \14\ Charge 1 alleges that this conspiracy took place ``between 
in or about March 1997 and in about April 1998.'' According to 
testimony at the hearing, the conspiracy continued into March 1999. 
May 13, 2003 at Tr. at 113, lines 9-21; id. at 118, lines 2-24. Mr. 
Mahdi himself has admitted that the conspiracy continued until March 
1999. Govt, Ex. 2 at 13, paragraph 9, at 17 paragraph 11 (in plea 
agreement, Mr. Mahdi certified to the truth of the allegation that 
conspiracy existed ``[b]etween in or about March, 1997, and in or 
about March, 1999'').
---------------------------------------------------------------------------

    Ruling: Accepted and Incorporated.
    50. BITS and Mr. Strome were co-conspirators of OTS and Mr. Mahdi 
in the above-referenced conspiracy. See paragraphs 8-13, 40, 42-43 
above; see also Govt. Ex. 3 at 27, lines 13-14 (Mr. Mahdi identified 
``Mr. Strom'' (sic) as ``the co-conspirator in this case'' during sworn 
testimony at the change of plea proceeding).
    Ruling: Accepted and Incorporated.
    51. The tranctions described in Charges 2 and 3 were exports from 
the United States to Iran because Mr. Mahdi and OTs intended to 
transship the items in question to Iran via Canada from the time that 
they were exported from the United States. Similarly, the transaction 
described in Charge 4 was a solicited and attempted export from the 
United States to Iran because Mr. Mahdi and OTS intended that these 
items would be transhipped to Iran via Canada after they were exported 
from the United States. See 15 CFR 734.2(b)(6).
    Ruling: Accepted and Incorporated.
    52. By actions taken regarding the equipment purchased under OTS 
reference number 701-1230-TSI, Mr. Mahdi and OTS, on or about October 
30, 1997,\15\ exported oil field equipment, which was subject to both 
the EAR and to OFAC's Iranian Transaction Regulations, from the United 
States through Canada to Iran, without prior authorization from OFAC, 
in violation of Sec.  746.7 of the EAR, thereby each committing one 
violation of Sec.  764.2(a) of the EAR--engaging in conduct prohibited 
by the EAR. See paragraphs 19-23, 25-26 above. Mr. Mahdi and OTS are 
each accordingly liable for the violation described in Charge 2.
---------------------------------------------------------------------------

    \15\ Charge 2 states that the export occurred on or about 
October 30, 1997. The equipment in question was shipped from the 
United States to Canada on or about October 30, 1997, see paragraphs 
22-23 above, and shipped from Canada to Iran in early November 1997. 
See paragraphs 25-26 above. Because this combination of shipments 
constituted an export from the United States to Iran, see paragraph 
51 above, the date of export stated in Charge 2 is accurate.
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    Ruling: Accepted and Incorporated.
    53. By actions taken regarding the equipment purchased under OTS 
reference number 702-1360-TSI, Mr. Mahdi and OTS, on or about February 
9, 1998,\16\ exported oil field equipment,

[[Page 57422]]

which was subject to both the EAR and to OFAC's Iranian Transaction 
Regulations, from the United States through Canada to Iran, without 
prior authorization from OFAC, in violation of Sec.  746.7 of the EAR, 
thereby each committing one violation of Section 764.2(a) of the EAR 
engaging in conduct prohibited by the Ear. See paragraphs 28-30 
above.\17\ Mr. Mahdi and OTS are each accordingly liable for the 
violation described in Charge 3.
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    \16\ The equipment in question was picked up by truck in Florida 
on or about February 9, 1998, and transported to Montreal, Canada. 
See paragraph 29 above. Charge 3 describes the export as taking 
place ``on or about February 2, 1999'' (the date on the Pars 
invoice). This one-week variance between the date as alleged and the 
date as established at trial is immaterial to the validity of the 
charge. See Tasty Baking Co. v. NLRB, 254 F.3d 114, 122 D.C. Cir. 
2001, and cases cited therein (``minor variances in `on or about' 
dates'' are permitted in both criminal and administrative 
enforcement proceedings).
    \17\ Although BIS did not supply direct evidence that this 
equipment was shipped from Canada to Iran, the following facts and 
circumstances support the finding that such a shipment occurred: (1) 
Mr. Madhi's repeated admissions that he shipped equipment obtained 
from BITS from Canada to Iran, see paragraph 16 above; (2) the fact 
that the letter ``T'' in this OTS reference number indicates that 
the customer ordering this equipment was Kala Naft in Tehran, Iran, 
see paragraphs 17 and 28 above; (3) the fact that Pars, the carrier 
that OTS and Mr. Mahdi arranged to transport the equipment from 
Florida to Montreal, Canada, served as the general sales agent for 
Iran Air, see paragraph 30 above; and (4) the fact that 
documentation provided to BITS by OTS indicated that the equipment 
would be exported form Canada, see paragraph 29 above.
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    Ruling: Accepted and Incorporated.
    54. By actions taken regarding the equipment ordered under OTS 
reference number 013-077-TBT, Mr. Mahdi and OTS, from on or about April 
21, 1998, to on or about March 17, 1999, solicited or attempted the 
export of oil field equipment, which was subject to both the EAR and to 
OFAC's Iranian Transaction Regulations, from the United States through 
Canada to Iran, without prior authorization from OFAC, in violation of 
Section 746.7 of the EAR, thereby each committing one violation of 
Section 764.2(c) of the Regulations--soliciting or attempting a 
violation of the Regulations. See paragraphs 31-37 above. Mr. Mahdi and 
OTS are each accordingly liable for the violation described in Charge 
4.
    Ruling: Accepted and Incorporated.
    55. On or about October 30, 1997, BITS and Mr. Strome, through 
Forward Logistics Group, Inc. caused a false material statement of the 
ultimate destination of the export described in Charge 2 as 
``Toronto,'' when the export was in fact ultimately destined for Iran, 
on an SED submitted to the United States Customers Service regarding 
that export. See paragraph 23 above. In so doing, BITS and Mr. Strome, 
the co-conspirators of OTS and Mr. Mahdi, acted within the scope of the 
conspiracy, in furtherance of the conspiracy's objective of making 
unauthorized exports of oil field equipment from the United States to 
Iran via Canada, and in a manner reasonably foreseeable by OTS and Mr. 
Mahdi as a natural consequence of the conspiracy.\18\ Accordingly, 
under the rule of Pinkerton v. United States, 328 U.S. 640, 645-46 
(1946), OTS and Mr. Mahdi are liable for the violation of Section 
764.2(g) of the EAR described in Charge 5: making the false statement 
that Toronto was the ultimate destination on the SED sumbitted on or 
about October 30, 1997.\19\
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    \18\ The conspiracy count to which Mr. Mahdi plead guilty in the 
criminal proceeding stated that the parties conspired to ship such 
equipment from the United States to Canada under SED's that falsely 
stated the equipment's ultimate destination, see Govt. Ex. 1 at 5, 
paragraph 13, and Mr. Mahdi admitted in his plea agreement that this 
allegation was true. See Govt. Ex. 2 at 13, paragraph 9 & 18, 
paragraph 13.
    \19\ The fact that Charge 5 states that OTS and Mr. Mahdi 
``prepared'' the SED in question, rather than stating that OTS and 
Mr. Mahdi are liable for the actions of their co-conspirators, does 
not affect the application of the Pinkerton rule. Where a conspiracy 
is alleged, a charging document need not plead that the Government 
will rely on Pinkerton to establish liability for substantive 
offenses; the conspiracy charge itself is sufficient notice of the 
Pinkerton theory of liability. See United States v. Washington, 106 
F.3d 983, 1010-12 (D.C. Cir. 1996), cert. denied, 522 U.S. 984 
(1997); United States v. Sax, 39 F.3d 1380, 1389-90 (7th Cir. 1994). 
Moreover, OTS and Mr. Mahdi--even if they had participated in the 
hearing--could not claim prejudicial surprise, because BIS's Pre-
Hearing Memorandum, dated February 26, 2003, at 13-14, made clear 
that BIS would rely on Pinkerton to establish liability for Charge 
5.
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    Ruling: Accepted and Incorporated.
    56. Alternatively, Mr. Mahdi and OTS are each liable for the 
violations described in Charges 2, 3, and 4 because the actions taken 
by their co-conspirators Mr. Strome and OTS constituted the 
unauthorized exports and attempted export described in those charges. 
In taking such actions, Mr. Strome and OTS acted within the scope of 
the conspiracy, in furtherance of the conspiracy's objective of making 
unauthorized exports of oil field equipment from the United States to 
Iran via Canada, and in a manner reasonably foreseeable by OTS and Mr. 
Mahdi as a natural consequence of the conspiracy. Accordingly, Mr. 
Mahdi and OTS are liable for such actions of their co-conspirators 
under the Pinkerton rule. See BIS's Motion for Summary Decision, dated 
May 31, 2002, at 12 n.14, and in BIS's Pre-Hearing Memorandum, dated 
February 26, 2003, at 12 n.11.\20\
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    \20\ If the Court were to find insufficient evidence of 
completed exports to Iran, as described in Charges 2 and 3, OTS and 
Mr. Mahdi should be found liable under Section 764.2(c) of the EAR 
for attempting such exports. A defendant may be found guilty of 
attempt even if only the completed offense is charge, provided that 
the attempt is itself an offense, as it is here under Section 
764.2(c). See, e.g., United States v. Marin, 513 F.2d 974, 976 (2d 
Cir. 1975); Simpson v. United States, 195 F.2d 721, 723 (9th Cir. 
1952); Clinton Cotton Mills v. United States, 164 F.2d 173, 177 (4th 
Cir. 1947).
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    Ruling: Accepted and Incorporated.
    57. Mr. Mahdi and OTS, acting through Danzas Canada, Ltd., 
transferred and forwarded from Canada to Iran the oil field equipment 
purchased under OTS reference number 701-1320-TSI. See paragraphs 25-26 
above. Mr. Mahdi knew, at a minimum, that Mr. Strome and BITS had 
violated the EAR by exporting this equipment from the United States to 
an ultimate destination of Iran without the required license. See 
paragraph 27 above. Thus, Mr. Mahdi committed the violation described 
in Charge 6: transferring and forwarding this equipment from Canada to 
Iran, knowing that it had been exported from the United States in 
violation of the EAR.\21\ Moreover, Mr. Mahdi's knowledge of Mr. 
Strome's violation of the EAR is attributable to OTS,\22\ so that OTS 
committed the violation described in Charge 6 also.
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    \21\ Charge 6 describes the transferring and forwarding of this 
equipment from Canada to Iran as occurring ``[o]n or about October 
30, 1997.'' The evidence shows that the equipment was shipped to 
Iran in early November 1997. As explained in footnote 18 above, this 
variance is immaterial to the validity of the charge.
    \22\ See e.g., In re Hellenic Inc., 252 F.3d 391, 395 (5th Cir. 
2001) (``An agent's knowledge is imputed to the corporation where 
the agent is acting within the scope of his authority and where the 
knowledge relates to matters within the scope of that authority * * 
* [C]ourts generally agree that the knowledge of directors or key 
officers, such as the president and vice president, is imputed to 
the corporation. * * *'').
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    Ruling: Accepted and Incorporated.
    58. Based on the following factors, the Court recommends that Mr. 
Mahdi and OTS should be denied U.S. export privileges for twenty years, 
per the standard terms of a denial order set out at Supplemental No. 1 
to part 764 of the EAR:
    a. The scope of prior efforts to acquire U.S. origin equipment to 
export to customers in Iraq and Iran in violation of U.S. export 
controls. See paragraphs 40-44 above.
    b. The importance of the foreign policy objectives furthered by 
controlling exports to embargoed countries, such as Iran, and of 
preventing exports that violated export controls on embargoed 
countries.
    c. The significant nature of the transactions at issue in these 
charges, as indicated by the fact that the equipment involved in 
Charges 2, 3, and 4 had a collective value of over $230,000.

Certificate of Service

    I hereby certify that I have served the foregoing Recommended 
Decision and Order by Federal Express to the following persons:

Undersecretary, Bureau of Industry and Security, U.S. Department of

[[Page 57423]]

Commerce, Room H-3839, 14th & Constitution Avenue, NW., Washington, DC 
20230, Phone: 202-482-5301.
Philip D. Golrick, Esq., Office of Chief Counsel for Industry and 
Security, U.S. Department of Commerce, Room H-3839, 14th & Constitution 
Avenue, NW., Washington, DC 20230, Phone: 202-482-5301.
Abdulamir Mahdi, 20 Huntingwood Drive, Scarborough, Ontario, Canada, 
M1W1A2, Phone: 905-946-9551.
ALJ Docketing Center, Baltimore, 40 S. Gay Street, Room 412, Baltimore, 
Maryland 21202-4022, Phone: 410-962-7434.

    Done and dated August 26, 2003, at Norfolk, Virginia.
Lucinda H. Shinault, CP,
Certified Paralegal to the ALJ Norfolk.
[FR Doc. 03-25076 Filed 10-2-03; 8:45 am]
BILLING CODE 3510-BW-M