[Federal Register Volume 69, Number 104 (Friday, May 28, 2004)]
[Notices]
[Pages 30610-30619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12181]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 01-BXA-17]


Decision and Order

    On December 10, 2001 the Bureau of Industry and Security (``BIS'') 
\1\ issued a charging letter against the respondent, Jason Liao, 
individually and doing business as JFD International (collectively 
referred to as ``Liao''), that alleged five violations of the Export 
Administration Regulations,\2\ which were issued under the Export 
Administration Act of 1979, as amended (50 U.S.C. app. Sec. Sec.  2401-
2420 (2000)) (``Act'').\3\
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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 signed by the Secretary of Commerce on 
April 16, 2002.
    \2\ The Regulations governing the violations at issue are found 
in the 1996 and 1997 versions of the Code of Federal Regulations (15 
CFR Parts 768-799 (1996), as amended (61 FR 12714, March 25, 1996) 
(hereinafter ``the former Regulations''), and 15 CFR Parts 768-799 
(1997) (``the Regulations'')). The March 25, 1996 Federal Register 
publication redesignated, but did not republish, the then-existing 
Regulations as 15 CFR Parts 768A-799A. As an interim measure that 
was part of the transition of newly restructured and reorganized 
Regulations, the March 25, 1996 Federal Register publication also 
restructured and reorganized the Regulations, designating them as an 
interim rule at 15 C.F.R. Parts 730-774, effective April 24, 1996. 
The 2003 Regulations establish the procedures that apply to this 
matter.
    \3\ From August 21, 1994 through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12924, which had been extended by successive Presidential Notices, 
the last of which was August 3, 2000 (3 CFR, 2000 Comp. 397 (2001)), 
continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)) (IEEPA). 
On November 13, 2000, the Act was reauthorized and it remained in 
effect through August 20, 2001. Executive Order 13222 of August 17, 
2001 (3 CFR, 2001 Comp., p. 783 (2002)), which has been extended by 
successive Presidential Notices, the most recent being that of 
August 7, 2003 (68 FR 47833, August 11, 2003), continues the 
Regulations in effect under IEEPA.
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    Specifically, BIS charged that (i) on or about December 9, 1996, 
Liao exported detector log video amplifiers (DLVAs) from the United 
States to the People's Republic of China (``PRC'') without the 
validated export license required under Section 772A.1(b) of the former 
Regulations; (ii) in connection with the December 9, 1996 export, Liao 
knew or had reason to know that a validated export license was 
required, in violation of Section 787A.4(a) of the former Regulations; 
(iii) on or about January 27, 1997, Liao exported DLVAs from the United 
States to the PRC without the license required under Sections 742.4 and 
742.5 of the Regulations; (iv) in connection with the January 27, 1997 
export, Liao knew or had reason to know that a license was required, in 
violation of Section 764.2(e) of the Regulations; and (v) Liao aided 
and abetted the release of controlled technology to three PRC nationals 
in violation of Section 764.2(b) of the Regulations by issuing a letter 
on or about July 18, 1997 to the PRC nationals inviting them the United 
States, knowing that Suntek Microwave Inc. would release U.S.-origin 
technology to them. The PRC nationals subsequently entered the United 
States and Suntek did release U.S.-origin technology to them.
    On October 21, 2003, the Administrative Law Judge (``ALJ'') 
conducted an evidentiary hearing in this matter. On April 5, 2004, the 
ALJ issued a Recommended Decision and Order, in which he found that 
Liao committed the five violations described above. With regard to the 
unlawful exports of national security controlled DLVAs to the PRC, the 
ALJ determined that, based on uncontested evidence, Liao delivered 70 
DLVAs to a customer in the PRC, which was controlled by the PRC, 
without obtaining the required export licenses.
    In addition, based on evidence that Liao had previously obtained 
licenses for exports of similar amplifiers to the PRC and on the sworn 
testimony of two witnesses that Liao knew that licenses were required 
for the export of the 70 DLVAs to the PRC, the ALJ found that Liao knew 
or should have known that these exports required a license from the 
Commerce Department.
    Finally, the ALJ held that Liao aided and abetted the transfer of 
controlled technology to three PRC nationals without the required 
export license by inviting and facilitating the travel of the PRC 
nationals to the United States for the purpose of obtaining the 
controlled technology. The ALJ recommended a monetary penalty of 
$55,000, the denial of Liao's export privileges for 20 years, and the 
exclusion of Liao from practice before BIS for a period of 20 years.
    The ALJ's Recommended Decision and Order, together with the entire 
record in this case, have been referred to me for final action under 
Section 766.22 of the Regulations. 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 the liability of Liao for each of the 
above-referenced charges. I also find that the penalty recommended by 
the ALJ is appropriate, given the knowing nature of the violations, the 
scope of the respondent's efforts to make unauthorized exports, and the 
importance of preventing future unauthorized exports. I therefore 
affirm the findings of fact and conclusions of law in the ALJ's 
Recommended Decision and Order.\4\
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    \4\ There is a clarification to the ALJ's Recommended Decision 
and Order that needs to be made. In the Recommended Decision and 
Order, the ALJ concludes that Liao released U.S.-origin technology 
to PRC nationals without the required export licenses: ``In 
consideration of the entire record, and lack of countervailing 
evidence, I find BIS presented reliable, probative, and substantial 
evidence that Liao released United States-origin technology to three 
Chinese nationals without a license as required by 15 CFR 
734.2(b).'' ALJ Recommend Decision and Order, 25. BIS, however, did 
not charge Liao with improperly transferring controlled technology 
to PRC nationals, and did not submit any evidence supporting this 
conclusion. I therefore vacate this portion of the ALJ's Recommended 
Decision and Order. However, I affirm the ALJ's conclusion that Liao 
aided and abetted their release of controlled technology to PRC 
nationals without the required license.

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[[Page 30611]]

    It is hereby ordered,
    First, that a civil penalty of $55,000 is assessed against Jason 
Liao, which shall be paid to the U.S. Department of Commerce within 30 
days from the date of entry of this Order. Payment shall be made in the 
manner specified in the attached instructions.
    Second, that, pursuant to the Debt collection Act of 1982, as 
amended (31 U.S.C. Sec. Sec.  3701-3720E (2000)), the civil penalty 
owed under this Order accrues interest as more fully described in the 
attached Notice, and, if payment is not made by the due date specified 
herein, Liao will be assessed, in addition to the full amount of the 
civil penalty and interest, a penalty charge and an administrative 
charge, as more fully described in the attached Notice.
    Third, that, for a period of 20 years from the date on which this 
Order takes effect, Jason Liao shall be excluded from acting as an 
attorney, accountant, consultant, freight forwarder, or in any other 
representative capacity for any license application or other matter 
before the Bureau of Industry and security.
    Fourth, that, for a period of 20 years from the date on which this 
Order takes effect, Jason Liao, individually and doing business as JFD 
International, 3370 Monroe Street, Santa Clara, California 95051, and 
all of his successors or assigns and, when acting for him or on his 
behalf, his officers, representatives, agents, and employees 
(individually referred to as a ``Denied Person''), may not, directly or 
indirectly, participate in any way in any transaction involving any 
commodity, software, or technology (hereinafter collectively referred 
to as ``item'') exported or to be exported from the United States that 
is subject to the Regulations, or in any other activity subject to the 
Regulations, 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 
Untied States that is subject to the Regulations, or in any other 
activity subject to the Regulations; 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 Regulations, or in any other activity subject to the Regulations.
    Fifth, 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 Regulations;
    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 Regulations 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 
the Regulations that has been exported from the United States;
    D. Obtain from a Denied Person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transactions to service any item subject to the 
Regulations 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 Regulations that has been or will be exported from 
the United States. For purposes of this paragraph, ``servicing'' means 
installation, maintenance, repair, modification, or testing.
    Sixth, that after notice and opportunity for comment as provided in 
Section 766.23 of the Regulations, any person, firm, corporation, or 
business organization related to a Denied Person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related service may also be made subject to the provisions of 
this Order.
    Seventh, that this Order shall be served on the Denied Person and 
on BIS, and shall be published in the Federal Register. Additionally, 
the ALJ's Recommended Decision and Order, except the section with the 
heading ``Recommended Order,'' shall also 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: May 24, 2004.
Kenneth I. Juster,
Under Secretary of Commerce for Industry and Security.

Instructions for Payment of Civil Penalty

    1. The civil penalty check should be made payable to: U.S. 
Department of Commerce.
    2. The check should be mailed to: U.S. Department of Commerce, 
Bureau of Industry and Security, Export Enforcement Team, Room H-6883, 
14th Street and Constitution Avenue, NW., Washington, DC 20230, ATTN: 
Sharon Gardner.

Notice

    The Order to which this Notice is attached describes the reasons 
for the assessment of the civil monetary penalty. It also specifies the 
amount owed and the date by which payment of the civil penalty is due 
and payable.
    Under the Debt Collection Act of 1982, as amended (31 U.S.C. 3701-
3720E (2000)), and the Federal Claims Collection Standards (31 CFR 
Parts 900-904 (2002)), interest accrues on any and all civil monetary 
penalties owed and unpaid under the Order, from the date of the Order 
until paid in full. The rate of interest assessed respondent is the 
rate of the current value of funds to the U.S. Treasury on the date 
that the Order was entered. However, interest is waived on any portion 
paid within 30 days of the date of the Order. See 31 U.S.C.A. 3717 and 
31 CFR 901.9.
    The civil monetary penalty will be delinquent if not paid by the 
due date specified in the Order. If the penalty becomes delinquent, 
interest will continue to accrue on the balance remaining due and 
unpaid, and respondent will also be assessed both an administrative 
charge to cover the cost of processing and handling the delinquent 
claim and a penalty charge of six percent per year. However, although 
the penalty charge will be computed from the date that the civil 
penalty becomes delinquent, it will be assessed only on sums due and 
unpaid for over 90 days after that date. See 31 U.S.C.A. 3717 and 31 
CFR 901.9.
    The foregoing constitutes the initial written notice and demand to 
respondent in accordance with section 901.2(b) of the Federal Claims 
Collection Standards (31 CFR 901.2(b)).

Office of the Administrative Law Judge

Alameda, California

Recommended Decision and Order
    Before:

[[Page 30612]]

    Hon. Parlen L. McKenna, Administrative Law Judge.
    Appearances:
    Mi-Yong Kim, Esq., For the Bureau of Industry and Security.
    Jennifer Zhong.
    Lay Representative for Jason Liao, individually and doing business 
as JFD International.

Preliminary Statement

    On December 5, 2001, the Office of Export Enforcement, Bureau of 
Export Administration, United States Department of Commerce (BIS or 
Bureau) \1\ charged Jason Liao, individually, and doing business as JFD 
International (hereinafter referred collectively as Liao) with five 
violations of the Export Administration Regulations (EAR), codified at 
15 CFR 730-774 (2001) issued pursuant to the Export Administration Act 
(EAA) of 1979, as amended (50 U.S.C. app. sections 2401-2402 (1991 and 
Supp. 2001)).\2\ BIS seeks $11,000 per violation, denial of export 
privileges, and/or exclusion from practice before BIS. The charges were 
as follows:
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    \1\ The Bureau of Export Administration issued the charging 
letter on December 5, 2001. Through an internal organizational 
order, the Department of Commerce changed the name of the Bureau of 
Export Administration to Bureau of Industry and Security (BIS). See 
Industry and Security Programs: Change of Name, 67 Fed. Reg. 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.
    \2\ BIS's authority under the EAA has been re-authorized three 
times through various Executive Orders. The most recent Executive 
Order continues the EAA citing national security reasons in 
Executive Order 13222. See 68 FR 47833 (August 7, 2003).
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    Charge 1 alleged Liao exported detector log video amplifiers (DLVA 
or amplifiers) from the United States to the People's Republic of China 
(China) on or about December 9, 1996. Liao exported the DLVAs without a 
license as required by 15 CFR 772A.1(b). This conduct, contrary to the 
Act, violated 15 CFR 787A.6 of the former regulations.
    Charge 2 alleged Liao knew or had reason to know that the export of 
DLVAs to China required a license as described in Charge 1. Liao's act 
of selling or transferring the DLVAs with knowledge of the license 
requirement violated 15 CFR 787A.4 of the former regulations.
    Charge 3 alleged Liao exported DLVAs from the United States to 
China without a license as required by 15 CFR 742.2 and 742.5 on or 
about January 27, 1997. Liao's conduct was contrary to the Act and 
violated 15 CFR 764.2(a).
    Charge 4 alleged Liao knew or had reason to know that export of 
DLVAs to China required a license as described in Charge 3. Liao's act 
of selling or transferring DLVAs with knowledge of the license 
requirement violated 15 CFR 764.2(e).
    Charge 5 alleged Liao issued an invitation letter to visit the 
United States to Mr. Hu Changhong, which also included invitations to 
Mr. Wang Yongan, and Mr. Qiu Yijie, all citizens of China. Liao knew 
Suntek Microwave, Inc. (Suntek) would release United States--origin 
technology to them during their visits to the United States. These 
Chinese citizens came to the United States pursuant to that invitation 
and Suntek released United States-origin technology to them. The act of 
releasing technology to Chinese citizens constituted an export under 
section 734.2(b) and required a license issued from BIS. Liao's conduct 
of aiding or abetting a prohibited act violated section 764.2(b).
    On February 5, 2002, the Respondent filed a timely answer denying 
all of the charges. Importantly, on October 19, 2000, the United States 
Attorneys Office (San Jose Division) filed felony charges against 
Silicon Telecom Industries, Inc., Charley Kuan, and Jason Liao. The 
alleged violations were conspiracy (18 U.S.C. 371); and Violation of 
Export Administration Regulations regarding exports to China (Title 50, 
U.S.C. 1705 (b)). Rather than defending against the indictment, Liao 
fled the United States and his current location is unknown. Mr. Kuan 
entered into a Plea Agreement with the United States Attorney and 
entered a plea of Guilty to the Charges.
    Finding good cause shown, the parties were granted adequate time 
for settlement discussions prior to the assignment of a judge and the 
setting of a hearing date. See 15 CFR Sec.  766.17(d).\3\ The parties 
did not reach settlement and on May 22, 2003, the Chief Administrative 
Law Judge issued an Order of Assignment of Administrative Law Judge and 
Notice of Hearing. By that Order, the Chief Administrative Law Judge 
took notice that Liao's wife, Jennifer Zhong, previously filed 
documentation on his behalf. Therefore, Ms. Zhong was directed to file 
a Notice of Appearance, signed by Liao and herself, designating Ms. 
Zhong as Liao's representative in this matter.
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    \3\ Administrative enforcement proceedings (including review by 
the Under Secretary) shall conclude within one year of submission of 
the charging letter, unless good cause shown. 15 CFR Sec.  
766(17)(d).
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    The undersigned Judge scheduled a hearing to commence on October 
21, 2003. The BIS regulations provide, ``[a]ll hearings will be held in 
Washington, DC, unless the administrative law judge determines, for 
good cause shown, that another location would better serve the 
interests of justice.'' 15 CFR 766.13. Here, Ms. Zhong explained that 
traveling to Washington, DC, to represent Liao would cause her extreme 
economic hardship. Further, Ms. Zhong stated that all of the witnesses 
she anticipated calling were located in California. Without objection 
from BIS, the undersigned concluded that good cause was shown and 
noticed the hearing to be held on October 21, 2003 in Alameda, 
California.
    On October 3, 2003, BIS filed a Request for a Chinese (Mandarin) 
Interpreter. That request was granted and a Teresa Wong was authorized 
to serve as the interpreter.
    The parties were ordered to file witness and exhibit lists no later 
than the close of business on October 19, 2003 (See Attachment A). 
After the hearing, the record remained open until December 10, 2003, 
for filing of post-hearing briefs. BIS filed a motion on December 8, 
2003, requesting additional time to file its post-hearing brief. The 
Bureau's request to extend the filing date for a post-hearing brief to 
December 15, 2003 was granted. On November 8, 2003, Jennifer Zhong 
filed a letter and seven exhibits. Ms. Zhong's filing was construed as 
a post-hearing brief. Upon review of the documents, the undersigned 
finds that the filing contained materials not previously admitted into 
the record. Therefore, Ms. Zhong's proffer is found to be untimely and 
are hereby rejected. Further, Ms. Zhong did not provide enumerated 
proposed findings of facts and conclusions of law. Rulings on 
enumerated proposed findings of fact and conclusions of law submitted 
by BIS are set forth in Attachment B.
    Attachment C contains applicable regulations that were referenced 
in the Charging Letter filed against Liao and further referenced in 
this Recommended Decision and Order. Parties may refer to Attachment D 
for details regarding review by the Under Secretary and appeal 
procedures.

II. Applicable Statutes and Regulations

    The acts constituting violations of the export control laws and 
regulations alleged by BIS in the Charging Letter occurred in 1996 and 
1997. Charges 1 and 2 concern acts that occurred in 1996. Charges 3, 4, 
and 5 involve acts the occurred in 1997. Thus, the regulations extant 
for each of the respective years is applicable.

[[Page 30613]]

A. Statutes/Executive Orders

    On August 20, 2001, the EAA and underlying regulations expired. See 
50 U.S.C. app. Sec.  2419. Three days prior to the termination date, 
the President signed an Executive Order continuing the regulations 
declaring that the lapse of the EAA constituted an ``unusual and 
extraordinary threat to the national security, foreign policy, and 
economy of the United States''. See Exec. Order. No. 13222, 3 CFR at 
783-784, (2001). Exercising authority under the International Emergency 
Economic Powers Act (IEEPA), 50 U.S.C. 1701-1706 (2000), the President 
maintained the effectiveness of the EAA and all regulations thereunder. 
The effectiveness of the export control laws and regulations were 
further extended by Notice issued by the President on August 14, 2002 
and August 7, 2003. See Notice of August 14, 2002: Continuation of 
Emergency Regarding Export Control Regulations, reprinted in 3 CFR at 
306 (2003) and Notice of August 7, 2003: Continuation of Emergency 
Regarding Export Control Regulations. The continuation 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, 278-279 (D.C. Cir. 2003); Times 
Publ'g Co. v. United States Department of Commerce, 236 F3d 1286, 1290 
(11 Cir. 2001).

B. Regulations

    The Regulations governing the violations at issue are found in the 
1996 and 1997 versions of the Code of Federal Regulations, (15 CFR 
Parts 768-799 (1996), as amended (61 FR 12714, March 25, 1996) (the 
former Regulations)), and 15 CFR Parts 730-774 (1997) (the 
Regulations)). The March 25, 1996 Federal Register publication 
redesignated, but did not republish, the then-existing Regulations as 
15 CFR Parts 768A-799A. As an interim measure that was part of the 
transition to newly restructured and reorganized Regulations, the March 
25, 1996 Federal Register publication also restructured and reorganized 
the Regulations, designating them as an interim rule at 15 CFR Parts 
730-774, effective April 24, 1996. The former Regulations and the 
Regulations define the various violations that BIS alleges occurred. 
The Regulations establish the procedures that apply to this matter.

III. Findings of Fact

    The following Findings of Fact are based on the entire record 
including the documentary evidence and the testimony of the witnesses 
who testified at the hearing. The facts of this case are as follows:

A. Background

    1. Jason Liao, a United States Citizen, received a doctorate in 
civil engineering from Colorado State University. (Gov't Ex. 12).\4\
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    \4\ The citations in this Initial Decision and Order are as 
follows: Transcript followed by the page number, (Tr. ----); Agency 
Exhibit followed by number (Gov't Ex. ----); and Respondent Exhibit 
followed by a letter (Resp Ex. ----).
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    2. Liao operated JFD International (JFD) with his wife, Jennifer 
Zhong, and Francis Chang out of their home in Santa Clara, California. 
(Gov't Ex. 12).
    3. JFD was a sales and marketing company representing United States 
manufacturers to customers in China and Korea. (Gov't Ex. 12).
    4. In 1996, Charlie Kuan, Jason Liao, William Yu, and Chengdu Jeway 
Microwave Communication Corp. (Jeway) formed Suntek Microwave, Inc. 
(Suntek), a joint venture engaged in research, development, marketing 
and production of microwave communication products. (Gov't Ex. 4).
    5. Suntek's Pre-Incorporation Agreement recorded the initial 
shareholder contribution as: Liao 10%; Jeway Corporation 50%; Charlie 
Kuan 25%; William Yu 10%; and Key Employee Team 5%. (Gov't Ex. 4.)
    6. Shareholder Jeway is a Chinese registered joint venture which 
entered into a contract with Southwest Research Institute of Electronic 
Equipment (SIWI) in April of 1997. SIWI is a Chinese Government 
controlled company located in Chengdu, China (Gov't Ex. 5). The purpose 
of the contract was to transfer microwave component manufacturing 
technology from Jeway to SIWI. (Tr. 49; Gov't Ex. 5, 32).
    7. The Chairman of the Board for Jeway is Wang Lei Pei, former 
manager of a Chinese Government controlled company known as the 29th 
Research Institute of the Ministry of Electronics (29th Institute) 
located in Chengdu, China. (Tr. 45, 46, 49, and 126; Gov't Ex. 5, 9). 
Previously, Mr. Pei managed SIWI. (Tr. 126; Gov't Ex. 32).
    8. Mr. Kuan hired Liao as the Sales and Marketing Manager for 
Suntek in 1996. (Tr. 143; Gov't Ex. 12).

B. Export of Digital Video Log Amplifiers to China Without a License

    9. Following the formation of Suntek in September 1996, Liao 
obtained specifications for 70 detector log video amplifiers (DLVA) 
Model SKA 1000 from Kunshan Technology Development Company (Kunshan) in 
Yangzhou, China. (Tr. 47-48; Gov't Ex. 12, 32).\5\
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    \5\ In an interview with Special Agent Benjamin Robinson of BIS, 
Liao stated the purchaser of the 70 DLVAs was Santa Trading Company 
in Chengdu, China. Further, Liao stated that he knew Santa was not 
the end user. (Gov't. Ex. 12).
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    10. Upon receipt of the order for 70 DLVAs, Liao forwarded the 
specifications to Suntek for manufacturing 70 units of Model SKA 1000. 
(Tr. 47-48; Gov't Ex. 32).
    11. The Purchase Order, Quotation, Packing List, Invoices and 
checks generated for Model SKA 1000 list the California based company 
Silicon Valley Scientific Instruments Corp. (SVSIC) as the purchaser. 
(Tr. 56-59; Gov't Ex. 12, 32).\6\
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    \6\ BIS did not offer testimony during the hearing detailing the 
relationship between SVSIC and Liao. However, the record does 
include an interview with Ling Wang, President and Owner of SVSIC. 
See Report of Investigative Activity at Gov't Ex. 12. (Tr. 144-146). 
During Ms. Wang's interview, she described Liao as an acquaintance 
and he asked her to act as the ``middleman'' on behalf of his 
company, JFD International, to place an order for 79 DLVAs Model SKA 
1000 to Suntek. (Gov't Ex. 12). BIS entered the document into the 
record without objection by Liao.
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    12. Model SKA 1000 is a solid-state electronic amplifier and its 
primary purpose is to increase an electronic signal (Tr. 26).
    13. Model SKA 1000 is used for commercial and military 
applications; therefore the Department of Commerce placed the commodity 
of the Commerce Control List for national security reasons. (Tr. 26-
28). The Department of Commerce issues export licenses for such 
commodities exported to all countries. (Tr. 24).
    14. Generally, Model SKA 1000 is made for general use. However, 
customers can provide a manufacturer with specifications to customize 
the commodity. (Tr. 28).
    15. The specifications Liao received from the Chinese company 
Kunshan for Model SKA 1000 had a frequency range of 8-12 gigahertz. 
(Tr. 38; Gov't Ex.3).
    16. Model SKA 1000 is classified as a Category 3 commodity on the 
Commerce Control List. (Tr. 25-26).
    17. John Verna, BIS licensing officer and electronic engineer 
responsible for evaluation of export applications, testified as an 
expert concerning Commerce Control List Category 3 and 4. (Tr. 23-35; 
Gov't Ex. 2, 16).
    18. License determinations are made on a case-by-case basis and 
evaluation of intelligence shared from other federal agencies. 
Specifically, license applications for certain commodities are

[[Page 30614]]

reviewed and controlled for national security reasons. (Tr. 24-34).
    19. Mr. Verna explained Category 3 commodities are regulated by 
Export Commodity Control Number (ECCN) 3A001.b.4.A. and a license is 
required if amplifiers exported to China exceed a frequency of 10.5 
gigahertz. (Tr. 27-28, 39; Gov't Ex. 16).
    20. Model SKA 1000 amplifiers are controlled for export to China 
for national security reasons and an exporter is required to obtain a 
license prior to export. (Tr. 34; Gov't Ex. 2, 16).
    21. Mr. Verna concluded that during the time period of October, 
1996, through July 2000, a license was required for Liao's order of 70 
Model SKA 1000 amplifiers exported to China. The reason a license was 
required was that the frequency range of 8-12 gigahertz exceeded the 
allowable 10.5 gigahertz. (Tr. 33-36, 39: Gov't Ex. 2, 16).
    22. David Ports, a licensing officer for the Department of 
commerce, reviews license applications for dual use commodities. (Tr. 
40-41).
    23. In addition to licensing controls for amplifiers exceeding a 
frequency of 10.5 gigahertz, Mr. Ports testified that the technology 
associated with such commodities is also controlled under ECCN 3E001. 
(Tr. 41-42; Gov't Ex. 15).
    24. Mr. Ports determined that the time period set forth from 
October of 1996, through July 2000, amplifier technology was controlled 
for national security reasons and an individual validated license was 
required for export to China or any foreign national. (Tr. 41-43; Gov't 
Ex. 15). Further, the transfer or release of amplifier technology to 
any foreign national included any foreign national in the United 
States. (Tr. 43; Gov't Ex. 15).
    25. Mr. Ports confirmed that license exceptions are available for 
exports but not to countries listed in Group D:1. (Tr. 43).
    26. China is a country in Group D:1; therefore no license 
exceptions are available. (Tr. 43).

C. Sale of 70 Digital Log Video Amplifiers by Liao

    27. Liao arranged the transition between Suntek and SVSIC for 70 
DLVAs with the assistance of SVSIC employee, Francis Chang.\7\ (Tr. 47-
49; Gov't Ex. 12).
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    \7\ JFD also employed Francis Chang. Mr. Chang's 
responsibilities at JFD included price quotes, shipping and 
receiving. (Gov't Ex. 12).
---------------------------------------------------------------------------

    28. The Packing Lists and Invoices produced by Suntek showed the 
DLVAs were shipped to SVSIC; however, Liao actually received and took 
possession of the 70 amplfiers and hand-delivered the units to SVSIC. 
(Tr. 56-59; Gov't Ex. 12, 32).
    29. Prime Transportation Corporation is a company operated out of 
Liao's home and was responsible for payments made to Suntek for the 
DLVAs. (Tr. 71-73; Gov't Ex. 12, 13).
    30. On or about December 9, 1996, and on or about January 27, 1997, 
Liao hand-carried some of the DLVAs to China. (Tr. 49, 60, 69-70, 89; 
Gov't Ex. 12). Liao sent the remaining units to China via Federal 
Express. (Tr. 143-144; Gov't Ex. 12).
    31. Suntek terminated Liao on May 16, 1997, for exporting 70 
controlled amplifers to China without a license and collecting a 
commission on the sale of the amplifiers without Mr. Kuan's approval. 
(Tr. 69-71; Gov't Ex. 9, 13).

D. Liao's Knowledge of Licensing Requirement

    32. Prior to Liao's employment at Suntek, he worked at Menlo 
Industries (Menlo) with the marketing department for exports to China. 
(Tr. 105-106).
    33. In 1995, JFD assisted Menlo to obtain a license from the 
Department of Commerce for microwave amplifiers with a frequency range 
between 6-18 gigahertz. The contact person listed on the application 
submitted by JFD was Liao. (Gov't Ex. 27).
    34. The amplifiers manufactured by Menlo and the DLVAs manufactured 
and exported in this case had the same technical parameters and were 
classified under the same ECCN number classification, 3A001.b.4.a.
    35. In 1996, Frances Chang, a JFD employee, purchased amplifiers, 
ECCN number 3A01A, from DBS Microwave Inc. (DBS Microwave). The Invoice 
from DBS referenced JFD as the shipping and billing address.
    36. The Invoice indicated that JFD would apply for the export 
license for this transaction with DBS Microwave. (Tr. 133-135; Gov't 
Ex. 36).

E. Invitations Were Sent to Chinese Nationals To Visit the United 
States in Order To Obtain Amplifier Technology

    37. Jeway, Chinese controlled and initial shareholder of Suntek, 
sent employees to the United States for the purpose of assisting Suntek 
to manufacture amplifiers and to obtain the technology associated with 
the amplifiers. (Tr. 77-82; Gov't Ex. 19).
    38. The visiting Chinese nationals worked with the Vice President 
of Engineering of Suntek and acquired the manufacturing knowledge 
regarding the amplifiers. The knowledge obtained by the visiting 
Chinese Nationals was detrimental to the national security of the 
United States. (Tr. 27-28, 77-78).
    39. Jennifer Zhong, acting on behalf of JFD, forwarded a letter 
dated July 18, 1997, to Mr. Hu Changhong, Project Manager of SIWI 
Electronics, inviting him and two colleagues, Mr. Wang Yongan and Mr. 
Qiu Yijie, to visit the United States from August 5, 1997 through 
October 15, 1997. (Tr. 78-799; Gov't Ex. 9, 17, and 25).
    40. JFD facilitated the visits by Chinese nationals. (Tr. 83-84; 
Gov't Ex. 17).
    41. JFD assumed the expenses incurred and obtained the necessary 
visas in an effort to facilitate the visit by the Chinese nationals. 
(Tr. 86, 88; Gov't Ex. 9, 17, 22-25).

IV. Ultimate Findings of Fact and Conclusions of Law

    1. Jason Liao, individually and doing business as JFD 
International, the subject matter of this proceeding, are properly 
within the jurisdiction of the Export Administration Act of 1979 (50 
U.S.C. app. sections 2401-2420) and the Export Administration 
Regulations (15 CFR Parts 730-774).
    2. BIS established by a preponderance of reliable, probative and 
substantial evidence that on or about December 9, 1996, Liao exported 
detector log video amplifiers from the United States to China without a 
validated export license as required under Section 772A.1(b) of the 
Former Regulations. Liao's conduct in exporting DLVAs without a license 
was contrary to the provisions of the Act and in violation of section 
787A.6 of the Former Regulations.
    3. BIS established by a preponderance of reliable, probative and 
substantial evidence that Liao knew or had reason to know that export 
of detector log video amplifiers on or about December 9, 1996, to China 
required a valid license under Sections 742A.2 and 742A.5 of the Former 
Regulations. Liao's conduct resulted in a violation of 787A.4 of the 
Former Regulations.
    4. BIS established by a preponderance of reliable, probative, and 
substantial evidence that on or about January 27, 1997, Liao exported 
detector log video amplifiers from the United States to China without a 
license as required under Sections 742.4 and 742.5 of the Regulations. 
Liao violated 764.2(a) of the Regulations by exporting commodities from 
the United States without a license. Liao's conduct was contrary to the 
provisions of the Act.
    5. BIS established by a preponderance of reliable, probative, and 
substantial evidence that Liao knew or had reason to know that export 
of detector log video amplifiers on or about January 27, 1997,

[[Page 30615]]

to China required a license in the violation of 764.2(e) the 
Regulations.
    6. BIS established by a preponderance of reliable, probative, and 
substantial evidence that on or about July 18, 1997, Liao issued an 
invitation letter to Mr. Hu Changhong, inviting him and fellow 
colleagues, M. Wang Yongan and Mr. Qiu Yije, to the United states. All 
three men were citizens of China, not citizens or permanent resident 
aliens of the United States. At the time Liao issued the invitation 
letter, he knew or had reason to know that Suntek would release United 
States-origin technology to them. The three individuals entered the 
United States and Suntek released United States-origin technology to 
them. The release of information to the three individuals from China 
constituted an export under 734.2(b) and a license was required. By 
causing, aiding or abetting a prohibited act, Liao violated Section 
764.2(b) of the Regulations.

V. Discussion

A. Administrative Procedure Act

    The EAA generally excludes application of the Administrative 
Procedure Act, as amended (5 U.S.C. 551, 553-559; and sections 701 to 
706. See 50 U.S.C. app. section 2412(a)). Further, Title 15 of the Code 
of Federal Regulations for Part 766 Section 1 states in part, ``This 
part does not confer any procedural rights or impose any requirements 
based on the Administrative Procedure Act (APA) for proceedings 
charging violations under the EAA, except as expressly provided for in 
this part.'' However, the EAA does provide an exception to 50 U.S.C. 
app. section 2412(a) and 15 CFR 766.1. Actions involving civil 
penalties and sanctions for violations arising under 50 U.S.C. app. 
sections 2407 and 2410, allow the party charged with an EAR violation 
to receive a formal complaint and at his request, a hearing before an 
administrative law judge.\8\ 50 U.S.C. app. section 2412(c)(1). Any 
such hearings held are conducted in accordance with sections 556 and 
557 of the APA as provided pursuant to 15 CFR Part 766. See 50 U.S.C. 
app. section 2412(c)(1). This case involved violations of section 2410; 
therefore the administrative proceeding was conducted in accordance 
with section 556 and 557 of the APA.
---------------------------------------------------------------------------

    \8\ Section 2407 addresses prohibitions and exceptions to 
foreign boycotts and export violations of the EAA and underlying 
regulations are addressed in section 2410.
---------------------------------------------------------------------------

    The undersigned conducted the October 21, 2003, hearing in 
accordance with provisions of a letter from the United States Office of 
Personnel Management (OPM) and an interagency reimbursable agreement 
between the Coast Guard and the BIS dated December 30, 2002. ``The OPM 
letter and the reimbursable agreement authorize Coast Guard 
Administrative Law Judges to adjudicate formal on-the-record hearings 
for cases involving violations of U.S. export laws and regulations.'' 
In the Matter of Mabdulamir Mahdi, 68 FR 57406, 57408 (October 3, 
2003).

B. Burden of Proof

    The burden of proof is on the Agency. In order to sustain that 
burden, BIS must prove the charges by reliable, probative and 
substantial evidence. 5 U.S.C. 556(d); see also Steadman v. Securities 
and Exchange Commission, 450 U.S. 91, 98 (1981). In Steadman, the 
Supreme Court concluded that the legislative history of the APA 
intended the establishment of the traditional preponderance of evidence 
standard applied in civil proceedings. Id. at 102. In other words, the 
burden of satisfying the preponderance standard is accomplished when 
the trier of fact believes 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).
    Here, BIS submitted overwhelming evidence to support the five 
charges filed against Liao. BIS offered the testimony of six witnesses 
without objection. Further, BIS proffered Exhibits 1 through 38 into 
evidence without objection. (TR. 11-12, 112, 132, 148-149). In 
rebuttal, Ms. Zhong proffered fourteen exhibits for admission into 
evidence. (Tr. 117-122). Exhibits 2, 3, 5, 6, 7, and 8 were not 
admitted because they were duplicative of the Government's exhibits. 
(Tr. 117). Exhibits 1, 4, 7, 9, 10, 11, 12, and 14 were excluded for 
lack of relevancy. Further, exhibits 10 and 11 were rejected since they 
were written in Chinese, not translated in English, not dated, and not 
served on BIS until two days prior to the hearing. (Tr. 122). Finally, 
Ms. Zhong presented the testimony of one witness, Francis Chang.

C. Violations of the Export Administration Act and Regulations

1. Violations of 15 CFR 787A.6--Export, Diversion, Reexport, 
Transshipment
    In Charge 1, BIS alleged Liao exported detector video amplifiers 
(DLVA) on or about December 9, 1996, from the United States to China 
without a valid export license as required under 15 CFR 772A.1(b) of 
the Former Regulations. The failure to obtain a license to export the 
DLVAs resulted in a violation of 15 CFR 787A.6. Section 787A.6 
basically provides that no person may export commodities or technical 
data to any person or destination for any use in violation of the 
terms, provisions, or conditions of the EAA or any regulation issued 
under the Act.
    Liao violated Export Administration Regulation 15 CFR 772A.1(b), 
which requires a person to obtain a license for the export of 
commodities or technical data. Title 50 of the United States Code 
Appendix Sec.  2415(A) provides, ``the term `export' means--an actual 
shipment, transfer, or transmission of good or technology out of the 
United States.''
    On or about December 9, 1996, Suntek released thirty (30) Model SKA 
1000 amplifiers to Liao. (Tr. 49; Gov't Ex. 12, 32). According to the 
purchase order, packing lists, and invoices, the amplifiers were to be 
shipped to SVSIC. (Gov't Ex. 12). However, Liao exported the amplifiers 
out of the United States by hand-carrying the amplifiers to China. (Tr. 
49, 60, 69-70, 89; 143-144; Gov't Ex. 6, 12). On or about January 27, 
1997, Suntek again released forty (40) Model SKA 1000 amplifiers to 
Liao. (Gov't Ex. 12, 32). Liao exported this second group of amplifiers 
out of the United States to China via Federal Express. (Tr. 143-144; 
Gov't Ex. 6, 12). The export of seventy (70) amplifiers out of the 
United States to China by Liao was accomplished without an export 
license from the United States Department of Commerce. (Tr. 69-70; 143, 
144; Gov't Ex. 6, 12, 28, 32).
    In consideration of the entire record, including the lack of 
countervailing evidence, I find BIS presented reliable, probative, and 
substantial evidence that Liao violated 15 CFR 787A.6 and failed to 
obtain a license to export DLVAs to China as required by 15 CFR 
772A.1(b).
2. Violation of 15 CFR 787A.4(a) of the Former Regulations--Acting With 
Knowledge of a Violation; Possession With Intent To Export Illegally
    In Charge 2, BIS alleged Liao knew or had reason to know that 
export of the DLVAs to China as described in Charge 1, required a 
validated export license; therefore he violated 15 CFR 787A.4 of the 
Former Regulations. According to section 787A.4(a), no person may sell 
or transfer any commodity or technical data, exported or cause to be 
exported from the United States, which is subject to EAR, with 
knowledge of an EAA violation or violation of any regulation, has 
occurred, is about to occur, or is intended to occur with respect to 
any transaction.

[[Page 30616]]

    The issue for determination is whether Liao knew his failure to 
obtain an export license was in violation of Section 772A.1. 
Previously, Menlo employed Liao where he worked in the marketing 
department as a representative for the China market. (Tr. 105-107; 
Gov't Ex. 14). BIS introduced evidence from 1995 wherein Liao's 
company, JFD, obtained a license from the Department of Commerce for 
export of amplifiers to China on behalf of JFD and Menlo. (Gov't Ex. 
27). The amplifiers at issue in this hearing and the amplifiers 
manufactured at Menlo and exported by JFD in 1995, were the same model 
and classified under the same Export Commodity Control Number (ECCN) 
3A01A.b.4.a. (Tr. 72-74; Gov't Ex. 9, 27). The export license obtained 
for Menlo listed JFD as the applicant and Jason Liao as the contact 
person. (Gov't Ex. 27). Moreover, Charlie Kuan also worked with Liao at 
Menlo during this time period and stated both men, Kuan and Liao, knew 
a license was required for export of amplifiers. (Tr. 73-74; Gov't Ex. 
9, 14).
    A similar transaction between JFD and DBS Microwave included the 
export of amplifiers with the same ECCN number, 3A01A.b.4.a, for export 
to China in 1996. (Tr. 133-135; Gov't Ex. 36). The invoices noted that 
JFD would apply for the required export license prior to shipment 
outside the United States. (Gov't Ex. 36). Further, Francis Chang, a 
JFD employee, testified that during the transaction with DBS Microwave, 
Liao knew a license was required. (Tr. 135).
    During Liao's employment with Suntek, he knowingly arranged the 
export of DLVAs to a Chinese controlled company through his company 
JFD. Suntek Production Manager, William Yu, testified Liao knew the 
seventy (70) amplifiers exported to China required a license.\9\ (Tr. 
107; Gov't Ex. 14). Charlie Kuan, President and Chairman of Suntek, 
further corroborated Mr. Yu's testimony. Specifically, Mr. Kuan 
testified that Liao knew an export license was required and assured Mr. 
Kuan he would be responsible for obtaining an export license. (Tr. 66-
69).
---------------------------------------------------------------------------

    \9\ Mr. Yu was born in China and immigrated to the United States 
in 1976 and received a bachelor of science degree and masters degree 
in electrical engineering from the University of California, Los 
Angeles. (Tr. 108-109). While employed at Suntek, Mr. Yu allowed 
Chinese nationals to rent his apartment while they trained at 
Suntek. (Tr. 108; Gov't Ex. 19, 24). Currently, Mr. Yu is Vice 
President of Technology at Cernex, Inc., which manufactures 
microwave amplifiers with a frequency range exceeding 10.5 gigahertz 
for customers in China. (Tr. 110-112; Gov't Ex. 33).
---------------------------------------------------------------------------

    In consideration of the entire record, including the lack of any 
countervailing evidence, I find BIS presented reliable, probative, and 
substantial evidence that Liao violated 15 CFR 787A.4 by acting with 
knowledge of a violation of the EAA.
3. Respondent Engaged in Conduct Prohibited by the EAA and the EAR 
Resulting in a Violation of 15 CFR 764.2.
    In Charge 3, BIS alleged on or about January 27, 1997, Liao 
exported DLVAs from the United States to China without a license as 
required under Sections 742.4(a) and 742.5(a). Section 742.4(a) 
restricts the export of items that would make a significant 
contribution to the military potential of any other country that would 
prove detrimental to the national security of the United States. 
Consequently, a license is required for all destinations, except 
Canada, for all items regulated by Export Commodity Control Number on 
the Commerce Control List. See 15 CFR 742.4(a). The purpose of export 
controls in 15 CFR 742.4(a) is to prevent contributions to the military 
potential of countries in Country Group D:1. Id. Moreover, extended 
review or denial of a license will occur on applications to China where 
the commodity would make a direct and significant contribution to 
electronic and anti-submarine warfare, intelligence gathering, power 
projection or air superiority. See 15 CFR 742.4(b)(7).
    The second regulation relied upon by BIS for violation of the EAR 
is 15 CFR 742.5 missile technology. In an effort to limit missile 
proliferation, a license is required for the export of items related to 
the design, development, production or use of missiles. 15 CFR 742.5. 
The purpose of this regulatory control is to ensure the national 
security of the United States. Id.
    Here, BIS presented evidence that Liao engaged in prohibited 
conduct by exporting commodities regulated for national security 
reasons. In 1996 and 1997, Liao exported 70 amplifiers with a frequency 
range of 8-12 gigahertz to China. (Tr. 38; Gov't Ex. 3). The amplifiers 
are dual use electronics that can be used for commercial or military 
applications. (Tr. 26-28). National security concerns arise because 
Model SKA 1000 amplifiers can be used for the following military 
applications; radar, missile, radio, electronic warfare equipment, 
electronic countermeasure equipment, ESM, traveling wave tube 
replacement and simulators. (Tr. 27-28; Gov't Ex. 3). During this time 
period, Liao did not obtain a license for export of amplifiers to 
China. (Tr. 33-36, 39; Gov't Ex. 2, 16).
    Given the above, Liao further violated the EAR by releasing 
technology that could potentially benefit China's military. Charlie 
Kuan, President of Suntek, explained one of the goals of Suntek was to 
bring Jeway employees to the United States to manufacture amplifiers 
and obtain technology associated with the amplifiers. (Tr. 75-89). 
Moreover, Liao's company, JFD International, arranged the visit of 
Chinese foreign nationals to Suntek for the purpose of learning about 
the manufacturing of amplifiers and associated technology. (Tr. 83-84; 
Gov't Ex. 17). Review of Government Exhibit 5, revealed JFD entered 
into a joint venture for the expressed purpose of passing technology 
gained from training in the United States to Chinese controlled company 
Jeway. (Gov't Ex. 5).
    In consideration of the entire record, and lack of countervailing 
evidence, I find BIS presented reliable, probative, and substantial 
evidence that Liao violated 15 CFR 764.2(a) by exporting Model SKA 1000 
amplifiers, with a frequency range of 8-12 gigahertz, and associated 
technology to China without the required license.
4. Violation of 15 CFR 764.2(e) by Acting With Knowledge of a Violation
    In Charge 4, BIS alleges Liao knew or had reason to know the DLVAs 
exported to China in Charge 3 required a license. Section 764.2(e) 
provides in part: a person may not buy, sell, dispose of, transfer, 
transport, or forward in whole or in part an item from the United 
States that is subject to the EAR with knowledge that a violation 
occurred, was about to occur, or was intended to occur. The testimony 
and exhibits herein, previously found Liao knowingly violated the 
regulations because he knew a license was required for exports. 
Further, Liao's previous business transactions with JFD, Menlo, and DBS 
Microwave discussed above, demonstrated his knowledge of export 
violations.
    In consideration of the entire record, and lack of countervailing 
evidence, I find BIS presented reliable, probative, and substantial 
evidence that Liao violated 15 CFR Sec.  764.2(e) by acting with 
knowledge of a regulation violation.
5. Liao Aided or Abetted in the Release of United States--Origin 
Technology to Three Chinese Nationals in violation of 15 CFR Sec.  
764.2(b)
    In Charge 5, BIS alleged on or about July 18, 1997, Liao issued 
invitation letters to three Chinese Nationals to visit the United 
States with knowledge that

[[Page 30617]]

Suntek would release United States--origin technology to them. Further, 
the release of technology in the United States to citizens of China 
constituted an export under 15 CFR 734.2(b) and a license was required.
    BIS asserts Liao aided or abetted in the prohibited act of hearing 
United States technology to Chinese nationals. Section 762.2(b) 
provides, ``No person may cause or aid, abet, counsel, command, induce, 
procure, or permit the doing of any act prohibited for the omission of 
any act required, by the EAA, the EAR, or any order, license or 
authorization issued thereunder.''
    Charlie Kuan, President of Suntek, explained one of the goals of 
Suntek was to bring Jeway employees to the United States to manufacture 
amplifiers and obtain technology associated with the amplifiers. (Tr. 
75-89). During this time, Suntek had a very limited number of 
technicians; therefore, Suntek committed resources to bring Jeway 
employees to the United States to assist technicians with the 
manufacturing of amplifiers. (Tr. 76). In an effort to facilitate the 
arrival of Jeway employees. JFD organized travel, boarding, and visa 
applications.
    JFD employee, Francis Chang, received a letter from Liao Guozi, 
General Manager for Jeway, providing instructions for obtaining visa 
applications for three Chinese nationals traveling to the United States 
for training at Suntek. (Gov't Ex. 17). Mr. Guozi advised Mr. Chang to 
avoid mentioning Suntek in the invitation letters in an effort ``to 
facilitate their visa applications and to protect Suntek''. (Gov't Ex. 
17). Mr. Guozi communicated that Chairman Wang instructed JFD to invite 
three engineers from SIWI for training on imported products at AEMI Co. 
located in San Diego. After a couple of days at AEMI, the three 
engineers would then go to Suntek. (Gov't Ex. 17). The Three engineers 
listed in Mr. Guozi's letter were: Wang Yongan, Hu Changhong, and Qiu 
Yijie. (Gov't Ex. 17). The correspondence also informed Mr. Chang that 
the engineers would be at Suntek for three months and expenses would be 
borne by JFD. (Gov't Ex. 17, 22-25).
    The instructions from Mr. Guozi were corroborated with witness 
testimony and documentation. (Gov't Ex. 9, 17, 19, 22-25). Mr. Kuan, 
President of Suntek, testified that bringing Jeway employees to Suntek 
for training was a ``company goal.'' (Tr. 75-76). JFD employee, Francis 
Chang, drafted a Letter of Invitation to Mr. Hu Changhong, Project 
Manager of SIWI dated July 18, 1997, The letter also invited Wang 
Yongan and Qiu Yijie to visit the United States for the purpose of 
receiving full installation training and perform quality inspection of 
microwave absorbers previously purchased from JFD. Although Francis 
Chang drafted the letter, Jennifer Zhong was listed as the signatory on 
behalf of JFD. (Tr. 124-129; Gov't Ex. 17). Liao approved the practice 
of invitations letters on JFD letterhead sent to foreign nationals. 
These letters were drafted by Mr. Chang and signed by Mr. Chang, Liao, 
or Jennifer Zhong. (Tr. 125-128; Gov't Ex. 18).
    In consideration of the entire record, and lack of countervailing 
evidence, I find BIS presented reliable, probative, and substantial 
evidence that Liao released United States--origin technology to three 
Chinese nationals without a license as required by 15 CFR 734.2(b). 
Further, Liao aided and abetted the prohibited act of inviting Chinese 
nationals and releasing technology to them by sending invitation 
letters to SIWI employees in violation of 15 C.F.R. Sec.  764.2(b).

VI. Sanction

    BIS requested the maximum civil penalty permitted. $11,000.00 per 
violation. See 15 CFR 764.3(a)(1) and 15 CFR 6.4(a)(3)(2001). Further, 
BIS seeks denial of export privileges for a period of twenty (20) years 
under 15 CFR 764.3(a)(2)(2001) and exclusion from practice before BIS 
as described in 15 CFR 764.3(a)(3)(2001).
    Several aggravating factors support the recommendation to order the 
maximum civil penalty, deny export privileges and exclude Liao from 
practice before BIS. Liao exported a restricted commodity without a 
license from the Department of Commerce. The seventy (70) amplifiers 
exported by Liao were controlled for national security reasons since 
they had dual-use capabilities serving the commercial industry or 
advancing military applications. Experts from the Department of 
Commerce explained the military applications of the amplifiers, Model 
SKA 1000, and associated technology could be used for radar, missile, 
radio, electronic warfare equipment, electronic countermeasure 
equipment, ESM, traveling wave tube replacement and simulators.
    Mr. Kuan, President of Suntek, testified that bringing Jeway 
employees to the United States with the intent to acquire United 
States--origin amplifier technology was a company goal. Liao, initial 
shareholder and one of the founders of Suntek, aided and abetted in the 
release of United States-origin technology to Chinese controlled 
companies by issuing invitational letters to Chinese national. The 
purpose of the visits by Chinese nationals was to gain training and 
perform quality inspections of United States-origin amplifiers and 
associated technology.
    Liao's employment history with Menlo and previous business 
transactions with JFD, DBS Microwave and Suntek, demonstrated his 
significant involvement with Model SKA 1000 amplifier exports. 
Furthermore, Liao facilitated the export of amplifiers to Chinese 
controlled companies through his company JFD. Coincidentally, another 
company, Prime Transportation Corporation, operated and controlled by 
Liao, provided payments for the amplifiers manufactured by Suntek. I 
find Liao individually, and doing business as JFD violated the EAA and 
EAR thus warranting the proposed civil penalty assessment by BIS, 
$55,000.00, appropriate.

    So Ordered,

Done and dated this 5th day of April, 2004.
    Alameda, California.

Honorable Parlen L. McKenna,
Administrative Law Judge.

Attachment A Exhibit List

A. Government Exhibits

Gov't Ex. 1--Superseding Indictment of Silicon Telecom Industries, 
Inc. a/k/a JFD International, Suntek Microwave, Inc., Charlie Kuan, 
and Jason Liao
Gov't Ex. 2--License determination from Department of Commerce for 
Suntek DLVA model SKA-1000
Gov't Ex. 3--Letter from Charlie Kuan to Office of Export 
Enforcement dated February 3, 2000, regarding DLVA specifications 
and applications
    Report of Investigative Activity telephone interview with 
Charlie Kuan dated February 3, 2000, regarding specifications for 
Model SKA 1000
    Facsimile to Mr. Sheridan regarding Specifications SKA-1000 sent 
by Charlie Kuan
Gov't Ex. 4--Pre-Incorporation Agreement dated May 20, 1996, for 
Suntek Microwave. Inc.
Gov't Ex. 5--Contract between JFD International and SIWI Electronics 
Co.
Gov't Ex. 6--Report of Investigative Activity interview of Jason 
Liao dated December 2, 1997
Gov't Ex. 7--Chengdu JEWAY Microwave Communication Co. Ltd. 
Marketing brochure
Gov't Ex. 8--Chengdu SIWI Electronic Inc. marketing brochure
Gov't Ex. 9--Report of Investigative Activity interview of Charlie 
Kuan, dated March 2, 2000
    Fax from JW, Wang Yongan to Suntek, Attention General Manager 
Kuan dated March 25, 2997
    Fax from Wang Yuwen to General Manager Yu dated June 26, 1997

[[Page 30618]]

    Fax from Liao Guozi to Charlie Kuan dated August 14, 1997
    Fax from Charlie Kuan to Wang Lipei dated March 12, 1998
Gov't Ex. 10--License application for Suntek Microwave, Inc. dated 
March 4, 1997
Gov't Ex. 11--Letter from Office of Strategic Trade and Foreign 
Policy Controls, Bureau of Export Administration, to Charlie Kuan 
regarding notice of intent to deny license application
    Bureau of Export Administration notice of denial of license 
application dated July 17, 1997
Gov't Ex. 12--Report of Investigative Activity interview of Jason 
Liao dated December 2, 1997
    SVSIC Purchase Orders
    Suntek Packing Lists
    Suntek Invoices
    JFD International Invoices
    Letter from Charlie Kuan to Jason Liao regarding payment for 
DLVAs dated October 9, 1997
    Prime Intrans Corporation checks
    Report of Investigative Activity interview of Ling Wang, dated 
May 24, 2000
Gov't Ex. 13--Letter from Charlie Kuan to Jason Liao regarding 
employment termination dated May 15, 1997
    Letter from Daniel C. Minutillo, Attorney for Suntek Microwave, 
Inc., to Bureau of Export Enforcement regarding Suntek's voluntary 
self disclosure dated June 10, 1997
    Report of Investigative interviews of Charlie Kuan dated 
February 14, 2000
Gov't Ex. 14--William Yu Affidavit dated April 25, 2000
    Report of Investigative Activity interviews of Charlie Kuan 
dated October 27, 1997 and February 14, 2000
    Report of Investigative Activity interview of Melba Bauto dated 
February 17, 2000
    Report of Investigative Activity interview of Russ Alm dated 
February 22, 2000
    Report of Investigative Activity interview of Salim Kader dated 
February 1, 2000
Gov't Ex. 15--License determination for amplifier technology
Gov't Ex. 16--Licensing determinations for Models SKA-1002, 1004 and 
1006
Gov't Ex. 17--Letter of Invitation from JFD International to SIWI 
employees, July 18, 1997
    Fax from Francis Chang to Charlie Kuan dated August 25, 1997
    Fax from Charlie Kuan to Liao Guozi/JW dated August 25, 1997
    Fax from Liao Guozi to Charlie Kuan dated June 27, 1997
Gov't Ex. 18--Letters of Invitation to SIWI and Jeway employees from 
JFD International
Gov't Ex. 19--Contract between JFD and SIWI Electronics Co.
    Report of Investigative Activity interview of Charlie Kuan dated 
April 25, 2000
    Affidavit of William Yu dated April 25, 2000
Gov't Ex. 20--Two Suntek Microwave, Inc. checks payable to Yan Jian 
Gui; each in the amount of Nine Hundred dollars ($900.00)
    Memorandum dated July 30, 1997, from Charlie Kuan to Jiangui Yan 
regarding use of time clock
    Fax from Liao Guozi to Charlie Kuan dated August 14, 1997
Gov't Ex. 21--Invoice from JFD International to Suntek dated 
December 13, 1996, regarding fees for B-1 visa extensions
    INS Notices of Action regarding Yong An Wang and An Lao Wang
    Affidavits of Support made by Jason Liao on behalf of Yong An 
Wang
Gov't Ex. 22--Fax from Charlie Kuan to Liao Guozi/JW dated October 
1, 1997
Gov't Ex. 23--Memorandum from Charlie Kuan to Jeway employees dated 
July 24, 1997, regarding telephone expenses
    Suntek Microwave, Inc. check 1824 made payable to cash 
for September 1997 pocket money
Gov't Ex. 24--Living Expenses Check paid by Suntek
Gov't Ex. 25--Facsimile from Charlie Kuan to Liao Guozi/JW dated 
June 27, 1997
Gov't Ex. 26--Facsimile from Charlie Kuan to Liao Guozi/JEWAY dated 
February 1, 1997
Gov't Ex. 27--Export License obtained by JFD International for 
amplifiers manufactured by Menlo
Gov't Ex. 28--Memo from Jason Liao to Charlie Kuan dated January 27, 
1997, regarding Liao's receipt of 70 units of SKA--1000 Amplifiers
Gov't Ex. 29--Facsimile from Charlie Kuan to Wang Libu and Liao 
Guozi dated December 23, 1996
Gov't Ex. 30--Memo from Jason Liao to Charlie Kuan and carbon copy 
to Bill Yu dated December 31, 1996 regarding results of DVLA after 
exported to China
Gov't Ex. 31--Memo from Charlie Kuan to Liao Guozi/JW dated April 7, 
1998
Gov't Ex. 32--Stipulation and Proposed Order for Unsealing of 
Factual Stipulation in U.S. v. Kuan, CR No. 00-20308-JW
    Plea Agreement in U.S. v. Kuan, CR 00-20308-JW
Gov't Ex. 33--Bill Yu, Vice President of Technology, Cernex, Inc. 
Business Card
Gov't Ex. 34--Agreement on Partnership of JFD International and 
Fictitious Business Name Statements
Gov't Ex. 35--Memo from Thomas Muir, Advanced Electromagnetics, Inc. 
to Francis Chang dated August 27, 1997 regarding absorber 
application training request
Gov't Ex. 36--DBS Microwave, Inc. Order Acknowledgement, Packing 
Slips and Invoices addressed to JFD International
Gov't Ex. 37--Bureau of Export Administration Charging letter to 
Jason Liao, individually, and doing business as JFD International 
dated December 5, 2001
Gov't Ex. 38--JFD International Invoice showing commission to Jason 
Liao

Attachment B Ruling on Bureau's Proposed Findings of Fact and 
Conclusions of Law

    On December 15, 2003, the Administrative Law Docketing Center 
(ALJ Docketing Center) received Post-Hearing Submissions of the 
Bureau of Industry and Security for filing in the above-referenced 
matter. The pleading included enumerated paragraphs entitled 
Findings of Fact and Conclusions of Law in accordance with 15 CFR 
766.17(a)(2). Rulings on the proposed findings are detailed below.
    1. The DLVAs are controlled for export to China for national 
security reasons. Through documentary evidence and witness 
testimony, BIS showed that the DLVAs were controlled for export to 
China for national security reasons and that licenses would be 
required for their exports. See Gov't Exhibit 2 and testimony of 
John Verna, BIS licensing officer, October 21, 2003 Hearing 
Transcript (October 21 Tr.) at 20-31 and 33-35.

Ruling: Accepted and Incorporated

    2. On or about December 9, 1996, and on or about January 27, 
1997, Liao exported DLVAs from the United States to China without 
the required export licenses.\10\ Specifically, Liao picked up the 
DLVAs from Suntek and exported them to China without licenses. See 
e.g. Gov't Exhibit 12, 28, and 32 (Plea Agreement of Charlie Kuan) 
at 4. According, Liao violated the EAR as specified in Charges 1 and 
3 of the Charging Letter. See Gov't Exh. 37.
---------------------------------------------------------------------------

    \10\ Because the DLVAs were hand-carried by Liao, there are not 
shipping documents. Therefore, BIS used the dates that Liao picked 
up the DLVAs from Suntek as the dates for export.
---------------------------------------------------------------------------

Ruling: Accepted and Incorporated

    3. At the time of these exports, Liao knew that licenses were 
required for the exports. In 1995, Liao applied for and obtained a 
license to export controlled amplifiers to China. See Gov't Exhibit 
27. These amplifiers were classified under the same ECCN number in 
1996 (3A01A.b.4.a) as the DLVAs in this case and under 3A01.b.4.a. 
in 1997. See id. The amplifiers were manufactured by Menlo 
Industries and when Menlo sold the amplifiers to Liao for export, 
Menlo informed Liao of the licensing requirement. See Gov't Exh. 11. 
Also, in 1996 Liao bought amplifiers from DBS Microwave, inc. (DBS). 
The invoices clearly indicated that these amplifiers were classified 
under ECCN 3A01A and that licenses were required for export from the 
United States. See Gov't Exh. 36. Accordingly, Liao violated the EAR 
as specified in Charges 2 and 4 of the Charging Letter. See Gov't 
Exh. 37.

Ruling: Accepted and Incorporated

    4. The DLVA technology was controlled for export to China. See 
Gov't Exh. 15. The release of DLVA technology in the United States 
to a foreign national is ``deemed'' to be an export to the foreign 
country. See 15 CFR 734.2(b)(2) and 734.2(b)(2)(ii) (1997).

Ruling: Accepted and Incorporated

    5. Liao caused, aided and abetted or abetted the release of DLVA 
technology to Messrs. Hu Changhong, Wang Yongan, and Qiu Yijie, 
Chinese nationals, by Suntek. On or about July 18, 1997, Liao 
invited the Chinese nationals to the Unite[s] States. At the time 
Liao issued the invitation letter, he knew that they were citizens 
of China, not citizens or permanent resident aliens of the United 
States; that they were going to work at Suntek manufacturing DLVAs; 
and that Suntek would release controlled U.S.-origin DLVA technology 
the [sic] them.

[[Page 30619]]

Ruling: Accepted and Incorporated

Certificate of Service

    I hereby certify that I have served the foregoing decision and 
order to the following persons as indicated:

Mi-Yong, Kim, Esq., Senior Attorney, Office of Chief Counsel for 
Industry and Security, U.S. Department of Commerce, Room H-3839, 
14th Street & Constitution Avenue, NW., Washington, DC 20230, (by 
Federal Express (overnight delivery));
Jason Liao, In c/o Jennifer Zhong, 3370 Monroe Street, Santa Clara, 
CA 95051, (by Federal Express (overnight delivery)).

    Done and dated this 5th day of April, 2004, Alameda, California.
Cindy J. Roberson,
Paralegal Specialist to the Hon. Parlen L. McKenna.
[FR Doc. 04-12181 Filed 5-27-04; 8:45 am]
BILLING CODE 3910-JT-M