[Federal Register Volume 70, Number 219 (Tuesday, November 15, 2005)]
[Notices]
[Pages 69311-69314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22608]


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

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[05-BIS-01]


In the Matter of: Phaedon Nicholas Criton Constan-Tatos (a.k.a. 
Fred Tatos) Suburban Guns (Pty) Ltd., 119 Main Road, P.O. Box 30, 
Plumstead 7800, Cape Town, South Africa; Respondent

Decision and Order

    This matter is before me upon a Recommended Decision and Order of 
an Administrative Law Judge (``ALJ''), as further described below.
    In a Charging Letter filed on January 28, 2005, the Bureau of 
Industry and Security (``BIS'') alleged that respondent Phaedon 
Nicholas Criton Constan-Tatos a.k.a. Fred Tatos (``Tatos'') committed 
five violations of the Export Administration Regulations (the 
``Regulations'') \1\, issued under the Export Administration Act of 
1979, as amended (50 U.S.C. app. sections 2401-2420 (2000)) (the 
``Act'').\2\ Specifically, BIS alleged that Tatos committed two 
violations of section 764.2(a), two violations of section 764.2(e), and 
one violation of section 764.2(k) of the Regulations. The Charging 
Letter alleged that, in violation of a denial of export privileges 
imposed against Suburban Guns (Pty) Ltd. (``Suburban Guns'') by BIS on 
April 1, 1998,\3\ Tatos twice facilitated the acquisition by Suburban 
Guns of shotgun screw chokes, choke tubes, and barrels, which are 
classified under Export Control Classification Number (``ECCN'') 0A984, 
and of other shotgun accessories, which are designated as EAR99 items, 
from U.S. companies.\4\ The Charging Letter further alleged that Tatos 
committed these acts in violation of the Denial Order imposed against 
Suburban Guns with knowledge that violations of an Order issued under 
the Act and the Regulations would occur. Finally, the Charging Letter 
alleged that Tatos made a false representation to an official of BIS 
during BIS's investigation of this case when he stated in an e-mail 
communication to a BIS Office of Export Enforcement Special Agent that 
Suburban Guns had not imported any items from the United States since 
the imposition of the Denial Order against it.
---------------------------------------------------------------------------

    \1\ The charged violations occurred in 2000. The Regulations 
governing the violations at issue are found in the 2000 version of 
the Code of Federal Regulations. 15 CFR parts 730-774 (2000). The 
2005 Regulations establish the procedures that apply to this matter.
    \2\ 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 by Pub. 
L. No. 106-508 (114 Stat. 2360 (2000)) and it remained in effect 
through August 20, 2001. Since August 21, 2001, the Act has been in 
lapse and the President, through Executive Order 13222 of August 17, 
2001 (3 CFR, 2001 Comp. 783 (2002)), which has been extended by 
successive Presidential Notices, the most recent being that of 
August 2, 2005 (70 FR 45273, Aug. 5, 2005), has continued the 
Regulations in effect under IEEPA.
    \3\ Action Affecting Export Privileges; Suburban Guns (Pty) 
Ltd., 63 FR 15,828 (Apr. 1, 1998).
    \4\ EAR99 is a designation for items subject to the Regulations 
but not listed on the Commerce Control List.
---------------------------------------------------------------------------

    BIS's Charging Letter was served by certified mail on Tatos on 
January 28, 2005, and received on or about February 11, 2005. Tatos did 
not file an answer to BIS's Charging Letter with the ALJ.
    On August 4, 2005, BIS filed a Motion for Default with the ALJ, 
recommending

[[Page 69312]]

that Tatos be denied export privileges for a period of five years and 
that Tatos be required to pay a $55,000 penalty. Thereafter, on 
September 21, 2005, based on the record before it, the ALJ issued a 
Recommended Decision and Order in which he found that Tatos committed 
five violations of the Regulations and recommended the penalty proposed 
by BIS--denial of Tatos' export privileges for five years and 
imposition of a $55,000 penalty against Tatos.
    The ALJ's Recommended Decision and Order, together with the entire 
record in this case, has been referred to me for final action under 
section 766.22 of the Regulations. I find that the record supports the 
ALJ's findings of fact and conclusions of law regarding the liability 
of Tatos for the above-referenced charges. I also find that the penalty 
recommended by the ALJ is appropriate, given the nature of the 
violations and the importance of preventing future unauthorized 
exports. Based on my review of the entire record, I affirm the findings 
of fact and conclusions of law in the ALJ's Recommended Decision and 
Order.
    Accordingly, It Is Therefore Ordered,
    First, that a civil penalty of $55,000 is assessed against Phaedon 
Nicholas Criton Constan-Tatos a.k.a. Fred Tatos (``Tatos''), 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. 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, 
Tatos 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 the timely payment of the civil penalty set forth above 
is hereby made a condition to the granting, restoration, or continuing 
validity of any export license, license exception, permission, or 
privilege granted, or to be granted, to Tatos. Accordingly, if Tatos 
should fail to pay the civil penalty in a timely manner, the 
undersigned may enter an Order denying all of Tatos' export privileges 
for a period of one year from the date of entry of this Order.
    Fourth, that, for a period of five years from the date of this 
Order, Phaedon Nicholas Criton Constan-Tatos a.k.a. Fred Tatos 119 Main 
Road, P.O. Box 30, Plumstead 7800, Cape Town, South Africa, and when 
acting for or on behalf of Tatos, his representatives, agents, assigns, 
and employees (``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 
United 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 the Denied Person any item 
subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the Denied Person of the ownership, possession, or 
control of any item subject to the Regulations that has been or will be 
exported from the United States, including financing or other support 
activities related to a transaction whereby the Denied Person acquires 
or attempts to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from the Denied Person of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from the Denied Person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the 
Regulations that has been or will be exported from the United States 
and that is owned, possessed or controlled by the Denied Person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by the Denied Person if such service involves the use of any 
item subject to the Regulations that has been or will be exported from 
the United States. For purposes of this paragraph, servicing means 
installation, maintenance, repair, modification or testing.
    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 the Denied Person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
this Order.
    Seventh, that this Order does not prohibit any export, re-export or 
other transaction subject to the Regulations where the only items 
involved that are subject to the Regulations are the foreign-produced 
direct product of U.S.-origin technology.
    Eighth, that this Order shall be served on the Respondent and on 
BIS, and shall be published in the Federal Register. In addition, the 
ALJ's Recommended Decision and Order, except for the section related to 
the Recommended Order, shall 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: October 20, 2005.
David H. McCormick,
Under Secretary for Industry and Security.

Recommended Decision and Order

    On January 28, 2005, the Bureau of Industry and Security, U.S. 
Department of Commerce (hereinafter, ``BIS''), issued a charging letter 
initiating this administrative enforcement proceeding against Phaedon 
Nicholas Criton Constan-Tatos (a.k.a. Fred Tatos) (hereinafter, 
``Tatos'' ). The charging letter alleged that Tatos committed five (5) 
violations of the Export Administration Regulations (currently codified 
at 15 CFR parts 730-74 (2005)) (``the Regulations''),\1\ issued under 
the Export Administration Act of 1979, as amended.\2\
---------------------------------------------------------------------------

    \1\ The charged violations occurred in 2000. The Regulations 
governing the violations at issue are found in the 2000 version of 
the Code of Federal Regulations (15 CFR parts 730-74 (2000)). The 
2005 Regulations establish the procedures that apply to this matter.
    \2\ Sections 50 U.S.C. 2401-2420 (2000) (hereinafter, ``the 
Act''). From August 21, 1994 through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12924, which was 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. 1701-06 (2000)) 
(hereinafter, ``IEEPA''). On November 13, 2000, the Act was 
reauthorized and it remained in effect through August 20, 2001. 
Since August 21, 2001, the Act has been in lapse and the President, 
through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp. 
783 (2002)), as extended by the Notice of August 2, 2005 (70 FR 
45273 (August 5, 2005)), has continued the Regulations in effect 
under IEEPA.

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

[[Page 69313]]

    Specifically, the charging letter alleged that Tatos violated the 
Denial Order imposed against Suburban Guns (Pty) Ltd. by placing an 
order on or about February 2, 2000, with a U.S. company for shotgun 
screw chokes, choke tubes, and other accessories, which were exported 
to Suburban Guns (Pty) Ltd. on or about March 1, 2000 (Charge 1). The 
charging letter also alleged that Tatos violated Suburban Guns (Pty) 
Ltd.'s Denial Order by placing an additional order on or about March 
29, 2000, with a U.S. company for shotgun barrels and screw chokes, 
which were exported to Suburban Guns (Pty) Ltd. on or about March 30, 
2000 (Charge 3). Pursuant to the Denial Order imposed against Suburban 
Guns (Pty) Ltd., Tatos was prohibited from facilitating the acquisition 
of any item subject to the Regulations that was exported or to be 
exported from the United States. See Action Affecting Export 
Privileges; Suburban Guns (Pty) Ltd., 63 FR 15828 (Apr. 1, 1998). The 
BIS charging letter also alleged that, in both exports described above, 
Tatos ordered and purchased the items with knowledge that violations of 
an Order issued under the Act and the Regulations would occur (Charges 
2 and 4). Finally, the BIS charging letter alleged that, on or about 
October 28, 2004, Tatos made a false representation to an official of 
BIS in the course of a BIS investigation (Charge 5).
    Section 766.3(b)(1) of the Regulations provides that notice of 
issuance of a charging letter shall be served on a respondent by 
mailing a copy by registered or certified mail addressed to the 
respondent at the resondent's last known address. In accordance with 
the Regulations, on January 28, 2005, BIS mailed the notice of issuance 
of a charging letter by certified mail to Tatos at: Phaedon Nicholas 
Criton Constan-Tatos (a.k.a. Fred Tatos), Suburban Guns (Pty) Ltd., 119 
Main Road, P.O. Box 30, Plumstead 7800, Cape Town, South Africa. BIS 
has submitted evidence that establishes that this charging letter was 
received by Suburban Guns (Pty) Ltd. on or about February 11, 2005. 
These actions constitute service under the Regulations.
    Section 766.6(a) of the Regulations provides, in pertinent part, 
that ``[t]he respondent must answer the charging letter within thirty 
(30) days after being served with notice of issuance of the charging 
letter'' initiating the administrative enforcement proceeding. To date, 
Tatos has not filed an answer to the charging letter.
    Pursuant to the default procedures set forth in section 766.7 of 
the Regulations, I find the facts to be as alleged in the charging 
letter, and hereby determine that those facts establish Tatos committed 
two violations of section 764.2(e), one violation of section 764.2(g), 
and two violations of section 764.2(k) of the Regulations.
    Section 764.3 of the Regulations sets forth the sanctions BIS may 
seek for violations of the Regulations. The applicable sanctions are: 
(1) A monetary penalty; (2) suspension from practice before the 
Department of Commerce; and (3) denial of export privileges under the 
Regulations. See 15 CFR 764.3 (2005). Because Tatos knowingly violated 
the Regulations by violating the Denial Order imposed against Suburban 
Guns (Pty) Ltd. and made a false representation to an official of BIS 
in the course of the investigation of these circumstances, BIS requests 
that I recommend to the Undersecretary of Commerce for Industry and 
Security \3\ that Suburban Guns (Pty) Ltd.'s export privileges be 
denied for five (5) years, and that I impose a civil penalty of fifty-
five thousand dollars ($55,000).
---------------------------------------------------------------------------

    \3\ Pursuant to section 13(c)(1) of the Export Administration 
Act and section 766.17(b)(2) of the Regulations, in export control 
enforcement cases, the Administrative Law Judge makes recommended 
findings of fact and conclusions of law that the Under Secretary 
must affirm, modify or vacate. The Under Secretary's action is the 
final decision for the U.S. Commerce Department.
---------------------------------------------------------------------------

    BIS has suggested these sanctions because Tatos' actions, in twice 
violating a Denial Order imposed against Suburban Guns (Pty) Ltd., 
doing so with knowledge that a violation of the Regulations was 
occurring, and making a false representation to an official of BIS 
investigating these circumstances evidence a blatant disregard for U.S. 
export control laws. Further, BIS believes that denying Tatos' export 
privileges in this case is not a sufficient deterrent to Tatos, as 
evidenced by his willingness to violate the denial order in effect 
against Suburban Guns (Pty) Ltd. In light of these circumstances, BIS 
believes that appropriate action is the denial of Tatos' export 
privileges for five (5) years and a civil penalty of fifty-five 
thousand dollars ($55,000).
    On this basis, I concur with BIS and recommend that the Under 
Secretary enter an Order denying Tatos' export privileges for a period 
of five (5) years and requiring Tatos to pay a civil penalty in the 
amount of fifty-five thousand dollars ($55,000). These penalties are 
consistent with penalties imposed in recent cases under the Regulations 
involving violations of denial orders. In the Matters of Yaudat Mustafa 
Talyi a.k.a. Yaudat Mustafa a.k.a. Joseph Talyi, 41 Chamale Cove East, 
Slidell, Louisiana 70460, Respondents; Decision and Order, 69 FR 77.177 
(Dec. 27, 2004) (affirming the ALJ's recommendations that a twenty year 
denial and maximum civil penalty of $11,000 per violation was 
appropriate where an individual exported oil field parts to Libya 
without authorization, in violation of the terms and conditions of a 
BIS order temporarily denying his export privileges and with knowledge 
that a violation would occur; and solicited a violation of the 
Regulations by ordering oil field parts from an equipment manufacturer 
located in the United States without authorization and with knowledge 
that a violation would occur). A five (5) year denial of Tatos' export 
privileges is warranted because Tatos' violations, like those of the 
defendants in the above-cited case, were deliberate acts in violation 
of an order denying export privileges.

Recommended Order--[Redacted]

    Accordingly, I am referring this Recommended Decision and Order to 
the Under Secretary of Commerce for Industry and Security for review 
and final action for the agency, without further notice to the 
respondent, as provided in section 766.7 of the Regulations.
    Within thirty (30) days after receipt of this Recommended Decision 
and Order, the Under Secretary will issue a written order affirming, 
modifying or vacating the Recommended Decision and Order. See 15 CFR 
766.22(c).
    Done and dated this 21st day of September 2005, New York, NY.

Walter J. Brudzinski,
Administrative Law Judge, U.S. Coast Guard.

Certificate of Service

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

    Under Secretary for Export Administration, Bureau of Industry and 
Security, U.S. Department of Commerce, Room H-3839, 14th & Constitution 
Avenue, NW., Washington, DC 20230. Phone: 202-482-5301.
    ALJ Docketing Center, Baltimore, 40 S. Gay Street, Room 412, 
Baltimore, Maryland 21202-4022. Phone: 410-962-7434.

[[Page 69314]]

    Done and dated this 21st day of September, 2005 at New York, NY.

Regina V. Thompson,
Paralegal Specialist, Assistant to the Administrative Law Judge.
[FR Doc. 05-22608 Filed 11-14-05; 8:45 am]
BILLING CODE 3510-DT-M