[Federal Register Volume 71, Number 115 (Thursday, June 15, 2006)]
[Notices]
[Pages 34596-34599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-5435]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 05-BIS-19]


In the Matter of: Teepad Electronic General Trading, P.O. Box 
13708, Murshed Bazar, Dubai, UAE, Respondent; Decision and 
Order

    On November 22, 2005, the Bureau of Industry and Security, U.S. 
Department of Commerce (``BIS''), issued a charging letter initiating 
this administrative enforcement proceeding against Teepad Electronic 
General Trading (``Teepad''). The charging letter alleged that Teepad 
committed five violations of the Export Administration Regulations 
(currently codified at 15 CFR parts 730-774 (2006)) (the 
``Regulations''),\1\ issued the Export Administration Act of 1979, as 
amended (50 U.S.C. App. Sec. Sec.  2401-2420 (2000)) (the ``Act'').\2\
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    \1\ The charged violations occurred in 2001 and 2002. The 
Regulations governing the violations at issue are found in the 2001 
and 2002 versions of the Code of Federal Regulations (15 CFR parts 
730-774 (2001-2002)).
    \2\ 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)) 
(``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 45,273 (August 5, 2005)), has 
continued the Regulations in effect under IEEPA.
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    The charging letter alleged that Teepad conspired and acted in 
concert with others, known and unknown, to bring about an act that 
constitutes a violation of the Regulations, namely the export of 
telecommunications devices to Iran without the required licenses. BIS 
alleged that the goal of the conspiracy was to obtain 
telecommunications devices, including devices manufactured by a U.S. 
company, including an Adit 600 Chassis, FXO Channel Cards, and ABI FXO 
Ports (ECCN 5A991\3\), on behalf of an Iranian end-user and to export 
those telecommunications devices to Iran, by way of the United Arab 
Emirates (UAE). These items were subject to both the Regulations and 
the Iranian Transactions Regulations \4\ of the Treasury Department's 
Office of Foreign Assets Control (OFAC).
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    \3\ The term ``ECCN'' refers to Export Control Classification 
Number. See 15 CFR 772.1 (2006).
    \4\ 31 CFR part 560 (2006).
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    The charging letter also alleged that, on or about December 17, 
2001, on or about March 7, 2002, Teepad aided and/or abetted the doing 
of an act that was prohibited by the Regulations. Specifically, BIS 
alleged that Teepad forwarded telecommunications devices manufactured 
by a U.S. company that were subject to both the Regulations and the 
Iranian Transactions Regulations of OFAC through the UAE to Iran 
without authorization from OFAC as required by Section 746.7 of the 
Regulations.
    Finally, the BIS charging letter alleged that in connection with 
the transactions occurring on or about December 17, 2001, and on or 
about March 7, 2002, Teepad transferred items exported from the United 
States with knowledge, or reason to know, that a violation of the 
Regulations would occur. Specifically, BIS alleged that Teepad 
transferred the telecommunications devices described above to Iran when 
Teepad knew or had reason to know that they had been exported from the 
United States without proper export authorization.
    Section 766.3(b)(1) of the Regulations provides that notice of the 
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 respondent's last known address. In accordance with 
the Regulations, on November 22, 2005, BIS mailed the notice of 
issuance of a charging letter by registered mail to Teepad. BIS 
submitted evidence that establishes the charging letter was received by 
Teepad on or about December 7, 2005.
    Section 766.6(a) of the Regulations provides, in pertinent part, 
that ``[t]he respondent must answer the charging letter within 30 days 
after being served with notice of issuance of the charging letter'' 
initiating the administrative enforcement proceeding. Furthermore, the 
charging letter informed Teepad that a failure to follow this 
requirement would result in default.
    On December 24, 2005, Teepad sent a letter to BIS's Director of the 
Office of Export Enforcement in which Teepad stated that it believed it 
was in compliance with international law. Teepad did not file this 
letter with the Administrative Law Judge (ALJ) Docketing Center in 
accordance with Section 766.6(a). I note that charging letter informed 
Teepad that, in accordance with the Regulations, the answer must be 
filed with the ALJ Docketing Center, and the letter provided the 
address of the Docketing Center. On March 9, 2006, Counsel for BIS 
notified Teepad by letter and by facsimile to the facsimile number 
provided by Teepad that Teepad was required to file a formal answer to 
the charging letter with the ALJ. In the same letter, BIS notified 
Teepad that it must contact the Office of Chief Counsel for Industry 
and Security, by March 22, 2006, if Teepad wished to enter into 
settlement negotiations. Teepad did not file an answer with the ALJ and 
did not contact the Office of Chief Counsel to discuss settlement. In 
the Recommended Decision and Order, the ALJ found that Teepad did not 
answer the charging letter in the manner required by Sections 766.5(a) 
and 766.6 of the Regulations.
    Pursuant to the default procedures set forth in Section 766.7 of 
the Regulations, BIS filed a Motion for Default Order on April 11, 
2006. Under Section 766.7(a) of the Regulations, ``[f]ailure of the 
respondent to file an answer within the time provided constitutes a 
waiver of the respondent's right to appear,'' and ``on BIS's motion and 
without further notice to the respondent, [the ALJ] shall find the 
facts to be as alleged in the charging letter.'' Based upon the record 
before him, the ALJ held Teepad in default.
    On May 22, 2006, the ALJ issued a Recommended Decision and Order in 
which he found the facts to be as alleged in the charging letter, and 
determined that those facts establish that Teepad committed one 
violation of Section 764.2(d), two violations of Section 764.2(b), and 
two violations of Section 764.2(e) of the Regulations. The ALJ 
recommended that Teepad be denied export privileges for a period of ten 
years.
    On May 30, 2006, Teepad submitted an e-mail to the Office of Chief 
Counsel for Industry and Security that Counsel for BIS has supplied to 
me. In that e-mail, Teepad denies all wrongdoing. For reasons stated 
previously in this Decision, this e-mail does not constitute a properly 
filed or timely response to the charges against Teepad (See, Sections 
766.5-6 of the Regulations).
    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 with respect to each of 
the above-referenced charges brought against Teepad. I also find that 
the penalty recommended by the ALJ is appropriate, given the nature of 
the violations, the importance of preventing

[[Page 34597]]

future unauthorized exports, and the lack of any mitigating factors. I 
note that Iran is a country against which the United States maintains 
an economic embargo because of its support for international terrorism. 
Although the imposition of monetary penalties is an appropriate option, 
I agree with the ALJ that in this case such a penalty may not be 
effective, given the difficulty of collecting payment against a party 
outside the United States.
    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, for a period of ten years from the date this Order is 
published in the Federal Register, Teepad Electronic General Trading, 
P.O. Box 13708, Murshed Bazar, Dubai, United Arab Emirates, 
and all of its successors and assigns, and, when acting for or on 
behalf of Teepad, its officers, representatives, agents, 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.
    Second, 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.
    Third, 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.
    Fourth, that this Order does not prohibit any export, reexport, 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.
    Fifth, that this Order shall be served on the Denied Person 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: June 9, 2006.
David H. McCormick,
Under Secretary of Commerce for Industry and Security.

Department of Commerce--Bureau of Industry and Security

[Docket No.: OS-BIS-19]

In the Matter of: Teepad Electronic General Trading, P.O. Box 
13708, Murshed Bazar, Dubai, UAE, Respondent; Recommended 
Decision and Order

    On November 22, 2005, the Bureau of Industry and Security, U.S. 
Department of Commerce (``BIS''), issued a charging letter initiating 
this administrative enforcement proceeding against Teepad Electronic 
General Trading (``Teepad''). The Charging Letter alleged that Teepad 
committee five violations of the Export Administration Regulations 
(currently codified at 15 CFR parts 730-774 (2006)) (the 
``Regulations''),\1\ issued under the Export Administration Act of 
1979, as amended (50 U.S.C. App. Sec. Sec.  2401-2420 (2000)) (the 
``Act'').\2\
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    \1\ The charged violations occurred in 2001 and 2002. The 
Regulations governing the violations at issue are found in the 2001 
and 2002 versions of the Code of Federal Regulations (15 CFR parts 
730-774 (2001-2002)). The 2006 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 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)) 
(``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 45,273 (August 5, 2005)), has 
continued the Regulations in effect under IEEPA.
---------------------------------------------------------------------------

    Specifically, the Charging Letter alleged that Teepad conspired and 
acted in concert with others, known and unknown, to bring about an act 
that constitutes a violation of the Regulations, namely the export of 
telecommunications devices to Iran without the required licenses. BIS 
alleged that the goal of the conspiracy was to obtain 
telecommunications devices, including devices manufactured by a U.S. 
company, including an Adit 600 Chassis, FXO Channel Cards, and ABI FXO 
Ports (ECCN 5A991 \3\), items subject to both the Regulations and the 
Iranian Transactions Regulations \4\ of the Treasury Department's 
Office of Foreign Assets Control (OFAC), on behalf of an

[[Page 34598]]

Iranian end-user and to export those telecommunications devices to 
Iran. (Charge 1).
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    \3\ The term ``ECCN'' refers to Export Classification Number. 
See 15 CFR 772.1 (2006).
    \4\ 31 CFR part 560 (2006).
---------------------------------------------------------------------------

    The Charging Letter also alleged that, on or about December 17, 
2001, and on or about March 7, 2002, Teepad aided and/or abetted the 
doing of an act that was prohibited by the Regulations. Specifically, 
BIS alleged that Teepad forwarded telecommunications devices 
manufactured by a U.S. company, including an Adit 600 Chassis, FXO 
Channel Cards, and ABI FXO Ports, items subject to both the Regulations 
(ECCN 5A991) and the Iranian Transactions Regulations of Treasury 
Department's OFAC, that had been exported from the United States, 
through the United Arab Emirates to Iran without authorization from 
OFAC as required by Section 746.7 of the Regulations. (Charges 2 and 
3).
    Finally, the BIS Charging Letter alleged that in connection with 
the transactions occurring on or about December 17, 2001, and on or 
about March 7, 2002, Teepad transferred items exported from the United 
States with knowledge that a violation of the Regulations would occur. 
Specifically, BIS alleged that Teepad transferred the 
telecommunications devices described above to Iran when Teepad knew or 
had reason to know that they had been exported from the United States, 
without authorization from OFAC. (Charges 4 and 5).
    Section 766.3(b)(1) of the Regulations provides that notice of the 
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 respondent's last known address. In accordance with 
the Regulations, on November 22, 2005, BIS mailed the notice of 
issuance of a charging letter by registered mail to Teepad at its last 
known address: Teepad Electronic General Trading, P.O. Box 
13708, Murshed Bazar, Dubai, UAE. BIS submitted evidence that 
establishes the Charging Letter was received by Teepad on or about 
December 7, 2005.\5\ These actions constitute service under the 
Regulations.
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    \5\ Government Exhibit A of the January 5, 2006 Certificate 
Regarding Service.
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    Section 766.6(a) of the Regulations provides, in pertinent part, 
that ``[t]he respondent must answer the charging letter within 30 days 
after being served with notice of issuance of the charging letter'' 
initiating the administrative enforcement proceeding. Furthermore, BIS 
informed Teepad that a failure to follow this requirement would result 
in default. (Charging Letter, at 3).
    On December 24, 2005, Teepad sent a letter to BIS's Director of the 
Office of Export Enforcement. Teepad did not file this letter with the 
ALJ Docketing Center in accordance with Section 766.6(a).\6\ In the 
letter, Teepad provided factual information and stated, inter alia, 
that Teepad believed it was in compliance with international law. 
(Gov't Ex. 2). On March 9, 2006, BIS notified Teepad via letter and 
facsimile \7\ that Teepad was required to file a formal answer to the 
Charging Letter with the ALJ. In that same letter, BIS notified Teepad 
that it must contact the Office of Chief Counsel for Industry and 
Security, by March 22, 2006, in the event that Teepad wished to discuss 
settlement of this matter. (Gov't Ex. 3). To date, Teepad has not filed 
an answer with the ALJ and has not contacted the Office of Chief 
Counsel to discuss settlement. Accordingly, Teepad has not answered the 
Charging Letter in the manner required by Sections 766.5(a) and 766.6 
of the Regulations.
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    \6\ The Charging Letter provided the address of the ALJ 
Docketing Center and specified that the answer must be filed in 
accordance with 15 CFR 766.5(a) to the ALJ Docketing Center.
    \7\ BIS's letter of March 9, 2006 was successfully sent to the 
facsimile number provided by Teepad. (Gov't Ex. 4).
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    Pursuant to the default procedures set forth in Section 766.7 of 
the Regulations, the undersigned finds the facts to be as alleged in 
the Charging Letter, and hereby determines that those facts establish 
that Teepad committed one violation of Section 764.2(d), two violations 
of Section 764.2(b), and two violations of Section 764.2(e) 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: 
(i) A monetary penalty, (ii) suspension from practice before the Bureau 
of Industry and Security, and (iii) a denial of export privileges under 
the Regulations. See CFR 764.3 (2001-2002). Because Teepad knowingly 
violated the Regulations by transferring items that were subject to the 
Regulations with knowledge that a violation of the Regulations would 
occur, BIS requests that the undersigned recommends to the Under 
Secretary of Commerce for Industry and Security \8\ that Teepad's 
export privileges be denied for ten years.
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    \8\ 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.
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    BIS suggested these sanctions because Teepad's knowing violation in 
transferring controlled telecommunications devices to Iran without 
prior authorization evidences a serious disregard for U.S. export 
control laws. Furthermore, BIS noted that Iran is a country against 
which the United States maintains an economic embargo because of Iran's 
support of international terrorism. BIS believes that the imposition of 
a civil monetary penalty in this case may be ineffective, given the 
difficulty of collecting payment against a party outside of the United 
States. In light of these circumstances, BIS believes that the denial 
of Teepad's export privileges for ten years is an appropriate sanction.
    On this basis, the undersigned concurs with BIS and recommends that 
the Under Secretary enter an Order denying Teepad's export privileges 
for a period of ten years. Such a denial order is consistent with 
penalties imposed in past cases under the Regulations involving 
shipment to Iran. See In the Matter of Petrom GmbH International Trade, 
70 FR 32,743 (June 6, 2005) (affirming the recommendations of the 
Administrative Law Judge that a twenty year denial order and a civil 
monetary sanction of $143,000 were appropriate where knowing violations 
involved a shipment of EAR99 items to Iran); In the Matter of Arian 
Transportvermittlungs, GmbH, 69 FR 28,120 (May 18, 2004) (affirming the 
recommendation of the Administrative Law Judge that a ten year denial 
order was appropriate where knowing violations involved a shipment of a 
controlled item to Iran); In the Matter of Jabal Damavand General 
Trading Company, 67 FR 32,009 (May 13, 2002) (affirming the 
recommendation of the Administrative Law Judge that a ten year denial 
order was appropriate where knowing violations involved shipment of 
EAR99 items to Iran); In the Matter of Adbulamire Mahdi, 68 FR 57,406 
(October 3, 2003) (affirming the recommendation of the Administrative 
Law Judge that a twenty year denial order was appropriate where knowing 
violations involved shipments of EAR99 items to Iran as a part of a 
conspiracy to ship such items through Canada to Iran). A ten year 
denial of Teepad's export privileges is warranted because Teepad's 
violations, like those of the defendants in the above-cited case, were 
deliberate acts done is violation of U.S. export control laws.
    The terms of the denial of export privileges against Teepad should 
be consistent with the standard language used by BIS in such orders. 
The language is:

[[Page 34599]]

[Redacted Section]

[Redacted Section]

[Redacted Section]

    Accordingly, the undersigned refers 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 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).

    Dated: May 22, 2006.
Joseph N. Ingolia,
Chief Administrative Law Judge.
[FR Doc. 06-5435 Filed 6-14-06; 8:45 am]
BILLING CODE 3510-33-M