[Federal Register Volume 71, Number 183 (Thursday, September 21, 2006)]
[Notices]
[Pages 55163-55166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7876]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Action Affecting Export Privileges; Ghashim Group, Inc. and Mazen 
Ghashim and Related Person MNC Group International, Inc.; In the Matter 
of Ghashim Group, Inc., d.b.a. KZ Results, 8746 Westpark Drive, 
Houston, TX 77063, Respondent Order Relating to Ghashim Group, Inc. 
D.B.A. KZ Results

    The Bureau of Industry and Security, U.S. Department of Commerce 
(``BIS'') has notified Ghashim Group, Inc., doing business as KZ 
Results (``KZ Results''),

[[Page 55164]]

of its intention to initiate and administrative proceeding against KZ 
Results pursuant to Section 7663.3 of the Export Administration 
Regulations (currently codified at 15 CFR parts 730-774 (2006)) (the 
``Regulations''),\1\ and Section 13(c) of the Export Administration Act 
of 1979, as amended (50 U.S.C. app. Sec. Sec.  2401-2420 (2000)) (the 
``Act''),\2\ through the issuance of a proposed charging letter to KZ 
Results that alleged that KZ Results committed 99 violations of the 
Regulations. Specifically, the charges are:
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    \1\ The charged violations occurred during 2003 and 2004. The 
Regulations governing the violations at issue are found in the 2003 
and 2004 versions of the Code of Federal Regulations (15 CFR parts 
730-774 (2003-2004)). The 2006 Regulations establish the procedures 
that apply to this matter.
    \2\ 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 successive Presidential 
Notices, the most recent being that of August 3, 2006 (71 FR 44,551 
(Aug. 7, 2006)), has continued the Regulations in effect under the 
International Emergency Economic Powers Act (50 U.S.C. 1701-1706 
(2000)) (``IEEPA''). The Act and the Regulations are available on 
the Government Printing Office Web site at: http://www.access.gpo.gov/bis/.
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Charge 1--15 CFR 764.2(d)--Conspiracy To Export Items From the United 
States to Syria Without the Required License

    Beginning in or about February 2003 and continuing through in or 
about June 2004, KZ Results conspired and acted in concert with others, 
known and unknown, to violate the Regulations and to bring about acts 
constituting violations of the Regulations. The purpose of the 
conspiracy was to export computers from the United States to Syria 
directly and by transshipment through the United Arab Emirates 
(``U.A.E.''). The computers were items subject to the Regulations and 
classified under Export Control Classification Number (``ECCN'') 4A003 
and ECCN 4A994. As set forth in Section 742.9 of the Regulations, a 
Department of Commerce export license was required before the computers 
could be exported to Syria. To accomplish the conspiracy, the 
conspirators, including KZ Results, participated in a scheme to have KZ 
Results purchase the computers from U.S. distributors and 
manufacturers, and to have KZ Results export the items to Syria 
directly or by transshipment through the U.A.E. without a Department of 
Commerce export license. In so doing, KZ Results committed one 
violation of Section 764.2(d) of the Regulations.

Charges 2-15--15 CFR 764.2(a)--Engaging in Prohibited Conduct by 
Exporting Computers to Syria Without the Required License

    On 14 occasions, between on or about February 26, 2003 and on or 
about December 13, 2003, KZ Results engaged in conduct prohibited by 
the Regulations by exporting over 300 computers subject to the 
Regulations and classified under ECCN 4A994, and one computer subject 
to the Regulations and classified under ECCN 4A003 to Syria without the 
Department of Commerce licenses required by Section 742.9 of the 
Regulations. In so doing, KZ Results committed 14 violations of Section 
764.2(a) of the Regulations.

Charges 16-26--15 CFR 764.2(a)--Engaging in Prohibited Conduct by 
Exporting Computers to Syria Through the United Arab Emirates Without 
the Required License

    On 11 occasions, between on or about January 7, 2004 and May 21, 
2004, KZ Results engaged in conduct prohibited by the Regulations by 
exporting over 400 computers subject to the Regulations and classified 
under ECCN 4A994 to Syria without the Department of Commerce license 
required by Section 742.9 of the Regulations. Specifically, KZ Results 
transshipped these computers to Syria through a shipping consolidator 
and forwarder in the U.A.E. In so doing, KZ Results committed 11 
violations of Section 764.2(a) of the Regulations.

Charges 27-37--15 CFR 764.2(e)--Acting With Knowledge of a Violation

    On 11 occasions, between on or about January 7, 2004 and May 21, 
2004, in connection with the transactions described in Charges 16-26, 
above, KZ Results sold, transferred or forwarded computers to Syria by 
transshipment through the U.A.E. with knowledge that violations of the 
Regulations were occurring. KZ Results had knowledge that violations 
were occurring because KZ Results had been advised by the U.S. 
Government and KZ Results' suppliers that licenses were required to 
export or transship these items to Syria, and KZ Results had license 
applications pending with BIS for exports to Syria of similarly 
controlled items. In selling, transferring or forwarding these 
computers with knowledge that violations were occurring, KZ Results 
committed 11 violations of Section 764.2(e) of the Regulations.

Charges 38-39--15 CFR 764.2(c)--Attempting To Violate the Regulations 
by Exporting Computers to Syria Through the United Arab Emirates 
Without the Required License

    On two occasions, on or about June 16, 2004 and on or about June 
22, 2004, KZ Results attempted to violate the Regulations by attempting 
to export over 10 computers subject to the Regulations and classified 
under ECCN 4A994 to Syria without the Department of Commerce licenses 
required by Section 742.9 of the Regulations.Specifically, KZ Results 
attempted to export these computers to Syria by transshipment through a 
shipping consolidator and forwarder in the U.A.E. In so doing, KZ 
Results committed two violations of Section 7642.2(a) of the 
Regulations.

Charges 40-41--15 CFR 764.2(e)--Acting With Knowledge of a Violation

    On two occasions, on or about June 16, 2004 and on or about June 
22, 2004, in connection with the transactions described in Charges 38-
39, above, KZ Results ordered, bought, stored, sold, transferred or 
transported computers with knowledge that violations of the Regulations 
were about to occur or were intended to occur in connection with the 
items. Specifically, KZ Results ordered, bought, stored, sold, 
transferred or transported the items, which KZ Results planned to 
export to Syria through the U.A.E. without a Department of Commerce 
license. KZ Results had knowledge that violations were about to occur 
or were intended to occur because KZ Results had been advised by the 
U.S. Government and KZ Results' computer suppliers that licenses were 
required to export or transship these items to Syria, and KZ Results 
had license applications pending with BIS for exports to Syria of 
similarly controlled items. In so doing, KZ Results committed two 
violations of Section 764.2(e) of the Regulations.

Charges 42-66--15 CFR 764.2(g)--Misrepresentation of Facts Through 
False Statement on Shipper's Export Declarations

    On 25 occasions between on or about February 26, 203 and on or 
about May 21, 2004, in connection with the transactions described in 
Charges 27-26, above, KZ Results indirectly made false statements to 
the U.S. Government in connection with the submission of export control 
documents. Specifically, KZ Results, through its freight forwarder, 
filed Shipper's Export Declarations (``SEDs'') with the U.S. Government 
stating that the items that were the subject of the SEDs qualified

[[Page 55165]]

for export as ``NLR,'' meaning that no license was required for their 
export. These representations were false, as licenses were required for 
the computers included in the shipments. SEDs are export control 
documents, as defined in part 772 of the Regulations. In filing, 
through its freight forwarder, SEDs with the U.S. Government that 
contained false statements of fact, KZ Results committed 25 violations 
of Section 764.2(g) of the Regulations.

Charges 67-77--15 CFR 764.2(e)--Acting With Knowledge of a False 
Statement Being Made to the U.S. Government

    On 11 occasions, between on or about January 7, 2004 and on or 
about May 21, 2004, in connection with the 11 transactions described in 
Charges 56-66, above, KZ Results sold, transferred or forwarded 
computers subject to the Regulations that were to be exported from the 
United States with knowledge that violations of the Regulations would 
occur in connection with the export of the computers. Specifically, KZ 
Results knew that it indirectly had filed a false SED with the U.S. 
Government in connection with its sale, transfer, or forwarding of the 
computers. KZ Results knew that the items required export licenses 
because KZ Results had been advised by the U.S. Government and KZ 
Results' computer suppliers that licenses were required to export or 
transship these items to Syria, and KZ Results had license applications 
pending with BIS for exports to Syria of similarly controlled items. 
Nevertheless, KZ Results informed its freight forwarder that the 
computers did not require export licenses and that the SEDs should 
indicate that no license was required. In so doing, KZ Results 
committed 11 violations of Section 764.2(e) of the Regulations.

Charges 78-88--15 CFR 764.2(g)--Misrepresentation of Facts Through 
False Statement on Shipper's Export Declaration

    On 11 occasions between on or about January 7, 2004 and on or about 
May 21, 2004, in connection with the transactions described in Charges 
16-26, above, KZ Results indirectly made false statements to the U.S. 
Government in connection with the submission of export control 
documents. Specifically, KZ Results, through its freight forwarder, 
filed SEDs with the U.S. Government stating that the U.A.B. was the 
country of ultimate destination of the computers that were the subject 
of the SEDs. These representations were false, as the country of 
ultimate destination of the computers being exported was Syria. SEDs 
are export control documents, as defined in part 772 of the 
Regulations. In filing, through its freight forwarder, SEDs with the 
U.S. Government that contained false statements of fact, KZ Results 
committed 11 violations of Section 764.2(g) of the Regulations.

Charges 89-99--15 CFR 764.2(e)--Acting With Knowledge of a False 
Statement Being Made to the U.S. Government

    On 11 occasions, between on or about January 7, 2004 and on or 
about May 21, 2004, in connection with the 11 transactions described in 
Charges 78-88, above, KZ Results sold, transferred or forwarded 
computers subject to the Regulations that were to be exported from the 
United States with knowledge that violations of the Regulations would 
occur in connection with the export of the computers. Specifically, KZ 
Results knew that it indirectly had filed a false SED with the U.S. 
Government in connection with its sale, transfer, or forwarding of the 
computers. KZ Results knew that the country of ultimate destination of 
the computers was Syria, but it informed its freight forwarder that the 
country of ultimate destination was the U.A.E. In so doing, KZ Results 
committed 11 violations of Section 764.2(e) of the Regulations.
    Whereas, BIS and KZ Results have entered into a Settlement 
Agreement pursuant to Section 766.18(a) of the Regulations whereby they 
agreed to settle this matter in accordance with the terms and 
conditions set forth therein, and
    Whereas,, I have approved of the terms of such Settlement 
Agreement; It is Therefore Ordered
    First, that a civil penalty of $1,089,000 is assessed against KZ 
Results. KZ Results shall pay $22,000 to the Department of Commerce as 
follows: $22,000 to the Department of Commerce as follows: $2,200 not 
later than October 15, 2006; $2,200 not later than November 15, 2006; 
$2,200 not later than December 15, 2006; $2,200 not later than January 
15, 2007; $2,200 not later than February 15,2007; $2,200 not later than 
March 15, 2007; $2,200 not later than April 15, 2007; $2,200 not later 
than May 15, 2007; $2,200 not later than June 15, 2007; and $2,200 not 
later than July 15, 2007. Payment shall be made in the manner specified 
in the attached instructions. Payment of the remaining $1,067,000 shall 
be suspended for a period of five years from the date of entry of this 
Order and thereafter shall be waived, provided that during the period 
of suspension, KZ Results has committed no violation of the Act, or any 
regulation, order, or license issued thereunder and has made the 
payment of $22,000, described above, in a timely manner.
    Second, that, pursuant to the Debt Collection Act of 1982, as 
amended (31 U.S.C. 3701-372OE (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, 
KZ Results 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 KZ Results. Accordingly, if KZ 
Results should fail to pay the civil penalty in a timely manner, the 
undersigned may enter an Order denying all of KZ Results' export 
privileges under the Regulations for a period of one year from the date 
of entry of this Order.
    Fourth, for a period of twenty years from the date of entry of this 
Order, Ghashim Group, Inc. d.b.a. KZ Results, 8746 Westpark Drive, 
Houston, Texas 77063 (``KZ Results''), its successors or assigns, and 
when acting for or on behalf of KZ Results, its representatives, 
agents, officers or employees (``Denied Person'') may not participate, 
directly or indirectly, 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:

[[Page 55166]]

    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 which 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 KZ Results by affiliation, ownership, 
control, or position of responsibility in the conduct of trade or 
related services may also be made subject of the provisions of this 
Order.
    Seventh, 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.
    Eighth, that the proposed charging letter, the Settlement 
Agreement, and this Order shall be made available to the public.
    Ninth, that this Order shall be served on the Denied Person and on 
BIS, and shall be published in the Federal Register.
    This Order, which constitutes the final agency action in this 
matter, is effective immediately.

    Entered this 12th day of September, 2006.
Darryl W. Jackson,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 06-7876 Filed 9-20-06; 8:45 am]
BILLING CODE 3510-DT-M