[Federal Register Volume 72, Number 103 (Wednesday, May 30, 2007)]
[Notices]
[Pages 29963-29965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-2677]


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

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 05-BIS-17]


In the Matter of: Jose Alberto Diaz Sanchez, President, Winter 
Aircraft Products SA, a/k/a Ruf S. Lopez SA; C/Ferrocarril 41; 1 DCHA 
28045 Madrid, Spain, Respondent; Final Decision and Order

    This matter is before me upon a Recommended Decision and Order of 
the Administrative Law Judge (``ALJ'').
    In a charging letter filed on September 12, 2005, the Bureau of 
Industry and Security (``BIS'') alleged that Respondent, Jose Alberto 
Diaz Sanchez, (``Diaz Sanchez''), in his capacity as President of 
Winter Aircraft Products SA (``Winter Aircraft''), committed two 
violations of the Export Administration Regulations (currently codified 
at 15 CFR parts 730-774) (2007)) (``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\ Specifically, the 
charging letter alleged that between on or about November 1, 2000, and 
on or about November 17, 2000, Diaz Sanchez took actions with intent to 
evade the Regulations. Specifically, on or about November 1, 2000, Diaz 
Sanchez, acting through his company Winter Aircraft, acquired aircraft 
parts, items subject to the Regulations and classified under Export 
Control Classification Number (``ECCN'') 9A991, from U.S. suppliers 
with intent to transship such items to Iran. Winter Aircraft failed to 
inform the U.S. suppliers of the ultimate destination of the items and, 
as such, no license was obtained from the U.S. Government for this 
transaction, as was required by Section 746.7 of the Regulations. On or 
about November 17, 2000, Winter Aircraft transshipped the aircraft 
parts subject to the Regulations to Iran. In taking these actions, Diaz 
Sanchez committed one violation of Section 764.2(h) of the Regulations.
---------------------------------------------------------------------------

    \1\ The violations charged 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 
2007 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 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 3, 2006 (71 FR 44,551 (August 7, 2006)), has 
continued the Regulations in effect under IEEPA.
---------------------------------------------------------------------------

    The charging letter further alleged that between on or about 
October 19, 2000, and on or about November 22, 2000, Diaz Sanchez took 
actions with intent to evade the Regulations. Specifically, on or about 
October 19, 2000, Diaz Sanchez, acting through his company Winter 
Aircraft, acquired aircraft parts, items subject to the Regulations and 
classified under ECCN 9A991, from U.S. suppliers with intent to 
transship such items to Iran. Winter Aircraft failed to inform the U.S. 
suppliers of the ultimate destination of the items and, as such, no 
license was obtained from the U.S. Government for this transaction, as 
was required by Section 746.7 of the Regulations. On or about November 
22, 2000, Winter Aircraft transshipped the aircraft parts to Iran. In 
taking these actions, Diaz Sanchez committed one violation of Section 
764.2(h) of the Regulations.
    In accordance with Section 766.3(b)(1) of the Regulations, on 
September 12,2005, BIS mailed the notice of issuance of the charging 
letter by registered mail to Diaz Sanchez at his last known address. 
The notice of issuance of a charging letter was received by Diaz 
Sanchez on or about September 21, 2005. The record establishes that BIS 
and Diaz Sanchez engaged in several months of correspondence regarding 
the matter, and BIS counsel advised Diaz Sanchez to file an answer to 
the charging letter. To date, Diaz Sanchez has not filed an answer to 
the charging letter with the ALJ, as required by the Regulations.
    In accordance with Section 766.7 of the Regulations, BIS filed a 
Motion for Default Order on March 20, 2007. This Motion for Default 
Order recommended that Diaz Sanchez be denied export privileges for a 
period of ten years. 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 found Diaz Sanchez 
in default.
    On May 1, 2007, the ALJ issued a Recommended Decision and Order in 
which he found that Diaz Sanchez committed two violations of Sec.  
764.2(h). The ALJ also recommended the penalty of denial of export 
privileges for ten years.
    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. I also find that the 
penalty recommended by the ALJ is appropriate, given the nature of the 
violations and the facts of this case, 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 for a period of ten years from the date of this Order, 
Jose Alberto Diaz Sanchez, President, Winter Aircraft Products SA, a/k/
a Ruf S. Lopez SA, C/Ferrocarril 41, 28045 Madrid, Spain, and when 
acting for or on behalf of Diaz Sanchez, his representatives, agents 
and employees (hereinafter collectively referred to as the ``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. Benefitting 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

[[Page 29964]]

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 
Sec.  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 
ALl'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 immediately.

    Dated: May 24, 2007.
Mark Foulon,
Acting Under Secretary of Commerce for Industry and Security.

Recommended Decision and Order

    On September 12, 2005, the Bureau of Industry and Security, U.S. 
Department of Commerce (BIS), issued a charging letter initiating this 
administrative enforcement proceeding against Jose Alberto Diaz 
Sanchez, (``Diaz Sanchez``), in his capacity as President of Winter 
Aircraft Products SA (``Winter Aircraft''). The charging letter alleged 
that Diaz Sanchez committed two 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. 2401-2420 (2000)) (the ``Act'').\2\ In 
accordance with Sec.  766.7 of the Regulations, BIS has moved for the 
issuance of an Order of Default against Diaz Sanchez as Diaz Sanchez 
has failed to file an answer to the allegations in the charging letter 
issued by BIS within the time period required by law.
---------------------------------------------------------------------------

    \1\ The violations charged 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 
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 
12,924, 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. Since August 21, 2001, 
the Act has been in lapse and the President, through Executive Order 
13,222 of August 17, 2001, 3 CFR, 2001 Comp. 783 (2002), as extended 
by the Notice of August 3, 2006, 71 FR 44551 (Aug. 7, 2006), has 
continued the Regulations in effect under IEEPA.
---------------------------------------------------------------------------

A. Legal Authority for Issuing an Order of Default

    Section 766.7 of the Regulations states that BIS may file a motion 
for an order of default if a respondent fails to file a timely answer 
to a charging letter. That section, entitled Default, provides in 
pertinent part:

    Failure of the respondent to file an answer within the time 
provided constitutes a waiver of the respondent's right to appear 
and contest the allegations in the charging letter. In such event, 
the administrative law judge, on BIS's motion and without further 
notice to the respondent, shall find the facts to be as alleged in 
the charging letter and render an initial or recommended decision 
containing findings of fact and appropriate conclusions of law and 
issue or recommend an order imposing appropriate sanctions.

15 CFR 766.7 (2006).

    Pursuant to Sec.  766.6 of the Regulations, a respondent must file 
an answer to the charging letter ``within 30 days after being served 
with notice of the issuance of the charging letter'' initiating the 
proceeding.

B. Service of the Notice of Issuance of Charging Letter

    In this case, BIS served notice of issuance of the charging letter 
in accordance with 766.3(b )(1) of the Regulations when it sent a copy 
of the charging letter by registered mail to Diaz Sanchez at his last 
known address on September 12, 2005. BIS has submitted evidence that 
establishes that this charging letter was received by Diaz Sanchez on 
or about September 21, 2005. In addition, BIS also received a letter 
from Winter Aircraft, the company of which Diaz Sanchez is President, 
acknowledging receipt of the charging letter on September 21, 2005. 
Further, BIS and Winter Aircraft have engaged in several months of 
correspondence regarding the matter. BIS counsel has advised Diaz 
Sanchez, through his company Winter Aircraft, repeatedly to file an 
answer to the charging letter with the Administrative Law Judge 
(``ALJ''). Diaz Sanchez has failed to file an answer to the charging 
letter as required by section 766.6 of the Regulations. Accordingly, 
Diaz Sanchez is in default.

C. Summary of Violations Charged

    The charging letter filed by BIS included a total of two charges. 
Specifically, the charging letter alleged the following:

Charge 1 (15 CFR 764.2(h)--Engaging in a Transaction With Intent To 
Evade the Regulations)

    Between on or about November 1, 2000, and on or about November 
17, 2000, Diaz Sanchez took actions with intent to evade the 
Regulations. Specifically, on or about November 1, 2000, Diaz 
Sanchez, acting through his company Winter Aircraff, acquired 
aircraft parts, items subject to the Regulations and classified 
under Export Control Classification Number (``ECCN'') 9A991, from 
U.S. suppliers with intent to transship such items to Iran. Winter 
Aircraft failed to inform the U.S. suppliers of the ultimate 
destination of the items and, as such, no license was obtained from 
the U.S. Government for this transaction, as was required by Section 
746.7 of the Regulations. On or about November 17, 2000, Winter 
Aircraft transshipped the aircraft parts subject to the EAR to Iran 
with a substantial markup in price. In taking these actions, Diaz 
Sanchez committed one violation of Section 764.2(h) of the 
Regulations.

[[Page 29965]]

Charge 2 (15 CFR 764.2(h)--Engaging in a Transaction With Intent To 
Evade the Regulations)

    Between on or about October 19, 2000, and on or about November 
22, 2000, Diaz Sanchez took actions with intent to evade the 
Regulations. Specifically, on or about October 19, 2000, Diaz 
Sanchez, acting through his company Winter Aircraft, acquired 
aircraft parts, items subject to the Regulations and classified 
under ECCN 9A991, from U.S. suppliers with intent to transship such 
items to Iran. Winter Aircraft failed to inform the U.S. suppliers 
of the ultimate destination of the items and, as such, no license 
was obtained from the U.S. Government for this transaction, as was 
required by Section 746.7 of the Regulations. On or about November 
22, 2000, Winter Aircraft transshipped the aircraft parts subject to 
the EAR to Iran with a substantial markup in price. In taking these 
actions, Diaz Sanchez committed one violation of Section 764.2(h) of 
the Regulations.

D. Penalty Recommendation

[REDACTED SECTION]

E. Conclusion

    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 Sec.  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 1, 2007.

The Honorable Joseph N. Ingolia,
Chief Administrative Law Judge.

[FR Doc. 07-2677 Filed 5-29-07; 8:45 a.m.]
BILLING CODE 3510-DT-M