Late last week, an aviation services company, along with its director and sales manager pleaded guilty today to federal charges relating to a conspiracy to illegally export aircraft components to entities in Iran from the U.S. via the Netherlands, the United Arab Emirates and Cyprus.

The company, Aviation Services International, B.V. (“ASI”), is based in Netherlands and serves as an aircraft parts supply company. Their Director, Robert Kraaipoel, also a citizen of the Netherlands and Robert Neils Kraaipoel, another citizen of the Netherlands who also acts as the sales manager for ASI, each entered a plea of guilty to a one-count criminal information in federal court in the District of Columbia last week.

They were charged with conspiracy to violate both the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions Regulations. These charges arose out of their failure to procure licenses from the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) by exporting aircraft components and other goods to Iran. The potential sentence facing the two individuals is five years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss. As for the corporate entity, ASI has agreed to pay a $100,000 fine and corporate probation for five years.

From approximately October 2005 to about October 2007, the defendants received orders from customers in Iran for U.S.-origin goods. The defendants would contact companies in the United States and negotiated purchases of materials on behalf of Iranian customers. TMoreover, the defendants provided false end-user certificates to U.S. companies in an effort to conceal that customers in Iran would receive the goods.

The defendants also caused certain companies in the United States to ship the materials to the Netherlands or to other countries, to skirt U.S. sanctions against Iran. Upon the arrival of those goods, they would be repackaged and transshipped to Iran.

In March 2007, a shipment of polymide film that ASI had purchased from a Kansas company was detained by U.S. officials. According to the criminal information, Robert Kraaipoel later contacted the U.S. freight forwarder and unsuccessfully attempted to have the items shipped to company in the U.A.E. The defendants knew that this particular company in the U.A.E. purchased items for customers in Iran.

Finally, the criminal information states that throughout much of August, September and October 2007 the defendants conducted purchases on behalf of a company in the U.A.E. that they knew supplied Iranian customers. For example, in September 2007, Niels Kraaipoel provided the U.A.E. company with a quotation for more than $200,000 worth of U.S.-origin aircraft parts and supplies.

Under the IEEPA and the Iranian Transaction Regulations, all exports to Iran of U.S.-origin commodities are prohibited absent authorization in the form of an export license from OFAC of the Department of the Treasury. It is also unlawful to ship U.S. origin products to a third country with the am of then diverting them or re-exporting them to Iran without the necessary authorization from OFAC. These prohibitions have been in place since 1995.

“This investigation demonstrates in clear terms the threat we face from the illegal foreign acquisition of U.S. technology. Keeping America’s critical technology from falling into the hands of state sponsors of terror has never been more important,” said David Kris, Assistant Attorney General for National Security.

“A business or individual who illegally ships U.S.-origin goods to embargoed countries, such as Iran, undermines our national security,” said Acting U.S. Attorney Phillips, Acting U.S. Attorney for the District of Columbia. “This prosecution reflects our commitment to enforcing our export control laws vigorously.”

“Combating illegal transshipment of U.S.-origin items to Iran is a significant challenge and one of our top priorities,” said Kevin Delli-Colli, Acting Assistant Secretary of Commerce for Export Enforcement. “Willful violations will be pursued regardless of where the perpetrators may reside.”

“Today’s pleas represent the culmination of a long-term collaboration effort amongst the investigators and prosecutors in bringing international arms dealers to justice,” said Sharon E. Woods, Director of the Defense Criminal Investigative Service. “As long as there are those who seek to illegally acquire U.S. Military equipment and technology, DCIS will remain committed to thwarting their efforts and to protecting America’s Warfighters.”

Assistant Attorney General Kris, Acting U.S. Attorney Phillips, and Acting Assistant Secretary Delli-Colli, and Director Woods praised Senior Special Agents David Poole and Special Agents Michael Imbrogna and James Brigham from the Department of Commerce Office of Export Enforcement; Special Agent Michael Campion from DCIS, Special Agents Michael McGonigle and Brett Gentrup from ICE, and Special Agent Amanda McDaniel from the FBI.

The prosecution is being handled by Assistant U.S. Attorneys Ann H. Petalas and Denise Cheung from the U.S. Attorney’s Office for the District of Columbia, and Trial Attorneys Ryan Fayhee and Jonathan Poling from the Counterespionage Section of the Justice Department’s National Security Division.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.