Here goes my sour grapes post. There have been a number of motions to dismiss filed by defendants in criminal prosecutions for violations of the International Emergency Economic Powers Act (IEEPA) arising from conduct prohibited by the Iranian Transactions and Sanctions Regulations (ITSR), and its predecessor the Iranian Transactions Regulations. A number of those motions have been filed by defendants who were non-U.S. persons–i.e., foreign nationals–who engaged in the prohibited conduct for which they were charged outside of the U.S. Finally, a large number of those motions have included argument that IEEPA is unconstitutionally vague. From what I understand, all of those motions have failed. This is a post about another such failed motion.
For those of you unfamiliar with IEEPA, it is the principal statute invoked by the President when the U.S. seeks to impose economic sanctions on a target–be it a country, person, company, or organization. For those of us who work on sanctions issues every day, we find it–and the regulations issued pursuant to its authority–to be complex, confusing, and like many defendants charged with violations of U.S. sanctions, vague. However, the courts don’t feel the same way. Indeed, many courts have found sanctions not to be vague, particularly because IEEPA “governs the activities of relatively sophisticated individuals who are deliberately engaged in international commerce and, therefore, must be familiar with (if not expert in) various legal regimes-e.g., customs duties and tariffs-multiple countries.” U.S. v. Quinn, 401 F.Supp. 2d 80, 100 (D.D.C. 2005).
Recently, the United States District Court for the Northern District of Georgia reminded us of the ease with which a “relatively sophisticated individual deliberately engaged in international commerce” can understand the IEEPA statute. In a Final Report & Recommendation on Defendant’s Motion to Declare 18 [sic] U.S.C. § 1705 Unconstitutional Due to Vagueness and as an Improper Delegation of Congressional Authority (the “motion to dismiss”), in United States v. Akova, 1:12-cr-00220-ELR-JKL-2 (N.D. Ga. Oct. 28, 2016), the court found unconvincing the defendant’s argument that no one could understand that it is illegal for a foreign citizen to export and transship materials from the United States to an Iranian customer because the IEEPA and OFAC regulations (including the ITR) ‘govern the activities of relatively sophisticated individuals who are deliberately engaged in international commerce and, therefore, must be familiar with (if not expert in) various legal regimes-e.g., customs duties and tariffs-in multiple countries.” Quinn, 401 F. Supp. 2d at 100.'”
Footnote 4 of the motion to dismiss also goes on to say, “[t]o the extent that Akova argues that 50 U.S.C. § 1705 is unconstitutionally vague because it refers to other statutes and implementing regulations, I reject that argument as well. While ‘putting together the pieces of this regulatory puzzle is not easy,’ the statutory provisions and regulations, when read together, “adequately provide for principled enforcement by making clear what conduct of the defendant violates the statutory scheme.’ See United States v. Guo, 634 F.3d 1119, 1122-23 (9th Cir. 2011)”.
Akova is a Turkish national who was arrested while on vacation in the United States for reexporting from Turkey to Iran an epoxy that is used in helicopter repair. Amongst Akova’s arguments were that 1) he hadn’t read IEEPA; 2) even if had read IEEPA, he wouldn’t have understood it to prohibit a foreign person from buying U.S. made epoxy for an Iranian customer, as 50 U.S.C. § 1705 doesn’t describe the type of conduct prohibited; 3) had he knowingly been engaged in prohibited conduct he wouldn’t have voluntarily have come to the United States for vacation; and 4) that IEEPA is vague insofar as it refers to other statutes or regulations.
I don’t pretend to know the totality of the circumstances underlying the prosecution of Mr. Akova. However, at this point I do know that the government wants to take the position that everyone in the world knows there is an embargo on Iran, and therefore, anyone in anywhere the world who in some way, shape, or form causes a U.S. origin good, service, or technology to be exported to Iran willfully violated the ITSR and could be criminally prosecuted. Further, I have spent many of my days huddle around meeting tables or on conference calls with very smart lawyers trying to make sense of IEEPA and regulations issued pursuant to it. While the these individuals, and myself, are (for the most part) familiar with IEEPA based legal regimes, I have a hard time believing everyone in the world engaging in international commerce is either familiar with, or expert in, IEEPA based regulations, or in particular the ITSR. In fact, it’s been my experience that most U.S. lawyers have no idea what IEEPA is, or the regulations issued pursuant to its authorities, much less foreign business persons transacting in their home countries.
Again, I don’t know the facts of Mr. Akova’s case. If there is evidence that he knew what he was doing was a violation of the ITSR, then those facts can be submitted to a jury so that a determination as to guilt could be made. However, I don’t believe it stretches credulity to suggest that someone in Turkey selling U.S. origin goods is not familiar with, nor expert in, the ITSR by virtue of the fact that he’s engaged in international commerce. Unfortunately, the courts don’t share that view. Thus, the moral of the story here is that: 1) IEEPA is not vague; and 2) if you are involved in international commerce, then U.S. courts will deem you to be expert in, or familiar with, the ITSR. Good luck out there.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org