Today the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced a settlement between itself and Dal-Tech, a Florida company, for apparent violations of the Iranian Transactions Regulations. The amount of the settlement was a mere $10,000; however, the value of the exports involved, radio frequency measurement devices, was also small and only valued $3,226. What is interesting however is that this settlement was part of a deferred prosecution agreement. This means that Dal-Tech was charged with a federal crime for violations of the International Emergency Economic Powers Act (“IEEPA”) and Iranian Transactions Regulations, however, in exchange for some conditions, the government dismissed the charges. In this case those conditions were the payment of $10,000 to OFAC and the implementation of a remedial action plan that was attached as an exhibit to the deferred prosecution agreement filed with the United States District Court in Delaware.

This is the second time in the last year that OFAC has announced a settlement of sanctions violations pursuant to a deferred prosecution agreement. Last year, Essie Cosmetics remitted $450,000 to OFAC as a result of a deferred prosecution agreement for violations of the Iranian Transactions Regulations after they had shipped approximately $33,000 worth of cosmetic goods to Iran. Although Dal-Tech’s prosecution was out of Delaware, both Essie Cosmetics and Dal-Tech are Florida companies who were involved in small exports to Iran.

So is the use of deferred prosecutions agreements a new trend in the world of OFAC enforcement? Possibly. We are hearing of numerous federal criminal investigations of IEEPA and Iran sanctions violations for activity that technically constitutes violations, but are fairly innocuous and may be a waste of government resources to fully prosecute. It’s also important to note that in order for an Assistant United States Attorney to bring a prosecution for a violation of IEEPA or the Iranian Transactions Regulations they require authorization from the main office of the Department of Justice in Washington. Those AUSAs involved in granting that authorization work fairly closely with OFAC and this may be a solution they have come up with to more aggressively enforce sanctions violations for non-egregious conduct without wasting the resources of the Department of Justice and the U.S. government. If these deferred prosecutions agreements will continue to be used remains to be seen. If they do, pursuit of one will be a great option for defense counsel representing parties being investigated for sanctions violations to explore.

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 ferrari@ferrariassociatespc.com.