For those of you unfamiliar with the case of USA v. Aviation Services International, B.V. d/b/a Delta Logistics, B.V., (“ASI”) it concerns a U.S.. prosecution of a Dutch aircraft supply company for violations of U.S. economic sanctions, in particular The Iranian Transactions Regulations. In ASI, the defendant (“ASI”) entered a guilty plea to these violations.

As with any plea hearing in the federal criminal system the government filed a factual proffer to show what evidence they would have offered at trial to prove that the defendant was indeed guilty of the charges leveled against them. Below is a brief analysis of the government’s factual proffer in that case.

In essence to prove that ASIl engaged in a violation of the (IEEPA) and the Iranian Transactions Regulations the government needs to show three different things: 1) that ASI engaged in prohibited transactions with Iran; 2) that ASI engaged in such transactions without obtaining the appropriate licenses from the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”); and 3) that ASI acted willfully.

1. Transactions with Iran: To prove that ASI engaged in prohibited transactions with Iran, the government’s factual proffer states that at trial they would have shown that ASI’s Director placed orders from U.S. suppliers for electronic communications equipment. In one instance, the order was placed through a New Hampshire company, then shipped to a Georgia company before being sent to ASI in the Netherlands. Once arriving in the Netherlands, the equipment was soon transshipped to Iran. In addition, the government contends that evidence exists to show that ASI and its Director entered into an agreement with an Iranian businessman in 2004 for ASI to procure U.S. origin goods and ship them to Iran. ASI also quoted and fulfilled contracts for the provision of U.S.-origin goods for a number of other customers in Iran.

ASI also engaged in similar activity with other types of articles. Some of those shipments were even seized by Dutch Customs Enforcement prior to their shipment to Iran.

2. No License: The factual proffer only states that at no time did ASI or its Director obtain a license to reexport the above referenced equipment to Iran from OFAC.

3. Willfully: According to the government’s factual proffer, in one case, upon the request of the U.S. supplier, ASI informed the U.S. supplier that the end-users were in Poland and that the items were for the Polish Border Control Agency, when actually the order was placed on behalf of parties in Iran for final shipment to Iran. ASI’s Director also informed the shipping company that the end-users were in Poland. There was also other information in the proffer suggesting that ASI provided false end-user information for other suppliers as well.

The above representation of what is contained in the factual proffer is abbreviated. There were a number of other occurrences in this case that warrant discussion but which are outside of this posting’s purpose. The above was merely provided to show what types of activities the government proves occurred in order to establish an IEEPA violation for export of U.S.-origin goods to Iran. In essence, it all comes down to whether the defendant was transacting with Iran without a license and whether they were dealing in a misleading way in an attempt to avoid the sanctions. The allegations in similar cases tend to show the same type of information used against the defendants. In short, those transacting with Iran for U.S.-origin goods and acting in a misleading or deceptive way run the risk of criminal prosecution for an IEEPA violation.

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@ferrari-legal.com.