Major Export Enforcement Cases - Directorate of Defense Trade ...

criminally. While PWC pleaded guilty to counts one and two, prosecution of PWC, UTC, and
HSC on the other charges is deferred for two years, provided that the companies abide by the
terms of a deferred prosecution agreement with the Justice Department. In addition to the
resolution of the criminal charges, as part of a global settlement, UTC also resolved over 500
additional administrative charges with the State Department. Those charges involved more than
800 exports in violation of the Arms Export Control Act from the mid-1990s to 2011. In
connection with the global settlement with the Justice and State Departments, PWC, UTC, and
HSC agreed to pay more than $75 million in penalties, subject themselves to independent
monitoring for several years, and be required to comply with an extensive training and remedial
action program to strengthen their export compliance. This investigation was conducted by ICE,
DCIS, FBI, Commerce and the State Department.
Carbon Fiber Material to Iran – On June 21, 2012, Richard Phillips, a resident of the Bronx,
N.Y. was sentenced in the Eastern District of New York to 92 months in prison for attempting to
export carbon fiber material to Iran in violation of the International Emergency Economic Powers
Act. Phillips pleaded guilty to this charge on Jan. 18, 2012. According to court filings, in
October 2011, Phillips offered his services and expertise in exporting a spool of carbon fiber to
Tehran, Iran, via the Philippines. The two main applications of carbon fiber in specialized
technology, including aerospace and nuclear technology, and in general engineering and
transportation. After a series of communications with an undercover federal agent in which he
was warned of the law regarding exports of carbon fiber to Iran, Phillips insisted on moving
forward with the export. He took possession of a spool of carbon fiber which was placed into a
shipping container and affixed a label to the contained addressed to the Philippines, where it was
to be forwarded to Iran. Phillips was first charged by criminal complaint on Oct. 21, 2011. This
investigation was conducted by ICE and the DCIS.
$619 Million Fine Against ING Bank for Transactions with Iran and Cuba – On June 12,
2012, ING Bank, N.V., a global bank based in Amsterdam, agreed to forfeit $619 million to the
Justice Department and the New York County District Attorney’s Office for conspiring to violate
U.S. sanctions on Iran and Cuba as well as New York state laws by illegally moving more than $2
billion (via more than 20,000 transactions) through the U.S. financial system on behalf of
sanctioned entities in Iran and Cuba. This conduct caused unaffiliated U.S. banks to unwittingly
process transactions that should have been blocked or stopped pursuant to Treasury Department
regulations. On June 12, 2012, a criminal information was filed in the District of Columbia
charging ING Bank with one count of conspiring to violate the International Emergency
Economic Powers Act and the Trading with the Enemy Act. ING Bank waived the federal
indictment, agreed to the filing of the information, accepted responsibility for its criminal conduct
and that of its employees, and agreed to pay $619 million to the Justice Department and the New
York County District Attorney’s office under deferred prosecution agreements with each. The
fine represented the largest against a financial institution in connection with an investigation into
U.S. sanctions and related offenses. The Justice Department’s case against ING Bank arose out
of ongoing investigations by the National Security Division and U.S. Attorney’s Office for the
District of Columbia into the illegal export of goods from the United States to sanctioned
countries, including Iran. For instance, ING processed payments on behalf of one customer,
Aviation Services International B.V. (ASI), a Dutch aviation company which was the subject of a
U.S. Commerce Department-initiated criminal investigation, through the United States for trade
services relating to the procurement by ASI of dual-use U.S. aviation parts for ASI’s Iranian
clients. The ING Bank investigation also resulted in part from a criminal referral from OFAC,
which was conducting its own probe of ING Bank. The ING Bank investigation was conducted
by the FBI, IRS, with assistance from OFAC and the Commerce Department.
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