Time to Check the Entity List: Eleven U.S. and Russian Companies and Individuals Charged in Illegal Export Scheme and 165 Added to BIS’ Entity List


On Wednesday, October 3, 2012, a Department of Justice (DOJ) indictment was unsealed charging eleven U.S. and Russian companies and individuals for their alleged involvement in a scheme to illegally export high-tech microelectronics from the United States to Russian military and intelligence agencies. The scheme allegedly involved a systematic conspiracy to obtain cutting-edge microelectronics manufactured in the United States and export them for use by Russian military and intelligence government end-users without obtaining the required export authorizations from the Department of Commerce, Bureau of Industry and Security (BIS). Sound like the latest Bond movie?

The microelectronics, including analog-to-digital converters, static random access memory chips, microcontrollers, and microprocessors, were exported by Houston-based Arc Electronics, Inc., to a Russian-based procurement firm, Apex Systems, LLC. To evade the U.S. export licensing requirements, the defendants provided false end-user information in connection with the purchase of the goods, concealed the fact that the goods were intended for export, and falsely classified goods on export records submitted to BIS. For example, Arc reported to U.S. suppliers that it was a manufacturer of benign products such as traffic lights, rather than an exporter. Both firms, as well as certain of the firms’ owners and employees, are charged with conspiring to violate and violating the International Emergency Economic Powers Act and the Arms Export Control Act, and with conspiring to commit wire fraud.

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