U.S Charges Wheeling Firm with
Violating Export Ban to Iran
CHICAGO – A Wheeling firm that manufactures pipe-cutting tools was
charged today with two federal felony offenses for allegedly violating
a foreign trade embargo against Iran, announced Patrick J. Fitzgerald,
United States Attorney for the Northern District of Illinois. The defendant,
E.H. Wachs Company, allegedly shipped pipe cutters and related equipment
in 1995 and 1996 from its warehouse in Wheeling, through Canada, knowing
that the products were destined for the National Iranian Gas Company (NIGC)
in Iran, in violation of the Iranian embargo barring exports of such goods.
Wachs manufactures pipe-cutting tools, including Trav-L-Cutters, and related
parts and other items used in the construction and repair of gas and oil
pipelines, which it sells worldwide.
The company was charged with one count each of violating the International
Emergency Economic Powers Act and the Iranian Transactions Regulations
in a two-count criminal information that was filed today in U.S. District
Court. No individuals were charged. Through its lawyers, E.H. Wachs, has
authorized the government to disclose that it has agreed to plead guilty
to the charges at a later date, which has not yet been set.
An Executive Order issued in May 1995, pursuant to the International
Emergency Economic Powers Act, prohibited the unauthorized exportation
from the United States to Iran or the financing of such exportation, of
any goods, technology or services except items intended to relieve human
suffering. The prohibition, commonly known as the Iranian embargo, was
also made part of the Code of Federal Regulations.
According to the charges, in 1993 and 1994, the NIGC invited bids to
purchase approximately 50 pipe-cutting machines, related blades and other
specified items. The bid invitations required that the successful bidder
have an agent located in Iran in order to provide service for the pipe-cutting
machines and to provide training for NIGC personnel on the use of the
machines. In 1994, the NIGC initiated negotiations with Wachs and an unnamed
Canadian company that had a subsidiary in Iran to purchase two Trav-L-Cutters
from Wachs to use to train NIGC employees. The Canadian company was Wachs’
exclusive dealer for Iran, and their agreement provided that Wachs would
pay the Canadian company a 10 percent commission on all sales of Wachs’
goods to companies located in Iran, even if the Canadian company did not
participate in the transaction.
In late 1994, the Canadian company, on behalf of the NIGC, issued purchase
and sales orders for two of Wach’s Trav-L-Cutters and related parts
for $26,271. After the Iranian trade embargo took effect in May 1995,
Wachs allegedly continued with plans to contract with the NIGC to sell
pipe cutters and related items. In July 1995, the charges allege that
Wachs wilfully violated the Iranian embargo by exporting pipe-cutting
equipment from the United States to Canada, when Wachs employees were
aware that the goods ultimately were destined for the NIGC in Iran without
the required export authorization.
The charges further allege that in January 1995, Wachs issued to NIGC
a quote of $4,669,643.90 for 50 Trav-L-Cutters and related items. Six
months later, after the effective date of the trade embargo, a Wachs international
sales coordinator issued a quote of $236,569.20 for 14 Trav-L-Cutters
and other items, through a European company, which listed Pakistan as
the ultimate destination for the items, when the Wachs employee knew that
the ultimate destination was Iran. After further negotiations over the
price and amount of the pipe cutters, in September 1996, Wachs allegedly
violated the Iranian embargo and the Export Administration Regulations
by shipping pipe cutters and related parts and items from the United States
to Canada, knowing the goods were destines for the NIGC in Iran, without
the required export authorization.
Mr. Fitzgerald announced the charges with Elissa A. Brown, Special Agent-in-Charge
in Chicago of the Homeland Security Department’s Bureau of Immigration
and Customs Enforcement, and Wendy B. Hauser, Special Agent-in-Charge
in Chicago of the U.S. Commerce Department’s Bureau of Industry
and Security, which togther conducted the investigation. The government
is being represented by Assistant U.S. Attorney George Jackson III.
Upon conviction, E.H. Wachs faces a maximum penalty on each count of
five years probation and a $500,000 fine. The Court, however, will determine
the appropriate sentence to be imposed under the United States Sentencing
Guidelines. The public is reminded that an information contains only charges
and is not evidence of guilt. The defendant is presumed innocent and is
entitled to a fair trial at which the government has the burden of proving
guilt beyond a reasonable doubt.