For Immediate Release
August 18, 2003
The U.S. Department of Commerce announced today the imposition of a $165,000 fine and a three-year denial of export privileges on E & M Computing Ltd. (E&M), of Ramat-Gan, Israel, to settle multiple charges that the company violated the Export Administration Regulations (EAR) when it sold and serviced computers and computer components to three customers in Israel, including a nuclear research center. The denial period was suspended for three years, and will thereafter be waived if the company does not violate U.S. export control laws during the period of suspension.
The Commerce Department’s Bureau of Industry and Security (BIS) charged that E&M caused the export of central processing units (CPUs), a workstation, a server, and a high performance computer to Israel without the required export licenses. BIS also charged that E&M evaded the EAR by purchasing computers from another vendor after learning that BIS would deny the first vendor’s license application to export the items.
In addition, BIS charged that E&M “loaned” a computer to
a customer until a BIS license could be obtained, and then provided false
and misleading information in support of the license application. E&M
later attempted to avoid detection of this loan by removing the computer from
the end-user when they were notified that BIS officials were planning to conduct
a post-shipment verification.
In other instances, E&M upgraded computers above the export control threshold with CPUs from its own warehouse. E&M also sold or loaned a server to a customer without authorization, after learning that a BIS license was required. Finally, E&M failed to disclose these upgrades to BIS when filing notifications required by the National Defense Authorization Act of 1998.
“This case demonstrates that companies may not evade the license requirements on exports of computer equipment by making illegal upgrades and transfers in-country. BIS will continue to pursue efforts by companies to circumvent U.S. export controls,” said Acting Assistant Secretary of Commerce for Export Enforcement Lisa Prager.
Acting Assistant Secretary Prager commended Special Agent Erin Kelly of BIS’s
San Jose Field Office for her efforts in this investigation.