For Immediate Release: December 16, 2005
Contact - BIS Public Affairs 202-482-2721
U.S. Department of Justice
United States Attorney for the District of Columbia
555 Fourth Street, NW
Washington, D.C. 20530
Houston Partnership Sentenced for Attempted Illegal Export of Specialty Alloy Pipes to Iran
Washington, D.C. - United States Attorney Kenneth L. Wainstein, Houston Resident-Agent-in-Charge Richard Modesette of the Department of Commerce, Bureau of Industry and Security, and Houston Acting Special-Agent-in-Charge Robert P. Rutt of the Department of Homeland Security, Bureau of Immigration and Customs Enforcement, announced that LPPAI, LTD., a Houston partnership doing business as PA, INC., of Houston, Texas, was sentenced today before the Honorable Ellen S. Huvelle of the United States District Court for the District of Columbia, having pled guilty in September to one count of Attempted Export Without an Export License. LPPAI pleaded guilty pursuant to a written plea agreement. Pursuant to the plea agreement, Judge Huvelle sentenced LPPAI to a criminal fine of $50,000 and corporate probation of three years with strict special terms of probation to ensure that LPPAI commits no further violations of the export control laws of the United States.
As part of the global resolution of this matter, LPPAI also entered into an administrative settlement agreement with the Department of Commerce, Bureau of Industry and Industry. Pursuant to that settlement agreement LPPAI consented to the entry of an administrative order, requiring it to pay an administrative penalty of $50,000 and to be subject to a suspended order denying export privileges for a period of five years. LPPAI also agreed not to contest the administrative forfeiture of the commodities seized pursuant to this investigation, which were valued at over $33,000.
The evidence in this case established that sometime in early 2004, Proclad International Pipelines, Ltd. (“Proclad”), a British corporation headquartered in Staffordshire, United Kingdom, requested a bid from PA, INC., for the sale of specialty alloy pipes. On or about January 30, 2004, PA, INC. prepared a bid for the sale of the pipes to Proclad. On or about February 2, 2004, Proclad accepted the bid of PA, INC., and sent PA, INC. a purchase order for $147,487.28 worth of specialty alloy pipes. Because PA, INC. did not have the total amount of the ordered pipes in stock, the parties agreed that PA, INC. would ship the pipes as they became available. The first shipment was for $33,653.13 worth of the specialty alloy pipes.
On or about February 2, 2004, Proclad sent an email to PA INC., which included shipping paperwork (also known as “shipping marks”) to be included on the shipment. The shipping marks indicated the description of the goods to be shipped and had blank spaces to be filled in regarding the weights and dimensions of the shipment. The shipping marks also indicated that the pipes were intended for a gas field development project in Iran. Within a diamond shaped box, the shipping marks indicated the Iranian destination of the shipment as follows:
NIOC – PARS OIL & GAS
ENI IRAN B.V. SOUTH PARS
PHASE 4 & 5
FIELD DEVELOPMENT PROJECT
HYUNDAI ENG & CONTR CO LTD.
PA, INC. filled in the blank spaces regarding the weights and dimensions of the shipment and placed these shipping marks on the crates that PA, INC. used to pack the pipes for shipment.
On or about February 10, 2004, PA, INC. delivered the crates containing the specialty alloy pipes, along with the shipping marks that indicated the Iranian destination of the shipment, to NNR Cargo, a freightforwarder designated by Proclad to process the export.
On or about February 11, 2004, NNR Cargo’s air freight manager reviewed the shipping documentation, including the shipping marks which indicated the Iranian destination, and contacted personnel at PA, INC. NNR Cargo’s air freight manager inquired whether it had a license to ship to Iran. Upon learning that PA, INC. did not have an export license NNR Cargo’s air freight manager refused to handle the shipment. NNR Cargo’s air freight manager informed PA, INC., that, because of the U.S. embargo against Iran, it could not ship merchandise to Iran in the absence of a license. NNR Cargo’s air freight manager indicated that the Iranian embargo covered direct or indirect shipments to Iran. NNR Cargo’s air freight manager indicated that NNR Cargo would return the shipment to PA, INC. In subsequent conversations, NNR Cargo’s air freight reiterated that the U.S. embargo against Iran prohibited this export.
On or about February 16, 2004, the shipment was returned from NNR Cargo to PA, INC. On or about February 17, 2004, PA, INC. delivered the crates containing the specialty alloy pipes, along with shipping documentation, to DFDS Transport, another freightforwarder designated by Proclad to process the export. The shipping documentation included the identical shipping marks, except that the references to Iran were deleted. Within a diamond shaped box, the shipping marks indicated the ultimate destination of the shipment as follows:
PHASE 4 & 5
FIELD DEVELOPMENT PROJECT
HYUNDAI ENG & CONTR CO LTD.
On or about February 18, 2004, agents with the Department of Commerce detained the shipment at DFDS Transport, thereby preventing its export.
No licenses were applied for or obtained from the United States Department of Treasury or any other agency in the District of Columbia, for any of the dealings with Iran by PA, INC.
In March 2004, PA, INC. converted to a Texas limited partnership under the name LPPAI, LTD. At the time of the conversion, LPPAI, LTD. assumed the name PA, INC., and continued to do business under that name. At the time of the conversion, LPPAI, LTD. assumed all of the liabilities and obligations of PA, INC.
The guilty plea and sentencing are the result of an investigation by the United States Department of Commerce, Bureau of Industry and Security; and the Department of Homeland Security, Bureau of Immigration and Customs Enforcement.
In announcing today’s sentencing, U.S. Attorney Wainstein, RAIC Modesette, and SAC Butt commended the efforts of Commerce Special Agent William Carter and ICE Special Agent Ernest A. Payton. They also praised Legal Assistants Latasha Sams and Cheryl Simms, and Assistant United States Attorneys Jonathan M. Malis and Jeffrey Beatrice, who prosecuted the case.