Valtex International Corporation and Owner Plead Guilty

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PRESS RELEASE

FOR IMMEDIATE RELEASE
Wednesday, February 2, 2005

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Karen Bailey, Media Coordinator (612) 664-5610
http://www.usdoj.gov/usao/mn/index.htm

Valtex International Corporation and Owner Plead Guilty to Felonies For Attempted Export to People’s Republic of China.

Minneapolis - Valtex International Corporation, a California export company, and its president and owner, Vladimir Alexanyan, pled guilty today to separate felonies arising out of the attempted export by Valtex of thermal material used to insulate satellites and missiles for space travel to the People’s Republic of China.

Vladimir Alexanyan, age 58, from Los Altos, California, pled guilty to submitting a materially false document to the United States Department of Commerce in which he represented that no export license was required from the Department of Commerce prior to shipping the thermal insulation to China. Separately, Valtex pled guilty to a violation of the export administration regulations administered by the Department of Commerce for attempting to export the contraband thermal insulation material to the Chinese Academy of Space Technology. In its plea agreement with the United States, Valtex agreed to pay a criminal fine of $250,000 for its violation of the export administration regulations.

In September 2000, Valtex applied to the Department of Commerce for a license to export Kapton, a metalized polymide film commonly used to insulate satellites and missiles for space travel, to the Chinese Academy of Space Technology in the People’s Republic of China. The Department of Commerce rejected Valtex’s application. Valtex again applied for an export license to export Kapton to a consignee located in Russia, which the Department of Commerce also rejected.

Despite two rejections for licenses to export Kapton, Alexanyan and Valtex ordered and accepted delivery of ten sheets of Kapton from a manufacturer located in Minnesota and attempted to ship the material to the Chinese Academy of Space Technology without an export license. During his guilty plea, Alexanyan admitted that he lied on a shipper’s export declaration indicating that the Kapton did not require an export license to be exported to the People’s Republic of China.

In addition to the criminal charges, the Department of Commerce has also reached a civil settlement with Alexanyan and Valtex in regard to the export violations described above. Specifically, Alexanyan was assessed a civil penalty of $88,000 and Valtex was assessed a $77,000 civil penalty. In addition, Alexanyan and Valtex were also both denied all export privileges to the People’s Republic of China for a period of five years for any items subject to the Export Administration Regulations. Also as part of the civil settlement, Valtex will be required to implement an export management system not later than December 29, 2005.

Valtex International faces a maximum potential criminal fine of $500,000. Alexanyan faces a maximum potential penalty of five years in prison and/or a $250,000 fine. The actual sentences will be determined by Chief Judge James Rosenbaum. Sentencing dates have not been set.

The case is the result of an investigation by the United States Department of Commerce, Office of Export Enforcement, and the United States Bureau of Immigration and Customs Enforcement, and was prosecuted by Assistant United States Attorney David J. MacLaughlin.