For Immediate Release: May 4, 2006
Contact - BIS Public Affairs 202-482-2721
U.S. Department of Justice
United States Attorney for the
District of Columbia
Channing Phillips (202) 514-6933
Lexington, Kentucky Corporate Executive Pleads Guilty to Making False Statements in Iran Trade Embargo Case
Washington, D.C. - A Lexington, Kentucky corporate executive, David S.C. Tatum, has pleaded guilty to making false statements in an Iranian trade embargo investigation, United States Attorney Kenneth L. Wainstein, Darryl W. Jackson, United States Department of Commerce Assistant Secretary for Export Enforcement, and Assistant Secretary Julie L. Myers of the United States Department of Homeland Security’s Immigration and Customs Enforcement (ICE), announced today.
Tatum, 70, of Lexington, Kentucky, entered his plea of guilty earlier today in U.S. District Court for the District of Columbia before the Honorable John D. Bates to the felony charge of making a material false statement to federal agents investigating violations of the U.S. trade embargo against Iran. The Honorable John D. Bates is scheduled to sentence Tatum on August 4, 2006.
Regarding this prosecution, United States Attorney Wainstein said, “It is of paramount importance that federal agents be able to fully investigate the facts surrounding violations involving national security matters. This prosecution shows that the Department of Justice will vigorously enforce the laws against obstructing such criminal investigations through false statements or other means.”
The charge arose from a Commerce Department Office of Export Enforcement (“OEE”) and ICE investigation into a scheme by two executives of Clark Material Handling Corporation (“CMHC”), a Kentucky-based forklift truck manufacturer, to sell U.S.-origin forklift components to an Iranian forklift truck manufacturer, Sepahan Lifter, in violation of the trade embargo against Iran. The two CMHC executives, Robert E. Quinn and Michael H. Holland, and Sepahan Lifter’s Managing Director, Mohammad A. Sharbaf, were indicted in the District of Columbia in April 2005. Tatum, then a Vice-President of CMHC, was interviewed during the course of the investigation. According to papers filed in connection with Tatum’s plea, he knew of the Iranian trade embargo. Tatum was also aware that Quinn and Holland were in communication with Sharbaf and had arranged for parts to be shipped to Sepahan Lifter through a company in the United Arab Emirates (“U.A.E.”), thereby making it appear that the parts were not going to an embargoed country.
According to court documents filed by the government, on or about August 10, 2005, in the District of Columbia, Tatum falsely told OEE and ICE agents investigating the matter that, after learning of Quinn’s and Holland’s dealings with Sepahan Lifter and Sharbaf, Tatum had instructed them to cease sending CMHC replacement parts to Sepahan Lifter or Sharbaf either directly or through a third party. In fact, he had not given such an instruction to Quinn or Holland.
After a trial ending in December 2005, a federal jury found Quinn guilty of all six counts of the indictment against him, and on February 23, 2006, he was sentenced to 39 months of imprisonment. Holland was acquitted after trial. Sharbaf remains at large. A fourth coconspirator, who had operated the intermediary company in the U.A.E., Khalid Mahmood, previously pled guilty to Iran embargo violations relating to other transactions, and provided substantial cooperation in the government’s investigation. On January 19, 2006, he was sentenced to 16½ months of imprisonment.
The International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1706, and the Iranian Transaction Regulations, 50 C.F.R. Part 560, prohibit all exports to Iran of U.S.-origin commodities absent authorization in the form of an export license from the Office of Foreign Assets Control (“OFAC”) of the Department of the Treasury. They also make it unlawful to ship U.S.-origin products to a third country and for re-export to Iran without the necessary OFAC authorization. These prohibitions have been in place since 1995.
In announcing today’s guilty plea, United States Attorney Wainstein, Assistant Secretary Jackson, and Assistant Secretary Myers praised the outstanding investigative work of OEE Special Agent Scott Douglas and ICE Special Agent Richard Reinhold, who conducted the investigation that led to Tatum’s prosecution. They also expressed appreciation to Assistant United States Attorneys Laura A. Ingersoll and Jay I. Bratt, who are prosecuting the case.