For Immediate Release: August 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 executive sentenced for
making false statements in Iran trade embargo case
Washington, D.C. - A Lexington, Kentucky corporate executive has been sentenced for making false statements in an Iran trade embargo case, U.S. Attorney Kenneth L. Wainstein announced today.
David S.C. Tatum, 70, of Lexington, Kentucky, was sentenced today in the U.S. District Court for the District of Columbia before the Honorable John D. Bates to one year of probation, 50 hours of community service, and a $5,000 fine for having made a material false statement to federal agents investigating violations of the U.S. trade embargo against Iran.
Tatum pled guilty to the offense on May 4, 2006. The charge arose from an investigation conducted by the U.S. Department of Commerce Department’s Office of Export Enforcement (“OEE”) and the U.S. Department of Homeland Security’s Immigration and Customs Enforcement (ICE) 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.
During the course of the investigation, Tatum, then a CMHC Vice President, was interviewed. According to papers filed in connection with Tatum’s plea, Tatum knew of the Iranian trade embargo and 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. In pleading guilty, Tatum admitted that in August 2005, he falsely told OEE and ICE agents investigating the matter that, after learning of Quinn’s and Holland’s dealing 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.
In imposing sentence on Tatum, the Court noted that the offense was particularly serious because it arose in the specific context of a federal criminal investigation, and had “a real chance of impeding justice.” However, because the advisory U.S. Sentencing Guidelines provide for a probationary sentence for such an offense, the Court imposed a term of probation with conditions.
After a trial ending in December 2005, a 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 16-1/2 months 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 sentence, U.S. Attorney Wainstein 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 U.S. Attorneys Laura A. Ingersoll and Jay I. Bratt, who prosecuted the case.