For Immediate Release: April 10, 2008
Contact - BIS Public Affairs 202-482-2721
U.S. Department of Justice
United States Attorney's Office
District of Columbia
Washington, D.C. - Cryostar SAS, formerly known as Cryostar France (“CRYOSTAR”), a French corporation, headquartered in Hesingue, France, has pleaded guilty to conspiracy, illegal export, and attempted illegal export of cryogenic submersible pumps to Iran, U.S. Attorney Jeffrey A. Taylor and Assistant Secretary of Commerce for Export Enforcement Darryl W. Jackson announced today.
CRYOSTAR pled guilty earlier today before the Honorable Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia to one count of Conspiracy, one count of Export without an Export License, and one count of Attempted Export without an Export License. Pursuant to a written plea agreement, CRYOSTAR must be sentenced to a criminal fine of $500,000 and corporate probation of two years when the company is sentenced by Judge Kollar-Kotelly on July 17, 2008.
“Foreign parties that choose to export U.S.-origin goods to embargoed destinations, such as Iran, violate our export control laws,” said Assistant Secretary Jackson. “As this case demonstrates, we will vigorously pursue such violations.”
“Export restrictions should not be viewed as avoidable obstacles, but rather as fundamental safeguards for the protection of our national interests,” stated U.S. Attorney Taylor. “This prosecution should serve as a reminder that failure to comply with U.S. export control laws can have severe consequences.”
The evidence in this case established that CRYOSTAR, with business locations around the world including in the United States, specialized in the design and manufacturing of cryogenic equipment, such as pumps, turbines, compressors and automatic filling stations that were used to transport and process natural gases at extremely cold temperatures. Ebara International Corp., Inc. (“Ebara”) was a Delaware corporation with its principal place of business in Nevada. Ebara engaged in the business of designing and manufacturing cryogenic pumps for various uses, including for pumping fluid hydrocarbons that have been cooled to cryogenic temperatures (280 degrees below zero). Ebara specialized in the design and manufacturing of cryogenic equipment, such as pumps, turbines, compressors and automatic filling stations that were used to transport and process natural gases at extremely cold temperatures. “TN” was a French company with a U.S. subsidiary.
In 2001, TN arranged to purchase cryogenic submersible pumps from Ebara for delivery to an Iranian company for installation at the 9th and 10th Olefin Petrochemical Complexes in Iran. CRYOSTAR agreed to facilitate this transaction by serving as the middleman for TN and Ebara, by purchasing the pumps from Ebara, by reselling them to TN (which forwarded the pumps to Iran), and by falsely indicating that the final purchaser was a French company that would install the pumps in France, when all parties to the transaction knew that the ultimate and intended destination of the pumps was Iran.
The conspirators developed a plan to conceal the export of cryogenic pumps to Iran, under which Ebara would sell and export the pumps to CRYOSTAR in France, which would then resell the pumps to TN, with the ultimate and intended destination being Iran. The conspirators set forth the plan on a “matrix,” which they used as a roadmap, including various procedures to be followed by each company to protect their conduct from detection by United States law enforcement, which included the following:
Following the procedures set forth in the “matrix,” the conspirators manufactured four pumps, and shipped them, in January 2003, for installation at the 9th Olefin Petrochemical Complex in Iran, (“First CRYOSTAR Order”). The total value of the First CRYOSTAR Order was approximately $746,756.
The conspirators prepared three additional pumps to be shipped to Iran in the fall of 2003, for installation at the 10th Olefin Petrochemical Complex in Iran (“Second CRYOSTAR Order”). The total value of the Second CRYOSTAR Order was approximately $1,125,055. The conspirators halted shipment of the Second CRYOSTAR Order because of this investigation.
The conspirators attempted to cover up their illegal conduct by creating false correspondence confirming that none of the pumps were sent, or were intended to be sent, to Iran.
None of the conspirators sought and obtained export licenses for either the First CRYOSTAR Order or the Second CRYOSTAR Order.
Ebara and its former president pled guilty and were sentenced at an earlier stage in this investigation.
CRYOSTAR’s guilty plea is the result of an investigation by the U.S. Department of Commerce, Bureau of Industry and Security.
In announcing today’s guilty plea, U.S. Attorney Taylor and Assistant Secretary Jackson commended the efforts of Commerce Special Agent Norma Curtis. They also praised Assistant U.S. Attorney Jonathan M. Malis, who is prosecuting the case.