[Federal Register: June 15, 2006 (Volume 71, Number 115)]
[Notices]
[Page 34593-34596]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jn06-22]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[Docket No. 05-BIS-21]
In the Matter of: Kailash Muttreja, MUTCO International,
Kelenberweg 37 1101, EX Amsterdam, Netherlands, Respondent; Decision
and Order
In a charging letter filed on November 22, 2005, the Bureau of
Industry and Security (BIS) alleged that Respondent, Kailash Muttreja
(Muttreja), committed two violations of the Export Administration
Regulations (Regulations) \1\, issued under the Export Administration
Act of 1979, as amended (50 U.S.C. app. Sec. Sec. 2401-2420 (2000))
(the Act).\2\
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\1\ The Regulations are currently codified at 15 CFR parts 730-
774 (2006). The charged violations occurred in 2000 through 2002.
The Regulations governing the violations at issue are found in the
2000 through 2002 versions of the Code of Federal Regulations (15
CFR parts 730-774 (2000-2002)). The 2006 Regulations establish the
procedures that apply to this matter.
\2\ From August 21, 1994 through November 12, 2000, the Act was
in lapse. During that period, the President, through Executive Order
12924, which had been extended by successive Presidential Notices,
the last of which was August 3, 2000 (3 CFR, 2000 Comp. 397 (2001)),
continued the Regulations in effect under the International
Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000))
(``IEEPA''). On November 13, 2000, the Act was reauthorized and it
remained in effect through August 20, 2001. Since August 21, 2001,
the Act has been in lapse and the President, through Executive Order
13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which has
been extended by successive Presidential Notices, the most recent
being that of August 2, 2005 (70 FR 45,273 (August 5, 2005)), has
continued the Regulations in effect under IEEPA.
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BIS alleged that Muttreja conspired to obtain toxins, including
Aflatoxin (M1, P1, Q1) and Staphyloccocal Enterotoxin (A and B), items
subject to the Regulations and classified under export control
classification number (ECCN) 1C351, on behalf of a North Korean end-
user and to export those toxins to North Korea. The charging letter
also alleged that Muttreja solicited a violation of the Regulations by
ordering the above-mentioned toxins from a U.S. company and by agreeing
to complete the shipment of the toxins from the Netherlands to North
Korea.
In accordance with Section 766.3(b)(1) of the Regulations, on
November 22, 2005, BIS mailed the notice of issuance of the charging
letter by registered mail to Muttreja at his last known address. BIS
has established that this charging letter was served in accordance with
Section 766.3 of the Regulations and that BIS received the signed mail
return receipt on January 18, 2006. To date, Muttreja has not filed an
answer to the charging letter with the ALJ, as required by the
Regulations.
In accordance with Section 766.7 of the Regulations, BIS filed a
Motion for Default Order on April 20, 2006. This Motion for Default
Order recommended that Muttreja be denied export privileges under the
Regulations for a period of six years. Under Section 766.7(a) of the
Regulations, ``[f]ailure of the respondent to file an answer within the
time provided constitutes a waiver of the respondent's right to
appear,'' and ``on BIS's motion and without further notice to the
respondent, [the ALJ] shall find the facts to be as alleged in the
charging letter.'' Based upon the record before him, the ALJ held
Muttreja in default.
On May 24, 2006, based on the record before him, the ALJ issued a
Recommended Decision and Order in which he found that Muttreja
committed one violation of Section 764.2(d) and one violation of
Section 764.2(c) of the Regulations. The ALJ recommended the penalty of
denial of Muttreja's export privileges for six years.
The ALJ's Recommended Decision and Order, together with the entire
record in this case, has been referred to me for final action under
Section 766.22 of the Regulations. I find that the record supports the
ALJ's findings of fact and conclusions of law. I also find that the
penalty recommended by the ALJ is appropriate, given the nature of the
violations and the importance of preventing future unauthorized
exports. Based on my review of the entire record, I affirm the findings
of fact and
[[Page 34594]]
conclusions of law in the ALJ's Recommended Decision and Order.
Accordingly, it is therefore ordered,
First, that, for a period of six years from the date this Order is
published in the Federal Register, Kailash Muttreja, MUTCO
International, Kelenberweg 37 1101, EX Amsterdam, Netherlands, and when
acting for or on his behalf, his representatives, agents, assigns, or
employees (``Denied Person''), may not, directly or indirectly,
participate in any way in any transaction involving any commodity,
software or technology (hereinafter collectively referred to as
``item'') exported or to be exported from the United States that is
subject to the Regulations, or in any other activity subject to the
Regulations, including, but not limited to:
A. Applying for, obtaining, or using any license, License
Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying,
receiving, using, selling, delivering, storing, disposing of,
forwarding, transporting, financing, or otherwise servicing in any way,
any transaction involving any item exported or to be exported from the
United States that is subject to the Regulations, or in any other
activity subject to the Regulations; or
C. Benefiting in any way from any transaction involving any item
exported or to be exported from the United States that is subject to
the Regulations, or in any other activity subject to the Regulations.
Second, that no person may, directly or indirectly, do any of the
following:
A. Export or reexport to or on behalf of the Denied Person any item
subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted
acquisition by the Denied Person of the ownership, possession, or
control of any item subject to the Regulations that has been or will be
exported from the United States, including financing or other support
activities related to a transaction whereby the Denied Person acquires
or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition
or attempted acquisition from the Denied Person of any item subject to
the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item
subject to the Regulations with knowledge or reason to know that the
item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the
Regulations that has been or will be exported from the United States
and that is owned, possessed or controlled by the Denied Person, or
service any item, of whatever origin, that is owned, possessed or
controlled by the Denied Person if such service involves the use of any
item subject to the Regulations that has been or will be exported from
the United States. For purposes of this paragraph, servicing means
installation, maintenance, repair, modification or testing.
Third, that, after notice and opportunity for comment as provided
in Section 766.23 of the Regulations, any person, firm, corporation, or
business organization related to the Denied Person by affiliation,
ownership, control, or position of responsibility in the conduct of
trade or related services may also be made subject to the provisions of
this Order.
Fourth, that this Order does not prohibit any export, reexport, or
other transaction subject to the Regulations where the only items
involved that are subject to the Regulations are the foreign-produced
direct product of U.S.-origin technology.
Fifth, that this Order shall be served on the Denied Person and on
BIS, and shall be published in the Federal Register. In addition, the
ALJ's Recommended Decision and Order, except for the section related to
the Recommended Order, shall be published in the Federal Register.
This Order, which constitutes the final agency action in this
matter, is effective upon publication in the Federal Register.
Dated: June 9, 2006.
David H. McCormick,
Under Secretary of Commerce for Industry and Security.
Department of Commerce--Bureau of Industry and Security
[Docket No: 05-BIS-21]
In the Matter of: Kailash Muttreja, MUTCO International, Kelenberweg 37
1101, EX Amsterdam, Netherlands, Respondent; Recommended Decision and
Order
On November 22, 2005, the Bureau of Industry and Security, U.S.
Department of Commerce (``BIS''), issued a charging letter initiating
this administrative enforcement proceeding against Kailash Muttreja
(``Muttreja''). The Charging Letter alleged that Muttreja committed two
violations of the Export Administration Regulations (currently codified
at 15 CFR parts 730-774 (2006)) (the ``Regulations''),\1\ issued under
the Export Administration Act of 1979, as amended (50 U.S.C. App.
Sec. Sec. 2401-2420 (2000)) (the ``Act,).\2\
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\1\ The charged violations occurred in 2000 through 2002. The
Regulations governing the violations at issue are found in the 2000
through 2002 versions of the Code of Federal Regulations (15 CFR
parts 730-774 (2000-2002)). The 2006 Regulations establish the
procedures that apply to this matter.
\2\ From August 21, 1994 through November 12, 2000, the Act was
in lapse. During that period, the President, through Executive Order
12924, which was extended by successive Presidential Notices, the
last of which was August 3, 2000 (3 CFR 2000 Comp. 397 (2001)),
continued the Regulations in effect under the International
Emergency Economic Powers Act (50 U.S.C. 1701-06 (2000))
(``IEEPA''). On November 13, 2000, the Act was reauthorized and it
remained in effect through August 20, 2001. Since August 21, 2001,
the Act has been in lapse and the President, through Executive Order
13222 of August 17, 2001 (3 CFR 2001 Comp. 783 (2002)), as extended
by the Notice of August 2, 2005 (70 FR 45,273 (August 5, 2005)), has
continued the Regulations in effect under IEEPA.
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Specifically, the Charging Letter alleged that Muttreja conspired
and acted in concert with others, known and unknown, to export toxins
from the United States to North Korea without the required Department
of Commerce license. BIS alleged that the goal of the conspiracy was to
obtain toxins, including Aflatoxin (M1, P1, Q1) and Staphyloccocal
Enterotoxin (A and B), items subject to the Regulations and classified
under export control classification number (``ECCN'') 1C351, on behalf
of a North Korean end-user and to export those toxins to North Korea.
BIS alleged that, in furtherance of the conspiracy, Muttreja ordered
the toxins from a co-conspirator in the United States and agreed to
complete the export to North Korea once the toxins were delivered to
the Netherlands from the United States. BIS alleged that, contrary to
Section 742.2 of the Regulations, no Department of Commerce license was
obtained for the export from the Untied States to North Korea. (Charge
1).
The Charging Letter filed by BIS also alleged that, in or about
July 2002, Muttreja solicited a violation of the Regulations by
ordering toxins, including Aflatoxin (M1, P1, Q1) and Staphyloccocal
Enterotoxin (A and B), items subject to the Regulations and classified
under export control classification number (``ECCN'') 1C351, from a co-
conspirator in the United States and agreeing to complete the export of
the toxins to North Korea. BIS also alleged that, contrary to Section
742.2 of the Regulations, no Department of Commerce license was
obtained for the export from the United States to North Korea. (Charge
2).
[[Page 34595]]
Section 766.3(b)(1) of the Regulations provides that notice of the
issuance of a charging letter shall be served on a respondent by
mailing a copy by registered or certified mail addressed to the
respondent at the respondent's last known address. In accordance with
the Regulations, on November 22, 2005, BIS mailed the notice of
issuance of a charging letter by registered mail to Muttreja at his
last known address: MUTCO International, Kelenberweg 37 1101, EX
Amsterdam, Netherlands. BIS has submitted evidence that establishes
that this Charging Letter was served in accordance with Section 766.3
of the Regulations and that BIS received the signed return receipt on
January 18, 2006.
Section 766.6(a) of the Regulations provides, in pertinent part,
that ``[t]he respondent must answer the charging letter within 30 days
after being served with notice of issuance of the charging letter''
initiating the administrative enforcement proceeding. To date, Muttreja
has not filed an answer to the Charging Letter.
Pursuant to the default procedures set forth in Section 766.7 of
the Regulations, the undersigned finds the facts to be as alleged in
the Charging Letter, and hereby determines that those facts establish
that Muttreja committed one violation of Section 764.2(d), and one
violation of Section 764.2(c) of the Regulations.
Section 764.3 of the Regulations sets forth the sanctions BIS may
seek for violations of the Regulations. The applicable sanctions are:
(i) A monetary penalty, (ii) suspension from practice before the Bureau
of Industry and Security, and (iii) a denial of export privileges under
the Regulations. See 15 CFR 764.3 (2006). Because Muttreja solicited
the export of toxins, items controlled by BIS for Anti-Terrorism
reasons for export to North Korea, BIS requests that the undersigned
recommends to the Under Secretary of Commerce for Industry and Security
\3\ that Muttreja's export privileges be denied for six years.
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\3\ Pursuant to section 13(c)(1) of the Export Administration
Act and Section 766.17(b)(2) of the Regulations, in export control
enforcement cases, the Administrative Law Judge makes recommended
findings of fact and conclusions of law that the Under Secretary
must affirm, modify or vacate. The Under Secretary's action is the
final decision for the U.S. Commerce Department.
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BIS has suggested these sanctions because Muttreja's role in
conspiring to export toxins to North Korea, as well as his role in
ordering toxins for export to North Korea, represents a significant
potential harm to the essential national interests protected by U.S.
export controls.\4\ BIS has noted that the items involved in the
attempted export in this case involved Aflatoxins (M1, PI, Q1) and
Staphyloccocal Enterotoxins (A and B). These items are controlled by
BIS for Anti-Terrorism reasons. BIS asserted that Muttreja's role in
conspiring and soliciting the export of these items for delivery to
North Korea--a country that the United States Government designated as
a state sponsor of international terrorism--represents significant harm
to the national interests protected by U.S. export controls.\5\
Furthermore, BIS believes that the imposition of a six-year denial
order is appropriate in this case since BIS may face difficulties in
collecting a monetary penalty, as Muttreja is not located in the United
States. Finally, BIS believes that the recommended denial order is
particularly appropriate in this case, since Muttreja has failed to
respond to the Charging Letter filed by BIS. In light of these
circumstances, BIS believes that the denial of Muttreja's export
privileges for six years is an appropriate sanction.
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\4\ See 15 CFR 766.1, Supp. No.1, III, A. (Stating that a denial
order may be considered even in matters involving simple negligence
or carelessness, if the violation(s) involves ``harm to the national
security or other essential interests protected by the export
control system,'' if the violations are of such a nature and extent
that a monetary fine alone represents an insufficient penalty * * *
.) (emphasis added).
\5\ See id. (``Designation Involved: BIS is more likely to seek
a greater monetary penalty and/or denial or export privileges * * *
in cases involving: (1) exports or reexports to countries subject to
anti-terrorism controls * * *.'') (emphasis in original).
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On this basis, the undersigned concurs with BIS and recommends that
the Under Secretary enter an Order denying Muttreja's export privileges
for a period of six years. Such a denial order is consistent with
penalties imposed in past cases under the Regulations involving
shipments to countries designated as ``Terrorist Supporting
Countries.'' \6\ See In the Matter of Petrom GmbH International Trade,
70 FR 32,743 (June 6, 2005) (affirming the recommendations of the
Administrative Law Judge that a twenty year denial order and a civil
monetary sanction of $143,000 were appropriate where knowing violations
involved a shipment of EAR99 items to Iran); In the Matters of Yaudat
Mustafa Talyi a.k.a. Yaudat Mustafa a.k.a. Joseph Talyi, 69 FR 77,177
(December 27, 2004) (affirming the ALJ's recommendations that a twenty
year denial order and maximum civil penalty of $11,000 per violation
were appropriate where an individual exported oil field parts to Libya
without authorization, in violation of a BIS order temporarily denying
his export privileges and with knowledge that a violation would occur;
and solicited a violation of the Regulations by ordering oil field
parts from a U.S. manufacturer without authorization and with knowledge
that a violation would occur); In the Matter of Arian
Transportvermittlungs. GmbH, 69 FR 28,120 (May 18, 2004) (affirming the
recommendation of the Administrative Law Judge that a ten year denial
order was appropriate where knowing violations involved a shipment of a
controlled item to Iran); In the Matter of Jabal Damavand General
Trading Company, 67 FR 32,009 (May 13, 2002) (affirming the
recommendation of the Administrative Law Judge that a ten year denial
order was appropriate where knowing violations involved shipments of
EAR99 items to Iran); In the Matter of Adbulamir, 68 FR 57,406 (October
3, 2003) (affirming the recommendation of the Administrative Law Judge
that a twenty year denial order was appropriate where knowing
violations involved shipments of EAR99 items to Iran as a part of a
conspiracy to ship such items through Canada to Iran).
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\6\ BIS's list of Terrorist Supporting Countries is set forth in
15 CFR part 740, Supp. No. 1, Country Group E:1.
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A six year denial of Muttreja's export privileges is warranted
because Muttreja's violations, like those of the respondents in the
above-cited case, involved exports made to Terrorist Supporting
Countries in violation of U.S. export control laws.
The terms of the denial of export privileges against Muttreja
should be consistent with the standard language used by BIS in such
orders. The language is:
[REDACTED SECTION]
[REDACTED SECTION]
[REDACTED SECTION]
[REDACTED SECTION]
This Order, which constitutes the final agency action in this
matter, is effective upon publication in the Federal Register.
Accordingly, the undersigned refers this Recommended Decision and
Order to the Under Secretary of Commerce for Industry and Security for
review and final action for the agency, without further notice to the
respondent, as provided in Section 766.7 of the Regulations.
Within 30 days after receipt of this Recommended Decision and
Order, the Under Secretary shall issue a written order affirming,
modifying, or vacating the Recommended Decision and Order. See 15 CFR
766.22(c).
[[Page 34596]]
Dated: May 24, 2006.
Joseph N. Ingolia,
Chief Administrative Law Judge.
[FR Doc. 06-5434 Filed 6-14-06; 8:45 am]
BILLING CODE 3510-33-M