International business and trade lawyer, Jon P. Yormick, will be giving 2 presentations this month on international trade issues. On June 10, at the National Association of Credit Management 118th Credit Congress & Expo in Orlando, he will present Navigating Economic Sanctions…Successfully. Yormick’s presentation will be part of an Advanced level session, “International Export Compliance and Fraud Detection.” Co-panelists include the Director of International Trade Compliance for DHL Express Americas Region, a Partner from Bingham Greenebaum Doll LLP, and the Senior Investigator at ConSec Investigations.
On June 19, at the 2014 Upstate New York Trade Conference & Expo in Rochester, Yormick will present on the “deemed export” rule, economic sanctions, FCPA/Antibribery, and antiboycott regulations as part of the Conference’s Export Controls (EAR/ITAR) Track. He will join the U.S. Trade Compliance Manager from Idex Optics & Photonics to discuss these and other export control topics during the session, “Advanced Exporting Issues aka ‘A day in the Life of a Professional Exporter.’” Yormick will then join with other panelists for the “ITAR & EAR Roundtable: Overview of Export Control Reform and Q&A/Forum.” For more information and registration, visit http://bit.ly/LeKSuT.
Yormick is an experienced international business and trade attorney practicing in the areas Export Controls & Economic Sanctions, Customs & International Trade, and FCPA/Antibribery. He represents U.S. and foreign clients before the U.S. Department of Commerce, Bureau of Industry and Security (BIS), the U.S. Customs and Border Protection (CBP), the U.S. Department of Homeland Security, Immigration and Customs Enforcement (ICE), the U.S. Department of State, Directorate of Defense Trade Controls (DDTC), the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC), and the U.S. International Trade Commission (ITC) on import and export laws and regulations, including the Export Administration Regulations (EAR), and the International Traffic in Arms Regulations (ITAR). His clients include those in the advanced manufacturing, advanced materials, aerospace and defense, distribution, electronics, energy, medical device, oil/gas, pharmaceuticals, professional services, steel, textiles and apparel, and transportation/logistics sectors.
In 2014, Mr. Yormick was appointed by the Secretary of the U.S. Department of Commerce as a member of the Northern Ohio District Export Council, and he was selected to serve on the LL.M. Advisory Board of Case Western Reserve University School of Law. He is also a member of the U.S. Small Business Administration International Trade Task Force – Buffalo District Office. Since 2010, he has served as the Coordinator in Buffalo and Cleveland of the Export Legal Assistance Network, a nationwide network of attorney volunteers organized by the U.S. Department of Commerce, the SBA, and the Federal Bar Association to provide free initial consultations to identify key legal issues for exporting companies.
This month, international business and trade attorney, Jon Yormick, will discuss Export Control Reform (ECR) in Cleveland and Rochester.
On October 10, Jon will speak at the monthly luncheon meeting of the Cleveland Foreign Credit Group, the group’s 300th meeting. The Cleveland Foreign Credit Group is made up of international credit managers from leading publicly-traded companies in Northeast Ohio, including Babcock & Wilcox, Lincoln Electric, Lubrizol, Materion, OMG Americas, Parker-Hannifin, and several others. In addition, regional and international banks are well represented in the membership, including Fifth Third Bank, HSBC, KeyBank, and PNC Bank. Half the member companies have annual turnover of at least $500 million. At each meeting, the companies have a presentation on a topic relating to international trade or credit, followed by a discussion of payment terms and experiences regarding customers in countries around the world. In 2007, Jon was recognized as the group’s Member of the Year.
Jon’s presentation on Preparing for Compliance and Enforcement Under Export Control Reform, will focus on the impact of ECR on a company’s sales opportunities and how international credit professionals play a key role in a company’s export compliance program.
One week later, on October 17, in Rochester, New York, Jon will participate on a panel at an ITAR & EAR Expert Roundtable Lunch presented by the Greater Rochester Enterprise, International Business Council. This sold-out event is the second time this year that the panel of experts will gather at the GRE to answer questions and discuss ECR with area companies. Joining Jon on the expert panel be export compliance leaders from Harris Corporation, Mohawk Global Trade Advisors, Qioptiq Defense, Inc., Redcom Laboratories, Inc., and Spectracom Corp.
New York Company Settles AECA and ITAR Violations for $8M after Making Voluntary Self-Disclosures: The Cost of Failing to Properly Determine Export Control Jurisdiction
A Long Island, New York company, Aeroflex, Inc., has entered into an $8 million settlement with the U.S. Department of State for an estimated 158 alleged violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR).
According to the nearly 18-page long Proposed Charging Letter, the Department considered the series of voluntary disclosures submitted by the company and its remedial compliance measures as “significant mitigating factors” in deciding the charges to pursue. The Department, however, found that there were significant national security interests involved and systemic and longstanding violations, including improper product classifications, and decided to charge the company with an estimated 158 violations for unauthorized exports based on information contained in the voluntary disclosures.
The Department found that the “violations were caused by inadequate corporate oversight and demonstrate systemic and corporate-wide failure to properly determine export control jurisdiction over commodities,” leading to “the unauthorized exports and re-exports of ITAR-controlled electronics, microelectronics, and associated technical data; and caused unauthorized exports of ITAR-controlled microelectronics by domestic purchasers.”
The 158 alleged violations included: 32 unauthorized exports of ITAR-controlled microelectronics and electronics, including to NATO and other allied countries; 96 unauthorized exports of ITAR-controlled microelectronics to China; causing 18 unauthorized exports of defense articles when the company and its subsidiaries “sold ITAR-controlled radiation tolerant multipurpose transceivers to domestic buyers who exported the transceivers without Department authorization,” due to Aeroflex’s incorrect jurisdiction determination; causing 7 unauthorized exports of defense articles to China by exporting “ITAR-controlled microelectronics to foreign entities who then re-exported these defense articles to the People’s Republic of China without Department authorization,” again due to making incorrect jurisdiction determinations; causing an unauthorized export of defense articles when it sold ITAR-controlled integrated circuits to the UAE for end-use on satellite projects in India, knowing the items would be re-exported without Department authorization; and misused the ITAR Canadian exemption 4 times when it exported radiation hardened microelectronics to Canada without Department authorization.
Despite the company-wide failures noted in the Proposed Charging Letter, Aeroflex and its subsidiaries apparently did make some efforts at export controls compliance – they were just badly misguided. The company apparently relied primarily on “commodity classification guidance from the Department of Commerce in reviewing the export control status of its microelectronics and electronics,” but failed to understand that Commerce can only properly classify items and technology that are subject to the Export Administration Regulations (EAR).
In other words, Aeroflex often skipped over the critical first-step in the export control analysis which is to determine jurisdiction over the commodities, technology, and software involved – whether jurisdiction lies with the Department of State or the Department of Commerce. Only after this determination is made, can classification be determined. The Proposed Charging Letter noted that while “companies may self-classify an article or service, it is to their advantage to seek a [Commodity Jurisdiction] CJ determination where a company has doubts” about whether an article or service is covered by the U.S. Munitions List and, therefore, falls under the jurisdiction of the Department of State.
Making the proper jurisdiction determination is highlighted not only by this settlement, but by Export Control Reform (ECR), which, in a little more than 60 days, will cause a shift in jurisdiction from the Department of State to the Department of Commerce for certain aircraft parts and components and gas turbine engines. Companies should be well into their reviews of how ECR will impact their exports. And as the Aeroflex settlement shows, incomplete or incorrect analyses of jurisdiction can lead to costly violations. Companies should not assume that jurisdiction will shift for their items and technologies under ECR. Whether affected by ECR or not, companies should use this settlement as a reminder to review jurisdiction regularly or to perform that in-depth analysis for the first time before “systemic and longstanding violations” occur. There really are no short-cuts to be taken with export controls.
In September, Jon Yormick will speak on U.S. export controls and offer guidance on compliance measures organizations must take in this era of investigations, enforcement, and increased penalties.
On September 19 in Buffalo, Jon will address the American Immigration Lawyers Association Upstate New York Chapter at its dinner meeting, “What Upstate NY Immigration Lawyers Should Know About Export Controls.” His presentation will focus on the I-129 Part 6 Certification requirements and the role of immigration counsel in export controls compliance. Jon will discuss specific issues regarding compliance with the deemed export rule, including dual/third-country nationals, TN and B-1 visa, and staffing company concerns. He will be joined by Jim Trubits of Mohawk Global Advisory Services. The meeting will be held at the Protocol Restaurant and be videotaped for Lawline CLE.
Two days later, on September 21, Jon will speak at the Ohio Aerospace Institute’s Industry Roundtable meeting on “Busting Myths of DDTC Registration.” He will debunk misconceptions and misunderstanding about registration and provide guidance on what aerospace, defense, technology companies and universities need to know about registering with the Department of State, Directorate of Defense Trade Controls (DDTC) for items and technical data on the U.S. Munitions List and provide an update on Export Control Reform (ECR).