2010-7437. Action Affecting Export Privileges; Bob Rahimzadeh

In the Matter of: Bob Rahimzadeh, 116 Hopper Lane, Folsom, CA 95630, Respondent; Order Relating to Bob Rahimzadeh.

The Bureau of Industry and Security, U.S. Department of Commerce (“BIS”), initiated this administrative proceeding against Bob Rahimzadeh (“Rahimzadeh”) pursuant to Section 766.3 of the Export Administration Regulations (the “Regulations”) ^[1] , and Section 13(c) of the Export Administration Act of 1979, as amended (the “Act”) ^[2] , through the issuance and filing of a charging letter as to Rahimzadeh that alleges that Rahimzadeh has committed four violations of the Regulations (“Charging Letter”). Specifically, these charges are:

Charge 1 15 CFR 764.2(b)—Causing, Aiding or Abetting

Between on or about July 26, 2004, and on or about September 28, 2004, Rahimzadeh caused, aided or abetted the doing of an act prohibited by the Regulations by facilitating or coordinating the export of approximately 174 rolls of hog hair filter media, part number HH60130 and valued at approximately $11,687.76, items which are subject to the Regulations and designated as EAR99 items,^[3] through the United Arab Emirates (“U.A.E.”) to Iran without the required U.S. Government authorization. Pursuant to Section 560.204 of the Iranian Transactions Regulations (“ITR”) ^[4] maintained by the U.S. Department of the Treasury's Office of Foreign Assets Control (“OFAC”), an export to a third country intended for transshipment to Iran is a transaction that requires OFAC authorization. Pursuant to Section 746.7 of the Regulations, no person may engage in the exportation of an item subject to both the Regulations and the ITR without authorization from OFAC. No OFAC authorization was sought or obtained for the transaction described herein. Rahimzadeh took this action after having been asked by Parto Abgardan Cooling Towers Co. (“Parto Abgardan”), an Iranian company, to arrange for the export of the items to Iran “via Dubai.” Parto Abgardan did not have a location in the U.A.E., and the address to which Rahimzadeh arranged for the items to be exported, “do Parto Abgardan,” was in fact subsequently added to the BIS Unverified List of entities involved in transactions in which BIS is unable to verify the existence or authenticity of the end-user or other party to the transaction, published in the Federal Register on October 19, 2006. 71 FR 61706 (Oct. 19, 2006).

In so doing, Rahimzadeh committed one violation of Section 764.2(b) of the Regulations.

Charge 2 15 CFR 764.2(e)—Acting With Knowledge of a Violation

Between on or about July 26, 2004, and on or about September 28, 2004, Rahimzadeh ordered or financed items to be exported from the United States with knowledge that a violation of the Regulations was occurring, was about to occur or was intended to occur in connection with the items. Specifically, between on or about July 26, 2004, and on or about September 28, 2004, Rahimzadeh ordered or financed approximately 174 rolls of hog hair filter media, part number HH60130 and valued at approximately $11,687.76, items which are subject to the Regulations and designated as EAR99, which Rahimzadeh knew would be exported to Iran via the U.A.E. without the required U.S. Government authorization. Pursuant to Section 560.204 of the ITR, an export to a third country intended for transshipment to Iran is a transaction that requires OFAC authorization. Pursuant to Section 746.7 of the Regulations, no person may engage in the exportation of an item subject to both the Regulations and the ITR without authorization from OFAC. Rahimzadeh knew that no OFAC authorization was sought or obtained for the transaction described herein.

Rahimzadeh had knowledge that a violation was occurring, was about to occur or was intended to occur in connection with the items because he was aware of the U.S. embargo of Iran and had knowledge that exporting items through the U.A.E. to Iran was a violation of U.S. law. Rahimzadeh stated to a BIS Office of Export Enforcement special agent in an interview on or about October 14, 2005, that approximately three years earlier he had become aware of sanctions barring the shipment of items to Iran and that he understood that knowingly shipping items to Iran through a third country was illegal. Rahimzadeh referred to this type of activity as “diverting” items to Iran. Moreover, on or about September 23, 1997, Rahimzadeh had issued a letter to Parto Abgardan stating, “I am trying to find a way to send the components that I promised to you. Unfortunately after many unsuccessful attempts, I came to a conclusion that the only way to open this channel is what you were thinking, and if I understood correctly, you are going to have some kind of agent or office in one of the Gulf countries. I tell you this that I would have no problem getting a container to my place and loading to a steam ship toward Dubai. * * * Many shipping companies express that you shouldn't have any major problem getting the goods to Tehran from Dubai.”

In so doing, Rahimzadeh committed one violation of Section 764.2(e) of the Regulations.

Charge 3 15 CFR 764.2(b)—Causing, Aiding or Abetting

Between on or about February 9, 2005, and on or about April 19, 2005, Rahimzadeh caused, aided, or abetted the doing of an act prohibited by the Regulations by facilitating or coordinating the export of approximately 185 rolls of hog hair filter media, part number HHB60130 and valued at approximately $9,838.30, items which are subject to the Regulations and designated as EAR99 items, through the U.A.E. to Iran without the required U.S. Government authorization. Pursuant to Section 560.204 of the ITR maintained by OFAC, an export to a third country intended for transshipment to Iran is a transaction that requires OFAC authorization. Pursuant to Section 746.7 of the Regulations, no person may engage in the exportation of an item subject to both the Regulations and the ITR without authorization from OFAC. No OFAC authorization was sought or obtained for the transaction described herein.

Specifically, after exporting certain hog hair filter media to Parto Abgardan in Iran, as described in Charges 1-2, Rahimzadeh was informed by Parto Abgardan that the items were not exactly the same as a sample Rahimzadeh had previously brought to Parto Abgardan before the transaction described in Charges 1-2 occurred. Rahimzadeh received from Parto Abgardan a piece of the original sample as well as a piece of the items described in Charges 1-2. Rahimzadeh then provided both pieces to the U.S. distributor, and placed a new order for 185 rolls of hog hair filter media, part number HHB60130, with the U.S. distributor. Rahimzadeh arranged for the U.S. distributor to supply the items, which were destined for Iran, to a freight forwarder for initial shipment to the U.A.E., “c/o Parto Abgardan.” Parto Abgardan did not have a location in the U.A.E., and the address to which Rahimzadeh arranged for the items to be exported, “c/o Parto Abgardan,” was in fact added to the BIS Unverified List of entities involved in transactions in which BIS is unable to verify the existence or authenticity of the end-user or other party to the transaction, published in the Federal Register on October 19, 2006. 71 FR 61706 (Oct. 19, 2006).

In so doing, Rahimzadeh committed one violation of Section 764.2(b) of the Regulations.

Charge 4 15 CFR 764.2(e)—Acting With Knowledge of a Violation

Between on or about February 9, 2005, and on or about April 19, 2005, Rahimzadeh ordered items to be exported from the United States with knowledge that a violation of the Regulations was occurring, was about to occur or was intended to occur in connection with the items. Specifically, between on or about February 9, 2005, and on or about April 19, 2005, Rahimzadeh ordered approximately 185 rolls of hog hair filter media, part number HHB60130 and valued at approximately $9,838.30, items which are subject to the Regulations and designated as EAR99, which Rahimzadeh knew would be exported to Iran via the U.A.E. without the required U.S. Government authorization. Pursuant to Section 560.204 of the ITR, an export to a third country intended for transshipment to Iran is a transaction that requires OFAC authorization. Pursuant to Section 746.7 of the Regulations, no person may engage in the exportation of an item subject to both the Regulations and the ITR without authorization from OFAC. Rahimzadeh knew that no OFAC authorization was sought or obtained for the transaction described herein.

Rahimzadeh had knowledge that a violation was occurring, was about to occur or was intended to occur in connection with the items because Rahimzadeh was aware of the U.S. embargo of Iran and had knowledge that exporting items through the U.A.E. to Iran was a violation of U.S. law. Rahimzadeh stated to a BIS Office of Export Enforcement special agent in an interview on or about October 14, 2005, that approximately three years earlier he had become aware of sanctions barring the shipment of items to Iran and that he understood that knowingly shipping items to Iran through a third country was illegal. Rahimzadeh referred to this type of activity as “diverting” items to Iran. Moreover, on or about September 23, 1997, Rahimzadeh had issued a letter to Parto Abgardan stating, “I am trying to find a way to send the components that I promised to you. Unfortunately after many unsuccessful attempts, I came to a conclusion that the only way to open this channel is what you were thinking, and if I understood correctly, you are going to have some kind of agent or office in one of the Gulf countries. I tell you this that I would have no problem getting a container to my place and loading to a steam ship toward Dubai. * * * Many shipping companies express that you shouldn't have any major problem getting the goods to Tehran from Dubai.”

In so doing, Rahimzadeh committed one violation of Section 764.2(e) of the Regulations.

Whereas, BIS and Rahimzadeh have entered into a Settlement Agreement pursuant to Section 766.18(b) of the Regulations, whereby they agreed to settle this matter in accordance with the terms and conditions set forth therein; and

Whereas, I have approved of the terms of such Settlement Agreement; it is therefore ordered:

First, Rahimzadeh shall be assessed a civil penalty in the amount of $100,000, the payment of which shall be suspended for a period of ten (10) years from the date of this Order, and thereafter shall be waived, provided that during the period of suspension, Rahimzadeh has committed no violation of the Act, or any regulation, order, or license issued thereunder.

Second, that for a period of ten (10) years from the date of this Order, Rahimzadeh, his representatives, assigns or agents (“Denied Person”) may not participate, directly or indirectly, 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. Benefitting 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.

Third, 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 which 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.

Fourth, 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 Rahimzadeh 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.

Fifth, that the Charging Letter, the Settlement Agreement, and this Order shall be made available to the public.

Sixth, that this Order shall be served on the Denied Person and on BIS, and shall be published in the Federal Register.

This Order, which constitutes the final agency action in this matter, is effective immediately.

Issued this 25th day of March 2010.

David W. Mills,

Assistant Secretary of Commerce for Export Enforcement.

Footnotes

1.  The Regulations are currently codified in the Code of Federal Regulations at 15 CFR parts 730-774 (2009). The violations occurred in 2004 and 2005. The Regulations governing the violation at issue are found in the 2004 and 2005 versions of the Code of Federal Regulations (15 CFR parts 730-774 (2004-2005)). The 2009 Regulations establish the procedures that apply to this matter.

2.  50 U.S.C. app. §§ 2401-2420 (2000). 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. p. 783 (2002)), which has been extended by successive Presidential Notices, the most recent being that of August 13, 2009 (74 FR 41325 (Aug. 14, 2009)) has continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (“IEEPA”).

3.  EAR99 is a designation for items subject to the Regulations but not listed on the Commerce Control List. 15 CFR 734.3(c).

4.  31 CFR part 560.