2012-14109. Order Denying Export Privileges

In the Matter of: Chitron Electronics, Inc., 102 Clematis Avenue, Suite 7, Waltham, MA 02453, Respondent, Chitron Electronics Company Limited, a/k/a Chi-Chuang Electronics Company Limited, a/k/a Shenzhen Chitron Electronics Company Limited, 2127 Sungang Road, Huatong Building 19/F, Luohu District, Shenzhen, 518001, China and Chitron (HK) Electronics Company Limited, a/k/a C.I.C. Electronics (HK) Limited, Room 05 13/F Nanyang Plaza, No. 57 Hung To Road, Kwum Tong, Kowloon, Hong Kong, Related Persons.

A. Denial of Export Privileges of Chitron Electronics, Inc.

On January 28, 2011, in the U.S. District Court, District of Massachusetts, Chitron Electronics, Inc. (“Chitron-US”) was convicted of violating the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. (2000)) (“IEEPA”) and Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2000)) (“AECA”). Specifically, Chitron-US was convicted of illegally exporting various electronic components and other items subject to the Export Administration Regulations (“EAR” or “Regulations”) ^[1] to end-users in China between 2004 and 2007, including to entities on the BIS Entity List, and for military end-uses. Chitron-US was also convicted of illegally exporting military electronic components designated on the U.S. Munitions List to China through Hong Kong between 2004 and 2007. In addition, Chitron-US was convicted of conspiring over a period of 10 years to violate the IEEPA and AECA (18 U.S.C. 371) and aiding and abetting (18 U.S.C. 2). Chitron-US was ordered to pay a $10,400 Special Assessment and a $15.5 million fine. Chitron-US is also listed on the Department of State's Debarred List.

Section 766.25 of the Regulations provides, in pertinent part, that “[t]he Director of the Office of Exporter Services, in consultation with the Director of the Office of Export Enforcement, may deny the export privileges of any person who has been convicted of a violation of the [Export Administration Act (“EAA”)], the EAR, of any order, license or authorization issued thereunder; any regulation, license, or order issued under the International Emergency Economic Powers Act (50 U.S.C. 1701-1706); 18 U.S.C. 793, 794 or 798; section 4(b) of the Internal Security Act of 1950 (50 U.S.C. 783(b)), or section 38 of the Arms Export Control Act (22 U.S.C. 2778).” 15 CFR 766.25(a); see also Section 11(h) of the EAA, 50 U.S.C. app. § 2410(h). The denial of export privileges under this provision may be for a period of up to 10 years from the date of the conviction. 15 CFR 766.25(d); see also 50 U.S.C. app. § 2410(h). In addition, Section 750.8 of the Regulations states that the Bureau of Industry and Security's Office of Exporter Services may revoke any Bureau of Industry and Security (“BIS”) licenses previously issued in which the person had an interest in at the time of his conviction.

I have received notice of Chitron-US's conviction for violating IEEPA and the AECA, and have provided notice and an opportunity for Chitron-US to make a written submission to BIS, as provided in Section 766.25 of the Regulations. I have not received a submission from Chitron-US. Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Chitron-US's export privileges under the Regulations for a period of 10 years from the date of Chitron-US's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Chitron-US had an interest at the time of its conviction.

B. Denial of Export Privileges of Related Person

Pursuant to Sections 766.25(h) and 766.23 of the Regulations, the Director of BIS's Office of Exporter Services, in consultation with the Director of BIS's Office of Export Enforcement, may take action to name persons related to a Respondent by ownership, control, position of responsibility, affiliation, or other connection in the conduct of trade or business in order to prevent evasion of a denial order. Chitron Electronics Company Limited (“Chitron-Shenzhen”), located in China, is the parent company of Chitron-US and was also indicted for the same crimes as Chitron-US. Chitron (HK) Electronics Company Limited (“Chitron-HK”), is a branch office of Chitron-US, located in Hong Kong. The illegal enterprise involved the use of Chitron-US, as a front company, and Chitron-HK, as a transit point, to funnel goods to its parent company, Chitron-Shenzhen for final delivery to end-users in China. Chitron-Shenzhen and Chitron-HK are related to Chitron-US by ownership, control, position of responsibility, affiliation, or other connection in the conduct of trade or business. BIS believes that naming Chitron-Shenzhen and Chitron-HK as related persons to Chitron-US is necessary to avoid evasion of the denial order against Chitron-US.

As provided in Section 766.23 of the Regulations, I gave notice to Chitron-Shenzhen and Chitron-HK that their export privileges under the Regulations could be denied for up to 10 years due to their relationship with Chitron-US and that BIS believes naming them as persons related to Chitron-US would be necessary to prevent evasion of a denial order imposed against Chitron-US. In providing such notice, I gave Chitron-Shenzhen and Chitron-HK an opportunity to oppose their addition to the Chitron-US Denial Order as a related party. Having received no submission, I have decided, following consultations with BIS's Office of Export Enforcement, including its Director, to name Chitron-Shenzhen and Chitron-HK as Related Persons to the Chitron-US Denial Order, thereby denying their export privileges for 10 years from the date of Chitron-US's conviction.

I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which the Related Persons had an interest at the time of Chitron-US's conviction. The 10-year denial period will end on January 28, 2021.

Accordingly, it is hereby ordered:

I. Until January 28, 2021, Chitron Electronics, Inc. with a last known address at: 102 Clematis Avenue, Suite 7, Waltham, MA 02453, and when acting for or on behalf of Chitron-US, its successors or assigns, agents or employees (collectively referred to hereinafter as the “Denied Person”), and the following persons related to the Denied Person as defined by Section 766.23 of the Regulations: Chitron Electronics Company Limited, a/k/a Chi-Chuang Electronics Company Limited, a/k/a Shenzhen Chitron Electronics Company Limited, with a last known address at: 2127 Sungang Road, Huatong Building 19/F, Luohu District, Shenzhen, 518001, China; and Chitron (HK) Electronics Company Limited, a/k/a C.I.C. Electronics (HK) Limited, with a last known address at: Room 05 13/F Nanyang Plaza, No. 57 Hung To Road, Kwum Tong, Kowloon, Hong Kong, and when acting for or on their behalf, their successors or assigns, agents, or employees (“the Related Persons”) (together, the Denied Person and the Related Persons are “Persons Subject to this Order”), 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. 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.

II. No person may, directly or indirectly, do any of the following:

A. Export or reexport to or on behalf of the Persons Subject to this Order any item subject to the Regulations;

B. Take any action that facilitates the acquisition or attempted acquisition by the Persons Subject to this Order 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 Persons Subject to this Order acquire or attempt to acquire such ownership, possession or control;

C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Persons Subject to this Order of any item subject to the Regulations that has been exported from the United States;

D. Obtain from the Persons Subject to this Order 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 Persons Subject to this Order, or service any item, of whatever origin, that is owned, possessed or controlled by the Persons Subject to this Order 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.

III. In addition to the Related Persons named above, after notice and opportunity for comment as provided in section 766.23 of the Regulations, any other 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 if necessary to prevent evasion of the Order.

IV. 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.

V. This Order is effective immediately and shall remain in effect until January 28, 2021.

VI. In accordance with Part 756 of the Regulations, Chitron-US may file an appeal of this Order with the Under Secretary of Commerce for Industry and Security. The appeal must be filed within 45 days from the date of this Order and must comply with the provisions of Part 756 of the Regulations.

VII. In accordance with Part 756 of the Regulations, the Related Persons may also file an appeal of this Order with the Under Secretary of Commerce for Industry and Security. The appeal must be filed within 45 days from the date of this Order and must comply with the provisions of Part 756 of the Regulations.

VIII. A copy of this Order shall be delivered to the Denied Person and the Related Persons. This Order shall be published in the Federal Register.

Issued this 4th day of June, 2012.

Bernard Kritzer,

Director, Office of Exporter Services.

Footnotes

1.  The Regulations are currently codified in the Code of Federal Regulations at 15 CFR parts 730-774 (2011). The Regulations issued pursuant to the EAA (50 U.S.C. app. §§ 2401-2420 (2000)). Since August 21, 2001, the EAA has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 C.F.R., 2001 Comp. 783 (2002)), which has been extended by successive Presidential Notices, the most recent being that of August 12, 2011 (76 FR 50661, August 16, 2011), has continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. (2000)).