2022-18874. Hans De Geetere, Paul Parmentierlaan 121, 8300 Knokke Heist, Belgium and Nyckeesstraat 4, 8300 Knokke Heist, Belgium; Knokke-Heist Support Corporation Management a/k/a Hasa-Invest, Paul Parmentierlaan 121, 8300 Knokke Heist, Belgium and ...

Pursuant to section 766.24 of the Export Administration Regulations (the “Regulations” or “EAR”),^[1] the Bureau of Industry and Security (“BIS”), U.S. Department of Commerce, through its Office of Export Enforcement (“OEE”), has requested the issuance of an Order temporarily denying, for a period of 180 days, the export privileges under the Regulations of: Hans De Geetere of Belgium (“De Geetere”) and his company Knokke-Heist Support Corporation Management, also known as Hasa-Invest (“Knokke-Heist”) (collectively “Respondents”).

I. Legal Standard

Pursuant to section 766.24, BIS may issue an order temporarily denying a respondent's export privileges upon a showing that the order is necessary in the public interest to prevent an “imminent violation” of the Regulations. 15 CFR 766.24(b)(1) and 766.24(d). “A violation may be `imminent' either in time or degree of likelihood.” 15 CFR 766.24(b)(3). BIS may show “either that a violation is about to occur, or that the general circumstances of the matter under investigation or case under criminal or administrative charges demonstrate a likelihood of future violations.” Id. As to the likelihood of future violations, BIS may show that the violation under investigation or charge “is significant, deliberate, covert and/or likely to occur again, rather than technical or negligent[.]” Id. A “[l]ack of information establishing the precise time a violation may occur does not preclude a finding that a violation is imminent, so long as there is sufficient reason to believe the likelihood of a violation.” Id.

II. OEE's Request for a Temporary Denial Order

As further detailed below, OEE's request and investigation are based, inter alia, upon facts indicating that De Geetere engaged in conduct prohibited by the Regulations by acquiring or attempting to acquire under false pretenses accelerometers, items subject to the Regulations, from the United States on behalf of prohibited end-users or for prohibited end-uses in China. The use of accelerometers by the aerospace and defense industries, and Respondents' false statements made to U.S. companies to obtain the items, raises significant concerns of future violations absent the issuance of a TDO.

A. Providing False End-User Information To Obtain U.S.-Origin Accelerometers

OEE's request and its broader investigation outline numerous attempts by Respondents to obtain U.S.-origin accelerometers from a U.S. vendor (“U.S. Company 1”). For instance, in or about April 2021, OEE detained a shipment of accelerometers being exported to a German company. OEE obtained sales documentation for this shipment from U.S. Company 1, including an end-user statement wherein Knokke-Heist asserted that the items were being purchased on behalf of a Belgian Government agency. Respondents provided U.S. Company 1 a letter in support of the end-user statement that was purportedly signed by the Belgian Government. In an attempt to get the accelerometers released, U.S. authorities were provided a BIS Form 711 dated April 15, 2021, and signed by “De Geetere H,” identified as the CEO of Knokke-Heist, asserting that the end-user was a Belgian Government agency.

OEE subsequently informed Respondents that they were unable to confirm the alleged Belgian Government end-user and planned to advise U.S. Company 1 not to proceed with the transaction. Despite this warning, OEE received an email purportedly written by Knokke-Heist's Belgian Government customer, copying De Geetere. The email states in relevant part:

I can hereby confirm that the order the BV—KHSCM—with enclosed reference letter KN0212807-KN (Paul Parmentierlaan 121—8300 Knokke Heist) is about a project that is financed and purchased by our services. This concerns the current trial order 81 pieces of [U.S. Company No. 1 accelerometers] and an open order that still needs to be completed according to the needs of 20,000 pieces [U.S. Company No. 1 accelerometers] (Year 2021).

We have included a support letter with the end user document to confirm the order. There is also a confirmation from the Ministry of Foreign Affairs. The document is drawn up in one of the three national languages of Belgium with which we officially communicate. I can only send you this letter in Flemish.

OEE was able to confirm this was a fraudulent email and that it did not come from the Belgian Government.

B. Respondent Prior Orders of Accelerometers and Entity List Connections

OEE's investigation later revealed that prior to the April 2021 detained shipment described above, De Geetere, via Knokke-Heist, had ordered approximately $360,000 worth of accelerometers via U.S. Company 1's German distributor starting in or about July 2020. Notably, these orders started shortly after a Chinese distributor for U.S. Company 1, Shanghai Nova Instruments Company, Ltd, was placed on the Entity List on June 5, 2020, for being “involved in the procurement of items subject to the EAR for possible use in missile and unmanned aerial vehicle applications in China without the licenses required pursuant to §§  744.3 and 744.21 of the EAR.” ^[2]

OEE's on-going investigation obtained evidence suggesting that at least some of Respondents' orders were placed on behalf of China Aerospace Research Institute, an entity BIS has reason to believe is connected to or is an alias for the China Aerospace Science and Technology Corporation (“CASC”) 1st Academy 12 Research Institute, a party also on BIS' Entity List and the recipient of at least some earlier shipments from entity listed Shanghai Nova Instruments.^[3] In or about November 2020, shortly after an order for China Aerospace Research Institute was rejected by U.S. Company 1, Respondents attempted to obtain the same quantity and model of accelerometers from U.S. Company 1's German distributor.

C. Later Attempts To Acquire Accelerometers via Additional Countries and Distributors

OEE later became aware of two June 2021 shipments of accelerometers by U.S. Company 1 to a recently incorporated United Arab Emirates-based company (“UAE Company 1”). Given the size of the second shipment and UAE Company 1's recent incorporation, the second shipment was detained to verify its bona fides and conduct a post-shipment verification (“PSV”) of the first and smaller shipment of accelerometers to UAE Company 1. Among other things, the PSV determined UAE Company 1 did not possess the type of equipment that could utilize the accelerometers at issue and did not make available either the items or records confirming their ultimate destination. Additionally, the PSV found that a fictitious name was used by UAE Company 1 when dealing with U.S. Company 1.

Further investigation revealed that UAE Company 1 purchased the items on behalf of Knokke-Heist and had forwarded the first shipment to Respondents using an address in the Netherlands. Moreover, other evidence gathered indicates that De Geetere was assisting UAE Company 1 in responding to the detention and subsequent seizure of the second shipment by the U.S. Government. The investigation also uncovered facts that indicate that De Geetere led UAE Company 1 to believe that the items were for ultimate use by a Belgian Government entity; the same fraudulent scheme De Geetere and Knokke-Heist employed directly with U.S. Company 1 several months earlier.

Additional attempts by the Knokke-Heist to acquire the same model of accelerometers were made to several other European distributors of U.S. Company 1 along with a separate September 2021 attempt to acquire the items directly from a U.S. company located in Florida, which identified De Geetere as the buyer's point of contact. Most recently, Belgian authorities identified a mid-August 2022 shipment of accelerometers from the United States to the Respondents. Given the sheer number and nature of attempts by Respondents to acquire U.S.-origin items under false pretenses on behalf of prohibited end-users or for prohibited end-uses, conduct which OEE's investigation reveals has continued, renders a TDO necessary to prevent future violations.

III. Findings

I find that the evidence presented by BIS demonstrates a clear pattern of Respondents attempting to obtain items subject to the EAR by knowingly providing false information in an attempt to conceal the true identity of their customers for which BIS authorization otherwise would be required, and that a violation of the Regulations by the above-captioned parties is imminent in degree of likelihood. As such, a TDO is needed to give notice to persons and companies in the United States and abroad that they should cease dealing with De Geetere and Knokke-Heist in export or reexport transactions involving items subject to the EAR. Such a TDO is consistent with the public interest to preclude future violations of the Regulations given the serious national security concerns impacted by the misconduct and the clear disregard for complying with U.S. export control laws.

This Order is being issued on an ex parte basis without a hearing based upon BIS's showing of an imminent violation in accordance with section 766.24 of the Regulations.

It is therefore ordered:

First, that Hans De Geetere, with an addresses at Paul Parmentierlaan 121, 8300 Knokke Heist, Belgium, and Nyckeesstraat 4, 8300 Knokke Heist, Belgium; and Knokke-Heist Support Corporation Management, a/k/a Hasa-Invest, with an addresses at Paul Parmentierlaan 121, 8300 Knokke Heist, Belgium, and Nyckeesstraat 4, 8300 Knokke Heist, Belgium, and when acting for or on their behalf, any successors or assigns, agents, or employees (each a “Denied Person” and collectively the “Denied Persons”) 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 EAR, or in any other activity subject to the EAR 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 EAR, or in any other activity subject to the EAR; 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 EAR, or in any other activity subject to the EAR.

Second, that no person may, directly or indirectly, do any of the following:

A. Export, reexport, or transfer (in-country) to or on behalf of a Denied Person any item subject to the EAR;

B. Take any action that facilitates the acquisition or attempted acquisition by a Denied Person of the ownership, possession, or control of any item subject to the EAR that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby a 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 a Denied Person of any item subject to the EAR that has been exported from the United States;

D. Obtain from a Denied Person in the United States any item subject to the EAR 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 EAR that has been or will be exported from the United States and which is owned, possessed or controlled by a Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by a Denied Person if such service involves the use of any item subject to the EAR 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 response as provided in section 766.23 of the EAR, any other person, firm, corporation, or business organization related to De Geetere or Knokke-Heist, 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.

In accordance with the provisions of section 766.24(e) of the EAR, De Geetere or Knokke-Heist, may, at any time, appeal this Order by filing a full written statement in support of the appeal with the Office of the Administrative Law Judge, U.S. Coast Guard ALJ Docketing Center, 40 South Gay Street, Baltimore, Maryland 21202-4022.

In accordance with the provisions of section 766.24(d) of the EAR, BIS may seek renewal of this Order by filing a written request not later than 20 days before the expiration date. Respondents De Geetere or Knokke-Heist, may oppose a request to renew this Order by filing a written submission with the Assistant Secretary for Export Enforcement, which must be received not later than seven days before the expiration date of the Order.

A copy of this Order shall be served on each denied person and shall be published in the Federal Register .

This Order is effective immediately and shall remain in effect for 180 days.

Matthew S. Axelrod,

Assistant Secretary for Export Enforcement.

Footnotes

1.  On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which includes the Export Control Reform Act of 2018, 50 U.S.C. 4801-4852 (“ECRA”). While section 1766 of ECRA repeals the provisions of the Export Administration Act, 50 U.S.C. app. 2401 et seq. (“EAA”), (except for three sections which are inapplicable here), section 1768 of ECRA provides, in pertinent part, that all orders, rules, regulations, and other forms of administrative action that were made or issued under the EAA, including as continued in effect pursuant to the International Emergency Economic Powers Act, 50 U.S.C. 1701 et seq. (“IEEPA”), and were in effect as of ECRA's date of enactment (August 13, 2018), shall continue in effect according to their terms until modified, superseded, set aside, or revoked through action undertaken pursuant to the authority provided under ECRA. Moreover, section 1761(a)(5) of ECRA authorizes the issuance of temporary denial orders. 50 U.S.C. 4820(a)(5).

2.  See 85 FR 34495 (June 5, 2020). Given the concerns that Chinese military end-users would continue to try and acquire U.S. Company 1's accelerometers, BIS issued US Company 1 an “is-informed” letter pursuant to section 744.21(b) of the Regulations imposing a license requirement for the export of accelerometers to China. An “is-informed” letter is specific notification provided by BIS “that a license is required for specific exports, reexports, or transfers (in-country) of any item because there is an unacceptable risk of use in or diversion to a 'military end use' or 'military end user'” in certain destinations including China. 15 CFR 744.21.(b).

3.  On August 14, 2019, BIS modified the Entity List entry for Beijing Aerospace Automatic Control Institute (BICD), which was first added to the Entity List on May 28, 1999 (64 FR 28909). This rule changes the existing entity name to China Aerospace Science and Technology Corporation (CASC) 1st Academy 12 Research Institute. 84 FR 40237 (Aug. 14, 2019). Additionally, on June 3, 2021, the Office of Foreign Assets Control (OFAC) named CASC to its list of Non-SDN Chinese Military-Industrial Complex Companies (NS-CMIC List). See https://home.treasury.gov/​policy-issues/​financial-sanctions/​recent-actions/​20210603.