06-7876. Action Affecting Export Privileges; Ghashim Group, Inc. and Mazen Ghashim and Related Person MNC Group International, Inc.; In the Matter of Ghashim Group, Inc., d.b.a. KZ Results, 8746 Westpark Drive, Houston, TX 77063, Respondent Order ...

The Bureau of Industry and Security, U.S. Department of Commerce (“BIS”) has notified Ghashim Group, Inc., doing business as KZ Results (“KZ Results”), of its intention to initiate and administrative proceeding against KZ Results pursuant to Section 7663.3 of the Export Administration Regulations (currently codified at 15 CFR parts 730-774 (2006)) (the “Regulations”),^[1] and Section 13(c) of the Export Administration Act of 1979, as amended (50 U.S.C. app. §§ 2401-2420 (2000)) (the “Act”),^[2] through the issuance of a proposed charging letter to KZ Results that alleged that KZ Results committed 99 violations of the Regulations. Specifically, the charges are:

Charge 1—15 CFR 764.2(d)—Conspiracy To Export Items From the United States to Syria Without the Required License

Beginning in or about February 2003 and continuing through in or about June 2004, KZ Results conspired and acted in concert with others, known and unknown, to violate the Regulations and to bring about acts constituting violations of the Regulations. The purpose of the conspiracy was to export computers from the United States to Syria directly and by transshipment through the United Arab Emirates (“U.A.E.”). The computers were items subject to the Regulations and classified under Export Control Classification Number (“ECCN”) 4A003 and ECCN 4A994. As set forth in Section 742.9 of the Regulations, a Department of Commerce export license was required before the computers could be exported to Syria. To accomplish the conspiracy, the conspirators, including KZ Results, participated in a scheme to have KZ Results purchase the computers from U.S. distributors and manufacturers, and to have KZ Results export the items to Syria directly or by transshipment through the U.A.E. without a Department of Commerce export license. In so doing, KZ Results committed one violation of Section 764.2(d) of the Regulations.

Charges 2-15—15 CFR 764.2(a)—Engaging in Prohibited Conduct by Exporting Computers to Syria Without the Required License

On 14 occasions, between on or about February 26, 2003 and on or about December 13, 2003, KZ Results engaged in conduct prohibited by the Regulations by exporting over 300 computers subject to the Regulations and classified under ECCN 4A994, and one computer subject to the Regulations and classified under ECCN 4A003 to Syria without the Department of Commerce licenses required by Section 742.9 of the Regulations. In so doing, KZ Results committed 14 violations of Section 764.2(a) of the Regulations.

Charges 16-26—15 CFR 764.2(a)—Engaging in Prohibited Conduct by Exporting Computers to Syria Through the United Arab Emirates Without the Required License

On 11 occasions, between on or about January 7, 2004 and May 21, 2004, KZ Results engaged in conduct prohibited by the Regulations by exporting over 400 computers subject to the Regulations and classified under ECCN 4A994 to Syria without the Department of Commerce license required by Section 742.9 of the Regulations. Specifically, KZ Results transshipped these computers to Syria through a shipping consolidator and forwarder in the U.A.E. In so doing, KZ Results committed 11 violations of Section 764.2(a) of the Regulations.

Charges 27-37—15 CFR 764.2(e)—Acting With Knowledge of a Violation

On 11 occasions, between on or about January 7, 2004 and May 21, 2004, in connection with the transactions described in Charges 16-26, above, KZ Results sold, transferred or forwarded computers to Syria by transshipment through the U.A.E. with knowledge that violations of the Regulations were occurring. KZ Results had knowledge that violations were occurring because KZ Results had been advised by the U.S. Government and KZ Results' suppliers that licenses were required to export or transship these items to Syria, and KZ Results had license applications pending with BIS for exports to Syria of similarly controlled items. In selling, transferring or forwarding these computers with knowledge that violations were occurring, KZ Results committed 11 violations of Section 764.2(e) of the Regulations.

Charges 38-39—15 CFR 764.2(c)—Attempting To Violate the Regulations by Exporting Computers to Syria Through the United Arab Emirates Without the Required License

On two occasions, on or about June 16, 2004 and on or about June 22, 2004, KZ Results attempted to violate the Regulations by attempting to export over 10 computers subject to the Regulations and classified under ECCN 4A994 to Syria without the Department of Commerce licenses required by Section 742.9 of the Regulations.Specifically, KZ Results attempted to export these computers to Syria by transshipment through a shipping consolidator and forwarder in the U.A.E. In so doing, KZ Results committed two violations of Section 7642.2(a) of the Regulations.

Charges 40-41—15 CFR 764.2(e)—Acting With Knowledge of a Violation

On two occasions, on or about June 16, 2004 and on or about June 22, 2004, in connection with the transactions described in Charges 38-39, above, KZ Results ordered, bought, stored, sold, transferred or transported computers with knowledge that violations of the Regulations were about to occur or were intended to occur in connection with the items. Specifically, KZ Results ordered, bought, stored, sold, transferred or transported the items, which KZ Results planned to export to Syria through the U.A.E. without a Department of Commerce license. KZ Results had knowledge that violations were about to occur or were intended to occur because KZ Results had been advised by the U.S. Government and KZ Results' computer suppliers that licenses were required to export or transship these items to Syria, and KZ Results had license applications pending with BIS for exports to Syria of similarly controlled items. In so doing, KZ Results committed two violations of Section 764.2(e) of the Regulations.

Charges 42-66—15 CFR 764.2(g)—Misrepresentation of Facts Through False Statement on Shipper's Export Declarations

On 25 occasions between on or about February 26, 203 and on or about May 21, 2004, in connection with the transactions described in Charges 27-26, above, KZ Results indirectly made false statements to the U.S. Government in connection with the submission of export control documents. Specifically, KZ Results, through its freight forwarder, filed Shipper's Export Declarations (“SEDs”) with the U.S. Government stating that the items that were the subject of the SEDs qualified for export as “NLR,” meaning that no license was required for their export. These representations were false, as licenses were required for the computers included in the shipments. SEDs are export control documents, as defined in part 772 of the Regulations. In filing, through its freight forwarder, SEDs with the U.S. Government that contained false statements of fact, KZ Results committed 25 violations of Section 764.2(g) of the Regulations.

Charges 67-77—15 CFR 764.2(e)—Acting With Knowledge of a False Statement Being Made to the U.S. Government

On 11 occasions, between on or about January 7, 2004 and on or about May 21, 2004, in connection with the 11 transactions described in Charges 56-66, above, KZ Results sold, transferred or forwarded computers subject to the Regulations that were to be exported from the United States with knowledge that violations of the Regulations would occur in connection with the export of the computers. Specifically, KZ Results knew that it indirectly had filed a false SED with the U.S. Government in connection with its sale, transfer, or forwarding of the computers. KZ Results knew that the items required export licenses because KZ Results had been advised by the U.S. Government and KZ Results' computer suppliers that licenses were required to export or transship these items to Syria, and KZ Results had license applications pending with BIS for exports to Syria of similarly controlled items. Nevertheless, KZ Results informed its freight forwarder that the computers did not require export licenses and that the SEDs should indicate that no license was required. In so doing, KZ Results committed 11 violations of Section 764.2(e) of the Regulations.

Charges 78-88—15 CFR 764.2(g)—Misrepresentation of Facts Through False Statement on Shipper's Export Declaration

On 11 occasions between on or about January 7, 2004 and on or about May 21, 2004, in connection with the transactions described in Charges 16-26, above, KZ Results indirectly made false statements to the U.S. Government in connection with the submission of export control documents. Specifically, KZ Results, through its freight forwarder, filed SEDs with the U.S. Government stating that the U.A.B. was the country of ultimate destination of the computers that were the subject of the SEDs. These representations were false, as the country of ultimate destination of the computers being exported was Syria. SEDs are export control documents, as defined in part 772 of the Regulations. In filing, through its freight forwarder, SEDs with the U.S. Government that contained false statements of fact, KZ Results committed 11 violations of Section 764.2(g) of the Regulations.

Charges 89-99—15 CFR 764.2(e)—Acting With Knowledge of a False Statement Being Made to the U.S. Government

On 11 occasions, between on or about January 7, 2004 and on or about May 21, 2004, in connection with the 11 transactions described in Charges 78-88, above, KZ Results sold, transferred or forwarded computers subject to the Regulations that were to be exported from the United States with knowledge that violations of the Regulations would occur in connection with the export of the computers. Specifically, KZ Results knew that it indirectly had filed a false SED with the U.S. Government in connection with its sale, transfer, or forwarding of the computers. KZ Results knew that the country of ultimate destination of the computers was Syria, but it informed its freight forwarder that the country of ultimate destination was the U.A.E. In so doing, KZ Results committed 11 violations of Section 764.2(e) of the Regulations.

Whereas, BIS and KZ Results have entered into a Settlement Agreement pursuant to Section 766.18(a) 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, that a civil penalty of $1,089,000 is assessed against KZ Results. KZ Results shall pay $22,000 to the Department of Commerce as follows: $22,000 to the Department of Commerce as follows: $2,200 not later than October 15, 2006; $2,200 not later than November 15, 2006; $2,200 not later than December 15, 2006; $2,200 not later than January 15, 2007; $2,200 not later than February 15,2007; $2,200 not later than March 15, 2007; $2,200 not later than April 15, 2007; $2,200 not later than May 15, 2007; $2,200 not later than June 15, 2007; and $2,200 not later than July 15, 2007. Payment shall be made in the manner specified in the attached instructions. Payment of the remaining $1,067,000 shall be suspended for a period of five years from the date of entry of this Order and thereafter shall be waived, provided that during the period of suspension, KZ Results has committed no violation of the Act, or any regulation, order, or license issued thereunder and has made the payment of $22,000, described above, in a timely manner.

Second, that, pursuant to the Debt Collection Act of 1982, as amended (31 U.S.C. 3701-372OE (2000)), the civil penalty owed under this Order accrues interest as more fully described in the attached Notice, and, if payment is not made by the due date specified herein, KZ Results will be assessed, in addition to the full amount of the civil penalty and interest, a penalty charge and an administrative charge, as more fully described in the attached Notice.

Third that the timely payment of the civil penalty set forth above is hereby made a condition to the granting, restoration, or continuing validity of any export license, license exception, permission, or privilege granted, or to be granted, to KZ Results. Accordingly, if KZ Results should fail to pay the civil penalty in a timely manner, the undersigned may enter an Order denying all of KZ Results' export privileges under the Regulations for a period of one year from the date of entry of this Order.

Fourth, for a period of twenty years from the date of entry of this Order, Ghashim Group, Inc. d.b.a. KZ Results, 8746 Westpark Drive, Houston, Texas 77063 (“KZ Results”), its successors or assigns, and when acting for or on behalf of KZ Results, its representatives, agents, officers or employees (“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. 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.

Fifth, 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.

Sixth, 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 KZ Results by affiliation, ownership, control, or position of responsibility in the conduct of trade or related services may also be made subject of the provisions of this Order.

Seventh, 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.

Eighth, that the proposed charging letter, the Settlement Agreement, and this Order shall be made available to the public.

Ninth, 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.

Entered this 12th day of September, 2006.

Darryl W. Jackson,

Assistant Secretary of Commerce for Export Enforcement.

Footnotes

1.  The charged violations occurred during 2003 and 2004. The Regulations governing the violations at issue are found in the 2003 and 2004 versions of the Code of Federal Regulations (15 CFR parts 730-774 (2003-2004)). The 2006 Regulations establish the procedures that apply to this matter.

2.  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 successive Presidential Notices, the most recent being that of August 3, 2006 (71 FR 44,551 (Aug. 7, 2006)), has continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)) (“IEEPA”). The Act and the Regulations are available on the Government Printing Office Web site at: http://www.access.gpo.gov/​bis/​.