In the Matters of: Peter Goldsmith, Michele Geslin, Respondents; Final Decision and Order, 68406-68411 [E8-27160]

Agencies

• DEPARTMENT OF COMMERCE
• Secretary for Industry and Security

[Federal Register Volume 73, Number 223 (Tuesday, November 18, 2008)]
[Notices]
[Pages 68406-68411]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-27160]


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DEPARTMENT OF COMMERCE

Secretary for Industry and Security

[Docket Nos. 07-BIS-0026; 07-BIS-0027]


In the Matters of: Peter Goldsmith, Michele Geslin, Respondents; 
Final Decision and Order

    This matter is before me upon a Recommended Decision and Order 
(``RDO'') of an Administrative Law Judge (``ALJ''), as further 
described below.
    In a charging letter filed on December 18, 2007, the Bureau of 
Industry and Security (``BIS'') alleged that Respondent Michele Geslin 
committed one violation of the Export Administration Regulations 
(currently codified at 15 CFR Parts 730-774 (2008) (``Regulations'')), 
issued pursuant to the Export Administration Act of 1979, as amended 
(50 U.S.C. app. 2401-2420 (2000)) (the ``Act''),\1\ when she aided and 
abetted the unlicensed export of a vessel to Cuba during a regatta she 
had helped to organize. Specifically, the charge against Respondent 
Michele Geslin is as follows:
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    \1\ From August 21, 1994 through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12924, which had been extended by successive Presidential Notices, 
the last of which was August 3, 2000 (3 CFR, 2000 Comp. 397 (2001)), 
continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)) 
(``IEEPA''). On November 13, 2000, the Act was reauthorized and 
remained in effect through August 20, 2001. 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)), which has 
been extended by successive Presidential Notices, the most recent 
being that of July 23, 2008 (73 FR 43603, July 25, 2008), has 
continued the Regulations in effect under IEEPA.
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Charge 1 15 CFR 764.2(b)--Aiding or Abetting the Export of a Vessel 
Without the Required License

    Between on or about April 10, 2003 through on or about May 31, 
2003, Geslin aided and/or abetted the doing of an act prohibited by the 
Regulations. Specifically, Geslin aided and/or abetted the export of 
the vessel Kailuana, an item classified on the Commerce Control List 
under Export Control Classification Number (ECCN) 8A992.f, to Cuba 
without the required Department of Commerce authorization. Geslin aided 
and/or abetted the export

[[Page 68407]]

of the vessel to Cuba by organizing a regatta to Cuba and by traveling 
on board the Kailuana and assisting with the vessel's export to Cuba 
during the regatta. Geslin, as organizer of the regatta, was advised by 
the BIS Office of Export Enforcement in a letter dated April 24, 2003, 
that a Department of Commerce export license was required for all 
participants in the regatta who were to take a vessel to Cuba. On May 
22, 2003, the Office of Export Enforcement met with Geslin and other 
regatta participants at the regatta's pre-launch party and again 
informed Geslin that a license was required for the temporary export of 
vessels to Cuba during the regatta. On May 23, 2003, the Office of 
Export Enforcement provided Geslin, as co-organizer of the regatta, 
with an additional letter indicating that an export license was 
required by all regatta participants who took their vessels to Cuba and 
that a particular license that had been identified by some participants 
as authority to take their vessel to Cuba during the regatta did not in 
fact authorize the temporary export of a vessel. Pursuant to Section 
746.2 of the Regulations, a license is required for the export of 
vessels to Cuba and no license was obtained for the export of the 
Kailuana to Cuba. In aiding and abetting this unlicensed export, Geslin 
committed one violation of Section 764.2(b) of the Regulations.
    December 18, 2007 Charging Letter against Michele Geslin, at 1-2 
(originally included as Ex. E in BIS's Motion for Summary Decision).
    Furthermore, in a separate charging letter filed on December 18, 
2007, BIS alleged that Respondent Peter Goldsmith also committed one 
violation of the Regulations when he aided and abetted the unlicensed 
export of a vessel to Cuba during the same regatta, which he also 
helped to organize. Specifically, the charge against Respondent Peter 
Goldsmith is as follows:

Charge 1 15 CFR 764.2(b)--Aiding or Abetting the Export of a Vessel 
without the Required License

    Between on or about April 10, 2003 through on or about May 31, 
2003, Goldsmith aided and/or abetted the doing of an act prohibited by 
the Regulations. Specifically, Goldsmith aided and/or abetted the 
export of the vessel Eu-Bett, an item classified on the Commerce 
Control List under Export Control Classification Number (ECCN) 8A992.f, 
to Cuba without the required Department of Commerce authorization. 
Goldsmith aided and/or abetted the export of the vessel to Cuba by 
organizing a regatta to Cuba and by traveling on board the Eu-Bett and 
assisting with the vessel's export to Cuba during the regatta. 
Goldsmith, as organizer of the regatta, was advised by the BIS Office 
of Export Enforcement in a letter dated April 10, 2003, that a 
Department of Commerce export license was required for all participants 
in the regatta who were to take a vessel to Cuba. Further, the Office 
of Export Enforcement contacted Goldsmith on or about April 28, 2003 
via telephone to again state the need of regatta participants to obtain 
a Department of Commerce export license before exporting a vessel to 
Cuba. On or about May 22, 2003, the Office of Export Enforcement met 
with Goldsmith and other regatta participants at the regatta's pre-
launch party and again informed Goldsmith that a license was required 
for the temporary export of vessels to Cuba during the regatta. 
Pursuant to Section 746.2 of the Regulations, a license is required for 
the export of vessels to Cuba and no license was obtained for the 
export of the Eu-Bett to Cuba. In aiding and abetting this unlicensed 
export, Goldsmith committed one violation of Section 764.2(b) of the 
Regulations.
    December 18, 2007 Charging Letter against Peter Goldsmith, at 1-2 
(originally included as Ex. F in BIS's Motion for Summary Decision).
    By separate letters, each dated ``02/10/2008,'' Geslin and 
Goldsmith responded to these charges indicating an intention to contest 
the charges. These responses were treated as answers to the Charging 
Letters, and on February 11, 2008, these cases were assigned to AU 
Brudzinski of the U.S. Coast Guard. On April 1, 2008, the cases against 
Geslin and Goldsmith were consolidated.\2\ In accordance with the 
Scheduling Order of ALJ Brudzinski, BIS propounded discovery requests, 
including Requests for Admission, upon both Geslin and Goldsmith. 
Neither responded to any the discovery requests, including the Requests 
for Admission, thus admitting the matters of fact therein. 15 CFR 
766.9(b).
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    \2\ These cases were consolidated with a case against a third 
respondent. BIS has not moved for summary decision against this 
third respondent and, accordingly, that claim is not addressed in 
the RDO nor will it be addressed in this Final Decision and Order.
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    On September 8, 2008, BIS filed a motion for summary decision 
against Respondents Geslin and Goldsmith as to the above charges. On 
October 15, 2008, based on the record before him, ALJ Brudzinski issued 
an RDO in which he determined that BIS was entitled to summary decision 
as to both of the charges at issue, finding that Geslin committed one 
violation of Sec.  764.2(b) when she aided and abetted an unlicensed 
export to Cuba of the vessel Kailuana, an item subject to the 
Regulations and classified under ECCN 8A992.f, and that Goldsmith also 
committed one violation of Sec.  764.2(b) when he aided and abetted an 
unlicensed export to Cuba of the vessel Eu-Bett, also an item subject 
to the Regulations and classified under ECCN 8A992.f. ALJ Brudzinski 
also recommended, following consideration of the record, that Geslin 
and Goldsmith each be assessed a monetary penalty of $11,000.00 and a 
denial of export privileges for three years. The ALJ further 
recommended that the denial of export privileges for each respondent be 
suspended for the entire three year period provided that each 
respondent pays the monetary penalty within 30 days of the Final 
Decision and Order and that each respondent commits no further 
violations during the period of suspension. In his RDO, ALJ Brudzinski 
indicated that, should either Geslin or Goldsmith fail to abide by any 
of the conditions of suspension, then the denial order will become 
active with regard to whichever respondent has failed to meet the terms 
of the suspension.
    The RDO, together with the entire record in this case, has been 
referred to me for final action under Sec.  766.22 of the Regulations. 
I find that the record supports the ALJ's findings of fact and 
conclusions of law, including the conclusion that the movement of a 
vessel from the United States to Cuba is considered an export, even if 
the vessel remains in Cuba only temporarily. RDO at 7.
    I also find that the penalty recommended by ALJ Brudzinski based 
upon his review of the entire record is appropriate, given the nature 
of the violations, the facts of this case, and the importance of 
deterring future unauthorized exports, and especially given the 
multiple warnings that the respondents received from BIS agents.\3\
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    \3\ The sanction recommended by the ALJ also is consistent with 
the sanction proposed by BIS, which based its request on the facts, 
as admitted, and circumstances of the case as a whole.
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    Based on my review of the entire record, I affirm the findings of 
fact and conclusions of law in the RDO.

Accordingly, it is therefore ordered

    First, that a civil penalty of $11,000.00 is assessed against 
Michele Geslin and that a civil penalty of $11,000 is also assessed 
against Peter Goldsmith, each of which shall be paid to the U.S. 
Department of Commerce within (30) thirty days from the date of entry 
of this Order.

[[Page 68408]]

    Second, pursuant to the Debt Collection Act of 1982, as amended (31 
U.S.C. 3701-3720E (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, Geslin and/or 
Goldsmith, will be assessed, in addition to the full amount of the 
civil penalty and interest, a penalty charge and administrative charge.
    Third, for a period of three (3) years from the date that this 
Order is published in the Federal Register, Michele Geslin, 2627 
Staples Avenue, Key West, FL 33040, and Peter Goldsmith, 2627 Staples 
Avenue, Key West, FL 33040, and their successors or assigns, and when 
acting for or on behalf of Geslin and/or Goldsmith, their 
representatives, agents, or employees (hereinafter collectively known 
as the ``Denied Persons'') 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.
    Fourth, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of the Denied Persons any 
item subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the Denied Persons 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 Persons 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 Denied Persons of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from the Denied Persons 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 Persons, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by the Denied Persons 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.
    Fifth, that, after notice and opportunity for comment as provided 
in Sec.  766.23 of the Regulations, any person, firm, corporation, or 
business organization related to the Denied Persons 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 
the Order.
    Sixth, 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.
    Seventh, that, as authorized by Sec.  766.17(c) of the Regulations, 
the denial period set forth above with regard to each respondent shall 
be suspended in its entirety, and shall thereafter be waived, provided 
that: (1) Within thirty days of the effective date of this Order, the 
respondent pays the monetary penalty imposed against him or her of 
$11,000.00 in full, and (2) for a period three years from the effective 
date of this Order, the respondent commits no further violations of the 
Act or Regulations.
    Eighth, that the final Decision and Order shall be served on both 
Geslin and Goldsmith and shall be published in the Federal Register. In 
addition, the ALJ's Recommended Decision and Order, except for the 
section related to the Recommended Order, shall also be published in 
the Federal Register.
    This Order, which constitutes the final agency action in this 
matter, is effective upon publication in the Federal Register.

    Dated: November 11, 2008.
Daniel O. Hill,
Acting Under Secretary of Commerce for Industry and Security.
United States Department of Commerce
Bureau of Industry and Security
Washington, DC 20230

Recommended Decision and Order \1\
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    \1\ For proceedings involving violations not relating to Part 
760 of the Export Enforcement Regulations, 15 CFR 766.17(b) and 
(b)(2) prescribe that the Administrative Law Judge's decision be a 
``Recommended Decision and Order.'' The violations alleged in this 
case are found in Part 764. Therefore, this is a ``Recommended'' 
decision. That section also prescribes that the Administrative Law 
Judge make recommended findings of fact and conclusions of law that 
the Under Secretary for Export Administration, Bureau of Industry 
and Security, U.S. Department of Commerce, must affirm, modify or 
vacate. 15 CFR 766.22. The Under Secretary's action is the final 
decision for the U.S. Commerce Department. 15 CFR 766.22(e).
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    Issued: October 15 2008.
    Issued by: Hon. Walter J. Brudzinski, Administrative Law Judge.

Preliminary Statement

    This Recommended Decision and Order is issued in response to the 
Agency's September 8, 2008 Motion for Summary Decision in the above 
captioned matters. Pursuant to the undersigned's Scheduling Order of 
May 7, 2008, Respondents had until October 8, 2008 to respond to the 
Agency's motion. Since that time has passed with no response, this 
matter is now ripe for decision.
    On April 1, 2008, I consolidated the following BIS cases: (1) In 
the Matter of Peter Goldsmith, Docket: 07-BIS-0026; (2) In the Matter 
of Michele Geslin, Docket: 07-BIS-0027; and (3) In the Matter of Wayne 
LaFleur, Docket: 07-BIS-0028. This Recommended Decision and Order 
pertains only to Respondents Michele Geslin and Peter Goldsmith 
(hereinafter, collectively, ``Respondents''). The Agency is not seeking 
summary decision with regard to Respondent LaFleur. Accordingly, the 
matter involving Respondent LaFleur has been excluded from the case 
caption.
    On December 18, 2007, the Bureau of Industry and Security, U.S. 
Department of Commerce (``BIS'' or ``Agency''), issued separate 
Charging Letters initiating administrative enforcement proceedings 
against Michele Geslin and Peter Goldsmith. The Charging Letter 
addressed to Ms. Geslin alleged that she committed one violation of the 
Export Administration Regulations, currently codified at 15 CFR Parts 
730-774 (2008)

[[Page 68409]]

(the ``Regulations''),\2\ issued under the Export Administration Act of 
1979, as amended (50 U.S.C. App. Sec. Sec.  2401-2420 (2000)) (the 
``Act'').\3\ The Charging Letter addressed to Goldsmith alleged that he 
also committed one violation of the Regulations.
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    \2\ The charged violations occurred in 2003. The Regulations 
governing the violations at issue are found in the 2003 version of 
the Code of Federal Regulations (15 CFR Parts 730-774 (2003)). The 
2008 Regulations establish the procedures that apply to this matter.
    \3\ 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 the Notice of July 23, 2008 
(73 FR 43,603 (July 25, 2008)), has continued the Regulations in 
effect under the International Emergency Economic Powers Act (50 
U.S.C. 1701-1706 (2000)).
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    Specifically, the Charging Letters allege that, between on or about 
April 10, 2003 through on or about May 31, 2003, each respondent aided 
and abetted an unlawful export to Cuba in violation of the Regulations. 
BIS alleged that Geslin and Goldsmith organized a regatta during that 
time period and that Geslin assisted the passage of the vessel 
Kailuana, an item classified on the Commerce Control List under Export 
Control Classification Number (ECCN) 8A992.f, to Cuba during that 
regatta. BIS further alleges that Goldsmith assisted the passage of the 
vessel Eu-Bett, also an item classified under ECCN 8A992.f to Cuba 
during that regatta. BIS alleges that these acts violate 15 CFR 764.2 
(2003), which prohibits the causing, aiding, or abetting of a violation 
of the Regulations, because the exports of the vessel Kailuana and the 
vessel Eu-Bett to Cuba were not authorized by the required Department 
of Commerce export licenses.
    In a letter dated February 10, 2008, Respondent Geslin responded to 
BIS's Charging Letter in which she stated ``I do not feel that the 
charges are viable.'' Moreover, in a similar letter dated February 10, 
2008, Respondent Goldsmith responded to BIS's Charging Letter in which 
he stated ``I would like to contest these charges.'' Subsequently, in a 
letter dated March 20, 2008, the Respondents, collectively, demanded a 
hearing.
    On February 25, 2008, this case was assigned to the undersigned 
Administrative Law Judge (``ALJ'') for adjudication pursuant to an 
Interagency Agreement with the Bureau of Industry and Security. As 
previously mentioned above, on April 1, 2008, the proceedings against 
Michele Geslin and Peter Goldsmith were consolidated. The matter 
involving Wayne LaFleur was also consolidated with these cases. 
However, BIS has stated that it will move for resolution of the case 
against LaFleur at a later time.
    On April 14, 2008, the undersigned issued an Order granting BIS's 
Motion to Strike or Deny Respondents' Demand for a Hearing because the 
demand for hearing was deemed untimely. I further ordered that because 
of the untimely filing of the demand for hearing by the Respondents, 
this matter will be decided on the record by the undersigned ALJ, in 
accordance with 15 CFR 766.15.
    On May 7, 2008, I issued a Scheduling Order for filing various 
motions and Discovery. On May 14, 2008, BIS issued to the Respondents 
its Requests for Admission. Responses to the Requests for Admission 
were due on June 6, 2008. Respondents Geslin and Goldsmith both failed 
to respond to these requests. Thus, all requests for admission must be 
deemed admitted under 15 U.S.C. 766.9. Further, on May 14, 2008, BIS 
issued to the Respondents its Requests for Interrogatories and 
Production of Documents. The answers to all interrogatories and the 
requested documents were due on July 11, 2008. Again, Respondents 
Geslin and Goldsmith were unresponsive to these requests.
    On September 8, 2008, BIS filed its Motion for Summary Decision 
together with 12 exhibits listed in Appendix A. BIS moved for summary 
decision on the charges against Geslin and Goldsmith based on the 
evidence contained in the exhibits and Respondents' admissions. That 
evidence demonstrates that there are no genuine issues of material fact 
and that under the facts presented, BIS is entitled to summary decision 
as a matter of law. Section 766.8 of the Regulations provides that the 
Administrative Law Judge may render a recommended summary decision and 
order disposing of some or all of the issues if the entire record shows 
as to the issues under consideration ``[t]hat there is no genuine issue 
as to any material fact[,]'' and ``[t]hat the moving party is entitled 
to a summary decision as a matter of law.'' 15 CFR 766.8 (2008). A 
dispute over a material fact is ``genuine'' if the evidence is such 
that a reasonable fact finder could render a ruling in favor of the 
non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 
(1986). Substantive law dictates which facts are material, and only 
disputes that might affect the outcome of the litigation will properly 
preclude the entry of summary decision. Id. at 247.
    Section 764.3 of the Regulations sets forth the sanctions BIS may 
seek for violations of the Regulations. The applicable sanctions are: 
(i) a monetary penalty, (ii) a denial of export privileges under the 
Regulations, and (iii) suspension from practice before the Bureau of 
Industry and Security. 15 CFR 764.3. Pursuant to the International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)) (``IEEPA''), 
as amended, the maximum monetary penalty in this case is $250,000 per 
violation. International Emergency Economic Powers Enhancement Act of 
2007, Pub. L. No. 110-96, 121 Stat. 1011 (2007); see also In the Matter 
of: Kabba &; Amir Investments, Inc., d.b.a. International Freight 
Forwarders, 73 FR 25649, 25653 (May 7, 2008), aff'd 73 FR 25648. BIS 
requests that the ALJ recommend to the Under Secretary of Commerce for 
Industry and Security \4\ that Respondents each (1) be assessed a civil 
penalty in the amount of $11,000 and (2) be made subject to a denial of 
export privileges for a period of three years which shall be suspended 
if each respondent pays the monetary fine against him or her within 
thirty days from the date of the final Decision and Order and does not 
commit any further violations of the Regulations during the three year 
period of the suspension.
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    \4\ Pursuant to Section 13(c)(1) of the Export Administration 
Act and Section 766.17(b)(2) of the Regulations, in export control 
enforcement cases, the ALJ makes recommended findings of fact and 
conclusions of law that the Under Secretary must affirm, modify or 
vacate. The Under Secretary's action is the final decision for the 
U.S. Department of Commerce.
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    BIS seeks this sanction because the Respondents, while they were 
organizing the regatta during which the vessels in question were 
exported to Cuba, were, advised on numerous occasions by federal agents 
that taking a vessel to Cuba without the proper Department of Commerce 
authorization was a violation of U. S. law.\5\ In addition, the items 
exported in this case involved vessels controlled for anti-terrorism 
reasons to a country that the United States Government has designated a 
state sponsor of international terrorism.\6\
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    \5\ See 15 CFR Part 766, Supp. No. 1, Sec.  III.A. (discussing 
the factors that BIS considers in the context of settling an 
enforcement action and stating that ``[i]n cases involving gross 
negligence, willful blindness to the requirements of the EAR, or 
knowing or willful violations, BIS is more likely to seek a denial 
of export privileges * * * and/or a greater monetary penalty than 
BIS would otherwise typically seek'').
    \6\ See 15 CFR Part 766, Supp. No. 1, Sec.  III.A. (discussing 
the factors that BIS considers in the context of settling an 
enforcement action and stating that ``BIS is more likely to seek a 
greater monetary penalty and/or denial or export privileges * * * in 
cases involving: (1) exports or reexports to countries subject to 
anti-terrorism controls * * *''). Cuba has been designated as a 
Terrorist Supporting Country and is subject to such anti-terrorism 
controls. See 15 CFR Part 740, Supp. No. 1 Country Group E:1 (2003); 
15 CFR 742.1, 746.2 (2003).

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[[Page 68410]]

    Pursuant to the undersigned's Scheduling Order of May 7, 2008, the 
deadline for serving and filing a response to Motions for Summary 
Decision is 30 days from the date of the motion. In this matter, the 
Respondents' responses were due no later than October 8, 2008. Prior to 
issuing this Recommended Decision and Order, the undersigned waited an 
additional week for Respondents to submit a response in the event of 
unexpected delays in mail delivery. To date, the Respondents have 
failed to submit a response.
    I find that the entire record before me shows that there are no 
genuine issues of material fact and that BIS is entitled to summary 
decision against Respondents Geslin and Goldsmith as a matter of law. 
Through their failure to answer BIS's Requests for Admissions, 
Respondents admitted that they aided and abetted the export of the 
vessels Kailuana and Eu-Bett to Cuba.6 Section 746.2 of the 
Regulations, requires a license to export these vessels from the United 
States to Cuba. Under the Regulations, the movement of the vessels from 
the United States to Cuba is considered an export, even if the vessels 
remained in Cuba only temporarily.7, 8
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    \7\ See 15 CFR 766.9 (noting that ``matters of fact or law of 
which admission is requested shall be deemed admitted unless, within 
a period designated in the request * * * the party to whom the 
request is directed serves upon the requesting party a sworn 
statement either denying specifically the matters of which admission 
is requested or setting forth in detail the reasons why the party to 
whom the request is directed cannot truthfully either admit or deny 
such matters'').
    \8\ See 15 CFR 734.2 (defining ``export'' to include ``an actual 
shipment or transmission of items subject to the [Regulations] out 
of the United States. * * *''). As BIS noted in its Motion, 
temporary exports have been subject to export control laws for more 
than 60 years. See, e.g., 7 FR 5007 (July 2, 1942) (amending Part 
802 of title 32 of the Code of Federal Regulations to authorize the 
export of certain stores and spare parts that are carried abroad on 
vessels and planes for use or consumption by the crew); cf. 15 CFR 
740.15(b)(2008).
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    The Respondents have admitted, and BIS has confirmed by searching 
its licensing database, that no such licenses were obtained. Ex. L, Ex. 
J (Requests 6 &; 15). Respondents have also both admitted to receiving 
multiple letters from BIS agents prior to the regatta in question 
informing them that the export of a vessel to Cuba required an export 
license. Ex, J (Requests 7-9, 16-18), Exs. A-D. In addition to 
admitting the facts described in the Charging Letters against them, the 
Respondents have also failed to raise any defenses to the charges in 
their answers to the respective Charging Letters, thus precluding them 
from any attempt to raise any new defense at this time.\9\
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    \9\ 15 CFR 766.6(b). See In the Matter of BiB and Malte 
Mangelsen, 71 FR 37042, 37050 (June 29, 2006) (affirming that 
defenses not specifically set forth in the answer shall be deemed 
waived in accordance with 15 CFR 766.6(a)) (aff'd by Under Secretary 
at 37042).
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    After admitting the facts against them and waiving any defenses to 
the charges, it is clear that no genuine issues of material fact remain 
in this case and that BIS is entitled to summary decision as a matter 
of law with regard to the charges against Geslin and Goldsmith.

Recommended Findings of Fact and Conclusions of Law

    Based upon the record before me, I make following findings of fact 
and conclusions of law:

Findings of Fact

    1. The vessel Kailuana was classified under Export Control 
Classification Number 8A992.f on the Commerce Control List at the time 
of the alleged violations. Ex. K.
    2. The vessel Kailuana traveled to Cuba during the regatta 
described in the charging letter. Ex. J (Request 3).
    3. Prior to the regatta that began on May 23, 2003, BIS 
specifically warned Michele Geslin on multiple occasions that a 
Department of Commerce license is required for a vessel to travel to 
Cuba. Ex. J (Requests 7-9).
    4. No Department of Commerce authorization was obtained for the 
Kailuana to travel to Cuba. Ex. J (Request 6); Ex. L.
    5. Michele Geslin organized and/or promoted the regatta that is 
referenced in the charging letter and which began on May 23, 2003. Ex J 
(Request 1).
    6. In addition, Michele Geslin traveled onboard the vessel Kailuana 
to Cuba during the regatta that began on May 23, 2003 and assisted its 
passage to Cuba as a crew member or through assistance to the captain 
and crew of that vessel. Ex. J (Requests 2 &; 4).
    7. The vessel Eu-Bett was classified under Export Control 
Classification Number 8A992.f on the Commerce Control List at the time 
of the alleged violations. Ex. K.
    8. The vessel Eu-Bett traveled to Cuba during the regatta described 
in the charging letter. Ex. J (Request 12).
    9. Prior to the regatta that began on May 23, 2003, BIS 
specifically warned Peter Goldsmith on multiple occasions that a 
Department of Commerce license is required for a vessel to travel to 
Cuba. Ex. J (Requests 16-18).
    10. No Department of Commerce authorization was obtained for the 
vessel Eu-Bett to travel to Cuba. Ex. J (Requests 15); Ex. L.
    11. Peter Goldsmith organized and/or promoted the regatta that is 
referenced in the charging letter and which began on May 23, 2003. Ex J 
(Request 10).
    12. Peter Goldsmith traveled on board the vessel Eu-Bett to Cuba 
during the regatta that began on May 23, 2003 and assisted its passage 
to Cuba as a crew member or through assistance to the captain and crew 
of that vessel. Ex. J (Requests 11 & 13).

Conclusions of Law

    1. The vessel Kailuana's passage to Cuba was an export and as such 
it required an export license from the Department of Commerce. See Ex. 
L; See also, Ex. J (Requests 5 & 14).
    2. Geslin aided and/or abetted an act prohibited by the Regulations 
by assisting the vessel Kailuana's passage to Cuba as a crew member or 
through assistance to the captain and crew of that vessel.
    3. The vessel Eu-Bett's passage to Cuba was an export and as such 
it required an export license from the Department of Commerce. See Ex. 
L; See also, Ex. J (Request 14).
    4. Goldsmith aided and/or abetted an act prohibited by the 
Regulations by assisting the vessel Eu-Bett's passage to Cuba as a crew 
member or through assistance to the captain and crew of the vessel.
    Respondents' role in aiding and abetting the export of vessels from 
the United States to Cuba demonstrates indifference to U.S. export 
control laws. Therefore, I find BIS's penalty recommendation entirely 
reasonable, especially given the repeated efforts made by BIS agents to 
specifically advise Respondents of the proper export licensing 
requirements.
    Accordingly, I recommend that the Under Secretary enter an Order 
imposing, for each respondent, an $11,000 civil penalty and a denial of 
export privileges for three years. Further, I recommend the Order state 
that the denial of export privileges with regard to each Respondent be 
suspended for the three year period provided that each respondent pays 
the monetary penalty within 30 days of the final Decision and Order and 
that each respondent commits no further violations during the period of 
the suspension. Should either Geslin or Goldsmith fail to abide by any 
of the conditions of suspension, then the denial order will become 
active with regard to whichever respondent has failed to meet the terms 
of the suspension. This penalty is consistent with prior cases decided 
by this Court.

[[Page 68411]]

In the Matter of: Kabba &; Amir Investments, Inc., d.b.a. International 
Freight Forwarders, 73 FR 25649, 25652 (May 7, 2008), aff'd at 73 FR 
25648 (imposing a monetary penalty of $6,000 and a conditional denial 
of export privileges for three years against a freight forwarder that 
aided and abetted an attempted export of medical equipment to Cuba).
    The terms of the export privileges denial against the Respondents 
should be consistent with the standard language used by BIS in such 
orders with modifications as necessary to comply with the conditional 
nature of the denial of export privileges described above:
    Wherefore,
    [REDACTED SECTION]
    [REDACTED SECTION]
    [REDACTED SECTION]
    [REDACTED SECTION]
    This Order, which constitutes the final agency action in this 
matter, is effective upon publication in the Federal Register.
    Accordingly, I am referring this Recommended Decision and Order to 
the Under Secretary of Commerce for Industry and Security for review 
and final action for the agency, without further notice to the 
Respondents, as provided in Section 766.7 of the Regulations.
    Within thirty (30) days after receipt of this Recommended Decision 
and Order, the Under Secretary will issue a written order affirming, 
modifying or vacating the Recommended Decision and Order. See 15 CFR 
766.22(c). A copy of the Agency's regulations for Review by the Under 
Secretary is attached as Appendix B.

    Done and dated this 15th day of October, 2008 at New York, New 
York.

HON. Walter J. Brudzinski,
Administrative Law Judge.

APPENDIX A

List Of Exhibits

A. Agency's Exhibits

    Exhibit A Letter to Michele Geslin dated April 24, 2003, with 
copy of certified mail receipt signed by Michele Geslin. (3 pages)
    Exhibit B Letter to race participants from BIS Special Agent 
dated April 22, 2003. (1 page)
    Exhibit C Letter to All Third Annual Conch Republic Cup Race 
Participants dated May 23, 2003; letter to race participants, dated 
May 23, 2003. (2 pages)
    Exhibit D Letter to Peter Goldsmith dated April 10, 2003, with 
copy of certified mail receipt initialed by Peter Goldsmith. (3 
pages)
    Exhibit E Charging Letter addressed to Michele Geslin dated 
December 18, 2007. (3 pages)
    Exhibit F Charging Letter addressed to Peter Goldsmith dated 
December 18, 2007. (3 pages)
    Exhibit G Michele Geslin's Answer to Charging Letter dated 
February 10, 2008. (1 page)
    Exhibit H Peter Goldsmith's Answer to Charging Letter dated 
February 10, 2008. (1 page)
    Exhibit I BIS Interrogatories and Requests for Production of 
Documents, with certificate of service dated May 14, 2008. (14 
pages)
    Exhibit J BIS Requests for Admission, with certificate of 
service dated May 14, 2008. (9 pages)
    Exhibit K Certified Licensing Determination dated September 4, 
2008. (2 pages)
    Exhibit L Certified copy of letter indicating results of BIS's 
search of its electronic licensing database for records of export 
licenses or applications related to the transactions in question. (2 
pages)

B. Respondents' Exhibits

    Respondents did not file any exhibits.

APPENDIX B

NOTICE TO THE PARTIES REGARDING REVIEW BY UNDER SECRETARY

    TITLE 15--COMMERCE AND FOREIGN TRADE
    SUBTITLE B--REGULATIONS RELATING TO COMMERCE AND FOREIGN TRADE 
CHAPTER VII--BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE
    SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
    PART 766--ADMINISTRATIVE ENFORCEMENT PROCEEDINGS

15 CFR 766,22

    Section 766.22 Review by Under Secretary.
    (a) Recommended decision. For proceedings not involving 
violations relating to part 760 of the EAR, the administrative law 
judge shall immediately refer the recommended decision and order to 
the Under Secretary. Because of the time limits provided under the 
EAA for review by the Under Secretary, service of the recommended 
decision and order on the parties, all papers filed by the parties 
in response, and the final decision of the Under Secretary must be 
by personal delivery, facsimile, express mail or other overnight 
carrier. If the Under Secretary cannot act on a recommended decision 
and order for any reason, the Under Secretary will designate another 
Department of Commerce official to receive and act on the 
recommendation.
    (b) Submissions by parties. Parties shall have 12 days from the 
date of issuance of the recommended decision and order in which to 
submit simultaneous responses. Parties thereafter shall have eight 
days from receipt of any response(s) in which to submit replies. Any 
response or reply must be received within the time specified by the 
Under Secretary.
    (c) Final decision. Within 30 days after receipt of the 
recommended decision and order, the Under Secretary shall issue a 
written order affirming, modifying or vacating the recommended 
decision and order of the administrative law judge. If he/she 
vacates the recommended decision and order, the Under Secretary may 
refer the case back to the administrative law judge for further 
proceedings. Because of the time limits, the Under Secretary's 
review will ordinarily be limited to the written record for 
decision, including the transcript of any hearing, and any 
submissions by the parties concerning the recommended decision.
    (d) Delivery. The final decision and implementing order shall be 
served on the parties and will be publicly available in accordance 
with Sec.  766.20 of this part.
    (e) Appeals. The charged party may appeal the Under Secretary's 
written order within 15 days to the United States Court of Appeals 
for the District of Columbia pursuant to 50 U.S.C. app. Sec.  
24l2(c)(3).
[FR Doc. E8-27160 Filed 11-17-08; 8:45 am]
BILLING CODE 3510-DT-P