Action Affecting Export Privileges; Aqua-Loop Cooling Towers, Co., 16732-16735 [2010-7439]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security
• Industry and Security Bureau

[Federal Register Volume 75, Number 63 (Friday, April 2, 2010)]
[Notices]
[Pages 16732-16735]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7439]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Action Affecting Export Privileges; Aqua-Loop Cooling Towers, Co.

    In the Matter of: 09-BIS-006, Aqua-Loop Cooling Towers, Co., P.O. 
Box 966, Folsom, CA 95763, and 116 Hopper Lane, Folsom, CA 95630, 
Respondent.

Order Relating to Aqua-Loop Cooling Towers, Co.

    The Bureau of Industry and Security, U.S. Department of Commerce 
(``BIS''), initiated this administrative proceeding against Aqua-Loop 
Cooling Towers, Co. (``Aqua-Loop'') 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 tiling of a charging letter as to 
Aqua-Loop that alleges that Aqua-Loop has committed five violations of 
the Regulations (``Charging Letter''). Specifically, these charges are:
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    \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. Sec.  240 1-2420 (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 41.325 (Aug. 14, 2009)), 
has continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (IEEPA'').
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Charge 1: 15 CFR 764.2(d)--Conspiracy to Export Items From the United 
States to Iran Without the Required Licenses

    Beginning at least in or about June 2004, and continuing through at 
least in or about April 2005, Aqua-Loop conspired or acted in concert 
with others, known and unknown, to violate the Regulations or to bring 
about an act that constitutes a violation of the Regulations. The 
purpose of the conspiracy was to export items subject to the 
Regulations from the United States to Iran, via the United Arab 
Emirates (``U.A.E.''), without the required U.S. Government 
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 Iranian Transactions Regulations (``ITR''),\3\ 
without authorization from the U.S. Department of the Treasury's Office 
of Foreign Assets Control (``OFAC''). Pursuant to section 560.204 of 
the ITR, an export to a third country intended for transshipment to 
Iran is a transaction subject to the ITR.
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    \3\ 31 CFR part 560.
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    In furtherance of the conspiracy, the conspirators, including Aqua-
Loop, participated in a scheme to have Aqua-

[[Page 16733]]

Loop source or obtain the items from a U.S. distributor, and then to 
have AquaLoop export the items to an Iranian customer and co-
conspirator, Parto Abgardan Cooling Towers Co. (``Parto Abgardan''), in 
Iran through a U.A.E. entity identified by Parto Abgardan. In 
furtherance of the scheme, Aqua-Loop obtained from Parto Abgardan 
information regarding items Parto Abgardan sought to have exported from 
the United States to Iran. Aqua-Loop then obtained such items and 
facilitated their export to Parto Abgardan in Iran. Pursuant to the 
conspiracy, various items were exported to Parto Abgardan in Iran, 
including the items discussed in Charges 2-5, below, for which no OFAC 
authorization was sought or obtained.
    In addition, the co-conspirators sought to bring about the export 
to Iran of other items subject to the Regulations. On or about December 
21, 2004, Parto Abgardan informed Aqua-Loop that it had contacted a 
U.S. company regarding the purchase of a filament winding machine, 
Parto Abgardan told Aqua-Loop, ``Since they can't sell directly to 
Iran, they are OK with selling it domestically and then we can transfer 
it from U.S. to Dubai and then to Iran. With your permission we are 
going to give Aqua-Loop's information to them so they can send you 
their offer'' based on the technical information provided to the U.S. 
company by Parto Abgardan. Thereafter, on or about December 23, 2004, 
Aqua-Loop's president, writing on Aqua-Loop stationery, responded, that 
he would be ``more than happy if I can be of assistance on your 
purchase of filament winding machines. Please let me know the detail, 
so I can pursue.'' In furtherance of the conspiracy, Parto Abgardan and 
Aqua-Loop continued to work together to accomplish this transaction; on 
or about January 31, 2005, Parto Abgardan provided Aqua-Loop with Parto 
Abgardan's contact at the U.S. filament winding machine company, and 
asked that Aqua-Loop contact the U.S. company. On or about February 1, 
2005, Aqua-Loop's president again wrote to Parto Abgardan, stating that 
he had had a ``long conversation'' with the U.S. company's 
representative and that ``I should emphasize that I found this lady a 
bit reluctant on the subject of export the unit to Iran. But she sound 
OK to work with us, if we do not mention any thing about Iran.''
    In so doing, Aqua-Loop committed one violation of section 764.2(d) 
of the Regulations.

Charge 2: 15 CFR 764.2(b)--Causing, Aiding or Abetting

    Between on or about July 26, 2004, and on or about September 28, 
2004, Aqua-Loop 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 HH6O 130 
and valued at approximately $11,687.76, items which are subject to the 
Regulations and designated as EAR99 items,\4\ through the U.A.E. to 
Iran without the required U.S. Government authorization. Pursuant to 
section 560.204 of the JTR 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 hR without authorization from OFAC. No 
OFAC authorization was sought or obtained for the transaction described 
herein.
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    \4\ EAR99 is a designation for items subject to the Regulations 
but not listed on the Commerce Control List. 15 CFR 734.3(c).
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    Aqua-Loop took this action after having been asked by 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 Aqua-Loop arranged for the items to be 
exported, ``do 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 61,706 (Oct. 19, 2006).
    In so doing, Aqua-Loop committed one violation of section 764.2(b) 
of the Regulations.

Charge 3: 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, Aqua-Loop 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, Aqua-Loop 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 Aqua-Loop 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. 
Aqua-Loop knew that no OFAC authorization was sought or obtained for 
the transaction described herein.
    Aqua-Loop had knowledge that a violation was occurring, was about 
to occur or was intended to occur in connection with the items because 
Aqua-Loop 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.
    Aqua-Loop's president 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. 
Aqua-Loop's president referred to this type of activity as 
``diverting'' items to Iran. Moreover, on or about September 23, 1997, 
AquaLoop 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, Aqua-Loop committed one violation of section 764.2(e) 
of the Regulations.

Charge 4: 15 CFR 764.2(b)--Causing, Aiding or Abetting

    Between on or about February 9, 2005, and on or about April 19, 
2005, Aqua-Loop 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 HHB6O 130 
and valued at approximately $9,838.30, items which are subject to the

[[Page 16734]]

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 2-3, Aqua-Loop was 
informed by Parto Abgardan that the items were not exactly the same as 
a sample Aqua-Loop's president had brought to Parto Abgardan before the 
transaction described in Charges 2-3 occurred. Aqua-Loop received from 
Parto Abgardan a piece of the original sample as well as a piece of the 
items described in Charges 2-3. Aqua-Loop then provided both pieces to 
the U.S. distributor, and placed a new order for 185 rolls of hog hair 
filter media, part number HHB6O 130, with the U.S. distributor. Aqua-
Loop 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 Aqua-Loop arranged for the 
items to be exported, ``do 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 61,706 (Oct. 19, 2006).
    In so doing, Aqua-Loop committed one violation of section 764.2(b) 
of the Regulations.

Charge 5: 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, Aqua-Loop 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, Aqua-Loop ordered approximately 185 rolls of hog hair 
filter media, part number HHB6O 130 and valued at approximately 
$9,838.30, items which are subject to the Regulations and designated as 
EAR99, which Aqua-Loop 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. Aqua-Loop knew 
that no OFAC authorization was sought or obtained for the transaction 
described herein.
    Aqua-Loop had knowledge that a violation was occurring, was about 
to occur or was intended to occur in connection with the items because 
Aqua-Loop 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. 
Aqua-Loop's president 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. 
Aqua-Loop's president referred to this type of activity as 
``diverting'' items to Iran. Moreover, on or about September 23, 1997, 
AquaLoop's president had issued a letter to Parto Abgardan, on Aqua-
Loop stationery, 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, Aqua-Loop committed one violation of section 764.2(e) 
of the Regulations.
    Whereas, BIS and Aqua-Loop 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, Aqua-Loop shall be assessed a civil penalty in the amount of 
$100,000, the payment of which shall be suspended for a period often 
(10) years from the date of this Order, and thereafter shall be waived, 
provided that during the period of suspension, Aqua-Loop has committed 
no violation of the Act, or any regulation, order, or license issued 
thereunder.
    Second, that for a period often (10) years from the date of this 
Order, Aqua-Loop, 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

[[Page 16735]]

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 Aqua-Loop 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.
[FR Doc. 2010-7439 Filed 4-1-10; 8:45 am]
BILLING CODE 3510-DT-P