Yuri I. Montgomery, Respondent; Final Decision and Order, 82464-82487 [2010-32563]

Agencies

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

[Federal Register Volume 75, Number 250 (Thursday, December 30, 2010)]
[Notices]
[Pages 82464-82487]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32563]



[[Page 82463]]

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Part III





Department of Commerce





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Bureau of Industry and Security



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Yuri I. Montgomery, Respondent; Final Decision and Order; Notice

Federal Register / Vol. 75 , No. 250 / Thursday, December 30, 2010 / 
Notices

[[Page 82464]]


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 DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 08-BIS-0004]


Yuri I. Montgomery, Respondent; Final Decision and Order

    This matter is before me upon a Recommended Decision and Order 
(``RDO'') issued by the Administrative Law Judge (``ALJ''), and a 
settlement proposal subsequently submitted by the parties.
    In a charging letter filed on July 1, 2008, the Bureau of Industry 
and Security (``BIS'') alleged that Respondent Yuri I. Montgomery 
(``Respondent'' or ``Montgomery'') \1\ had committed fourteen 
violations of the Export Administration Regulations (currently codified 
at 15 CFR parts 730-774 (2010) (``Regulations'')), issued pursuant to 
the Export Administration Act of 1979, as amended (50 U.S.C. app. 2401-
2420) (the ``EAA'' or ``Act''),\2\ by participating in transactions 
involving the export or attempted export from the United States of 
items subject to the Regulations, while knowing that he was subject to 
a BIS order denying his export privileges. On January 15, 2010, BIS 
unilaterally withdrew Charge 10, leaving thirteen charges for 
consideration by the ALJ.
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    \1\ Montgomery is also known as ``Yuri Malinkovski.''
    \2\ Since August 21, 2001, the Act has been in lapse, and the 
President, through Executive Order 13,222 of August 17, 2001 (3 CFR 
2001 Comp. 783 (2002)), which has been extended by successive 
Presidential Notices, the most recent being that of August 12, 2010 
(75 FR 50681 (Aug. 16, 2010)), has continued the Regulations in 
effect under the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq. (2000)). The unlawful conduct at issue here 
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 2010 Regulations govern the 
procedural aspects of this case.
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    Charges 1-7 of the Charging Letter allege that:

    As described in further detail in the attached schedule of 
violations, which is incorporated herein by reference, on seven 
occasions between on or about July 2, 2003, and on or about October 
8, 2003, Montgomery took actions prohibited by a BIS order denying 
export privileges under Sec.  766.25 of the Regulations (Denial 
Order). Specifically, Montgomery carried on negotiations concerning, 
ordered, bought, sold and/or financed various items exported or to 
be exported from the United States that are subject to the 
Regulations, and/or benefited from transactions involving items 
exported or to be exported from the United States that are subject 
to the Regulations. At the time Montgomery engaged in the described 
actions, his export privileges had been denied under the Regulations 
by a Denial Order dated September 11, 2000, and published in the 
Federal Register on September 22, 2000 (65 FR 57,313). Under the 
terms of the Denial Order, Montgomery ``may not directly or 
indirectly, participate in any way in 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, including * * * [c]arrying 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 
* * * [b]enefiting 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.'' That Denial Order is effective until January 22, 
2009, and continued in force at the time of the aforementioned 
actions taken by Montgomery. In so doing, Montgomery committed seven 
violations of Section 764.2(k) of the Regulations.

    Charges 8-9, and 11-14 allege that Montgomery acted with knowledge 
of violations of the Denial Order in connection with the items exported 
or to be exported from the United States to Macedonia, as follows:

    As described in further detail in the attached schedule of 
violations, on seven occasions between on or about July 2, 2003, and 
or about October 8, 2003, Montgomery carried on negotiations 
concerning, ordered, bought, sold and on or financed various items 
subject to the Regulations with knowledge that a violation of an 
Order issued under the Regulations had occurred, was about to occur, 
or was intended to occur in connection with the items. Specifically, 
Montgomery carried on negotiations concerning, ordered, bought, sold 
and/or financed various items that were exported from the United 
States to a Macedonian company with knowledge that he was or would 
be violating a Denial Order imposed against him dated September 11, 
2000, and published in the Federal Register on September 22, 2000 
(65 FR 57,313). Montgomery knew that he was the subject of the 
Denial Order because, inter alia, he had been provided notice of the 
Denial Order when it issued in September 2000, and he had on October 
24, 2000, written to then-BIS Under Secretary for Export Enforcement 
Reinsch to request reinstatement of his ``export privileges denied 
on September 11, 2000 * * *.'' That request for reinstatement had 
been denied by the Under Secretary on December 21, 2000, and the 
Denial Order continued in force at the time of aforementioned 
actions taken by Montgomery. In so doing, Montgomery committed seven 
violations of Sec.  764.2(e) of the Regulations.

    The schedule of violations attached to the Charging Letter provided 
additional detail as to each of the seven transactions involved, 
including the dates of the transactions, the items involved and their 
values, and the consignee.
    On October 28, 2010, the ALJ issued an RDO in accordance with Sec.  
766.17 of the Regulations. The RDO provides a detailed summary of the 
procedural background and pre-RDO case activity, including the seven 
stays or extensions of time sought or stipulated to by Respondent 
during the course of the litigation below. Montgomery filed his answer 
to the Charging Letter on April 2, 2009, and pursuant to part 766 of 
the Regulations was permitted to take discovery during the litigation 
and to present evidence and rebuttal evidence concerning the charges 
and the defenses he raised. Because no party had demanded a hearing as 
provided in Sec.  766.6(c) of the Regulations, the RDO issued on the 
record by the ALJ in accordance with Sec.  766.6(c) and Sec.  766.15.
    The ALJ served the RDO on the parties as required in Sec.  
766.17(b)(2). On November 10, 2010, however, the ALJ issued a 
Supplemental Certificate of Service, stating that the RDO initially 
served on the Respondent on October 28, 2010, via overnight carrier, 
had been returned as undeliverable, and that he was attempting service 
of the RDO a second time. On November 17, 2010, I received a delivery 
confirmation from the ALJ showing that Respondent received a copy of 
the RDO on November 11, 2010.
    The delivery confirmation that I received on November 17, 2010, 
demonstrated that the ALJ had fulfilled his obligation under Section 
766.17(b)(2) of the Regulations to certify the full record for my 
review in accordance with Section 766.22. As such, and in the interest 
of avoiding confusion and ensuring that the parties had the full time 
allotted to them by the Regulations to make any submissions, I ordered 
that the deadlines for the parties' various filings be established 
using the November 17, 2010 date as the date the RDO was issued. 
Thereafter, Respondent Montgomery retained new legal counsel and 
subsequently filed, and I granted, three unopposed motions seeking a 
stay of the proceedings to allow the parties to conduct settlement 
negotiations.
    As part of the settlement agreement, Respondent Montgomery admits 
to the violations of the Regulations alleged in Charges 1-9 and 11-14 
of the Charging Letter. In addition, Montgomery has consented to my 
affirming the RDO, as modified with regard to the RDO's Recommended 
Sanction in order, instead, to impose the sanctions agreed

[[Page 82465]]

to by Montgomery and set forth in the parties' settlement proposal.
    I have the authority, pursuant to Sec.  766.22(c) of the 
Regulations, to affirm, modify or vacate the RDO. Where a case is 
pending before me pursuant to Sec.  766.22, I also have the authority, 
under Sec.  766.18(b)(2), to approve or reject a settlement proposal 
submitted to me by the parties.
    Based on my review of the record, including the RDO and the 
settlement proposal submitted by the parties, I hereby affirm the RDO, 
including its findings of fact and conclusions of law concerning 
Respondent Montgomery's seven violations of Section 764.2(k) of the 
Regulations and his six violations of Section 764.2(e); except that I 
hereby modify the RDO's recommended sanctions such that the sanctions 
imposed against Montgomery are consistent with the parties' settlement 
proposal, which I hereby approve.
    Accordingly, it is therefore ordered:
    First, that a civil penalty of $340,000.00 is assessed against 
Montgomery. Of this civil penalty, $17,500 shall be paid by Montgomery 
to the U.S. Department of Commerce in 12 installments as follows: 
$1,458 no later than January 1, 2011; $1,458 no later than the first 
day of each month from February, 2011 through and including November, 
2011; and $1,462 shall be due no later than December 1, 2011. Payment 
of the remaining $322,500 shall be suspended for a period of ten (10) 
years from the date of this Order, provided that during the period of 
suspension, Montgomery has committed no violation of the Act, or any 
regulation, order, or license issued thereunder, and has made full and 
timely payment of the $17,500 as set forth above. If any of the twelve 
installment payments is not fully and timely made, any remaining 
scheduled installment payments and the remaining $322,500 shall become 
due and owing immediately.
    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 dates specified herein, Montgomery 
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 thirty (30) years from the date of this 
Order, Yuri I. Montgomery, a/k/a Yuri Malinkovski, with a last known 
address of 2912 10th Place West, Seattle, WA 98119, and when acting for 
or on behalf of Montgomery, his representatives, assigns, agents or 
employees (hereinafter collectively referred to as ``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.
    Fourth, 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.
    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 Person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
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 Montgomery shall have an opportunity to request that 
the Under Secretary reinstate his export privileges after a period of 
ten (10) years from the date of the Order, provided that Montgomery has 
committed no violation of the Act, or any regulation, order, or license 
issued thereunder prior to the submission of his request for 
reinstatement. BIS shall in its sole unreviewable discretion determine 
whether to grant, or deny, in whole or in part Montgomery's request for 
reinstatement of his export privileges.
    Eighth, that the final Decision and Order shall be served on 
Montgomery and on BIS 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 immediately.
    Dated: December 21, 2010.

Eric L. Hirschhorn,
Under Secretary of Commerce for Industry and Security.

Certificate of Service

    I hereby certify that, on this 21st day of December, 2010, I have 
served the foregoing DECISION AND ORDER signed by Eric L. Hirschhorn, 
Under Secretary of Commerce for Industry and Security, in the matter of 
Yuri I. Montgomery (Docket No: 08-BIS-0004) to be sent via United 
Parcel Service postage pre-paid to:

Douglas N. Jacobson, Esq., Law Offices of Douglas N. Jacobson, PLLC, 
1725 I Street, NW., Suite 300, Washington, DC 20006. Facsimile: 202-
688-2782.

[[Page 82466]]

(By Facsimile and United Parcel Service.)
Eric Clark, Joseph Jest, John Masterson, Attorneys for Bureau of 
Industry and Security, Office of Chief Counsel for Industry and 
Security, U.S. Department of Commerce, Room HCHB 3839, 14th Street and 
Constitution Ave., NW., Washington, DC 20230. Facsimile: 202-482-0085. 
(Served via hand delivery.)
ALJ Docketing Center, Attention: Hearing Docket Clerk, 40 S. Gay 
Street, Room 412, Baltimore, MD 20212-4022. (By United Parcel Service.)

    A copy of this Order has also been sent via United Parcel Service 
to:

Yuri I. Montgomery, 2912 10th Place West, Seattle, WA 98119. (By United 
Parcel Service.)

Andrea A. Monroe,

Office of the Under Secretary for Industry and Security.

Recommended Decision and Order \3\
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    \3\ 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 and Order.'' 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 by: Hon. Walter J. Brudzinski, Administrative Law Judge.
    Issued: October 28, 2010.
    On behalf of Bureau of Industry and Security:

John T. Masterson, Esq., Chief Counsel for Industry and Security, 
Joseph V. Jest, Esq., Chief of Enforcement and Litigation, Parvin R. 
Huda, Esq., Senior Counsel, Eric Clark, Esq., Attorney Advisor, 
Attorneys for Bureau of Industry and Security, Office of Chief Counsel 
for Industry and Security, United States Department of Commerce, Room 
H-3839, 14th Street & Constitution Avenue, NW., Washington, DC 20230.

    On behalf of Respondent:

Yuri I. Montgomery, Pro se, 2912 10th Place West, Seattle, WA 98119.

Table of Contents

Preliminary Statement
    Charging Letter
    Schedule of Violations--Yuri Montgomery
    Denial Order of September 11, 2000
    Jurisdiction of U.S. Coast Guard Administrative Law Judges.
    Pre-Decisional Motion Practice
    Outstanding Motion
Determination of Respondent's Failure To Comply with Discovery
    Authority for Sanction for Failure To Comply With Discovery
    Sanction on Respondent's Refusal to Disclose Discovery Materials
    Paragraph IV of the Denial Order
Time for Decision
Recommended Findings of Fact
    General Findings and Background
    Charges 1 and 8, 61 pairs of Magnum boots
    Charges 2 and 9, firing range clearing devices
    Charge 3
    Charges 4 and 11
    Charges 5 and 12
    Charges 6 and 13
    Charges 7 and 14
Discussion
    Burden of Proof
    Respondent's Prior Criminal Conviction
    Denial Order
    Law
    Applying the Denial Order and the Law to the Findings of Fact
Ultimate Findings of Fact and Conclusions of Law
Affirmative Defenses
Respondent's Two Objections
Respondent's Remaining Affirmative Defenses
Recommended Sanction
Recommended Order
Attachment A--Summary of Pre-Decision Motion Practice
    Activity Prior To Respondent's Answer to Charging Letter--Case 
to be Adjudicated on the Record
    The November 10, 2009 Memorandum and Order
Attachment B--Lists of Exhibits
Attachment C--Rulings on Proposed Findings of Fact
Attachment D--Notice to the Parties Regarding Review by the Under 
Secretary
Certificate of Service

Preliminary Statement

    On July 1, 2008, the Bureau of Industry and Security (BIS) charged 
Respondent, Yuri Montgomery, with 14 counts of violating two (2) 
separate code sections of the Export Administration Regulations 
(EAR).\4\ The EAR is issued under the authority of the Export 
Administration Act (EAA) of 1979.\5\
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    \4\ The Regulations are currently codified in the Code of 
Federal Regulations at 15 CFR parts 730-774 (2008). The violations 
charged occurred in 2003. The Regulations governing the violations 
here are found in the 2003 version of the Code of Federal 
Regulations (15 CFR parts 730-774 (2003)). The 2008 Regulations 
govern the procedural aspects of this case.
    \5\ Title 50 U.S.C. app. 2401-2420 (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. 783 (2002)), which 
has been extended by successive Presidential Notices, the most 
recent being that of August 15, 2007, 72 FR 46137 (Aug. 16, 2007), 
has continued the Regulations in effect under the Emergency Economic 
Powers Act (50 U.S.C. 1701-1706 (2000)) (``IEEPA'').
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Charging Letter

    The fourteen (14) Count Charging Letter alleges seven (7) 
violations of EAR code section 764.2(k), ``Acting Contrary to the Terms 
of a Denial Order,'' and seven (7) violations of EAR code section 
764.2(c), ``Acting with Knowledge of a Violation'' as follows:

Charges 1-7, 15 CFR 764.2(k): Acting Contrary to the Terms of a Denial 
Order

    As described in further detail in the attached schedule of 
violations, which is incorporated herein by reference, on seven 
occasions between on or about July 2, 2003, and on or about October 
8, 2003, Montgomery took actions prohibited by a BIS order denying 
export privileges under Section 766.25 of the Regulations (Denial 
Order). Specifically, Montgomery carried on negotiations concerning, 
ordered, bought, sold and/or financed various items exported or to 
be exported from the United States that are subject to the 
Regulations, and/or benefitted from transactions involving items 
exported or to be exported from the United States that are subject 
to the Regulations. At the time Montgomery engaged in the described 
actions, his export privileges had been denied under the Regulations 
by a Denial order dated September 11, 2000, and published in the 
Federal Register on September 22, 2000 (65 FR 57,313). Under the 
terms of the Denial Order, Montgomery: May not directly or 
indirectly, participate in any way in any transaction involving an 
(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 * * * [c]arrying 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 * * * [b]enefitting in any way from any transaction 
involving any item exported or to be exported from the United States 
that is subject to the Regulations.'' That Denial Order is effective 
until January 22, 2009, and continued in force at the time of the 
aforementioned actions taken by Montgomery. In so doing, Montgomery 
committed seven violations of Section 764.2(k) of the Regulations.

Charges 8-14, 15 CFR 764.2(e): Acting with Knowledge of a Violation

    As described in further detail in the attached schedule of 
violations, on seven occasions between on or about July 2, 2003, and 
[on] or about October 8, 2003, Montgomery carried on negations 
concerning, ordered, bought, sold and/or financed various items 
subject to the Regulations with knowledge that a violation of an 
Order issued under the Regulations had occurred, was about to occur, 
or was intended to occur in connection with the items. Specifically, 
Montgomery carried on negotiations concerning, ordered, bought, sold 
and/or financed various items that were

[[Page 82467]]

exported from the United States to a Macedonian company with 
knowledge that he was or would be violating a Denial Order because, 
inter alia, he had been provided notice of the Denial Order when it 
issued in September 2000, and he had on October 24, 2000, written to 
then-BIS Under Secretary for Export Enforcement Reinsch to request 
reinstatement of his ``export privileges denied on September 11, 
2000 * * * .'' That request for reinstatement had been denied by the 
Under Secretary on December 21, 2000, and the Denial Order continued 
in force at the time of aforementioned actions by Montgomery. In so 
doing, Montgomery committed seven violations of Section 764.2(e) of 
the Regulations.

    The Charging Letter further detailed Charges 1-7 as violations of 
15 CFR 764.2(k) and Charges 8-14 as violations of 15 CFR 764.2(e) as 
follows:
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    \6\ BIS withdrew Charge Ten on January 15, 2010.

                                     Schedule of Violations--Yuri Montgomery
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              Date                  Charges           Items           Value      Violation        Consignee
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7/2/03..........................         1, 8  61 prs Magnum            $3,355    764.2(k);  Micei, Int'l
                                                boots.                             764.2(e)
7/18/03.........................         2, 9  2 firing range           $1,136    764.2(k);  Micei, Int'l
                                                clearing Devices.                  764.2(e)
8/5/03..........................    3, 10 \6\  10,800 pairs of             RFQ    764.2(k);  Micei, Int'l
                                                boots.                             764.2(e)
8/5/03..........................        4, 11  45 pairs Oxford          $2,562    764.2(k);  Micei, Int'l
                                                shoes, 5 Remote                    764.2(e)
                                                strobe tubes.
8/13/03.........................        5, 12  150 shirts........       $1,744    764.2(k);  Micei, Int'l
                                                                                   764.2(e)
9/9/03..........................        6, 13  2 load binder,1         $147.53    764.2(k);  Micei, Int'l
                                                ratchet strap, 1                   764.2(e)
                                                binder chain, 1
                                                safety shackle.
10/8/03.........................        7, 14  Items in Order        $5,723.31    764.2(k);  Micei, Int'l
                                                25473620/                 764.2(e)
                                                017.
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    The Charging Letter advised the maximum civil penalty is up to the 
greater of $250,000 per violation or twice the transaction value that 
forms the basis of the violation, plus a denial of export privileges 
and/or exclusion from practice before BIS. The Charging Letter 
concluded that failure to answer the charges within thirty (30) days 
will be treated as a default, and, although Respondent is entitled to 
an agency hearing, he must file a written demand for one with his 
answer.

Denial Order of September 11, 2000

    The pleadings, discovery, and affidavits in the administrative 
record reflect that on January 22, 1999, Respondent, Yuri I. 
Montgomery, also known as Yuri I. Malinskovski, was convicted in U.S. 
District Court for the District of Columbia of knowingly and willfully 
exporting and causing the export of prohibited items to Macedonia and 
Slovenia without applying for and obtaining the required export 
licenses in violation of the International Emergency Economic Powers 
Act and the Export Administration Act of 1979.
    Pursuant to Section 11(h) of the Export Administration Act and 5 
CFR 766.25 (2000) the Director, Office of Exporter Services, Bureau of 
Export Administration, issued an order (Denial Order) on September 11, 
2000 denying Respondent export privileges effective through January 22, 
2009.\7\
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    \7\ Through an internal organizational order, the Department of 
Commerce changed the name of Bureau of Export Administration to 
Bureau of Industry and Security. See, Industry and Security 
Programs: Change of Name, 67 FR 20,630 (Apr. 26, 2002). Pursuant to 
the Savings Provision of the Order, ``Any actions undertaken in the 
name of or on behalf of the Bureau of Export Administration, whether 
taken before, on, or after the effective date of this rule, shall be 
deemed to have been taken in the name of or on behalf of the Bureau 
of Industry and Security.'' Id. at 20,631.
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    The Denial Order states, in pertinent part, Respondent ``may not, 
directly or indirectly, participate in any way in 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 in any other activity subject to the 
Regulations.'' The Denial Order detailed non-exclusive examples of 
conduct included in the broad prohibition including ``[c]arrying 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 
an 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.'' (65 FR 57,313 (Sept. 22, 2000)). Paragraph IV of the 
Denial Order states, ``[t]his 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.'' (Id.). 
Respondent's pleadings claim that the exported items in question fall 
into this exception.

Jurisdiction of U.S. Coast Guard Administrative Law Judges

    The Charging Letter states the U.S. Coast Guard is providing 
Administrative Law Judge services for these proceedings. Accordingly, 
BIS forwarded the Charging Letter to the U.S. Coast Guard 
Administrative Law Judge Docketing Center for adjudication. The ALJ 
Docketing Center subsequently issued its Notice of Docket Assignment to 
the Respondent and BIS. The administrative file reflects that at the 
time of the Charging Letter and continuing to the present, Memoranda of 
Agreement (MOA) and Office of Personnel Management letters issued in 
accordance with 5 U.S.C. 3344 and 5 CFR 930.230 authorize the detail of 
U.S. Coast Guard Administrative Law Judges to adjudicate BIS cases 
involving export control regulations on a reimbursable basis.

Pre-Decisional Motion Practice

    Throughout the course of this proceeding, Respondent filed dozens 
of motions, including numerous motions to stay. Respondent eventually 
filed his Answer ``under protest, duress, and compulsion of the Order 
Denying Respondent's Motion for More Definite Statement.'' Respondent's 
Answer included 19 affirmative defenses. Neither Respondent nor BIS 
demanded a hearing. Therefore, the undersigned

[[Page 82468]]

issued an Order stating the matter will be adjudicated on the record in 
accordance with 15 CFR 766.6(c). A summary of Respondent's motions, 
BIS' replies, and the undersigned's decisions on those motions is 
detailed in Attachment A.

Outstanding Motion

    Respondent filed his Declaration in Support of Defenses on 
September 22, 2010, seven (7) months after the February 24, 2010 
deadline for filing his evidence in support of his defenses. The 
Declaration included 43 attachments and a letter dated April 29, 2010 
stating Respondent has suffered severe mental stress as a result of 
these proceedings. Respondent's Declaration explained his relationship 
with Micei International, summarized the events that occurred prior to 
the issuance of the Denial Order, and explanations of the attached 
exhibits. The majority of the evidence submitted supported Respondent's 
assertion that he did not violate the EAR because the country of origin 
for some of the items in question was China.
    BIS filed its response on October 7, 2010, objecting to 
Respondent's Declaration. Specifically, the Agency argues that the 
submission of this Declaration along with its attachments are in direct 
violation of this court's discovery orders; that all exhibits except 
Ex. 7 are dated prior to the discovery deadline and are thus untimely 
and should not be considered. BIS also argues that several of the 
exhibits submitted by Respondent raise authenticity and accuracy 
concerns, including the fact that two of the e-mails sent by separate 
people contained identical wording and grammatical mistakes. 
Furthermore, the exhibits in question do not provide any probative 
value because the items' country of origin is not the issue because the 
items were exported from the United States. BIS requests the 
undersigned disregard Respondent's Declaration and the attached 
exhibits because the filling further demonstrates Respondent's refusal 
to comply with the ALJ's orders and the rules that govern this 
proceeding.
    After careful review of Respondent's Declaration and BIS' response, 
the undersigned rejects Respondent's Declaration as untimely because it 
was filed approximately 7 months after his evidence was due and 
violates discovery procedures. Respondent was repeatedly accorded stays 
and additional time to file evidence and submissions. Respondent 
repeatedly ignored these deadlines. Even if the undersigned accepted 
Respondent's Declaration and exhibits, they would carry no probative 
value. As discussed in detail below, all items in question were shipped 
from the United States in violation of the EAR. Accordingly, 
Respondent's Declaration in Support of Defenses and its attached 
exhibits is rejected.

Determination on Respondent's Failure To Comply With Discovery

    On June 19, 2009, BIS served all discovery requests on Respondent 
but Respondent replied only to BIS's Requests for Admission on July 6, 
2009. He did not respond to BIS's Interrogatories and Requests for 
Production of Documents. Instead, Respondent asserted preliminary 
objections on June 30, 2009 and renewed objections on September 3, 
2009. In my Order of August 20, 2009, Respondent was again ordered to 
respond to the interrogatories and document requests. To date, he has 
not replied to BIS's Interrogatories and Requests for Production of 
Documents, nor did he submit copies of his discovery requests as 
previously ordered to determine if enforcement is appropriate.

Authority for Sanction for Failure To Comply With Discovery

    The Discovery Rules at 15 CFR 766.9 (d) provide as follows:

    Enforcement. The administrative law judge may order a party to 
answer designated questions, to produce specified documents or 
things or to take any other action in response to a proper discovery 
request. If a party does not comply with such an order, the 
administrative law judge may make a determination or enter any order 
in the proceeding as the judge deems reasonable and appropriate. The 
judge may strike related charges or defenses in whole or in part or 
may take particular facts relating to the discovery request to which 
the party failed or refused to respond as being established for 
purposes of the proceeding in accordance with the contentions of the 
party seeking discovery. [Emphasis added.] In addition, enforcement 
by a district court of the United States may be sought under section 
12(a) of the EAA.

    On October 26, 2009, BIS filed its Supplemental Submission in 
Response to the October 15, 2009 Order that the parties submit copies 
of their respective discovery requests to the undersigned to determine 
if enforcement pursuant to Section 766.9(d) of the Regulations is 
appropriate. In its Supplemental Submission, BIS claims, among other 
things, that Respondent's Answer to BIS's Motion for Summary Decision 
contained information and references to documents upon which Respondent 
is relying that should have been disclosed in BIS's discovery requests 
but were not disclosed. BIS avers that Respondent ``should be barred 
from offering as evidence or otherwise seeking to make use of this 
material, as well as any other responsive material that he failed to 
produce, whether responsive documents or information that is responsive 
to any interrogatory.'' (BIS's October 26, 2009 Supplemental Submission 
in Response to October 15, 2009 Order, at 3.)
    Specifically, the information in question is a Declaration from 
Sanja Milic of Micei and a purported e-mail from Range Systems. BIS 
argues that the e-mail contains information that was responsive to its 
discovery requests pertaining to Respondent's Defense No. 16 found in 
on page 3 of ``Declaration of Yuri Montgomery in Opposition to Bureau 
of Industry and Security's Motion for Summary Decision as to Charges 
Two, Six, Nine, and Thirteen'' dated October 12, 2009. Defense No. 16 
states, ``[w]hen I contacted Maintenance Products, Inc. to inquire of 
the availability of the products which are listed in the [sic] charges 
6 and 13 of the Charging Letter herein, I was informed by Maintenance 
Products, Inc. that all of the products Micei was interested in 
purchasing were made in China and were very cheap and I did not even 
inquire of their prices.'' BIS further averred that the Court should 
strike Respondent's defense number 16 and any argument or purported 
evidence related to that defense. BIS ended with the recommendation 
that the Court postpone ruling on any discovery sanction until after 
ruling on the Motion for Summary Decision because that Motion can be 
resolved without discovery sanctions. The undersigned also notes that 
Respondent's Affirmative Defense No. 16 filed on April 2, 2009 with his 
Corrected Answer to Charging Letter avers ``[t]he goods subject to the 
Charging Letter are of foreign origin and are therefore not subject to 
the prohibitions of the purported Denial Order.'' Respondent's 
affirmative defense no. 11, filed in his original Answer, reads ``[t]he 
goods subject to the Charging Letter are of foreign origin and are 
therefore not subject to the Charging Letter.''
    The undersigned denied BIS's Motion for Partial Summary Decision. 
BIS asked in its January 15, 2010 ``Memorandum on Evidence Submitted in 
Support of Charges'' that Respondent be barred from offering as 
evidence or otherwise seeking to make use of any responsive material 
that he failed to produce, whether the information is a responsive 
document or answer to an interrogatory. In addition, BIS asks the Court 
to strike Respondent's Defense No. 16 and any argument or purported 
evidence related

[[Page 82469]]

to that defense pursuant to 15 CFR 766.9(d).
    The November 10, 2009 memorandum and Order stated that the 
undersigned will make a determination or enter an Order deemed 
reasonable and appropriate in accordance with 15 CFR 766.9(d) on the 
issue of Respondent's continued refusal to comply with BIS's 
Interrogatories and Requests for Production of Documents despite 
previous Orders to do so. That determination follows:

Sanction on Respondent's Refusal To Disclose Discovery Materials

    Respondent's arguments, e-mail, and Declaration contain information 
that should have been disclosed during discovery. Respondent failed to 
disclose this information despite being ordered to do so and then used 
those undisclosed discovery materials in his defense against BIS's 
Motion for Summary Decision. His arguments that the items in question 
are foreign made and therefore excluded from the Denial Order still 
remain in his affirmative defense filed with his Answer. Therefore, in 
consideration of the forgoing and in accordance with 15 CFR 766.9(d), 
the following are stricken from the record: (1) Respondent's Defense 
No. 16 in his ``Declaration of Yuri Montgomery in Opposition to Bureau 
of Industry and Security's Motion for Summary Decision as to Charges 
Two, Six, Nine, and Thirteen'' dated October 12, 2009; (2) the 
Declaration from Sanja Milic of Micei; (3) the e-mail from Range 
Systems; (4) Affirmative Defense No. 16 in Respondent's Corrected 
Answer to Charging Letter which states ``[t]he goods subject to the 
Charging Letter are of foreign origin and are therefore not subject to 
the prohibitions of the purported Denial Order;'' (5) Affirmative 
Defense No. 11 which states, ``[t]he goods subject to the Charging 
Letter are of foreign origin and are therefore not subject to the 
Charging Letter;'' and (6) any argument related to that basic defense.

Paragraph IV of the Denial Order

    Even if Respondent complied with discovery as previously ordered, 
and if the arguments and documents were found credible and give 
appropriate weight, they do not show that the items in question fall 
into the Paragraph IV exception to the Denial Order based only on their 
purported foreign origin. Paragraph IV of the Denial Order states, 
``[t]his 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.'' This language does not amend the 
specific language in Paragraph I of the Denial Order which prohibits 
any participation of any kind in the export from the United States of 
any items subject to the Regulations.
    Paragraph I prohibits participation in transactions involving items 
exported or to be exported from the United States. Items located in the 
United States are subject to the Regulations, regardless of where they 
are produced. See, 15 CFR 734.3(a). Since the items in this case were 
located in the United States at the time of Respondent's transactions 
and were not subject to the exclusive jurisdiction of another agency, 
Respondent was prohibited from participating in those transactions. The 
items in question are subject to the EAR as shown below:
    Respondent claims that the Paragraph IV exemption applies if the 
items in question were manufactured abroad. As shown above, items 
subject to the EAR include items located in the United States 
regardless of where they have been manufactured or produced. In this 
case, jurisdiction is based on the fact that the items in question were 
located in the United States at the time of the transactions or the 
attempted or intended transactions, regardless of their origin. Once 
jurisdiction of the items in question is established based on the 
location of the items in the United States, such as in this case, it is 
not necessary to consider any other basis. The origin of an item must 
be determined only if the item happens to be located abroad at the time 
of the transaction. In this case, the items were located in the United 
States.
    In summary, Paragraph IV of the Denial Letter provides a narrow 
exception to transactions involving only items subject to the 
Regulations by reason of the foreign direct product rule which does not 
apply here because the items in question were not located abroad. In 
this case, jurisdiction over these items exists under Section 734.3. 
The items were subject to the Regulations and were exported or 
attempted or intended to be exported from the United States. Therefore, 
Respondent's affirmative defense that foreign origin of the goods 
exempts them from the Regulations is rejected even in the absence of 
sanction.

Time for Decision

    Title 15 CFR 766.17(d) provides that administrative enforcement 
proceedings not involving Part 760 of the EAR shall be concluded within 
one year from submission of the Charging Letter unless the 
Administrative Law Judge extends such period for good cause shown. In 
light of the attached detailed activity in these proceedings evidencing 
several stays, the time consumed to adjudicate disputed discovery 
issues, and the additional time consumed to adjudicate numerous 
motions, the undersigned finds that good cause exists for not 
concluding these proceedings within the time prescribed and that these 
proceedings are extended to October 28, 2010. This matter is now ripe 
for decision.
    As detailed in Attachment A, the parties have raised many issues 
and the undersigned has ruled on most of them in previously issued 
Orders. This Recommended Decision and Order also rules on the 
affirmative defenses and any outstanding issues. As noted above, BIS 
filed its Notice of Withdrawal of Charge 10, concerning the 10,800 
pairs of boots described in the charging Letter's Schedule of 
Violations. Therefore, seven (7) counts of section 764.2(k) and six (6) 
counts of Section 764.2(e) of the Regulations remain for decision. 
After careful review of the entire record, I find that BIS has proved, 
by the preponderance of reliable, probative, and credible evidence, on 
seven (7) occasions, from July 2, 2003 and October 8, 2003, that 
Respondent violated EAR code Section 764.2(k), ``Acting Contrary to the 
Terms of a Denial Order,'' and on six (6) occasions that Respondent 
violated EAR code Section 764.2(e), ``Acting with Knowledge of a 
Violation.''

Recommended Findings of Fact

    The Findings of Fact and Conclusions of Law are based on a thorough 
and careful analysis of the documentary evidence, exhibits, and the 
entire record as a whole.

General Findings and Background

    1. Respondent Yuri I. Montgomery, also known as Yuri I. Malinkovski 
was convicted in the U.S. District Court for the District of Columbia 
of violating the International Emergency Economic Powers Act (50 U.S.C. 
1701-1706 (1991 & Supp. 2000) and the Export Administration Act of 
1979, as amended (currently codified at 50 U.S.C. app. 2401-2420 (1991 
& Supp. 2000)). (BIS Ex. B)
    2. Specifically, Respondent's conviction was for knowingly and 
willingly exporting and causing the export of U.S.-origin stun guns to 
Macedonia and U.S. origin laser gun sights to Slovenia without applying 
for and obtaining the required export licenses from the Department of 
Commerce, and of knowingly and willfully exporting and causing the

[[Page 82470]]

export of U.S.-origin PAGST military helmets to Slovenia and U.S.-
origin handcuffs, laser gun sights, and laser mountings to Macedonia 
without applying for and obtaining the required export licenses from 
the Department of Commerce. (BIS Ex. B)
    3. Section 11(h) of the Export Administration Act of 1979 provides 
that, at the discretion of the Secretary of Commerce, no person 
convicted of violating the International Emergency Economic Powers Act 
or the Export Administration Act, or certain other provisions of the 
U.S. Code, shall be eligible to apply for or use any export license 
issued pursuant to, or provided by, the Export Administration Act or 
the Export Administration Regulations for a period of up to 10 years 
from the date of the conviction. (BIS Ex. B)
    4. Pursuant to Sections 766.25 and 750.8(a) of the Regulations and 
upon notification that a person has been convicted of violating the 
International Emergency Economic Powers Act or the Export 
Administration Act, the Director, Office of Exporter Services, in 
consultation with the Director, Office of Export Enforcement, shall 
determine whether to deny that person's export privileges for a period 
up to 10 years from the date of conviction and shall also determine 
whether to revoke any license previously issued to such person. (BIS 
Ex. B)
    5. Having received notice of Respondent's conviction and after 
providing Respondent with notice and opportunity to make written 
submission before issuing an Order denying his export privileges, the 
Director, Office of Exporter Services, Bureau of Export Administration, 
issued an Order (Denial Order) on September 11, 2000 denying Respondent 
export privileges effective through January 22, 2009 and publishing it 
in the Federal Register.\8\ (65 FR 57,313 (Sept. 22, 2000) (BIS Ex. B))
---------------------------------------------------------------------------

    \8\ Through an internal organizational order, the Department of 
Commerce changed the name of Bureau of Export Administration to 
Bureau of Industry and Security. See, Industry and Security 
Programs: Change of Name, 67 FR 20,630 (Apr. 26, 2002). Pursuant to 
the Savings Provision of the Order, ``Any actions undertaken in the 
name of or on behalf of the Bureau of Export Administration, whether 
taken before, on, or after the effective date of this rule, shall be 
deemed to have been taken in the name of or on behalf of the Bureau 
of Industry and Security.'' Id. at 20,631.
---------------------------------------------------------------------------

    6. Paragraph I of the Denial Order states that ``Until January 22, 
2009, Yuri I. Montgomery, also known as Yuri I. Malinkovski, [home 
address redacted] may not, directly or indirectly, participate in any 
way in any transaction involving any Commodity, software or technology 
(hereinafter collectively referred to as `item') exported or to be 
exported from the United States, that is subject to the Regulations, or 
in any other activity subject to the Regulations * * *. '' (BIS Ex. B, 
at paragraph I)
    7. The Denial Order specifically listed as non-exclusive examples 
of prohibited participation, ``[c]arrying 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 * * *.'' (BIS Ex. 
B)
    8. The Denial Order also provided that Respondent was prohibited 
from ``[b]enefiting 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. 
(BIS Ex. B)
    9. Respondent received actual notice of the Denial Order by letter 
on or about September 13, 2000 from BIS that included a copy of the 
Denial Order. (BIS Ex. E, page 4, Request/Response 3; BIS Ex. F)
    10. On October 24, 2000, Respondent wrote to then Under Secretary 
William Reinsch requesting reinstatement of his ``export privileges 
denied on September 11, 2000.'' (BIS Ex. E, page 4, Request/Response 5; 
BIS Ex. G)
    11. Under Secretary Reinsch denied the request on Dec. 21, 2000. 
(BIS Ex. H)
    12. Respondent had notice of the Denial Order no later than October 
24, 2000. (BIS Ex. E, pages 4-16, Requests/Responses Nos. 2, 5, 7m, 8m, 
9h, 10m, 11m, 12m, and 13m)
    13. Respondent knew that the Denial Order was in effect at all 
times from September 11, 2000 until January 22, 2009. (BIS Ex. E, page 
4, Request/Response 2)
    14. Respondent knew that he was subject to the Denial Order at the 
time of each transaction at issue. (BIS Ex. E, pages 4-16, Requests/
Responses Nos. 2, 5, 7m, 8m, 9h, 10m, 11m, 12m, and 13m)
    15. Respondent encouraged Micei ``to use my credit card for Micei 
purchases as much as possible as it would allow me to accumulate United 
Airline miles through the use of my United Visa credit card * * *'' 
(October 12, 2009 Declaration of Yuri Montgomery in Opposition to BIS's 
Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen, 
at paragraph 12)
    16. On several occasions, Respondent ``made inquiries for Micei of 
the availability on some of the products purchased for Micei.'' (Id. at 
paragraph 14)
    17. Respondent benefited from all the purchases by stating, ``[t]he 
charges made with my credit card directly attribute to the `violations' 
alleged Micei in the Charging Letter herein amount to approximately 
$15,000, which allowed me to accumulate approximately $15,000 [sic] 
miles with United Airlines.'' (BIS Ex. J, page 3, paragraph 18; BIS Ex. 
E, page 6, admission 7j)
    The preceding Findings of Fact are incorporated in the following, 
specific Findings of Fact as set for below:

Charges 1 and 8, 61 Pairs of Magnum boots

    18. On or about June 9, 2003 Respondent placed an order for 61 
pairs of Magnum boots with the Modesto, California Division of Hi-Tec 
Retail, Inc., manufacturer and retailer of footwear. (BIS Exhibit E, 
page 4, admission 7a; BIS Exhibits L and M)
    19. The issuing bank declined Hi-Tec's initial attempt to charge 
Montgomery's credit card for the order which caused R. Uber at Hi-Tec 
to seek assistance from Respondent. (BIS Ex. O).
    20. Micei employee Sanja Milic advised Hi-Tec via e-mail that 
according to Respondent, VISA had put a security block on its payment 
which he had already removed so that Hi-Tec can charge the amount 
without any problem. (BIS EX. P)
    21. With the payment issue resolved, Respondent paid for the boots 
with his credit card. (BIS Ex. Q; BIS Ex. 5 at page 4, admission 7b)
    22. Micei reimbursed Respondent for purchasing the boots. (BIS Ex. 
E, page 5, admission 7i(iii))
    23. Respondent intended the boots, which are subject to the 
Regulations, to be exported to Macedonia. (BIS Ex. E at page 7, 
admission 7e; BIS Exhibits N, R, and S; BIS Ex. I, 15 CFR 734.3(a))
    24. The boots were exported from the United States to Macedonia on 
or about July 2, 2003. (BIS Exhibits R and S)
    25. The boots are items subject to the Regulations. (15 CFR 
734.3(a); BIS Ex. I)
    26. At the time of the transaction, Respondent knew he was subject 
to the Denial Order. (BIS Ex. E at Request/Response 7m)

Charges 2 and 9, Firing Range Clearing Devices

    27. At Micei's request, Respondent telephonically contacted Range 
Systems, a New Hope, Minnesota manufacturer of firing range equipment, 
``to inquire of the availability and price

[[Page 82471]]

for their product * * *.'' (October 12, 2009 Declaration of Yuri 
Montgomery in Opposition to BIS's Motion for Summary Decision as to 
Charges Two, Six, Nine, and Thirteen, paragraph 20)
    28. In a July 8, 2003 e-mail inquiry sent to Range Systems 
describing himself as Micei's regional office, Respondent stated that 
``currently we have one [bid] which calls for various products 
including 5-10 clearing traps such as your RRI Guardian (GDN) model * * 
*. Please quote the price of your RRR GUARDIAN (GDN) model and e/m me a 
complete price list if possible * * *.'' (BIS Ex. T, page 2)
    29. Range Systems provided the requested price quote in a reply e-
mail sent on July 11, 2003. (BIS Ex. T, page 1)
    30. Respondent placed an order for two of the gun clearing devices 
via e-mail sent on July 15, 2003. (BIS Ex. E, page 6, admission 8a; BIS 
Exhibits T, U, and V)
    31. Respondent paid Range Systems, Inc. for the gun clearing 
devices with his VISA credit card. (BIS Ex. T; BIS Ex. E, page 6, 
admission 8b)
    32. Respondent directed Ranges Systems to export the gun clearing 
devices to Micei in Macedonia via their freight forwarder, requesting 
that he be advised of the weight and size of the boxes via e-mail with 
a copy to Micei representatives. (BIS Ex. T, page 1)
    33. Micei reimbursed Respondent for the purchase of the gun 
clearing devices. (BIS Ex. E, page 7, admission 8i)
    34. On or about July 18, 2003, Range Systems exported the gun 
clearing devices from the United States to Macedonia. (BIS Ex. E, page 
7, admission 8e; BIS Ex. T; X, and W)
    35. The gun clearing devices were manufactured in the United 
States. (BIS Ex. Y, Z, and AA)
    36. The gun clearing devices are items subject to the Regulations. 
(BIS Ex. I; 15 CFR 734.3(a))
    37. At the time of the transaction, Respondent knew he was subject 
to the Denial Order. (BIS Ex. E, page 8, admission 8k and 8m)
    38. Respondent benefited from the purchase of the gun clearing 
devices. (BIS Ex. E, page 7, admission 8j)

Charge 3

    39. On August 5, 2003, Respondent sent an e-mail to Galls, Inc., a 
Lexington, Kentucky based distributor of police equipment, military 
equipment, and apparel, identifying himself as ``Micei Int'l U.S. 
Operations'' and requesting a price quotation for 10,800 pairs of shoes 
and boots. (BIS Ex. E, page 8, admission 9a; BIS Ex. BB, EE, and FF)
    40. Respondent intended to export the boots and shoes from the 
United States to Macedonia. (BIS Ex. E, page 8, admission 9d; BIS Ex. 
BB)
    41. Respondent carried on negotiations concerning the shoes and 
boots, stating in an e-mail to Galls ``our [Micei] HQ will be putting 
up the performance bond at 20% in cash. Therefore, please make sure you 
quote the best possible price so you can so we can win this one, too.'' 
(BIS Ex. BB)
    42. The boots and shoes are items subject to the Regulations (BIS 
Ex. I; 15 CFR 734.3(a))
    43. Respondent knew he was subject to the Denial Order on or about 
August 5, 2003, at or about the time he requested a quotation. (BIS Ex. 
E, page 9, admission 8f)

Charges 4 and 11

    44. Micei's account number at Galls is 2547320. (BIS Ex. CC)
    45. On or about August 5, 2003, Respondent contacted Galls to pay 
for order  25473620/016, previously placed. (BIS Ex. DD)
    46. The items in that order number consist of shoes and remote 
strobe tubes.\9\ (BIS Ex. EE and FF)
---------------------------------------------------------------------------

    \9\ Remote strobe tubes are components of the flashing emergency 
lights found on vehicles such as police cars.
---------------------------------------------------------------------------

    47. In Respondent's August 5, 2003 e-mail to Galls, he provided his 
credit card account information to pay for the $2,562.44 order, stating 
that Micei advised him to pay for the items with his VISA card. (BIS 
Ex. DD and BIS Ex. E, page 9, admission 10b)
    48. Micei reimbursed Respondent for purchasing the shoes and remote 
strobe tubes. (BIS Ex. E, page 10, admission 10i(iii))
    49. Respondent intended to export the shoes and strobe tubes from 
the United States to Macedonia. (BIS Ex. E, page 9, admission 10e; BIS 
Exhibits EE, FF, and GG)
    50. The shoes and remote strobe tubes were exported from Galls's 
Inc. in Lexington, Kentucky, United States to Macedonia on or about 
September 5, 2003. (BIS Exhibits EE and GG)
    51. The shoes and remote strobe tubes are items subject to the 
Regulations. (BIS Ex. I; 15 CFR 734.3)
    52. At the time of the transaction, Respondent knew he was subject 
to the Denial Order. (BIS Ex. E, page 11, admission 10m)
    53. Respondent benefited from the VISA card purchase of the shoes 
and remote strobe tubes from Galls by earning credit towards the 
purchase of airline tickets. (BIS Ex. E, page 10, admission j and 
finding of fact 17 above)

Charges 5 and 12

    54. On July 31, 2003, Respondent placed on order for 150 golf/polo 
shirts from Save On Promotional Products of Sandy, Oregon. (BIS Ex. HH 
and II)
    55. Upon receiving Respondent's order, Save On ordered the shirts 
from its supplier, Tri-Mountain Gear Corp. of Baldwin Park, California. 
(BIS Ex. LL)
    56. Respondent ordered the shirts for or on behalf of Micei and 
intended them to be exported from the United States to Macedonia. (Ex. 
E at Request/Response 11e); BIS Ex. HH: BIS Ex. II; BIS Ex. KK; BIS Ex. 
LL; BIS Ex. MM; BIS Ex. BIS NN)
    57. Respondent paid for the order with his credit card. (BIS Ex. 
JJ; BIS Ex. E at Request/Response 11b)
    58. Micei reimbursed Respondent for purchasing the shirts. (BIS Ex. 
E, page 12, admission 11i(iii))
    59. The shirts were exported from the United States to Macedonia on 
or about August 13, 2003. (BIS Ex. MM; BIS Ex. NN)
    60. The shirts are items subject to the Regulations. (BIS Ex. I; 
(15 CFR 734.3(a))
    61. At the time of the transaction, Respondent knew he was subject 
to the Denial Order. (BIS Ex. E, page 12, admission 11m)
    62. Respondent benefited from purchasing the shirts from a U.S. 
supplier using his VISA card by earning credit towards the purchase of 
airline tickets. (BIS Ex. E, page 12, admission 11j; Finding of Fact 
17, above)

Charges 6 and 13

    63. Respondent ordered two load binders, one ratchet strap, one 
binder chain, and one safety shackle from Maintenance Products, Inc. of 
Lowell, Indiana, on or about September 9, 2003. (BIS Ex. E, page 13, 
admission 12a; BIS Ex. OO and QQ)
    64. Respondent paid Maintenance Products, Inc. for the load 
binders, ratchet strap, binder chain, and safety shackle, including 
freight charges of $21.52, with his VISA credit. (BIS Ex. E, page 13, 
admission 12b; BIS Ex. PP and QQ)
    65. Micei reimbursed Respondent for purchasing the binder, ratchet 
strap, binder chain, and safety shackle. (BIS Ex. E, page 14, admission 
12i(iii))
    66. As Respondent intended, the load liners, ratchet strap, binder 
chain, and safety shackle exported from the United States to Macedonia 
on or about September 15, 2003. (BIS Ex. E, page 13, admission e; BIS 
Ex. RR and SS)
    67. The load binders, binder chain, and safety shackle were 
manufactured

[[Page 82472]]

in the United States. (BIS Ex. TT and UU)
    68. The load binders, ratchet strap, binder chain and safety 
shackle are items subject to the Regulations. (BIS Ex. I and 49 CFR 
734.3(a))
    69. At the time of the transaction, Respondent knew he was subject 
to the Denial Order. (BIS Ex. E, page 14, admission 12m; BIS Ex. B, 
paragraph I and BIS Ex. F, paragraph I on page 3 of the Order Denying 
Export Privileges)
    70. By charging the purchase from the U.S. supplier of the load 
binders, ratchet strap, binder chain and safety shackle on his VISA 
card, Respondent benefitted by earning credit towards the purchase of 
airline tickets. (BIS Ex. E, page 14, admission 12j; see also, Finding 
of Fact 17, above)

Charges 7 and 14

    71. In October 2003, Respondent, describing himself as ``Micei 
Int'l (N/America Op's), placed an order for uniform pants with Galls 
(Galls  5473720/017). (BIS Ex. VV)
    72. Again describing himself as representing Micei, Respondent paid 
for the order with his VISA credit card. (BIS Ex. E, page 14, admission 
13b; BIS Ex. WW)
    73. The uniform pants were to be shipped from Galls' supplier, 
Liberty Uniform of Spartanburg, South Carolina, to Micei in Macedonia. 
(BIS Ex. E, page 15, admission 13e; BIS Ex. XX)
    74. Micei reimbursed Respondent for purchasing the uniform pants. 
(BIS Ex. E, pages 15 and 16, admission 13i(iii))
    75. The uniform pants are items subject to the Regulations. (BIS 
Ex. I; 15 CFR 734.3(a))
    76. At the time of the transaction, Respondent knew he was subject 
to the Denial Order. (BIS Ex. E, page 16, admission 13m)
    77. Respondent benefitted from his purchase of the uniform pants 
with his VISA credit card by earning airline frequent flier miles. (BIS 
Ex. E, page 16, admission 13j; see also, Finding of Fact 17, above)

Discussion

Burden of Proof

    The burden in this proceeding lies with the Bureau of Industry and 
Security to prove the charges instituted against the Respondents by a 
preponderance of reliable, probative, and substantial evidence. 
Steadman v. SEC., 450 U.S. 91, 102 (1981); In the Matter of Abdulmir 
Madi, et al, 68 FR 57406 (October 3, 2003). In the simplest terms, the 
Agency must demonstrate that the existence of a fact is more probable 
than its nonexistence. Concrete Pipe & Products v. Construction 
Laborers Pension Trust, 508 U.S. 602, 622 (1993).

Respondent's Prior Criminal Conviction

    The evidence shows that on January 22, 1999, Respondent, Yuri I. 
Montgomery, also known as Yuri I. Malinkovski, was convicted in the 
U.S. District Court for the District of Columbia of knowingly and 
willingly exporting and causing the export of U.S. origin stun guns to 
Macedonia and U.S. origin laser gun sights to Slovenia without applying 
for and obtaining the required export licenses from the