Order Relating to Eric Baird, 65340-65342 [2018-27572]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 83, Number 244 (Thursday, December 20, 2018)]
[Notices]
[Pages 65340-65342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27572]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Order Relating to Eric Baird

In the Matter of: Eric Baird, 647 Norsota Way Sarasota, FL 34242; 
Respondent; 16-BIS-0002.

    The Bureau of Industry and Security, U.S. Department of Commerce 
(``BIS''), has notified Eric Baird, of Sarasota, Florida (``Baird''), 
that it has initiated an administrative proceeding against Baird 
pursuant to Section 766.3 of the Export Administration Regulations (the 
``Regulations''),\1\ through the issuance of an Amended Charging Letter 
to Baird that alleges that Baird committed one hundred sixty-six (166) 
violations of the Regulations.\2\ Specifically, the charges are:
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    \1\ The Regulations originally issued under the Export 
Administration Act of 1979, as amended, 50 U.S.C. 4601-4623 (Supp. 
III 2015) (``the EAA''), which lapsed on August 21, 2001. 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 8, 2018 
(83 FR 39,871 (Aug. 13, 2018)), continued the Regulations in full 
force and effect under the International Emergency Economic Powers 
Act, 50 U.S.C. 1701, et seq. (2012) (``IEEPA''). On August 13, 2018, 
the President signed into law the John S. McCain National Defense 
Authorization Act for Fiscal Year 2019, which includes the Export 
Control Reform Act of 2018, Public Law 115-232, tit. 17, subtitle B, 
132 Stat. 2208 (2018) (``ECRA''). While Section 1766 of ECRA repeals 
the EAA (except for three sections which are inapplicable here), 
Section 1768 of ECRA provides, in pertinent part, that all rules and 
regulations that were made or issued under the EAA, including as 
continued in effect pursuant to IEEPA, and were in effect as of 
ECRA's date of enactment (August 13, 2018), shall continue in effect 
according to their terms until modified, superseded, set aside, or 
revoked through action undertaken pursuant to the authority provided 
under ECRA.
    \2\ The Regulations are currently codified in the Code of 
Federal Regulations at 15 CFR parts 730-774 (2018). The charged 
violations occurred in 2011-2013. The Regulations governing the 
violations at issue are found in the 2011-2013 versions of the Code 
of Federal Regulations (15 CFR parts 730-774). The 2018 Regulations 
set forth the procedures that apply to this matter.
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Charges 1-166 15 CFR 764.2(b)--Causing, Aiding or Abetting a Violation

    1. On at least one hundred sixty-six (166) occasions beginning 
on or about August 1, 2011, and continuing through on or about 
January 7, 2013, Baird caused, aided, abetted, commanded, induced 
and/or permitted (``caused, aided or abetted'') the doing of an act 
prohibited by, or the omission of an act required by, the 
Regulations. As further alleged below, Baird caused, aided or 
abetted the filing of false or misleading export control documents, 
namely Shipper's Export Declarations and Automated Export System 
filings (``SED/AES filings''), and the failure to make required SED/
AES filings, in connection with the export or attempted export of 
items subject to the Regulations. Baird also caused, aided or 
abetted the export and attempted export without the required BIS 
licenses of items subject to the Regulations and listed on the 
Commerce Control List (``CCL'').
    2. At all times pertinent hereto, Baird was Chief Executive 
Officer (``CEO'') of Access USA Shipping, LLC, d/b/a MyUS.com and f/
k/a Access USA Shipping, Inc. (``Access''), a company originally 
registered in Florida that he founded in 1997. Baird was directly or 
indirectly Access's primary shareholder until on or about August 28, 
2012. After a partial sale of Access on or about August 28, 2012, 
Baird continued to serve as its CEO and maintained a minority equity 
stake in the company with the right to appoint two members of 
Access's board of directors. Baird was replaced as CEO of Access in 
or about September 2013. Baird's interests, however, were not fully 
divested until on or about March 22, 2016, at which time he no 
longer had an equity interest in Access or the right to appoint 
board members.
    3. Access provided foreign customers with a U.S. physical 
address for items purchased from U.S. merchants for ultimate export 
from the United States. For a fee, Access provided

[[Page 65341]]

such customers a ``suite,'' which was a designated place or space at 
Access's warehouse facilities to which customers could have items 
delivered from U.S. merchants. When Access received items that a 
foreign customer had ordered from a U.S. merchant, Access employees 
entered into Access's order management system information regarding 
the name of the merchant, shipment tracking number, a detailed 
description of the item, and the value of the item. Before the 
shipment was exported from the United States, however, Access 
employees would revise the original item information, including the 
item's value and/or its description, to generate an invoice that 
contained false or misleading information for use in connection with 
the export of the items. At times, Access's order system included 
account notes that directed packaging or price tags be removed or 
that a shipment's declared value be kept below a certain dollar 
amount.
    4. Baird established, directed, controlled, and/or authorized 
Access's policy and practice of falsifying the value and description 
of items being exported or intended for export, including items 
listed on the CCL. Baird also at times personally participated in 
the undervaluing and mis-description of such items.
    5. Access routinely undervalued items using multiple different 
strategies or schemes, including, for example, by lowering values of 
items by 25%-50% depending on the country of destination. The extent 
of undervaluation reached or exceeded 75% on some occasions, and for 
some customers maximum declared values of no more than, for example, 
$50 or $100, were used, regardless of the true value of the items.
    6. Similarly, on numerous occasions, descriptions of CCL items 
or other items subject to the Regulations were altered to help avoid 
export control scrutiny and detection by law enforcement, including 
on occasions when the items also were undervalued. For example, a 
night vision lens converter was described as ``camera lenses''; 
laser sights as ``tools and hardware''; and rifle scopes as 
``sporting goods'' or ``tools, handtools.'' In one instance, rifle 
stocks and grips were described as ``toy accessories.'' Access's 
October 2010 and October 2012 Customer Service Training Manuals 
illustrate the pervasiveness of altering descriptions of items, in 
part, to avoid export control scrutiny and detection, including 
those related to firearms and related parts that were considered 
prohibited or restricted items.
    7. Baird also established, directed, controlled, and/or 
authorized Access's ``personal shopper program'' or ``alternative 
program.'' Under this program, Access or an Access employee was 
presented to U.S. merchants as the purchaser and/or end-user of the 
items in situations where foreign customers were seeking products 
from U.S. merchants that did not accept foreign payment methods or 
had raised concerns that Access was not an end user and refused to 
sell or ship to Access because they wished to prevent the export of 
their goods, such as companies that sell weapons or weapon parts. 
Through this evasive program, Access purchased items for export to 
its foreign customers without informing the U.S. merchants that the 
items were intended for export. Foreign customers would email an 
Access employee their shopping list, and the Access employee would 
purchase the items using credit cards in Baird's name, or using a 
credit card account or other payment mechanisms opened in the name 
of the individual employee, whom Access would subsequently 
reimburse. At times, shipments were delivered to the homes of Access 
employees so that, in addition to being misled to believe that a 
domestic customer was involved, the U.S. merchant would be misled to 
believe that Access itself was not involved in the transaction.
    8. As part of this ``personal shopper program,'' Baird directed 
or authorized Access employees to use his credit cards and driver's 
license information to make purchases of items for export. In 
addition, Baird personally asked Access employees to apply for 
credit card accounts and have customer deliveries sent to their 
personal addresses to make the shipments appear as if they were for 
domestic customers.
    9. At all times relevant hereto, Baird knew of the Regulations 
and Access's export control compliance obligations, including the 
need for items to be accurately valued and described for purposes of 
SED/AES filing requirements and the need to determine licensing 
requirements. Baird received this information through, for example, 
outreach visits from and other communications with BIS special 
agents and other federal law enforcement agents, as well as at 
various occasions through other Access officials or personnel and 
through companies that regularly served as freight forwarders or 
carriers in connection with export transactions involving Access.
    10. For example, on or about July 11, 2007, BIS's Office of 
Export Enforcement (``OEE'') conducted an outreach visit to Access, 
during which a BIS Special Agent provided detailed oral and written 
information regarding compliance with the EAR and other U.S. export 
control laws and regulations. As part of this outreach visit, the 
BIS Special Agent met with Baird, including explaining that items 
should be checked for export license requirements and that customers 
should be screened. In addition, Access documents indicate that by 
no later than January 2008, Baird knew that false or misleading 
statements on SED/AES filings could lead to penalties of up to 
$250,000 per violation,\3\ and that by March 2008, Baird knew that a 
SED/AES filing must be made for each export when the value of the 
items under a single Schedule B number is more than $2,500.\4\ 
Access subsequently received Shield America outreach visits from the 
Department of Homeland Security, Homeland Security Investigations 
(``HSI'') on March 27, 2009, June 9, 2010, and January 10, 2012, 
respectively, during which HSI special agents provided compliance 
information. Baird attended the January 10, 2012 outreach visit. In 
addition, the BIS Special Agent provided detailed information on 
properly valuing items on export control documents during a 
telephone discussion with CEO Eric Baird on January 18, 2012, and a 
related follow-up email with him.
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    \3\ The maximum penalty figure that currently applies in this 
case is $295,141 per violation. See 15 CFR 6.3(b); 83 FR 706 (Jan. 
8, 2018). Since January 2008, the maximum penalties have been 
adjusted for inflation multiple times pursuant to the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, Sec. 
701 of Public Law 114-74, enacted on November 2, 2015. See also 15 
CFR 6.5.
    \4\ A Schedule B number is a ten-digit number used in the United 
States to classify physical goods for export to another country.
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    11. Access documents also include correspondence among Baird and 
Access's then-Chief Technology Officer (``CTO'') and other company 
officials indicating that Baird remained fully aware at and around 
the time of the violations alleged herein of SED/AES filing 
requirements and the potential significant sanctions for false or 
misleading statements on SED/AES filings. In emails in September 
2011 to Baird, the CTO, who is Baird's sister, provided information 
on a BIS enforcement case involving false or misleading reporting of 
declared value on export documents. In an email dated September 20, 
2011, she included information describing BIS's imposition of civil 
penalties as part of the settlement of a case involving repeat 
undervaluing of exports on Shipper's Export Declarations and stated, 
inter alia: ``I will not be a party to [undervaluation]. I know 
we're doing it now. I know we have the means to avoid doing it. I 
know we are WILLINGLY AND INTENTIONALLY breaking the law.'' 
(Emphasis in original). In the same email chain later that day, 
Baird suggested that Access could undervalue by 25% and if Access 
was ``warned by [the U.S.] government,'' then it ``can stop ASAP.''
    12. Baird, however, did not stop Access's undervaluing of 
exports or its or his related violations of the Regulations. Rather, 
almost immediately following this September 20, 2011 email exchange, 
Baird and the CTO discussed on September 21, 2011, how Access's 
order system would be modified to either automatically or manually 
undervalue where there was no merchant invoice. The order system 
would be and was in fact modified to enable undervaluing by a set 
percentage based on the country of destination for the export, if 
there was no U.S. merchant's invoice or no value listed on the U.S. 
merchant's invoice. Additionally, when a U.S. merchant's invoice was 
included in a package received from a U.S. merchant, Access would 
remove the invoice at its customer's request, both before and after 
the September 2011 modification of the order system.
    13. While Access for a short time did reduce the extent it 
engaged in its unlawful undervaluing activities, it fully resumed 
and even expanded those activities in no later than January 2012, 
pursuant to Baird's direction and/or authorization. Beginning no 
later than on or about January 16, 2012, Baird directed or 
authorized that Access customers be notified that Access's order 
system was being modified to remove the recent limitation on 
undervaluing and that Access would work together with them so that 
false values could be declared and undervalued to the extent of the 
customers' choosing.

[[Page 65342]]

    14. In doing the foregoing, Baird caused, aided or abetted 
Access, as well as forwarders and carriers involved in export 
transactions with Access, to make false or misleading SED/AES 
filings with the U.S. Government. Such false or misleading filings 
violate Section 764.2(g) of the Regulations. Baird also caused, 
aided or abetted the failure by Access and its forwarders and 
carriers to make required SED/AES filings. The failure to make a 
required SED/AES filing violates Section 764.2(a) of the 
Regulations. Baird also caused, aided or abetted the export and 
attempted export of items classified under Export Control 
Classification Number (``ECCN'') 0A987 and controlled for Crime 
Control reasons without the BIS licenses required pursuant to 
Section 742.7 of the Regulations to export the items to Argentina, 
Austria, Hong Kong, Indonesia, Libya, Saudi Arabia, South Africa and 
Yemen. Such unlicensed exports and attempted exports violated 
Section 764.2(a) and 764.2(c), respectively, of the Regulations.
    15. In so doing, Baird committed one hundred sixty-six 
violations of Section 764.2(b) of the Regulations.

    Whereas, BIS and Baird 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;
    Whereas, I have taken into consideration the admission of 
liability by Baird set forth in the Settlement Agreement with regard 
to the violations in the Amended Charging Letter;
    Whereas, I have also taken into consideration the plea agreement 
that Baird has entered into with the U.S. Attorney's Office for the 
Middle District of Florida (``the plea agreement''); and
    Whereas, I have approved of the terms of such Settlement 
Agreement;
    It is therefore ordered:
    First, Baird shall be assessed a civil penalty in the amount of 
$17,000,000. Baird shall pay the U.S. Department of Commerce 
$10,000,000 not later than 30 days from the date of this Order. 
Payment of the remaining $7,000,000 shall be suspended for a period 
of five (5) years from the date of this Order, and thereafter shall 
be waived, provided that during this five-year payment probationary 
period, Baird has made full and timely payment of $10,000,000 as set 
forth above and has otherwise complied with the provisions of the 
Settlement Agreement and this Order, has complied in full with the 
plea agreement and any sentence imposed upon him following his 
conviction, and has committed no violation of the Export Control 
Reform Act of 2018 (``ECRA'') \5\ or the Regulations or any order, 
license, or authorization issued thereunder. If Baird fails to 
comply with the terms of the Settlement Agreement or of this Order, 
or the terms of the plea agreement or sentence, or commits a 
violation of ECRA or the Regulations or any order, license, or 
authorization issued thereunder, during the five-year payment 
probationary period under this Order, the suspension of the civil 
penalty may be modified or revoked by BIS and the remaining 
$7,000,000 may become due and owing immediately.
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    \5\ See note 1, supra.
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    Second, pursuant to the Debt Collection Act of 1982, as amended 
(31 U.S.C. 3701-3720E (2012)), 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, 
Baird will be assessed, in addition to the full amount of the civil 
penalty and interest, a penalty charge and an administrative charge, 
as more fully described in the attached Notice.
    Third, for a period of five (5) years from the date of this 
Order, Eric Baird, with a last known address of 647 Norsota Way, 
Sarasota, FL 34242, and when acting for or on his behalf, his 
successors, assigns, representatives, agents, or employees 
(hereinafter collectively referred to as the ``Denied Person''), 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, 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 
engaging 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 from any other activity subject to 
the Regulations.
    Fourth, 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, after notice and opportunity for comment as provided in 
Section 766.23 of the Regulations, any person related to the Denied 
Person by ownership, control, position of responsibility, 
affiliation, or other connection in the conduct of trade or business 
may also be made subject to the provisions of this Order.
    Sixth, the five-year denial period set forth above shall be 
active for a period of four (4) years from the date of this Order. 
As authorized by Section 766.18(c) of the Regulations, the remaining 
one (1) year of the denial period shall be suspended, and shall 
thereafter be waived five (5) years from the date of this Order, 
provided that Baird has made full and timely payment as set forth 
above, has otherwise complied with the provisions of the Settlement 
Agreement and this Order, has complied with the plea agreement and 
any sentence imposed upon or following the entry of his plea and 
conviction, and has committed no other violation of ECRA or the 
Regulations or any order, license, or authorization issued 
thereunder. If Baird does not make full and timely payment as set 
forth above or otherwise fails to comply with the Settlement 
Agreement or this Order, does not fully and timely comply with the 
plea agreement or sentence, or commits another violation of ECRA or 
the Regulations or any order, license, or authorization issued 
thereunder, the suspension of the remaining one year of the denial 
period may be modified or revoked by BIS. If Baird fails to comply 
with any of the above conditions after the four-year active portion 
of the denial period but before five years from the date of this 
Order, the full one year suspended portion of the denial order may 
be imposed from the date BIS determines such violation occurred, and 
any license issued pursuant to ECRA or the Regulations in which the 
Denied Person has an interest at that time will be revoked.
    Seventh, Baird shall not take any action or make or permit to be 
made any public statement, directly or indirectly, denying the 
allegations in the Amended Charging Letter or this Order.
    Eighth, the Amended Charging Letter, the Settlement Agreement, 
and this Order shall be made available to the public.
    Ninth, this Order shall be served on Baird, and shall be 
published in the Federal Register.
    This Order, which constitutes the final agency action in this 
matter, is effective immediately.

    Issued on December 14, 2018.
Douglas Hassebrock,
Director, Office of Export Enforcement, performing the non-exclusive 
functions and duties of the Assistant Secretary of Commerce for Export 
Enforcement.
[FR Doc. 2018-27572 Filed 12-19-18; 8:45 am]
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