In the Matter of: Alexander Brazhnikov, Jr., Respondent; Final Decision and Order, 13876-13886 [2021-05022]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 86, Number 46 (Thursday, March 11, 2021)]
[Notices]
[Pages 13876-13886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05022]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 19-BIS-0001]


In the Matter of: Alexander Brazhnikov, Jr., Respondent; Final 
Decision and Order

    This matter is before me upon a Recommended Decision and Order on 
Sanction (``Sanction RDO'') of an Administrative Law Judge (``ALJ''). 
On January 26, 2021, the ALJ referred the Sanction RDO to me pursuant 
to 15 CFR 766.17(b)(2). In the Sanction RDO, the ALJ found that 
Respondent Alexander Brazhnikov, Jr. (``Respondent'') violated 15 CFR 
764.2(d) by conspiring with others to violate the Export Administration 
Regulations (currently codified at 15 CFR parts 730-774) (``EAR'' or 
``Regulations'') by exporting regulated items to Russian End-Users on 
the Entity List without the required licenses. The ALJ recommended that 
a denial of export privileges for 15 years be assessed against 
Respondent. For the reasons set forth below, I affirm the Sanction RDO 
and issue the attached Order imposing sanction.
    As described in further detail below, on April 21, 2020, in this 
same case, the ALJ issued an Order Partially Granting Motion for 
Summary Decision (``Summary Decision Order'') in which he found that 
Respondent had violated the EAR. The ALJ attached the Summary Decision 
Order to the

[[Page 13877]]

Sanction RDO. I affirm the Summary Decision Order as well.

I. Background

A. Respondent's Criminal Conviction

    On June 11, 2015, Respondent pled guilty to a three-count Criminal 
Information in the U.S. District Court for the District of New Jersey. 
Count Three charged Respondent with conspiracy to willfully export from 
the United States to Russia electronic components under the 
jurisdiction of the Department of Commerce without first having 
obtained the required licenses from the Department of Commerce, in 
violation of 18 U.S.C. 371. The object of the conspiracy was to evade 
the EAR by supplying controlled electronics components to Russian end-
users, including defense contractors licensed to procure parts for the 
Russian military, the Federal Security Service of the Russian 
Federation (FSB), and Russian entities involved in the design of 
nuclear weapons and tactical platforms. The overt acts alleged in 
furtherance of the conspiracy included that on or about November 20, 
2013, and on or about April 23, 2014, Respondent and his co-
conspirators caused the export of electronic components obtained from 
certain U.S. manufacturers to Russia on behalf of ``a banned entity for 
which no export license could have lawfully been obtained.'' Respondent 
specifically admitted to engaging in these overt acts as part of his 
plea allocution.

B. BIS Charging Letter

    In a Charging Letter filed on April 22, 2019, the Bureau of 
Industry and Security (``BIS'') alleged that Respondent committed one 
violation of the EAR, stemming from his involvement in a conspiracy to 
violate the Regulations in connection with the export to Russia of 
U.S.-origin electronic components and other items subject to the 
Regulations. The violation alleged in the charging letter is as 
follows: \1\
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    \1\ Unless otherwise indicated, I have reproduced the violation 
alleged in the Charging Letter exactly as it is written. It includes 
all of the footnotes in the charging section. The numbering of the 
footnotes is different because the Charging Letter had additional 
footnotes prior to the charging section.
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Charge 1 15 CFR 764.2(d)--Conspiracy

    1. Beginning in at least January 2008, and continuing through at 
least June 2014, Brazhnikov conspired and acted in concert with 
others, known and unknown, to bring about acts that constitute 
violations of the Regulations. The purpose of the conspiracy was to 
evade the Regulations in connection with the export to Russia of 
U.S.-origin electronic components and other items subject to the 
Regulations, including to Russian entities on BIS's Entity List, 
Supplement No. 4 to Part 744 of the Regulations.
    2. Brazhnikov pled guilty in the U.S. District Court for the 
District of New Jersey on June 11, 2015, to having conspired to 
violate the International Emergency Economic Powers Act (``IEEPA'') 
(in violation of 18 U.S.C. 371), as well as to having conspired to 
smuggle goods from the United States (in violation of 18 U.S.C. 554) 
and to commit money laundering (in violation of 18 U.S.C. 
1956(h)).\2\
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    \2\ Brazhnikov pled guilty to all three counts of the Criminal 
Information in Case No. 2:15-CR-300-01 (D. N.J.). [The remainder of 
the footnote references an earlier footnote in the Charging Letter 
that was not part of the charging section.]
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    3. Brazhnikov admitted under oath as part of his plea allocution 
that he and his co-conspirators acquired U.S.-origin electronic 
components and other items while routinely concealing from the U.S. 
manufacturers and distributors of the items who the intended end 
users were and where they were located.
    4. Brazhnikov admitted under oath to further concealing the 
actual intended end users in an attempt to avoid detection by the 
U.S. Government, including by re-packaging and re-labeling the items 
and then having them shipped to various falsely-identified 
recipients and false addresses in Russia, some of which were vacant 
apartments or storefronts controlled by his Russian co-conspirators. 
If Brazhnikov had exported the items directly to a recipient or 
address on BIS's Entity List, it raised the possibility that the 
shipment would have been flagged or stopped by the U.S. Government. 
He also admitted that he and his Russian co-conspirators established 
a number of foreign bank accounts in third countries in the names of 
front companies, in order to conceal from the U.S. Government, the 
source of the funds and the identities of the end-users. Brazhnikov 
would receive funds laundered through these front accounts in third 
countries, rather than directly from the end users in Russia.
    5. Brazhnikov also admitted under oath to having systematically 
falsified shipping documents to understate the value of the U.S.-
origin items he was exporting, in order to evade the requirement to 
file Electronic Export Information (``EEI'') with the U.S. 
Government via the Automated Export System (``AES''). An EEI filing 
was required to be made in the AES for each export of items subject 
to the Regulations when the value of the items under a single 
Schedule B or Harmonized Tariff Schedule number is more than $2,500. 
15 CFR 758.l (2008-2014); see also 15 CFR 30.37 (2008-2014).\3\
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    \3\ 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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    6. Brazhnikov's overt acts in furtherance of the conspiracy also 
included, inter alia, exporting U.S.-origin electronic components 
subject to the Regulations to the All-Russian Scientific Research 
Institute of the Technical Physics (``VNIITF'') in Russia, without 
the required BIS licenses, on or about November 20, 2013, and on or 
about April 23, 2014, respectively.\4\ These items were designated 
EAR99 \5\ under the Regulations and valued at approximately $26,732 
and $19,937, respectively.
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    \4\ These two transactions were among the overt acts 
specifically alleged in Count Three (Conspiracy to Violate IEEPA) of 
the Criminal Information to which Brazhnikov pled guilty in the U.S. 
District Court for the District of New Jersey . . . . Brazhnikov 
admitted under oath that he was the owner, chief executive officer, 
and principal operator of the following four New Jersey-based 
companies--ABN Universal, Inc., ZOND-R, Inc., Telecom Multipliers, 
and Electronic Consulting, Inc.--and that these companies were used 
in furtherance of the conspiracy.
    \5\ The items were designated EAR99 under the Regulations, which 
is a designation for items subject to the Regulations but not listed 
on the Commerce Control List. 15 CFR 772.1.
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    7. VNIITF was at all times relevant hereto listed on the Entity 
List, Supplement No. 4 to Part 744 of the Regulations.\6\ Pursuant 
to Section 744.11 of the Regulations and VNIITF's Entity List entry, 
a BIS export license was at all relevant times required to export 
any item subject to the Regulations to VNIITF, including the 
electronic components described in Paragraph 6, supra.\7\
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    \6\ VNIITF has been on the Entity List since June 30, 1997. 62 
FR 35,334 (Jun. 30, 1997). The VNIITF Entity List listing has at all 
times relevant hereto included VNIITF's full name, the ``VNIITF'' 
acronym, and various VNIITF aliases (and related acronyms), 
including the Federal State Unitary Enterprise Russian Federal 
Nuclear Center--Academician E.I. Zababkhin All-Russian Scientific 
Research Institute of Technical Physics (``FGUPRFYaTs-VNIITF''). 
FGUPRFYaTs-VNIITF was added to the listing as an alias of VNIITF on 
December 17, 2010. 75 FR 78,883 (Dec. 17, 2010).
    \7\ See 15 CFR 744.11 and Supplement No. 4 to part 744 of the 
Regulations (2008-2014).
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    8. Brazhnikov engaged in the unlicensed exports described above 
knowing that that [sic] no BIS export license had been sought or 
obtained. He continued to do so, moreover, even after though [sic] 
BIS Special Agents conducted an outreach visit with him on or about 
January 23, 2013, during which the Special Agents discussed, inter 
alia, both the licensing requirements for exports to Russia and EEI 
filing requirements.
    9. In so doing, as alleged in Paragraphs 1-8, supra, Brazhnikov 
violated Section 764.2(d) of the Regulations.

C. Summary Decision Order

    On December 16, 2019, BIS filed a motion for summary decision 
pursuant to 15 CFR 766.8. BIS argued that as a result of Respondent's 
criminal conviction for Count Three, there was no genuine issue of 
material fact as to whether he had violated the EAR as alleged in the 
Charging Letter, and that BIS was entitled to a summary decision as a 
matter of law.\8\ On February 10, 2020, Respondent filed an opposition 
to the motion.
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    \8\ In its Motion, BIS attached a copy of the Criminal 
Information, Plea Agreement, Transcript of Plea Hearing, and 
Judgment. Pursuant to 15 CFR 766.22(c), I have considered these 
documents in my review.
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    On April 21, 2020, the ALJ issued the Summary Decision Order. The 
ALJ determined that BIS had met its burden to show that there was no 
genuine issue

[[Page 13878]]

of material fact as to the allegations supporting the violation alleged 
in the charging letter, and accordingly found that Respondent violated 
15 CFR 764.2(d). As BIS had not argued for a particular sanction in its 
motion, the ALJ ordered the parties to submit written briefs stating 
their position as to an appropriate sanction. The ALJ did not certify 
his ruling in the Summary Decision Order to the Under Secretary for 
final decision.

D. Sanction RDO

    On May 29, 2020, BIS submitted a brief requesting that the ALJ 
recommend that Respondent's export privileges be denied for at least 15 
years. On that same day, Respondent filed a brief arguing that a six-
month denial period was appropriate.
    On January 26, 2021, the ALJ issued the Sanction RDO recommending a 
15-year denial period. In the Sanction RDO, the ALJ again found that 
Respondent had violated 15 CFR 764.2. As previously stated, the 
Sanction RDO incorporated the Summary Decision Order as an attachment. 
The ALJ referred the Sanction RDO to me for review and final decision.

II. Review by Under Secretary

A. Introduction

    Under Section 766.17(b)(2) of the EAR, in proceedings such as this 
one, the ALJ shall issue a recommended decision that includes 
recommended findings of fact, conclusions of law, and findings as to 
whether there has been a violation of the EAR or any order, license or 
authorization issued thereunder. If the ALJ finds that one or more 
violations have been committed, the ALJ shall recommend an order 
imposing administrative sanctions, or such other action as the ALJ 
deems appropriate. The ALJ must also ``immediately certify'' the record 
to the Under Secretary for a final decision in accordance with Section 
766.22 of the EAR.
    The Under Secretary shall issue a written order affirming, 
modifying or vacating the recommended decision and order of the ALJ 
based on the written record for decision, including the transcript of 
any hearing, and any submissions by the parties concerning the 
recommended decision. 15 CFR 766.22(c).
    On February 5, 2021, I issued a notice to the parties clarifying 
that my review of this case would include both the Sanction RDO and the 
incorporated Summary Decision Order and, taking note that Respondent 
had been representing himself, gave the parties additional time, until 
February 17, 2021, to respond to both decisions.

B. Submissions of the Parties in Response to the ALJ's Decisions and 
Orders

    On February 17, 2021, BIS submitted a response recommending that I 
find that Respondent had violated the EAR and affirm the recommended 
sanction. Respondent did not submit a response or a reply to the BIS 
response.

C. Review of Summary Decision Order and Sanction RDO

    In the Summary Decision Order and again in the Sanction RDO, the 
ALJ correctly found that ``[b]etween January 2008 through June 2014, 
Respondent violated 15 CFR 764.2(d) by conspiring with others to 
violate the EAR by exporting regulated items to Russian end-users on 
BIS' Entity List without the required licenses.'' Respondent, in 
pleading guilty to Count Three of the Information, admitted to all of 
the material facts alleged in the Charging Letter. The District Court, 
in accepting the Defendant's guilty plea, determined that there was a 
factual basis to support the plea. See Fed. R. Crim. P. 11(b)(3) 
(``Before entering judgment on a guilty plea, the court must determine 
that there is a factual basis for the plea.'').
    As the ALJ concluded in the Summary Decision Order, under the 
doctrine of collateral estoppel, Respondent cannot challenge the 
underlying facts that he admitted to in his criminal case. See SEC. v. 
Bilzerian, 29 F.3d 689, 694 (D.C. 1994) (``[C]ollateral estoppel 
prohibits relitigation of an issue of fact or law that has been decided 
in earlier litigation.''). In this case, the Charging Letter included 
underlying facts from Respondent's criminal case that establish as a 
matter of law that Respondent violated Section 764.2(d).
    The Sanction RDO recommended an order imposing a denial of export 
privileges for 15 years as a penalty against Respondent. In 
recommending this penalty, the ALJ noted the years-long scheme, the 
sophisticated effort to evade detection, the deliberateness of the 
violation, and that the end-user for the transactions described in the 
Charging Letter was an organization on BIS's Entity List that poses a 
risk to U.S. national security. The ALJ's analysis in support of the 
recommended sanction was well-reasoned and persuasive. I agree with his 
determination that a 15-year denial of export privileges is 
appropriate.

III. Conclusion and Final Order

    Based on my review of the written record and for the reasons 
described above, I affirm the recommended finding in the Summary 
Decision Order and Sanction RDO that Respondent violated the EAR as 
alleged in the Charging Letter, and affirm the recommended sanction of 
a 15-year denial of export privileges in the Sanction RDO.
    Accordingly, it is therefore ordered:
    FIRST, that for a period of Fifteen (15) years from the date that 
this Order is published in the Federal Register, Alexander Brazhnikov, 
Jr., with a last known address of 234 Central Avenue, Mountainside, New 
Jersey 07092, and when acting for or on his behalf, his successors, 
assigns, representatives, agents, or employees (hereinafter 
collectively referred to as ``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 EAR, or in any other activity subject to the EAR, 
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 EAR, or engaging in any other 
activity subject to the EAR; 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 EAR, or from any other activity subject to the EAR.
    SECOND, 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 EAR;
    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 EAR 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

[[Page 13879]]

any item subject to the EAR that has been exported from the United 
States;
    D. Obtain from the Denied Person in the United States any item 
subject to the EAR 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 EAR 
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 EAR that has been or will be exported from the United States. For 
purposes of this paragraph, servicing means installation, maintenance, 
repair, modification or testing.
    THIRD, after notice and opportunity for comment as provided in 
Section 766.23 of the EAR, any person, firm, corporation, or business 
organization 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.
    FOURTH, that this Order shall be served on Alexander Brazhnikov, 
Jr. and on BIS, and shall be published in the Federal Register. In 
addition, the ALJ's Summary Decision Order and the Sanction RDO 
described above, shall also be published in the Federal Register, 
except for the section with the Recommended Order in the Sanction RDO.
    This Order, which constitutes the final agency action in this 
matter, is effective upon publication in the Federal Register.

    Dated: March 5, 2021.
Jeremy Pelter,
Senior Advisor for Policy and Program Integration, Performing the 
Nonexclusive Functions and Duties of the Under Secretary of Commerce 
for Industry and Security.

United States of America

Department of Commerce

Bureau of Industry and Security

In the Matter of: Alexander Brazhnikov, Jr., Respondent
Docket No. 19-BIS-0001

Recommended Decision and Order on Sanction

Issued: January 26, 2021

Issued By: Hon. Michael J. Devine, Presiding

Appearances

For the Bureau of Industry and Security
Gregory Michelsen, Esq., Opher Shweiki, Esq., Deborah A. Curtis, Esq., 
U.S. Department of Commerce, Room H-3839, 14th Street & Constitution 
Ave. NW, Washington, DC 20230
For Respondent
Alexander Brazhnikov, Jr., pro se, 234 Central Ave., Mountainside, NJ 
07092

I. Procedural History

    This case arises from Alexander Brazhnikov, Jr.'s (Respondent) 
violation of the Export Administration Regulations (EAR or 
Regulations). Prior to the institution of this administrative 
proceeding, Respondent pled guilty in the U.S. District Court for the 
District of New Jersey on June 11, 2015, to, inter alia, having 
conspired to violate the International Emergency Economic Powers Act 
(IEEPA), the statutory scheme that gave effect to the EAR.\9\
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    \9\ The Export Administration Regulations, 15 CFR parts 730-774, 
were promulgated under the Export Administration Act of 1979 
(``EAA''), formerly codified at 50 U.S.C. 4601-4623. The offenses in 
this case occurred between January 2008 and June 2014. Although the 
EAA had expired prior to 2008, the President, through Executive 
Order 13,222 of August 17, 2001, and through successive Presidential 
Notices, continued the EAR in full force and effect under the 
International Emergency Economic Powers Act (``IEEPA''), codified at 
50 U.S.C. 1701, et seq. Accordingly, at the time the offenses 
occurred, BIS had jurisdiction over this matter pursuant to the 
IEEPA and the EAR. The EAA was repealed in 2018, with the enactment 
of the Export Control Reform Act (``ECRA''). See 50 U.S.C. 4826. The 
ECRA provides BIS with permanent statutory authority to administer 
the EAR. The ECRA specifically states that all administrative or 
judicial proceedings commenced prior to its enactment are not 
disturbed by the new legislation. See Id. Accordingly, BIS currently 
has jurisdiction over this matter, as it did at the time of the 
alleged offenses.
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    On April 22, 2019, the Bureau of Industry and Security (BIS or 
Agency) initiated this administrative proceeding by issuing a Charging 
Letter against Respondent alleging one violation, conspiracy to violate 
the EAR, under 15 CFR 764.2(d). The charge read as follows:

Charge 1 15 CFR 764.2(d)--Conspiracy

    1. Beginning in at least January 2008, and continuing through at 
least June 2014, Brazhnikov conspired and acted in concert with 
others, known and unknown, to bring about acts that constitute 
violations of the Regulations. The purpose of the conspiracy was to 
evade the Regulations in connection with the export to Russia of 
U.S.-origin electronic components and other items subject to the 
Regulations, including to Russian entities on BIS' Entity List, 
Supplement No. 4 to Part 744 of the Regulations.
    2. Brazhnikov pled guilty in the U.S. District Court for the 
District of New Jersey on June 11, 2015, to having conspired to 
violate the International Emergency Economic Powers Act (``IEEPA'') 
(in violation of 18 U.S.C. 371), as well as to having conspired to 
smuggle goods from the United States (in violation of 18 U.S.C. 554) 
and to commit money laundering (in violation of 18 U.S.C. 1956(h)).
    3. Brazhnikov admitted under oath as part of his plea allocution 
that he and his co-conspirators acquired U.S.-origin electronic 
components and other items while routinely concealing from the U.S. 
manufacturers and distributors of the items who the intended end 
users were and where they were located.
    4. Brazhnikov admitted under oath to further concealing the 
actual intended end users in an attempt to avoid detection by the 
U.S. Government, including by re-packaging and re-labeling the items 
and then having them shipped to various falsely-identified 
recipients and false addresses in Russia, some of which were vacant 
apartments or storefronts controlled by his Russian co-conspirators. 
If Brazhnikov had exported the items directly to a recipient or 
address on BIS' Entity List, it raised the possibility that the 
shipment would have been flagged or stopped by the U.S. Government. 
He also admitted that he and his Russian co-conspirators established 
a number of foreign bank accounts in third countries in the names of 
front companies, in order to conceal from the U.S. Government, the 
source of the funds and the identities of the end-users. Brazhnikov 
would receive funds laundered through these front accounts in third 
countries, rather than directly from the end users in Russia.
    5. Brazhnikov also admitted under oath to having systematically 
falsified shipping documents to understate the value of the U.S.-
origin items he was exporting, in order to evade the requirement to 
file Electronic Export Information (``EEI'') with the U.S. 
Government via the Automated Export System (``AES''). An EEI filing 
was required to be made in the AES for each export of items subject 
to the Regulations when the value of the items under a single 
Schedule B or Harmonized Tariff Schedule number is more than $2,500. 
15 CFR 758.1 (2008-2014; see also 15 CFR 30.37 (2008-2014).
    6. Brazhnikov's overt acts in furtherance of the conspiracy also 
included, inter alia, exporting U.S.-origin electronic components 
subject to the Regulations to the All-Russian Scientific Research 
Institute of the Technical Physics (``VNIITF'') in Russia, without 
the required BIS licenses, on or about November 20, 2013, and on or 
about April 23, 2014, respectively. These items were designated 
EAR99 under the Regulations and valued at

[[Page 13880]]

approximately $26,732 and $19,937, respectively.\10\
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    \10\ While the Charging Letter stated the value of the 
transactions as $26,732 and $19,937, the invoices produced by BIS to 
support this allegation showed that the amounts were listed in 
rubles, not dollars. This discrepancy did not affect the ALJ's 
determination that Respondent violated the EAR.
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    7. VNIITF was at all times relevant hereto listed on the Entity 
List, Supplement No. 4 to Part 744 of the Regulations. Pursuant to 
Section 744.11 of the Regulations and VNIITF's Entity List entry, a 
BIS export license was at all relevant times required to export any 
item subject to the Regulations to VNIITF, including the electronic 
components described in Paragraph 6, supra.
    8. Brazhnikov engaged in the unlicensed exports described above 
knowing that no BIS export license had been sought or obtained. He 
continued to do so, moreover, even after though [sic] BIS Special 
Agents conducted an outreach visit with him on or about January 23, 
2013, during which the Special Agents discussed, inter alia, both 
the licensing requirements for exports to Russia and EEI filing 
requirements.
    9. In so doing, as alleged in Paragraph 1-8, supra, Brazhnikov 
violated Section 764.2(d) of the Regulations.

    Neither party requested a hearing in this case, and accordingly, 
the ALJ issued an Order on October 18, 2019, holding that the parties 
had waived their right to a hearing and the case would proceed on the 
record, and further setting forth a schedule for discovery, motions, 
and final briefs. See 15 CFR 766.6(c) and 766.15.
    On December 16, 2019, BIS filed a Motion for Summary Decision with 
supporting documentation, contending Respondent's criminal conviction 
in U.S. District Court demonstrates there is no dispute Respondent 
committed a violation of the EAR under 15 CFR 764.2(d). In response, 
Respondent filed an opposition to the motion.
    On April 21, 2020, the ALJ issued an Order Partially Granting 
Motion for Summary Decision (Summary Decision Order), finding 
Respondent's arguments did not create a genuine issue of material fact 
and that BIS was entitled to a decision as a matter of law that 
Respondent violated the EAR under 15 CFR 764.2(d). Respondent did not 
dispute his conviction and did not object to the documents BIS attached 
to its Motion, which included his plea allocution. Respondent was thus 
collaterally estopped from denying the facts set forth in the Charging 
Letter, as they were the same facts to which Respondent admitted 
through his guilty plea in the federal criminal case. Accordingly, the 
ALJ found Charge 1 proved, but reserved ruling on the sanction. The 
Summary Decision Order included Recommended Findings of Fact and 
Recommended Ultimate Findings of Fact and Conclusions of Law. See 
Attachment A.
    On May 29, 2020, BIS submitted a final brief contending Respondent 
should be denied export privileges for at least 15 years. On the same 
date, Respondent filed a brief, in the form of a letter, arguing that 
deprivation of export privileges for six months would be a sufficient 
sanction.
    The record is now ripe for decision on sanction.

II. Recommended Findings of Fact Regarding Sanction

    After considering the whole record, including the parties' final 
briefs, and the Summary Decision Order, I find the following facts 
proved by preponderant evidence:

    1. As part of the conspiracy lasting between January 2008 and 
June 2014, Russian customers, including Russian defense contractors, 
paid Respondent and his co-conspirators to procure the U.S.-origin 
electronics. (Mot. for Summ. Dec., Ex. 4 at p. 18 (Respondent's Plea 
Allocution)).
    2. To conceal the source of the funds and thus the identities of 
the Russian customers, Respondent and his co-conspirators 
established bank accounts held by foreign shell companies and moved 
the funds from the Russian customers to those bank accounts. (Mot. 
for Summ. Dec., Ex. 4 at pp. 17-21 (Respondent's Plea Allocution)).
    3. Respondent deliberately concealed the identities of the true 
end-users (including the VNIITF) of the electronics from the U.S. 
vendors and U.S. authorities by utilizing New Jersey corporations 
founded by Respondent to repackage the items for export to Russia, 
and by shipping the items to false addresses in Russia, e.g., vacant 
apartments. (Mot. for Summ. Dec., Ex. 4 at pp. 21-22 (Respondent's 
Plea Allocution)).
    4. Respondent falsified the value of the exported items to evade 
the requirements for filing EEI forms, in an attempt to conceal the 
extent of the activities from U.S. authorities. (Mot. for Summ. 
Dec., Ex. 4 at p. 22 (Respondent's Plea Allocution)).
    5. Respondent and his co-conspirators were responsible for 
illegal export transactions totaling over $65 million. (Mot. for 
Summ. Dec., Ex. 4, p. 24 (Respondent's Plea Allocution)).

III. Discussion

A. Burden of Proof

    The Administrative Procedure Act (APA) governs proceedings for 
administrative penalties for EAR violations. 5 U.S.C. 554, et seq. See 
50 U.S.C. 4819(c)(2) (``Any civil penalty under this subsection may be 
imposed only after notice and opportunity for an agency hearing on the 
record in accordance with sections 554 through 557 of Title 5.'') 
Pursuant to the APA, the burden in this proceeding lies with BIS to 
prove the charge against Respondent by reliable, probative, and 
substantial evidence. 5 U.S.C. 556(d). The ``reliable, probative, and 
substantial'' standard is synonymous with the ``preponderance of the 
evidence'' standard of proof. Steadman v. SEC, 450 U.S. 91, 102 (1981); 
In the Matter of Abdulmir Madi, et al., 68 FR 57406 (October 3, 2003).
    As noted in the Summary Decision Order, BIS has already established 
there is no genuine dispute of material fact concerning the alleged 
violations. Concrete Pipe & Products v. Construction Laborers Pension 
Trust, 508 U.S. 602, 622 (1993). Therefore, at this stage of the 
proceedings, those facts in the Summary Decision Order are established. 
However, BIS still retains the burden to prove any additional 
aggravating facts offered in support of its request for sanction with 
preponderant evidence, meaning BIS must show the fact's existence is 
more probable than not. 5 U.S.C. 556(d). After determining which facts 
have been proven by preponderant evidence, it is then up to the ALJ to 
determine an appropriate sanction.\11\
---------------------------------------------------------------------------

    \11\ 15 CFR 766.17(b)(2) states, in pertinent part, ``If the 
administrative law judge finds that one or more violations have been 
committed, the judge shall recommend an order imposing 
administrative sanctions, as provided in part 764 of the EAR, or 
such other action as the judge deems appropriate.''
---------------------------------------------------------------------------

B. Determining an Appropriate Sanction

    Section 764.3 of the EAR describes the permissible sanctions BIS 
may seek for the violation charged in this proceeding: (1) A civil 
penalty, (2) a denial of export privileges under the Regulations, and 
(3) an exclusion from practice. See 15 CFR 764.3. Supplement Number 1 
to 15 CFR part 766, titled Guidance on Charging and Penalty 
Determinations in Settlement of Administrative Enforcement Cases 
(``Penalty Guidance''), provides non-binding guidance on penalty 
determinations in the context of settlement discussions between BIS and 
respondents in administrative enforcement cases. The Penalty Guidance 
was created to aid settlement negotiations, and does not create any 
right or obligation as to what penalty or sanction BIS may seek after 
litigation; however, it provides helpful guideposts for considering an 
appropriate sanction even in the context of a litigated enforcement 
action.
1. Aggravation
    The Penalty Guidance discusses actions that may be considered 
``aggravating factors.'' Such actions include conduct that shows the 
respondent knew he/she was violating U.S. laws or regulations, i.e., a

[[Page 13881]]

deliberate intent to violate the EAR; intentional concealment of 
conduct for the purpose of misleading authorities or other parties 
involved in the transaction; and conduct that implicates U.S. national 
security and/or U.S. foreign policy, e.g., by exporting items to 
individuals/organizations on BIS ``Entity List.'' See 15 CFR part 766, 
Supp. No. 1, at Sec.  III ``Aggravating Factors.''
    As addressed in the Findings of Fact, above, Respondent admitted to 
engaging in deliberate acts with his co-conspirators meant to conceal 
their actions, including creating bank accounts for shell companies to 
conceal the true source of the funds, using his New Jersey-based 
corporations to repackage and ship the items to the Russian end-users, 
shipping components to false addresses to conceal the true identity of 
the Russian end-users, and falsifying the value of the exports to evade 
EEI filing requirements. Respondent admitted to these acts in his plea 
allocution before the Federal District Court, and accordingly BIS has 
proven these facts by preponderant evidence. (Mot. for Summ. Dec., Ex. 
4 (Respondent's Plea Allocution)). A party's deliberateness in 
violating the EAR and concealment of the conduct are aggravating 
factors that are given substantial weight. See 15 CFR part 766, Supp 
No. 1, at Sec. Sec.  III(A) and IV(B). There is no dispute that 
Respondent willfully and deliberately used sophisticated tactics to 
evade detection by U.S. authorities and to conceal the identities of 
the true end-users from the U.S. vendors.
    In its final brief, BIS asserts that pursuant to section 764.3 of 
the regulations, BIS may seek administrative sanctions including a 
civil penalty of up to $307,922 per violation or twice the value of the 
transaction upon which the penalty is imposed, whichever is greater. 
BIS also states that in view of the $65 million criminal forfeiture 
imposed in regard to the criminal action, BIS is not recommending an 
additional civil penalty in this matter, but contends Respondent's 
conduct is of such a serious nature that a 15-year denial of export 
privileges is ``not only necessary but proportionate to other cases, 
especially considering the activities of the prohibited end-users at 
issue such as VNIITF.'' (BIS Final Brief, p. 9).\12\ BIS argues that 
VNIITF assists Russia in the development of its nuclear weapons 
program.\13\ VNIITF is currently, and was at the time of Respondent's 
conduct, on BIS' Entity List. The Entity List was established to 
identify organizations that pose a significant national security 
concern:
---------------------------------------------------------------------------

    \12\ BIS demonstrated by preponderant evidence that Respondent 
shipped items to VNIITF in violation of the EAR, as set forth fully 
in the Summary Decision Order.
    \13\ BIS cites to the information provided by the Nuclear Threat 
Initiative on its website, https://www.nti.org/learn/facilities/926/.

    The Entity List (supplement no. 4 to part 744) identifies 
persons reasonably believed to be involved, or to pose a significant 
risk of being or becoming involved, in activities contrary to the 
national security or foreign policy interests of the United States. 
The entities are added to the Entity List pursuant to sections of 
part 744 (Control Policy: End-User and End-Use Based) and part 746 
(Embargoes and Other Special Controls) of the EAR.
    15 CFR 744.16 (emphasis supplied).

    The degree to which the conduct implicates national security 
concerns due to the sensitivity of the items exported or the nature of 
the recipient of the exports is another factor that is given 
substantial weight. Here, the recipient, VNIITF, is considered an 
organization to which exports must be carefully controlled because of 
potential harm to the national security or foreign policy. Respondent's 
conduct in providing VNIITF with electronic components is highly 
troubling.
2. Mitigation
    The Penalty Guidance likewise discusses actions that may be 
considered ``mitigating factors.'' Such actions include immediate 
cessation of the unlawful conduct once it was discovered, quick and 
decisive efforts to ascertain the cause and extent of the violation, 
and exceptional cooperation with the agency to investigate and resolve 
violations. See 15 CFR part 766, Supp. No. 1, at Sec.  III ``Mitigating 
Factors.''
    In his Final Brief, Respondent presents the following in support of 
his contention that a six-month denial of export privileges is 
appropriate:

    [C]onsidering that throughout the whole time of COVID-19 I have 
been working at the forefront and providing services to the 
community, as well as a small amount of offense, I believe that 
deprivation of export privileges for 6 months will be sufficient 
sanctions.
    Resp. Final Brief, p. 1.

    Respondent did not elaborate on his efforts to aid those impacted 
by COVID-19 or explain why that should be considered a mitigating 
factor in these administrative enforcement proceedings.
    In his opposition to BIS' Motion for Summary Decision, Respondent 
did not acknowledge his responsibility for his violations of the EAR, 
but instead asserted that his father took responsibility for the 
charges. Respondent's failure to acknowledge his responsibility came 
after he pled guilty in the criminal case and formally admitted in a 
plea hearing before a U.S. District Court judge that he had engaged in 
the violations and acts of concealment discussed above. In addition to 
avoiding an admission of responsibility, Respondent has not presented 
any evidence that he will implement an export compliance program, or 
make any effort to ensure his activities comport with export 
regulations, if he is allowed to continue in the export business. 
Likewise, he has not demonstrated cooperation in any significant manner 
with BIS in the present case. A mere contention of some form of 
community service relating to the COVID-19 pandemic is not evidence and 
does not present any valid basis for mitigation of sanctions for the 
charged violations.
3. Analysis of Respondent's Conduct in Comparison With Other 
Administrative Penalty Cases
    BIS points to the imposition of a 10-year denial of export 
privileges in the case In the Matters of: Trilogy International 
Associates, Inc., William Michael Johnson, Respondents, 83 FR 9259 
(Mar. 5, 2018). In Trilogy, the course of conduct lasted from January 
2010 through May 2010, wherein the respondents exported an explosives 
detector and 115 analog to digital converters to Russia. The Under 
Secretary of Commerce for Industry and Security found the respondents 
were ``willfully ignoring, or, at best, blinding themselves to their 
compliance obligations.'' 83 FR at 9262. Trilogy did not involve export 
of items to an organization on the Entity List, and the time period of 
the illegal acts was much briefer than Respondent's four-year course of 
conduct. Moreover, unlike the instant case, the respondents in Trilogy 
were found to have ``willfully ignored'' or ``blinded themselves'' to 
the regulations, as opposed to having engaged in extensive, deliberate 
concealment efforts. As such, a harsher penalty for Respondent seems 
appropriate.
    BIS also cites two cases in which administrative enforcement 
actions were brought against the respondents after they had been 
convicted of conspiracy to violate the IEEPA under 18 U.S.C. 371 and 50 
U.S.C. 1705, as in the instant case, by exporting items to Russian end-
users. In those cases, In the Matter of: Alexey Krutilin, 82 FR 43218 
(Sep. 14, 2017) and In the Matter of:

[[Page 13882]]

Dmitrii Karpenko, 82 FR 43217 (Sep. 14, 2017), the Office of Export 
Enforcement proceeded under 15 CFR 766.25, which allows the immediate 
imposition of an administrative penalty without the need for a charging 
letter and opportunity for hearing, but restricts the penalty to a 
maximum ten-year denial of export privileges. The respondent in 
Krutilin was given the maximum ten-year denial penalty. The respondent 
in Karpenko was given a five-year denial penalty. Neither of those 
cases mentioned the involvement of Russian organizations on the Entity 
List.
    Another case cited by BIS involving a clearly deliberate violation 
of export control regulations is In the Matter of: Yavuz Cizmeci, 80 FR 
18194 (Apr. 3, 2015), wherein the respondent aided Iran Air in 
procuring a Boeing 747 in direct violation of a Temporary Denial Order 
(``TDO''). The TDO, issued on June 6, 2008, prohibited a company called 
Ankair from ``directly or indirectly, participating in any way in any 
transaction involving the Boeing 747 . . . .'' Yet, on June 26, 2008, 
the respondent, CEO of Ankair, assisted in transferring possession of 
the plane to Iran Air. The transaction value was estimated at 
approximately $5.3 million. The respondent settled the administrative 
enforcement action and agreed to a $50,000 civil penalty and a 20-year 
denial of export privileges. While this case is factually distinct, 
both cases involve intentional violations of the EAR and transactions 
in the millions of dollars.
4. Sanction Determination
    Respondent violated the EAR by conspiring with others to, inter 
alia, export electronic components to an organization on the Entity 
List. Respondent further admitted to engaging in a years' long, 
sophisticated scheme to evade detection by U.S. authorities. The 
deliberateness of Respondent's violations and concealment efforts, the 
extent of the activity, and the fact that Respondent helped to export 
controlled items to an organization that is considered to pose a risk 
to U.S. national security, all justify an extensive period of denial of 
export privileges. Respondent failed to provide any mitigating 
evidence. Considering the 20-year denial imposed in Cizmeci, the ten-
year denials imposed in Trilogy and Krutilin, and the five-year denial 
imposed in Karpenko, a 15-year denial of export privileges for 
Respondent's conduct is comparable to sanctions imposed in similar 
cases and reasonable when considered in light of the applicable Penalty 
Guidance factors. Accordingly, I find that a 15-year denial of export 
privileges is appropriate.

IV. Conclusions of Law

    1. Respondent and the subject matter of this proceeding are 
properly within the jurisdiction of BIS pursuant to the Export 
Control Reform Act of 2018 and the EAR. 50 U.S.C. 4826; 15 CFR parts 
730-774.
    2. Between January 2008 through June 2014, Respondent violated 
15 CFR 764.2(d) by conspiring with others to violate the EAR by 
exporting regulated items to Russian end-users on BIS' Entity List 
without the required licenses.

V. Recommended Order

[Redacted Section]

    This Recommended Decision and Order is being referred to the Under 
Secretary for review and final action by overnight carrier as provided 
under 15 CFR 766.17(b)(2). Due to the short period of time for review 
by the Under Secretary, all papers filed with the Under Secretary in 
response to this Recommended Decision and Order must be sent by 
personal delivery, facsimile, express mail, or other overnight carrier 
as provided in 15 CFR 766.22(a).
    Submissions by the parties must be filed with the Under Secretary 
for Export Administration, Bureau of Industry and Security, U.S. 
Department of Commerce, Room H-3898, 14th Street and Constitution 
Avenue NW, Washington, DC 20230, within twelve (12) days from the date 
of issuance of this Recommended Decision and Order. Thereafter, the 
parties have eight (8) days from receipt of any responses in which to 
submit replies. See 15 CFR 766.22(b).
    Within thirty (30) days after receipt of this Recommended Decision 
and Order, the Under Secretary shall issue a written order, affirming, 
modifying, or vacating the Recommended Decision and Order. See 15 CFR 
766.22(c). A copy of the regulations regarding review by the Under 
Secretary can be found in Attachment B.

[Signature of Michael J. Devine]

Michael J. Devine
U.S. Coast Guard Administrative Law Judge

Done and dated January 26, 2021, at
Baltimore, Maryland

Attachment A: April 21, 2020 Order Partially Granting Motion for 
Summary Decision
Attachment B: Review by Under Secretary, 15 CFR 766.22

Attachment A

United States Department of Commerce

Bureau of Industry and Security

Washington, DC

In the Matter of: Alexander Brazhnikov, Jr. Respondent
Docket No. 19-BIS-0001

Order Partially Granting Motion for Summary Decision

Issued: April 21, 2020

Issued By: Hon. Michael J. Devine, Presiding

Appearances

For the Bureau of Industry and Security
Gregory Michelsen, Esq., Joseph V. Jest, Esq., Deborah A. Curtis, Esq., 
U.S. Department of Commerce, Room H-3839, 14th Street & Constitution 
Ave. NW, Washington, DC 20230
For Respondent
Alexander Brazhnikov, Jr., pro se, 234 Central Ave., Mountainside, NJ 
07092

I. Preliminary Statement

    The Bureau of Industry and Security (BIS) initiated this 
administrative enforcement action against Alexander Brazhnikov, Jr. 
(Respondent) by serving a Charging Letter against him on April 22, 
2019. BIS brought one Charge against Respondent, under 15 CFR 764.2(d), 
alleging he conspired with others to do acts that constitute violations 
of the Export Administration Regulations (EAR).
    As the basis for Charge 1, BIS alleged Respondent conspired with 
others from January 2008 through June 2014 to export regulated 
electronic components from the U.S. to Russian customers listed on 
BIS's ``Entity List'' without the required licenses.\14\ BIS supports 
Charge 1 with Respondent's June 11, 2015 guilty plea and subsequent 
conviction in the U.S. District Court for the District of New Jersey of 
conspiracy to violate the International Emergency Economic Powers Act 
(IEEPA) by acting with others to cause the export of electronic 
components from United States manufacturers to Russia on behalf of an 
entity for which no export license could have lawfully been obtained. 
According to the Charging Letter, the facts underlying the criminal 
case are the same as the facts underlying this administrative action.
---------------------------------------------------------------------------

    \14\ The Entity List is found in Supplement No. 4 to 15 CFR Part 
744. It designates foreign persons, businesses, and organizations to 
which export is prohibited without a license.
---------------------------------------------------------------------------

    On December 16, 2019, BIS filed a Motion for Summary Decision, 
arguing

[[Page 13883]]

Respondent's conviction demonstrates there is no dispute Respondent 
committed a violation of the EAR under 15 CFR 764.2(d). Respondent 
filed a late response on February 10, 2020, listing his contentions in 
three numbered paragraphs, arguing (1) his father took responsibility 
for all of the actions alleged in the Charging Letter, (2) BIS did not 
prove that ``these parts were U.S.-Origin,'' and (3) the total cost of 
the exported items listed in two sample invoices attached by BIS to its 
Motion for Summary Decision was $734.58. For the reasons set forth 
below, the undersigned is PARTIALLY GRANTING BIS' Motion for Summary 
Decision.

II. Recommended Findings of Fact

    1. Respondent pled guilty to a federal criminal charge of 
conspiracy to violate the International Emergency Economic Powers 
Act (IEEPA) in the U.S. District Court for the District of New 
Jersey on June 11, 2015, Case. No. 2:15-CR-00300-WJM-1. (Mot. for 
Summ. Dec., p. 4-5; Ex. 2; Ex. 3; Ex. 4; Ex. 5).
    2. Between January 2008 and June 2014, Respondent exported 
electronic components from U.S. vendors to Russian end-users. (Mot. 
for Summ. Dec., pp. 5-6, 8; Ex. 4 at p. 17-18).
    3. On or about November 20, 2013, Respondent exported multiple 
shipments of electronic components to the All-Russian Scientific 
Research Institute of Technical Physics (VNIITF) Academician E.I. 
Zababakhina. (Mot. for Summ. Dec., Ex. 2 at p. 15; Ex. 4 at p. 24; 
Ex. 11).
    4. Some of the items in the November 20, 2013 shipments were 
electronic components on the Commerce Control List under ECCN EAR99. 
(Mot. for Summ. Dec., Ex. 9).
    5. On or about April 23, 2014, Respondent exported electronic 
components to VNIITF Academician E.I. Zababakhina. (Mot. for Summ. 
Dec., Ex. 2 at p. 15; Ex. 4 at 24; Ex. 12).
    6. The components in the April 23, 2014 shipment were on the 
Commerce Control List under ECCN EAR99. (Mot. for Summ. Dec., Ex. 
10).
    7. BIS placed the VNIITF on the Entity List in 1997, and it 
remained there at all times during 2008 through 2014. (Mot. for 
Summ. Dec., pp. 8-9); see Entity List at Supplement No. 4 to 15 CFR 
part 744.
    8. BIS added the Academician E.I. Zababakhina to the Entity List 
as an alias for the VNIITF in 2010. (Mot. for Summ. Dec., pp. 8-9); 
see Entity List at Supplement No. 4 to 15 CFR part 744.
    9. Respondent exported the afore-mentioned items without 
obtaining a BIS license.

III. Discussion

A. Jurisdiction

    The alleged offenses occurred between January 2008 and June 2014. 
At that time, BIS had jurisdiction over this matter pursuant to the 
IEEPA and the EAR promulgated under the Export Administration Act of 
1979 (EAA), codified at 50 U.S.C. 4601-4623. See 15 CFR parts 730-774. 
Although the EAA had lapsed at that time, the President, through 
Executive Order 13,222 of August 17, 2001, and through successive 
Presidential Notices, continued the regulations in full force and 
effect under the IEEPA. 50 U.S.C. 1701, et seq.
    In August 2018, Congress enacted the John S. McCain National 
Defense Authorization Act containing the Export Control Reform Act of 
2018, which repealed much of the EAA but provided BIS with permanent 
statutory authority to administer the EAR. See 50 U.S.C. 4826. The 2018 
Act specifically states all administrative actions made or 
administrative proceedings commenced prior to its enactment are not 
disturbed by the new legislation. See Id. Accordingly, BIS currently 
has jurisdiction over this matter, as it did at the time of the alleged 
offenses.

B. Standard of Review for Summary Decision

    The regulations governing BIS civil penalty enforcement proceedings 
allow a party to move for summary decision disposing of some or all of 
the issues in the case if there is no genuine issue as to any material 
fact and the moving party is entitled to summary decision as a matter 
of law. 15 CFR 766.8. A dispute over a material fact is ``genuine'' if 
the evidence is such that a reasonable fact finder could render a 
ruling in favor of the non-moving party. Anderson v. Liberty Lobby, 
Inc., 477 U.S. 242, 248 (1986).
    The moving party bears the initial burden of production to identify 
those portions of the record that demonstrate an absence of genuine 
issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 330-
331 (1986). Once the moving party meets that initial burden, the burden 
of production then shifts to the non-moving party to identify specific 
evidentiary material that demonstrates a genuine issue for trial. Id. 
Mere denials of allegations are not sufficient to demonstrate a genuine 
issue of material fact. Sanders v. Nunley, 634 F.Supp. 474, 476 (N.D. 
Ga. 1985).
    When considering the ultimate burden of persuasion, the ALJ must 
apply the ``substantive evidentiary standard of proof that would apply 
at the trial on the merits.'' Liberty Lobby, 477 U.S. at 252. Here, the 
standard of proof is the standard set forth in the Administrative 
Procedure Act--a preponderance of the evidence. 50 U.S.C. 4819(c)(2); 
Sea Island Broadcasting Corp. of S.C. v. F.C.C., 627 F.2d 240, 243 
(1980).

C. No Genuine Issue of Material Fact Exists

1. Legal Basis for Charge 1 (15 CFR 764.2(d)--Conspiracy)
    According to Charge 1, BIS alleges Respondent conspired with others 
to violate the EAR under 15 CFR 764.2(d), from January 2008 through 
June 2014 to procure electronic components from U.S. vendors and export 
the components to Russian end-users, while evading U.S. licensing 
regulations prohibiting such export transactions. (Mot. for Summ. Dec., 
Ex. 1 [Charging Letter], pp. 1-3). The electronic components were 
listed on BIS's Commerce Control List. The Russian end-users were 
listed on BIS' Entity List, and, as such, were entities deemed by the 
U.S. ``to pose a significant risk of being or becoming involved, in 
activities contrary to the national security or foreign policy 
interests of the United States.'' 15 CFR 744.16.
a. Regulation of Items on the Commerce Control List
    BIS maintains authority over the exportation of certain items. 
These items are listed on the Commerce Control List (CCL), and divided 
into categories, such as ``nuclear materials,'' ``telecommunications 
and information security,'' and ``aerospace and propulsion.'' 15 CFR 
774.1(a); 15 CFR 738.2(a). Categories are divided into groups, such as 
``materials,'' ``software,'' and ``technology.'' 15 CFR 738.2(b). 
Within each category and group, items are identified by an Export 
Control Classification Number (ECCN). 15 CFR 738.2(d).
    An ECCN listing provides information on the reasons that BIS 
regulates that particular item; one must cross-reference the 
information in the ECCN listing with information provided in the 
Commerce Country Chart to determine if a license is required to export 
the item to a particular country. 15 CFR 738.2, 738.4; Supplement No. 1 
to Part 738 (Commerce Country Chart).
b. Regulation of Exports to Entities on the Entity List
    In addition to the Commerce Control List, the EAR provides another 
layer of regulation by way of the Entity List, which specifies 
individuals, businesses, and organizations to whom the export of 
certain items is prohibited without a license. With regard to the 
Entity List, the EAR provides:

    The Entity List (Supplement No. 4 to part 744) identifies 
persons reasonably believed to be involved, or to pose a significant 
risk of being or becoming involved, in activities contrary to the 
national security or foreign

[[Page 13884]]

policy interests of the United States. The entities are added to the 
Entity List pursuant to sections of part 744 (Control Policy: End-
User and End-Use Based) and part 746 (Embargoes and Other Special 
Controls) of the EAR.
    (a) License requirements. The public is hereby informed that in 
addition to the license requirements for items specified on the 
Commerce Control List (CCL), you may not export, reexport, or 
transfer (in-country) items specified on the Entity List to listed 
entities without a license from BIS. The specific license 
requirement for each listed entity is identified in the license 
requirement column on the Entity List in Supplement No. 4 to this 
part.
    15 CFR 744.16.

    As stated in the regulation, above, items subject to regulation by 
virtue of being on the Commerce Control List may also be subject to 
additional regulation if the end-users are listed on the Entity List.
c. Respondent Is Collaterally Estopped From Denying the Facts Set Forth 
in the Charging Letter Due to Guilty Plea in Related Federal Criminal 
Case
    BIS contends no genuine issue of material fact exists as to Charge 
1 because Respondent pled guilty to a Federal criminal charge of 
conspiracy to violate the IEEPA \15\ in the U.S. District Court for the 
District of New Jersey on June 11, 2015, in Case. No. 2:15-CR-00300-
WJM-1. (Mot. for Summ. Dec., p. 4-5; Ex. 2 (Criminal Information); Ex. 
3 (Plea Agreement); Ex. 4 (Transcript of Plea Hearing); Ex. 5 (Judgment 
in a Criminal Case). The facts underlying the criminal case are the 
same facts underlying this administrative action.
---------------------------------------------------------------------------

    \15\ Respondent was convicted of the crime codified at 18 U.S.C. 
371 (``Conspiracy to commit offense or to defraud United States''). 
The IEEPA specifies that violation of its terms can result in 
criminal penalties pursuant to 50 U.S.C. 1705 (``Penalties'').
---------------------------------------------------------------------------

    BIS attached the Criminal Information for Case. No. 2:15-CR-00300-
WJM-1 to its Motion for Summary Decision, which describes in detail the 
actions taken by Respondent and his co-conspirators to export regulated 
items to Russian organizations on the Entity List without obtaining the 
required licenses. (Mot. for Summ. Dec., Ex. 2). BIS also attached the 
plea agreement executed by Respondent, the transcript of the plea 
hearing, the judgment of conviction, and Respondent's response to BIS's 
Requests for Admission in this administrative action. (Mot. for Summ. 
Dec., Exs. 3-6, respectively).
    Through his responses to the Requests for Admission, Respondent 
conceded the authenticity of the documents related to his criminal 
conviction attached to BIS' Motion for Summary Decision. (Mot. for 
Summ. Dec., Ex. 6 at Requests for Admission Nos. 1-3). Respondent also 
admitted to many of the underlying facts in his response to the 
Requests for Admission. (Mot. for Summ. Dec., Ex. 6 at Requests for 
Admission Nos. 5, 7, 14, 16, 19, 26-30). The facts Respondent did not 
admit to in the Requests for Admission are contradicted by Respondent's 
statements made under oath during the plea hearing. For example, 
Respondent denied the following Request for Admission:

    15. Admit that Respondent Alexander Brazhnikov, Jr., and his co-
conspirators exported electronic components from the United States 
to Russia knowing that, although licenses were required that 
licenses had not been obtained.
    Response: DENY. I had never sent any electronic parts which 
required licensing. I am not responsible for any ``co-
conspirators.''
    (Mot. for Summ. Dec., Ex. 6).

    Despite Respondent's denial of that Request for Admission, he 
answered as follows in his plea hearing in the criminal case:

    U.S. Attorney: As part of the conspiracy to evade the 
International Emergency Economic Powers Act as alleged in Count 3 of 
the Information, did you and your co-conspirators purposefully 
export electronics components from the United States to Russia 
knowing that, although licenses were required for such exports, 
licenses had not been obtained?
    Brazhnikov: Yes.
    (Mot. for Summ. Dec., Ex. 5, p. 23).

    Collateral estoppel prevents Respondent from denying or re-
litigating the facts set forth in the Charging Letter, because they are 
the same facts he admitted in his federal criminal case. Smith v. SEC., 
129 F.3d 356, 362 (6th Cir. 1997) (conviction for insider trading 
creates situation where ``[i]n order to prevail in the civil action, 
the SEC now needs only to move for summary judgment on the basis of the 
collateral estoppel effect of that conviction.''); SEC. v. Bilzerian, 
29 F.3d 689, 693-694 (D.C. Cir. 1994) (``the district court found that 
Bilzerian was collaterally estopped from contesting the facts set forth 
in support of the SEC's civil claims because the same facts formed the 
basis of his criminal conviction.''). Accordingly, there is no genuine 
dispute over whether Respondent committed acts constituting conspiracy 
to violate the EAR. The specific facts are set forth in the following 
section.
2. Material Facts as to Charge 1
    Respondent was the owner, operator, and CEO of several business 
incorporated in New Jersey. Respondent's father was the owner, 
operator, and CEO of several Russian business entities. Respondent's 
father was one of Respondent's co-conspirators with respect to the 
following actions. Between January 2008 and June 2014, Respondent and 
his co-conspirators, through the afore-mentioned businesses, exported 
electronic components from the U.S. to Russian end-users, knowing the 
EAR required licenses for such exports and not obtaining the required 
licenses. (Mot. for Summ. Dec., pp. 5-6, 8; Ex. 4 at pp. 17-18, 23).
    One of the end-users to which Respondent and his co-conspirators 
exported items was the All-Russian Scientific Research Institute of 
Technical Physics (VNIITF) Academician E.I. Zababakhina. BIS placed the 
VNIITF on the Entity List in 1997, and it remained there at all times 
from 2008 to 2014. BIS added the Academician E.I. Zababakhina to the 
Entity List as an alias for the VNIITF in 2010. (Mot. for Summ. Dec., 
pp. 8-9); see Entity List at Supplement No. 4 to 15 CFR part 744.
    On November 20, 2013, Respondent and his co-conspirators sent 
multiple shipments of electronic components, evidenced by four 
invoices, to VNIITF Academician E.I. Zababakhina. (Mot. for Summ. Dec., 
Ex. 2 at p. 15; Ex. 4 at p. 24; Ex. 11). BIS, through certified 
Licensing Determinations, determined some of the items in the shipments 
were electronic components found on the Commerce Control List under 
ECCN EAR99. (Mot. for Summ. Dec., Ex. 9).
    On April 23, 2014, Respondent and his co-conspirators again shipped 
electronic components to VNIITF Academician E.I. Zababakhina. (Mot. for 
Summ. Dec., Ex. 2 at p. 15; Ex. 4 at 24; Ex. 12). BIS performed a 
certified Licensing Determination, concluding the components were found 
on the Commerce Control List under ECCN EAR99. (Mot. for Summ. Dec., 
Ex. 10).
    Pursuant to the Entity List, a license was required to export ``all 
items subject to the EAR'' to VNIITF Academician E.I. Zababakhina. See 
Supplement No. 4 to Part 744. As the November 20, 2013 and April 23, 
2014 shipments contained items subject to the EAR, Respondent was 
prohibited from exporting the items without obtaining a license from 
BIS. 15 CFR 744.16(a). As evidenced by his statement at the plea 
hearing, Respondent and his co-conspirators knew licenses were required 
for these exports and failed to obtain them. (Mot. for Summ. Dec., Ex. 
4 at p. 23-24).

[[Page 13885]]

3. Respondent Failed To Identify Any Genuine Issues of Material Fact
a. Respondent Claims His Father Took All Responsibility
    In his Response to the Motion for Summary Decision, Respondent 
makes three contentions. First, Respondent contends his father ``took 
all responsibility for it.'' (Resp. to Mot. for Summ. Dec., p. 1). In 
support, Respondent attached a document drafted in Russia, along with a 
translated copy, purportedly made by Respondent's father on October 10, 
2019. The document states Respondent's father is the owner of two 
companies (Zond-R, Inc.; Telecom Multipliers, Inc.) involved in the 
scheme to violate the IEEPA. (Resp. to Mot. for Summ. Dec., Ex. 1). 
Respondent's argument here is merely a denial of the Charge and does 
not give rise to a genuine issue of material fact. Sanders, 634 F.Supp. 
at 476. Contrary to Respondent's bald assertion, the document does not 
state Respondent's father takes all responsibility for the scheme, it 
only affirms Respondent's father owns companies involved in the scheme. 
Further, Respondent is estopped from arguing now that his father 
actually owned those companies, because Respondent admitted in the June 
11, 2015 plea hearing in Criminal Case No. 2:15-CR-00300-WJM-1 he owned 
Zond-R, Inc. and Telecom Multipliers, Inc. (Mot. for Summ. Dec., Ex. 4 
at p. 17).
b. Respondent Argues BIS Did Not Prove Items Were U.S.-Origin
    Second, Respondent argues ``BIS did not provide ANY evidence that 
these parts were U.S.-Origin.'' (Resp. to Mot. for Summ. Dec., p. 1). 
This argument lacks merit because one element of the crime to which 
Respondent pled guilty was the fact that he, along with his co-
conspirators, illegally exported U.S.-origin electronics to Russian 
organizations. (Mot. for Summ. Dec., Ex. 4 at pp. 20-24).
c. Respondent Contends BIS Misstated the Monetary Value of the Exports
    Finally, Respondent argues the cost of the electronic components he 
conspired to export was $734.58, not $46,669.71. Respondent is 
referring to the November 20, 2013 and April 23, 2014 export 
transactions mentioned by BIS in the Charging Letter, which were among 
the overt acts Respondent admitted to in the criminal case. (Mot. for 
Summ. Dec., Ex. 1 at pp. 2-3). The Charging Letter does contain some 
errors in the amount of the transactions; the invoices attached to 
BIS's Motion for Summary Decision show the amounts were listed in 
rubles, not dollars. (Mot. for Summ. Dec., Exs. 11, 12).
    However, the specific value of the exports is not a material fact. 
A fact is material if it ``might affect the outcome of the suit under 
the governing law.'' Anderson, 477 U.S. at 248. The pertinent elements 
of the criminal charge against Respondent in the U.S. District Court 
and the administrative charge against Respondent in this proceeding are 
(1) Respondent conspired with others (2) to export U.S. electronic 
components (3) to Russian organizations on BIS's ``Entity List'' (4) 
without the licenses required by the EAR. See 18 U.S.C. 371; 50 U.S.C. 
1705; 15 CFR 744.16. The cost of the items is immaterial in regard to 
finding a violation proven. While the EAR provides a limited licensing 
exception for certain exports under a certain monetary value, this 
exception does not apply to items exported to Russia or items exported 
to entities on the Entity List. See 15 CFR 740.3; Suppl. No. 1 to Part 
740.16 17
---------------------------------------------------------------------------

    \16\ 15 CFR 740.3(b): ``This License Exception is available for 
all destinations in Country Group B (see Supplement No. 1 to part 
740), provided that the net value of the commodities included in the 
same order and controlled under the same ECCN entry on the CCL does 
not exceed the amount specified in the LVS paragraph for that entry.
    \17\ Country Group B does not include Russia or entities listed 
in the Entity List.
---------------------------------------------------------------------------

D. Conclusion--BIS Is Entitled to a Decision as a Matter of Law

    BIS met its burden of production as to Charge 1, conspiracy to 
violate the EAR under 15 CFR 764.2(d), with evidence that Respondent 
pled guilty a related federal criminal charge. The facts underlying the 
criminal charge being identical to the facts underlying the instant 
administrative charge, Respondent is estopped from denying them. 
Respondent filed a late response to the Motion for Summary Decision but 
failed to identify any triable issues of fact. Considering BIS' 
evidence as a whole, BIS met its ultimate burden of persuasion, showing 
by a preponderance of the evidence that no genuine issue of material 
fact exists and BIS is entitled, as a matter of law, to a decision in 
its favor as to Charge 1.

IV. Recommended Ultimate Findings of Fact and Conclusions of Law

    1. Respondent and the subject matter of this proceeding are 
properly within the jurisdiction of the BIS pursuant to the Export 
Control Reform Act of 2018 and the Export Administration Regulations 
(EAR). 50 U.S.C. 4826; 15 CFR parts 730-774.
    2. The facts underlying the federal criminal charge to which 
Respondent pled guilty are identical to the facts set forth in the 
Charging Letter. (Mot. for Summ. Dec., Exs. 1-5).
    3. Respondent is estopped from denying or re-litigating the 
facts set forth in the Charging Letter. Smith v. S.E.C., 129 F.3d 
356, 362 (6th Cir. 1997); S.E.C. v. Bilzerian, 29 F.3d 689, 693-694 
(D.C. Cir. 1994).
    4. Between January 2008 through June 2014, Respondent violated 
15 CFR 764.2(d) by conspiring with others to violate the EAR by 
exporting regulated items to Russian end-users on BIS' Entity List 
without the required licenses.

V. Sanction

    Section 764.3 of the EAR establishes the sanctions BIS may seek for 
the violations charged in this proceeding. The sanctions are: (1) A 
monetary penalty, (2) denial of export privileges under the 
regulations, and (3) exclusion of practice before the Department of 
Commerce. BIS has not moved for any particular sanction to be imposed. 
Accordingly, sanctions will be addressed following an opportunity for 
the parties to be heard on the issue. In keeping with the October 18, 
2019 Scheduling Order, this matter shall proceed on the record. The 
parties shall submit final written briefs stating their positions as to 
an appropriate sanction on or before May 29, 2020. There will not be 
any reply briefs.
    Wherefore,

Order

    It is hereby ordered, BIS's Motion for Summary Decision is GRANTED 
IN PART. Charge 1, brought pursuant to 15 CFR 764.2(d), is found 
PROVEN.
    It is further ordered, the parties shall submit written briefs 
stating their positions as to an appropriate sanction on or before May 
29, 2020.

[Signature of Michael J. Devine]
Hon. Michael J. Devine

Administrative Law Judge

Done and dated April 21, 2020
Baltimore, Maryland

Attachment B

15 CFR 766.22--Review by Under Secretary

    (a) Recommended decision. For proceedings not involving 
violations relating to part 760 of the EAR, the administrative law 
judge shall immediately refer the recommended decision and order to 
the Under Secretary. Because of the time limits provided under the 
EAA for review by the Under Secretary, service of the recommended 
decision and order on the parties, all papers filed by the parties 
in response, and the final decision of the Under Secretary must be 
by personal delivery, facsimile, express mail or other overnight 
carrier. If the Under Secretary cannot act on a recommended decision 
and order for any reason, the Under Secretary will designate another 
Department of Commerce official to receive and act on the 
recommendation.

[[Page 13886]]

    (b) Submissions by parties. Parties shall have 12 days from the 
date of issuance of the recommended decision and order in which to 
submit simultaneous responses. Parties thereafter shall have eight 
days from receipt of any response(s) in which to submit replies. Any 
response or reply must be received within the time specified by the 
Under Secretary.
    (c) Final decision. Within 30 days after receipt of the 
recommended decision and order, the Under Secretary shall issue a 
written order affirming, modifying or vacating the recommended 
decision and order of the administrative law judge. If he/she 
vacates the recommended decision and order, the Under Secretary may 
refer the case back to the administrative law judge for further 
proceedings. Because of the time limits, the Under Secretary's 
review will ordinarily be limited to the written record for 
decision, including the transcript of any hearing, and any 
submissions by the parties concerning the recommended decision.
    (d) Delivery. The final decision and implementing order shall be 
served on the parties and will be publicly available in accordance 
with Sec.  766.20 of this part.
    (e) [Reserved by 75 FR 33683].

[FR Doc. 2021-05022 Filed 3-10-21; 8:45 am]
BILLING CODE 3510-DT-P