Order Relating to Kenneth Scott, Scott Communications, Inc., and Mission Communications, LLC; In the Matter of: Scott Communications, Inc., 61574 Hillside Road, St. Ignatius, MT 59865; Mission Communications, LLC, 61574 Hillside Road, St. Ignatius, MT 59865; Kenneth Peter Scott, 61574 Hillside Road, St. Ignatius, MT 59865; Respondents, 19913-19916 [2023-06920]
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acquisition from UTair of any item
subject to the EAR that has been
exported from the United States except
directly related to safety of flight and
authorized by BIS pursuant to section
764.3(a)(2) of the Regulations;
D. Obtain from UTair 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 except
directly related to safety of flight and
authorized by BIS pursuant to section
764.3(a)(2) of the Regulations; 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 UTair, or
service any item, of whatever origin,
that is owned, possessed or controlled
by UTair if such service involves the use
of any item subject to the EAR that has
been or will be exported from the
United States except directly related to
safety of flight and authorized by BIS
pursuant to section 764.3(a)(2) of the
Regulations. For purposes of this
paragraph, servicing means installation,
maintenance, repair, modification, or
testing.
Third, that, after notice and
opportunity for comment as provided in
section 766.23 of the EAR, any other
person, firm, corporation, or business
organization related to UTair 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.
In accordance with the provisions of
sections 766.24(e) of the EAR, UTair
may, at any time, appeal this Order by
filing a full written statement in support
of the appeal with the Office of the
Administrative Law Judge, U.S. Coast
Guard ALJ Docketing Center, 40 South
Gay Street, Baltimore, Maryland 21202–
4022.
In accordance with the provisions of
section 766.24(d) of the EAR, BIS may
seek renewal of this Order by filing a
written request not later than 20 days
before the expiration date. A renewal
request may be opposed by UTair as
provided in section 766.24(d), by filing
a written submission with the Assistant
Secretary of Commerce for Export
Enforcement, which must be received
not later than seven days before the
expiration date of the Order.
A copy of this Order shall be provided
to UTair, and shall be published in the
Federal Register.
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This Order is effective immediately
and shall remain in effect for 180 days.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export
Enforcement.
[FR Doc. 2023–06883 Filed 4–3–23; 8:45 am]
BILLING CODE 3510–DT–P
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[Case No. 22–BIS–0007]
Order Relating to Kenneth Scott, Scott
Communications, Inc., and Mission
Communications, LLC; In the Matter
of: Scott Communications, Inc., 61574
Hillside Road, St. Ignatius, MT 59865;
Mission Communications, LLC, 61574
Hillside Road, St. Ignatius, MT 59865;
Kenneth Peter Scott, 61574 Hillside
Road, St. Ignatius, MT 59865;
Respondents
The Bureau of Industry and Security,
U.S. Department of Commerce (‘‘BIS’’),
has notified Scott Communications, Inc.
and Kenneth Scott (collectively
‘‘Scott’’), as well as Mission
Communications, LLC (‘‘Mission’’) of St.
Ignatius, Montana (‘‘Respondents’’), that
it has initiated an administrative
proceeding against them pursuant to
section 766.3 of the Export
Administration Regulations (the
‘‘Regulations’’),1 through the issuance of
a Charging Letter alleging that
Respondents committed five violations
of the Regulations. Specifically:
General Allegations
1. In or about March 2017, a Federal
Bureau of Investigations (‘‘FBI’’) Special
Agent working in an undercover
capacity (the ‘‘UC’’) contacted Kenneth
Scott via email. The UC used an email
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,
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, 50 U.S.C. 4801–4852 (‘‘ECRA’’). While section
1766 of ECRA repeals the provisions of 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 until modified, superseded,
set aside, or revoked through action undertaken
pursuant to the authority provided under ECRA.
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19913
address identified from a trade
magazine advertisement in which Scott
Communications advertised various
communications equipment for sale.
During the course of the sales
negotiations with the UC, Scott was
acting on behalf of Scott
Communications, Inc. For example, the
advertisement also included a telephone
and fax number for ‘‘Ken Scott.’’ A 2017
Better Business Bureau business profile
further identified Kenneth Scott as the
president of Scott Communications, Inc.
In addition, in his email
communications with the UC, as well in
his social media profiles, Kenneth Scott
identified himself as the President of
Scott Communications.
2. On or about March 16, 2017, the UC
sent Scott an email titled ‘‘Motorola
Radio Quote Request.’’ In the email, the
UC requested a price quote for two
Motorola XTS 2500, 800 or 900 Mhz
radios. The UC also told Scott that, after
the initial order of two radios, he
intended to follow up with a larger
order. The UC also asked Scott about
shipping to Iran and later informed
Scott that he intended to transship the
radios from Jordan to Iran. Scott
ultimately agreed to ship the radios to
Jordan with knowledge that they would
then be transshipped to Iran.
3. Specifically, on or about March 21,
2017, the UC emailed Scott asking him
to: Please provide me with your
competitive shipping price to Jordan.
My customer will test the units there.
For the second order, it would be very
valuable to me if you can ship directly
to my customer in Iran. I want to
continue business with you and this
would be very helpful because as you
know my customer cannot purchase
directly from the United States. If you
are able to get the units to Iran we will
negotiate your fees in addition to the
price for radios and your shipping rates.
If you can only get the radios close, we
can determine an appropriate fee.
4. In response, Scott stated: I have
never shipped to IRAN, and the way the
politics here are concerned, I would
guess not. Where else could we ship
them to, [p]rior to them going to IRAN.
Do you have a broker here in the US?’’
5. The following day, the UC
responded with: Unfortunately, I do not
have a US based broker. I understand
that due to the sanctions the US has
against Iran one cannot ship goods from
the US directly to that country. If you
can ship the radios to Jordan I can
transship them to my customer in Iran.
Please provide me with a quote for
shipping the two radios to Jordan.
6. The UC also discussed possible
shipments to Singapore. Scott
ultimately advised that shipping via
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DHL to Jordan would cost $250 and
indicated that the price would remain
the same if the UC preferred Singapore.
On or about March 22, 2017, Scott
emailed an invoice to the UC, listing
two Motorola XTS 2500 radios valued at
$850 each, for a total product cost of
$1700, with shipping valued at $250.
On or about March 28, 2017, the UC
advised Scott via email that he was
ready to proceed with the order and
reiterated again that the ultimate
consignee was located in Iran.
7. On or about April 15, 2017, the UC
reached out to Scott and informed him
that, after speaking to his customer in
Iran, the customer expected the radios
to be loaded with 256-Bit AES
Encryption. Scott indicated that he did
not provide encryption but advised that
the customer could program the radios
himself if he had the software. The UC
agreed to proceed with the sale but
asked Scott about the availability of
other models that could be loaded with
256-bit AES encryption and stated that
encrypted radios were more difficult to
procure. The UC then proceeded to
share emails from his purported
customer in Iran with Scott, again
reiterating that the ultimate end-user
was located in Iran. On or about April
17, 2017, Scott emailed the UC with
suggestions on how to procure the
necessary equipment to load the radios
with 256-bit AES encryption.
8. Following additional emails in
which the UC again advised Scott that
the ultimate end-user was located in
Iran and that the radios would be
transshipped from Jordan to Iran, Scott
proceeded with the sales transaction.
On or about June 7, 2017, Scott
provided the UC with the U.S. Postal
Service (‘‘USPS’’) tracking number for
the shipment of the two radios, which
were ultimately detained with the
assistance of the USPS in St. Ignatius,
Montana prior to export. Scott
completed the United States Postal
Form 2976–R and signed the customs
declaration form, verifying that he had
complied with all applicable export
laws and regulations.
9. In December 2018, Special Agents
from the FBI and BIS contacted Scott to
conduct an interview and outreach.
During the interview, Scott stated that
he was familiar with BIS regulations
and that he regularly checks the BIS
website for updates. When asked about
conducting business with sanctioned
countries, Scott stated that he had never
done business with North Korea, Cuba,
Syria or Sudan. When asked specifically
about Iran, he acknowledged that he had
received an inquiry about a Motorola
portable radio destined for a customer
in Iran and that he completed the sale.
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He indicated, however, that the export
was made through an individual in
Florida. At the conclusion of the
interview, the BIS Special Agent
explained the BIS voluntary selfdisclosure program, provided Scott with
additional information related to export
controls, and served Scott with an
administrative subpoena. Despite
receiving this information, Scott never
filed a voluntary self-disclosure related
to the shipment of the two Motorola
radios.
10. Later that same day, Scott
forwarded the BIS Special Agent several
emails related to his sales transaction
with the UC. Scott failed to include any
of the emails with the UC referencing
Iran or discussing possible
transshipment through Jordan or
Singapore. He also claimed that he had
‘‘misspoke[n] about the route this
package took’’ when he stated that the
export mentioned during the interview
had gone through Florida.
11. After the BIS Special Agent
contacted Scott with additional
questions, Scott responded: Call me on
Monday so I can explain, I never sold
anything to Iran. My customer had
someone in Iran who wanted to buy
these radios. I refused after he called me
a [sic] tried to convince me to sell and
ship to that location. I refused. I actually
was thinking he was trying to set me up.
Then he hounded me about Encryption,
which I flat told him no way. . .
12. In answering the BIS Special
Agent’s questions via email and
responding to the BIS administrative
subpoena, Scott made several false
statements about the sales transaction
with the UC. Notably, he falsely stated
that he communicated with the UC by
phone, denied having had additional
email communications with the UC, and
falsely stated that the UC told him that
the radios’ end-use was for oil
exploration.
13. When the emails Scott provided to
the BIS Special Agent were compared
with emails obtained by the UC during
the investigation, it appeared that Scott
edited one of the emails to support his
claim that he did not export anything to
Iran. Specifically, in an April 15, 2017
email to the UC, which made no refence
to Iran, Scott inserted the following
sentence into the document he provided
to the BIS Special Agent: ‘‘I won’t sell
to IRAN OR I WILL NOT SUPPLY ANY
ENCRYPTION. I have explained this to
you on the phone, why are you
badgering me.’’
14. Scott also failed to comply with
reporting requirements by failing to file
an Electronic Export Information
(‘‘EEI’’) for the export of the two radios
and failed to maintain appropriate
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records. Specifically, the BIS Special
Agent asked Scott to respond to OEE’s
subpoena requesting ‘‘[a]ny and all
records, from 2013 to present, related to
export/re-export, facilitation of an
export/re-export, or attempted export/
re-export of any and all commodities
subject to the Export Administration
Regulations. . . .’’ In response, Scott
stated that he has never ‘‘kept a record
or a file on this stuff, as I had no idea
I had to. . . . Some of my shipping
records were on my old computer that
was damaged by a lightning strike about
3 years ago.’’
15. Since at least March 2018, Scott
has also exported under the business
name Mission Communications, LLC
(‘‘Mission’’), which shares the same
address as Scott Communications, Inc.
Specifically, beginning in March 2018
and continuing until at least May 2019,
Scott began exporting under an export
identification number associated with
Mission. In addition, at times material
to the violations, including in his
December 2018 communications with
the BIS Special Agent, Scott identified
himself via email as the president of
Mission.
16. BIS incorporates and alleges
paragraphs 1–15 of the General
Allegations into the below:
Charge 1 CFR 764.2(e)—Acting With
Knowledge of a Violation Related to the
Sale of Two Digital Portable Radios
17. Beginning in or about March 2017
and continuing through on or about
June 7, 2017, Scott sold, transferred, or
conducted negotiations with respect to
items subject to the EAR and the Iranian
Transactions and Sanctions Regulations
(‘‘ITSR’’),2 specifically two Motorola
Astro XTS 2500 Digital Portable Radios,
a commodity classified as Export
Control Classification Number (ECCN)
5A991.g. and controlled for AntiTerrorism reasons, with knowledge that
a violation of the Regulations had or
was about or intended to occur in
connection with the items. In particular,
Scott sold, transferred, or conducted
negotiations with respect to the items
with knowledge that they were destined
for Iran without the required U.S.
Government authorization. At all times
pertinent hereto, section 742.8 of the
Regulations imposed a BIS license
requirement for the export or reexport of
the items to Iran. Additionally, section
746.7 of the Regulations prohibits the
export or reexport to Iran of any item
subject to both the Regulations and the
ITSR, if the transaction is prohibited by
the ITSR and has not been authorized by
the Treasury Department’s Office of
2 31
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Foreign Assets Control (‘‘OFAC’’). At all
times pertinent hereto, the ITSR
prohibited, inter alia, the unauthorized
export or reexport, either directly or
indirectly, of the items to Iran. See 31
CFR 560.204–205.
18. Specifically, as set forth above, in
or about March 2017, Scott began
negotiating the sale of two Motorola
Astro XTS 2500 Digital Portable Radios
through emails with an undercover
Special Agent, whose true identity was
unknown to Scott. The UC requested
that the radios be sent to Iran and later
stated that they would be transshipped
from Jordan to Iran. Although the UC
reiterated on multiple occasions that the
ultimate end-user was located in Iran,
Scott agreed to complete the sales
transaction. On or about June 7, 2017,
Scott provided the undercover Special
Agent with a USPS tracking number for
the shipment of the two radios.
19. No U.S. Government authorization
had been sought or obtained in
connection with this transaction. In
engaging in such conduct with
knowledge that a violation of the EAR,
or any order, license or authorization
issued thereunder, has occurred, is
about to occur, or is intended to occur,
Scott violated section 764.2(e) of the
Regulations.
Charges 2–3 15 CFR 764.2(g)—
Misrepresenting and Concealing Facts
to an Official of a United States Agency
20. On at least two occasions between
December 2018 and January 2019, Scott
and Mission made a false or misleading
representation, statement, certification,
or falsified or concealed a material fact,
to a U.S. government official.
21. Following the above-described
efforts by Scott to ship the two radios,
FBI and BIS Special Agents interviewed
Scott on or about December 5, 2018.
During the interview with these U.S.
government officials, Scott stated that
he received an inquiry for a Motorola
portable radio destined for a customer
in Iran and that he had completed the
sale. Thereafter, on or about December
7, 2018, in a follow-up email to the BIS
Special Agent, Scott indicated that he
had never shipped anything to Iran and
that, when the buyer telephoned him to
purchase for a customer in Iran, he
refused.
22. On or about December 7, 2018,
Scott made additional materially false
statements or omissions to the BIS
Special Agent about his
communications related to the sale of
the radios. Specifically, Scott falsely
represented that he communicated with
the UC by phone and that there were no
email communications indicating that
the radios were destined for Iran. He
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also falsely stated that the UC advised
him that the radios would be used for
oil exploration.
23. Additionally, on or about
December 11, 2018, Scott produced an
email in response to the BIS subpoena
that had been materially altered and
falsified. Although the original April 15,
2017, email communication between
Scott and the UC made no reference to
Iran, the document provided by Scott to
the Special Agent had been altered and
falsified by inserting the following
statement into the email: ‘‘I won’t sell to
IRAN OR I WILL NOT SUPPLY ANY
ENCRYPTION. I have explained this to
you on the phone, why are you
badgering me.’’ (Capitalization as shown
in email).
24. By making a false or misleading
representation, statement, or
certification, or falsifying or concealing
any material fact to BIS and/or FBI
Special Agents in the course of an
investigation or other action subject to
the EAR, Scott and Mission violated
section 764.2(g) of the Regulations on at
least two occasions.
Charge 4 15 CFR 764.2(a)—Engaging
in Prohibited Conduct Related to the
Failure to File Electronic Export
Information
25. On or about June 7, 2017, Scott
engaged in conduct prohibited by the
Regulations by failing to comply with
reporting requirements, namely by
failing to file Electronic Export
Information (‘‘EEI’’) for the shipment of
two Motorola Astro XTS 2500 Digital
Portable Radios as described above. EEI
includes export information about a
transaction such as the names and
addresses of the parties to a transaction;
the ECCN (when required); the
description, quantity and value of the
items exported; and the license
authority for the export.
26. Section 758.1(b) of the EAR
required that EEI be filed in certain
situations, including for all exports of
items subject to the EAR that were
destined for Iran, a Country Group E:1
destination,3 regardless of value, and
‘‘for all exports subject to the EAR that
require submission of a license
application, regardless of value or
destination . . . .’’ Records checks
reflect that Scott failed to file EEI related
to the June 7, 2017 shipment of the two
Motorola Astro XTS 2500 Digital
Portable Radios.
27. By failing to file the EEI for the
shipment of the two Motorola Astro
XTS 2500 Digital Portable Radios as
required pursuant to section 758.1(b),
Scott committed one violation of section
3 See
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19915
764.2(a) of the Regulations, by engaging
in any transaction or taking any other
action prohibited by or contrary to, or
refraining from engaging in any
transaction or taking any other action
required by ECRA, the EAR, or any
order, license or authorization issued
thereunder.
Charge 5 15 CFR 764.2(i)—Failure To
Comply With Reporting, Recordkeeping
Requirements
28. Between on or about March 16,
2017 and January 14, 2019, Scott and
Mission failed to comply with the
recordkeeping requirements set forth in
Part 762 of the EAR. Scott and Mission
at all relevant times were (and remain)
subject to the jurisdiction of the United
States and participated in transactions
involving the export from the United
States of items subject to the
Regulations, including the transaction
described in Charge 1, supra, and were
required to keep and maintain all
records described in section 762.2 of the
Regulations made or obtained. See 15
CFR 762.1(a)(2), (a)(4), and (b).
29. The records required to be
retained include, inter alia, bills of
lading and other ‘‘export control
documents’’ (as defined in part 772 of
the Regulations), correspondence, and
any other records Scott or Mission made
or obtained pertaining to such
transactions. See 15 CFR 762.2 and
772.1 (at definition of ‘‘export control
document’’). All such records must be
retained for a period of five years from
the date of the export of the item
involved in the transaction. See 15 CFR
762.6(a). In addition, any such records
formally or informally requested by BIS
(or any other U.S. Government agency)
may not be destroyed or disposed of
without written authorization from BIS
(or other agency concerned), even if
such records have been retained for
more than the required retention period.
See 15 CFR 762.6(b).
30. Scott and Mission failed to
maintain records as required pursuant
to section 762 of the EAR. On or about
December 5, 2018, the BIS Special
Agent served Scott with a BIS
administrative subpoena requesting
‘‘[a]ny and all records, from December
2013 to present, related to export/reexport, facilitation of an export/reexport, or attempted export/re-export of
any and all commodities’’ subject to the
EAR. The requested records included,
but were not limited to, requests for
quotes, waybills, bills of lading,
Shipper’s Export Declarations, payment
records, emails, and other
correspondence.
31. On or about December 10, 2018,
in responding to the BIS administrative
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subpoena, Scott advised the BIS Special
Agent that he has never ‘‘kept a record
or a file on this stuff, as I had no idea
I had to. . . . Some of my shipping
records were on my old computer that
was damaged by a lightning strike about
3 years ago.’’ On January 14, 2019, after
the BIS Special Agent granted Scott
additional time to respond to the
subpoena, he provided some records,
including a list of freight forwarders/
brokers and invoices related to exports
to approximately 15 countries. For
almost all of these exports, however, he
failed to produce any of the other
requested records, including quotes,
requests for quotes, waybills, bills of
lading, payment records, or emails and
other correspondence. Scott also
acknowledged that the records were
incomplete, claiming that ‘‘[w]e lost our
main HD computer during a storm in
April of 2015. A lot of information was
lost.’’
32. As a result of these failures, Scott
and Mission committed a violation of
section 764.2(i) of the Regulations, by
failing or refusing to comply with any
reporting or recordkeeping requirement
of ECRA, the EAR, or of any order,
license, or authorization issued
thereunder.
Whereas, I have taken into
consideration the Respondents’ limited
ability to pay a monetary penalty;
Whereas, BIS and Respondents 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, Respondents admit
committing the alleged conduct
described in the Charging Letter; and
Whereas, I have approved of the terms
of such Settlement Agreement; it is
therefore ordered:
First, for a period of twenty (20) years
from the date of the Order, Kenneth
Scott, Scott Communications, Inc., and
Mission Communications, LLC, with a
last known address of 61574 Hillside
Road, St. Ignatius, MT 59865, and when
acting for or on their behalf, their
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 to 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:
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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.
Second, 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.
Third, any licenses issued under the
Regulations in which Respondents have
an interest as of the date of this Order
shall be revoked by BIS.
Fourth, after notice and opportunity
for comment as provided in section
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766.23 of the Regulations, any person,
firm, corporation, or business
organization related to the Denied
Person by affiliation, ownership,
control, or position of responsibility in
the conduct of trade or related services
may also be made subject to the
provisions of the Order.
Fifth, the Settlement Agreement and
this Order shall be made available to the
public.
This Order, which constitutes the
final agency action in this matter, is
effective immediately.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export
Enforcement.
[FR Doc. 2023–06920 Filed 4–3–23; 8:45 am]
BILLING CODE 3510–DT–P
DEPARTMENT OF COMMERCE
International Trade Administration
Antidumping or Countervailing Duty
Order, Finding, or Suspended
Investigation; Opportunity To Request
Administrative Review and Join
Annual Inquiry Service List
Enforcement and Compliance,
International Trade Administration,
Department of Commerce.
FOR FURTHER INFORMATION CONTACT:
Brenda E. Brown, Office of AD/CVD
Operations, Customs Liaison Unit,
Enforcement and Compliance,
International Trade Administration,
U.S. Department of Commerce, 1401
Constitution Avenue NW, Washington,
DC 20230, telephone: (202) 482–4735.
AGENCY:
Background
Each year during the anniversary
month of the publication of an
antidumping or countervailing duty
order, finding, or suspended
investigation, an interested party, as
defined in section 771(9) of the Tariff
Act of 1930, as amended (the Act), may
request, in accordance with 19 CFR
351.213, that the Department of
Commerce (Commerce) conduct an
administrative review of that
antidumping or countervailing duty
order, finding, or suspended
investigation.
All deadlines for the submission of
comments or actions by Commerce
discussed below refer to the number of
calendar days from the applicable
starting date.
Respondent Selection
In the event Commerce limits the
number of respondents for individual
examination for administrative reviews
initiated pursuant to requests made for
E:\FR\FM\04APN1.SGM
04APN1
]]>Agencies
[Federal Register Volume 88, Number 64 (Tuesday, April 4, 2023)]
[Notices]
[Pages 19913-19916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06920]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[Case No. 22-BIS-0007]
Order Relating to Kenneth Scott, Scott Communications, Inc., and
Mission Communications, LLC; In the Matter of: Scott Communications,
Inc., 61574 Hillside Road, St. Ignatius, MT 59865; Mission
Communications, LLC, 61574 Hillside Road, St. Ignatius, MT 59865;
Kenneth Peter Scott, 61574 Hillside Road, St. Ignatius, MT 59865;
Respondents
The Bureau of Industry and Security, U.S. Department of Commerce
(``BIS''), has notified Scott Communications, Inc. and Kenneth Scott
(collectively ``Scott''), as well as Mission Communications, LLC
(``Mission'') of St. Ignatius, Montana (``Respondents''), that it has
initiated an administrative proceeding against them pursuant to section
766.3 of the Export Administration Regulations (the
``Regulations''),\1\ through the issuance of a Charging Letter alleging
that Respondents committed five violations of the Regulations.
Specifically:
---------------------------------------------------------------------------
\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, 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, 50 U.S.C. 4801-4852 (``ECRA''). While
section 1766 of ECRA repeals the provisions of 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 until modified,
superseded, set aside, or revoked through action undertaken pursuant
to the authority provided under ECRA.
---------------------------------------------------------------------------
General Allegations
1. In or about March 2017, a Federal Bureau of Investigations
(``FBI'') Special Agent working in an undercover capacity (the ``UC'')
contacted Kenneth Scott via email. The UC used an email address
identified from a trade magazine advertisement in which Scott
Communications advertised various communications equipment for sale.
During the course of the sales negotiations with the UC, Scott was
acting on behalf of Scott Communications, Inc. For example, the
advertisement also included a telephone and fax number for ``Ken
Scott.'' A 2017 Better Business Bureau business profile further
identified Kenneth Scott as the president of Scott Communications, Inc.
In addition, in his email communications with the UC, as well in his
social media profiles, Kenneth Scott identified himself as the
President of Scott Communications.
2. On or about March 16, 2017, the UC sent Scott an email titled
``Motorola Radio Quote Request.'' In the email, the UC requested a
price quote for two Motorola XTS 2500, 800 or 900 Mhz radios. The UC
also told Scott that, after the initial order of two radios, he
intended to follow up with a larger order. The UC also asked Scott
about shipping to Iran and later informed Scott that he intended to
transship the radios from Jordan to Iran. Scott ultimately agreed to
ship the radios to Jordan with knowledge that they would then be
transshipped to Iran.
3. Specifically, on or about March 21, 2017, the UC emailed Scott
asking him to: Please provide me with your competitive shipping price
to Jordan. My customer will test the units there. For the second order,
it would be very valuable to me if you can ship directly to my customer
in Iran. I want to continue business with you and this would be very
helpful because as you know my customer cannot purchase directly from
the United States. If you are able to get the units to Iran we will
negotiate your fees in addition to the price for radios and your
shipping rates. If you can only get the radios close, we can determine
an appropriate fee.
4. In response, Scott stated: I have never shipped to IRAN, and the
way the politics here are concerned, I would guess not. Where else
could we ship them to, [p]rior to them going to IRAN. Do you have a
broker here in the US?''
5. The following day, the UC responded with: Unfortunately, I do
not have a US based broker. I understand that due to the sanctions the
US has against Iran one cannot ship goods from the US directly to that
country. If you can ship the radios to Jordan I can transship them to
my customer in Iran. Please provide me with a quote for shipping the
two radios to Jordan.
6. The UC also discussed possible shipments to Singapore. Scott
ultimately advised that shipping via
[[Page 19914]]
DHL to Jordan would cost $250 and indicated that the price would remain
the same if the UC preferred Singapore. On or about March 22, 2017,
Scott emailed an invoice to the UC, listing two Motorola XTS 2500
radios valued at $850 each, for a total product cost of $1700, with
shipping valued at $250. On or about March 28, 2017, the UC advised
Scott via email that he was ready to proceed with the order and
reiterated again that the ultimate consignee was located in Iran.
7. On or about April 15, 2017, the UC reached out to Scott and
informed him that, after speaking to his customer in Iran, the customer
expected the radios to be loaded with 256-Bit AES Encryption. Scott
indicated that he did not provide encryption but advised that the
customer could program the radios himself if he had the software. The
UC agreed to proceed with the sale but asked Scott about the
availability of other models that could be loaded with 256-bit AES
encryption and stated that encrypted radios were more difficult to
procure. The UC then proceeded to share emails from his purported
customer in Iran with Scott, again reiterating that the ultimate end-
user was located in Iran. On or about April 17, 2017, Scott emailed the
UC with suggestions on how to procure the necessary equipment to load
the radios with 256-bit AES encryption.
8. Following additional emails in which the UC again advised Scott
that the ultimate end-user was located in Iran and that the radios
would be transshipped from Jordan to Iran, Scott proceeded with the
sales transaction. On or about June 7, 2017, Scott provided the UC with
the U.S. Postal Service (``USPS'') tracking number for the shipment of
the two radios, which were ultimately detained with the assistance of
the USPS in St. Ignatius, Montana prior to export. Scott completed the
United States Postal Form 2976-R and signed the customs declaration
form, verifying that he had complied with all applicable export laws
and regulations.
9. In December 2018, Special Agents from the FBI and BIS contacted
Scott to conduct an interview and outreach. During the interview, Scott
stated that he was familiar with BIS regulations and that he regularly
checks the BIS website for updates. When asked about conducting
business with sanctioned countries, Scott stated that he had never done
business with North Korea, Cuba, Syria or Sudan. When asked
specifically about Iran, he acknowledged that he had received an
inquiry about a Motorola portable radio destined for a customer in Iran
and that he completed the sale. He indicated, however, that the export
was made through an individual in Florida. At the conclusion of the
interview, the BIS Special Agent explained the BIS voluntary self-
disclosure program, provided Scott with additional information related
to export controls, and served Scott with an administrative subpoena.
Despite receiving this information, Scott never filed a voluntary self-
disclosure related to the shipment of the two Motorola radios.
10. Later that same day, Scott forwarded the BIS Special Agent
several emails related to his sales transaction with the UC. Scott
failed to include any of the emails with the UC referencing Iran or
discussing possible transshipment through Jordan or Singapore. He also
claimed that he had ``misspoke[n] about the route this package took''
when he stated that the export mentioned during the interview had gone
through Florida.
11. After the BIS Special Agent contacted Scott with additional
questions, Scott responded: Call me on Monday so I can explain, I never
sold anything to Iran. My customer had someone in Iran who wanted to
buy these radios. I refused after he called me a [sic] tried to
convince me to sell and ship to that location. I refused. I actually
was thinking he was trying to set me up. Then he hounded me about
Encryption, which I flat told him no way. . .
12. In answering the BIS Special Agent's questions via email and
responding to the BIS administrative subpoena, Scott made several false
statements about the sales transaction with the UC. Notably, he falsely
stated that he communicated with the UC by phone, denied having had
additional email communications with the UC, and falsely stated that
the UC told him that the radios' end-use was for oil exploration.
13. When the emails Scott provided to the BIS Special Agent were
compared with emails obtained by the UC during the investigation, it
appeared that Scott edited one of the emails to support his claim that
he did not export anything to Iran. Specifically, in an April 15, 2017
email to the UC, which made no refence to Iran, Scott inserted the
following sentence into the document he provided to the BIS Special
Agent: ``I won't sell to IRAN OR I WILL NOT SUPPLY ANY ENCRYPTION. I
have explained this to you on the phone, why are you badgering me.''
14. Scott also failed to comply with reporting requirements by
failing to file an Electronic Export Information (``EEI'') for the
export of the two radios and failed to maintain appropriate records.
Specifically, the BIS Special Agent asked Scott to respond to OEE's
subpoena requesting ``[a]ny and all records, from 2013 to present,
related to export/re-export, facilitation of an export/re-export, or
attempted export/re-export of any and all commodities subject to the
Export Administration Regulations. . . .'' In response, Scott stated
that he has never ``kept a record or a file on this stuff, as I had no
idea I had to. . . . Some of my shipping records were on my old
computer that was damaged by a lightning strike about 3 years ago.''
15. Since at least March 2018, Scott has also exported under the
business name Mission Communications, LLC (``Mission''), which shares
the same address as Scott Communications, Inc. Specifically, beginning
in March 2018 and continuing until at least May 2019, Scott began
exporting under an export identification number associated with
Mission. In addition, at times material to the violations, including in
his December 2018 communications with the BIS Special Agent, Scott
identified himself via email as the president of Mission.
16. BIS incorporates and alleges paragraphs 1-15 of the General
Allegations into the below:
Charge 1 CFR 764.2(e)--Acting With Knowledge of a Violation Related to
the Sale of Two Digital Portable Radios
17. Beginning in or about March 2017 and continuing through on or
about June 7, 2017, Scott sold, transferred, or conducted negotiations
with respect to items subject to the EAR and the Iranian Transactions
and Sanctions Regulations (``ITSR''),\2\ specifically two Motorola
Astro XTS 2500 Digital Portable Radios, a commodity classified as
Export Control Classification Number (ECCN) 5A991.g. and controlled for
Anti-Terrorism reasons, with knowledge that a violation of the
Regulations had or was about or intended to occur in connection with
the items. In particular, Scott sold, transferred, or conducted
negotiations with respect to the items with knowledge that they were
destined for Iran without the required U.S. Government authorization.
At all times pertinent hereto, section 742.8 of the Regulations imposed
a BIS license requirement for the export or reexport of the items to
Iran. Additionally, section 746.7 of the Regulations prohibits the
export or reexport to Iran of any item subject to both the Regulations
and the ITSR, if the transaction is prohibited by the ITSR and has not
been authorized by the Treasury Department's Office of
[[Page 19915]]
Foreign Assets Control (``OFAC''). At all times pertinent hereto, the
ITSR prohibited, inter alia, the unauthorized export or reexport,
either directly or indirectly, of the items to Iran. See 31 CFR
560.204-205.
---------------------------------------------------------------------------
\2\ 31 CFR part 560 (2017).
---------------------------------------------------------------------------
18. Specifically, as set forth above, in or about March 2017, Scott
began negotiating the sale of two Motorola Astro XTS 2500 Digital
Portable Radios through emails with an undercover Special Agent, whose
true identity was unknown to Scott. The UC requested that the radios be
sent to Iran and later stated that they would be transshipped from
Jordan to Iran. Although the UC reiterated on multiple occasions that
the ultimate end-user was located in Iran, Scott agreed to complete the
sales transaction. On or about June 7, 2017, Scott provided the
undercover Special Agent with a USPS tracking number for the shipment
of the two radios.
19. No U.S. Government authorization had been sought or obtained in
connection with this transaction. In engaging in such conduct with
knowledge that a violation of the EAR, or any order, license or
authorization issued thereunder, has occurred, is about to occur, or is
intended to occur, Scott violated section 764.2(e) of the Regulations.
Charges 2-3 15 CFR 764.2(g)--Misrepresenting and Concealing Facts to an
Official of a United States Agency
20. On at least two occasions between December 2018 and January
2019, Scott and Mission made a false or misleading representation,
statement, certification, or falsified or concealed a material fact, to
a U.S. government official.
21. Following the above-described efforts by Scott to ship the two
radios, FBI and BIS Special Agents interviewed Scott on or about
December 5, 2018. During the interview with these U.S. government
officials, Scott stated that he received an inquiry for a Motorola
portable radio destined for a customer in Iran and that he had
completed the sale. Thereafter, on or about December 7, 2018, in a
follow-up email to the BIS Special Agent, Scott indicated that he had
never shipped anything to Iran and that, when the buyer telephoned him
to purchase for a customer in Iran, he refused.
22. On or about December 7, 2018, Scott made additional materially
false statements or omissions to the BIS Special Agent about his
communications related to the sale of the radios. Specifically, Scott
falsely represented that he communicated with the UC by phone and that
there were no email communications indicating that the radios were
destined for Iran. He also falsely stated that the UC advised him that
the radios would be used for oil exploration.
23. Additionally, on or about December 11, 2018, Scott produced an
email in response to the BIS subpoena that had been materially altered
and falsified. Although the original April 15, 2017, email
communication between Scott and the UC made no reference to Iran, the
document provided by Scott to the Special Agent had been altered and
falsified by inserting the following statement into the email: ``I
won't sell to IRAN OR I WILL NOT SUPPLY ANY ENCRYPTION. I have
explained this to you on the phone, why are you badgering me.''
(Capitalization as shown in email).
24. By making a false or misleading representation, statement, or
certification, or falsifying or concealing any material fact to BIS
and/or FBI Special Agents in the course of an investigation or other
action subject to the EAR, Scott and Mission violated section 764.2(g)
of the Regulations on at least two occasions.
Charge 4 15 CFR 764.2(a)--Engaging in Prohibited Conduct Related to the
Failure to File Electronic Export Information
25. On or about June 7, 2017, Scott engaged in conduct prohibited
by the Regulations by failing to comply with reporting requirements,
namely by failing to file Electronic Export Information (``EEI'') for
the shipment of two Motorola Astro XTS 2500 Digital Portable Radios as
described above. EEI includes export information about a transaction
such as the names and addresses of the parties to a transaction; the
ECCN (when required); the description, quantity and value of the items
exported; and the license authority for the export.
26. Section 758.1(b) of the EAR required that EEI be filed in
certain situations, including for all exports of items subject to the
EAR that were destined for Iran, a Country Group E:1 destination,\3\
regardless of value, and ``for all exports subject to the EAR that
require submission of a license application, regardless of value or
destination . . . .'' Records checks reflect that Scott failed to file
EEI related to the June 7, 2017 shipment of the two Motorola Astro XTS
2500 Digital Portable Radios.
---------------------------------------------------------------------------
\3\ See Supplement No. 1 to 15 CFR part 740.
---------------------------------------------------------------------------
27. By failing to file the EEI for the shipment of the two Motorola
Astro XTS 2500 Digital Portable Radios as required pursuant to section
758.1(b), Scott committed one violation of section 764.2(a) of the
Regulations, by engaging in any transaction or taking any other action
prohibited by or contrary to, or refraining from engaging in any
transaction or taking any other action required by ECRA, the EAR, or
any order, license or authorization issued thereunder.
Charge 5 15 CFR 764.2(i)--Failure To Comply With Reporting,
Recordkeeping Requirements
28. Between on or about March 16, 2017 and January 14, 2019, Scott
and Mission failed to comply with the recordkeeping requirements set
forth in Part 762 of the EAR. Scott and Mission at all relevant times
were (and remain) subject to the jurisdiction of the United States and
participated in transactions involving the export from the United
States of items subject to the Regulations, including the transaction
described in Charge 1, supra, and were required to keep and maintain
all records described in section 762.2 of the Regulations made or
obtained. See 15 CFR 762.1(a)(2), (a)(4), and (b).
29. The records required to be retained include, inter alia, bills
of lading and other ``export control documents'' (as defined in part
772 of the Regulations), correspondence, and any other records Scott or
Mission made or obtained pertaining to such transactions. See 15 CFR
762.2 and 772.1 (at definition of ``export control document''). All
such records must be retained for a period of five years from the date
of the export of the item involved in the transaction. See 15 CFR
762.6(a). In addition, any such records formally or informally
requested by BIS (or any other U.S. Government agency) may not be
destroyed or disposed of without written authorization from BIS (or
other agency concerned), even if such records have been retained for
more than the required retention period. See 15 CFR 762.6(b).
30. Scott and Mission failed to maintain records as required
pursuant to section 762 of the EAR. On or about December 5, 2018, the
BIS Special Agent served Scott with a BIS administrative subpoena
requesting ``[a]ny and all records, from December 2013 to present,
related to export/re-export, facilitation of an export/re-export, or
attempted export/re-export of any and all commodities'' subject to the
EAR. The requested records included, but were not limited to, requests
for quotes, waybills, bills of lading, Shipper's Export Declarations,
payment records, emails, and other correspondence.
31. On or about December 10, 2018, in responding to the BIS
administrative
[[Page 19916]]
subpoena, Scott advised the BIS Special Agent that he has never ``kept
a record or a file on this stuff, as I had no idea I had to. . . . Some
of my shipping records were on my old computer that was damaged by a
lightning strike about 3 years ago.'' On January 14, 2019, after the
BIS Special Agent granted Scott additional time to respond to the
subpoena, he provided some records, including a list of freight
forwarders/brokers and invoices related to exports to approximately 15
countries. For almost all of these exports, however, he failed to
produce any of the other requested records, including quotes, requests
for quotes, waybills, bills of lading, payment records, or emails and
other correspondence. Scott also acknowledged that the records were
incomplete, claiming that ``[w]e lost our main HD computer during a
storm in April of 2015. A lot of information was lost.''
32. As a result of these failures, Scott and Mission committed a
violation of section 764.2(i) of the Regulations, by failing or
refusing to comply with any reporting or recordkeeping requirement of
ECRA, the EAR, or of any order, license, or authorization issued
thereunder.
Whereas, I have taken into consideration the Respondents' limited
ability to pay a monetary penalty;
Whereas, BIS and Respondents 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, Respondents admit committing the alleged conduct described
in the Charging Letter; and
Whereas, I have approved of the terms of such Settlement Agreement;
it is therefore ordered:
First, for a period of twenty (20) years from the date of the
Order, Kenneth Scott, Scott Communications, Inc., and Mission
Communications, LLC, with a last known address of 61574 Hillside Road,
St. Ignatius, MT 59865, and when acting for or on their behalf, their
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 to 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.
Second, 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.
Third, any licenses issued under the Regulations in which
Respondents have an interest as of the date of this Order shall be
revoked by BIS.
Fourth, after notice and opportunity for comment as provided in
section 766.23 of the Regulations, any person, firm, corporation, or
business organization related to the Denied Person by affiliation,
ownership, control, or position of responsibility in the conduct of
trade or related services may also be made subject to the provisions of
the Order.
Fifth, the Settlement Agreement and this Order shall be made
available to the public.
This Order, which constitutes the final agency action in this
matter, is effective immediately.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2023-06920 Filed 4-3-23; 8:45 am]
BILLING CODE 3510-DT-P
