Final Decision and Order, 80857-80861 [2024-22549]
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Federal Register / Vol. 89, No. 193 / Friday, October 4, 2024 / Notices
grantee of FTZ 227, requesting subzone
status for the facility of Canoo Inc.,
located in Pryor, Oklahoma. The
application was submitted pursuant to
the provisions of the Foreign-Trade
Zones Act, as amended (19 U.S.C. 81a–
81u), and the regulations of the FTZ
Board (15 CFR part 400). It was formally
docketed on October 1, 2024.
The proposed subzone (10 acres) is
located at 4461 Zarrow Street, Building
625, Pryor, Oklahoma. No authorization
for production activity has been
requested at this time. The proposed
subzone would be subject to the existing
activation limit of FTZ 227.
In accordance with the FTZ Board’s
regulations, Camille Evans of the FTZ
Staff is designated examiner to review
the application and make
recommendations to the Executive
Secretary.
Public comment is invited from
interested parties. Submissions shall be
addressed to the FTZ Board’s Executive
Secretary and sent to: ftz@trade.gov. The
closing period for their receipt is
November 13, 2024. Rebuttal comments
in response to material submitted
during the foregoing period may be
submitted during the subsequent 15-day
period to November 29, 2024.
A copy of the application will be
available for public inspection in the
‘‘Online FTZ Information Section’’
section of the FTZ Board’s website,
which is accessible via www.trade.gov/
ftz.
For further information, contact
Camille Evans at Camille.Evans@
trade.gov.
Dated: October 1, 2024.
Elizabeth Whiteman,
Executive Secretary.
part 400). It was formally docketed on
September 30, 2024.
The proposed subzone would consist
of the following sites: Site 1 (2.33 acres)
1500 Frost Road, Streetsboro; and Site 2
(0.54 acres) 16445 Gar Highway,
Montville. No authorization for
production activity has been requested
at this time. The proposed subzone
would be subject to the existing
activation limit of FTZ 40.
In accordance with the FTZ Board’s
regulations, Juanita Chen of the FTZ
Staff is designated examiner to review
the application and make
recommendations to the Executive
Secretary.
Public comment is invited from
interested parties. Submissions shall be
addressed to the FTZ Board’s Executive
Secretary and sent to: ftz@trade.gov. The
closing period for their receipt is
November 13, 2024. Rebuttal comments
in response to material submitted
during the foregoing period may be
submitted during the subsequent 15-day
period to November 29, 2024.
A copy of the application will be
available for public inspection in the
‘‘Online FTZ Information Section’’
section of the FTZ Board’s website,
which is accessible via www.trade.gov/
ftz.
For further information, contact
Juanita Chen at juanita.chen@trade.gov.
Dated: September 30, 2024.
Elizabeth Whiteman,
Executive Secretary.
[FR Doc. 2024–22941 Filed 10–3–24; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[FR Doc. 2024–22970 Filed 10–3–24; 8:45 am]
[Docket Number: 24–TDO–0001]
BILLING CODE 3510–DS–P
Final Decision and Order
DEPARTMENT OF COMMERCE
Foreign-Trade Zones Board
[S–172–2024]
khammond on DSKJM1Z7X2PROD with NOTICES
Foreign-Trade Zone 40; Application for
Subzone; Permco, Inc.; Montville and
Streetsboro, Ohio
An application has been submitted to
the Foreign-Trade Zones (FTZ) Board by
the Cleveland Cuyahoga County Port
Authority, grantee of FTZ 40, requesting
subzone status for the facilities of
Permco, Inc., located in Montville and
Streetsboro, Ohio. The application was
submitted pursuant to the provisions of
the Foreign-Trade Zones Act, as
amended (19 U.S.C. 81a–81u), and the
regulations of the FTZ Board (15 CFR
VerDate Sep<11>2014
17:26 Oct 03, 2024
Jkt 265001
In the Matter of:
SkyTechnic, Kiyevskoye Shosse 22–Y,
Moskovsky Settlement, Moscow, Russia
108811;
Skywind International Limited, Room 2403A
24/F Lippo CTR Tower One, 89
Queensway, Admiralty, Hong Kong;
Hong Fan International, Shop 102, Level 1,
One Exchange Square, Hong Kong, and
Room A 11/F Henfa Commercial Building,
348–350 Lockhart Road, Hong Kong, and
Vistra Corporate Services Centre, Wickhams
Cay II, Road Town, Tortola, British Virgin
Islands;
Lufeng Limited, Room A 11/F Henfa
Commercial Building, 348–350 Lockhart
Road, Hong Kong, and
Vistra Corporate Services Centre, Wickhams
Cay II, Road Town, Tortola, British Virgin
Islands;
Unical dis Ticaret Ve Lojistik JSC, 34140
Zeytinlik Mh. Halcki Sk, Iten Han Gue
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80857
Carsi Blok No 28/58, Bakirkoy, Istanbul,
Turkey, and
Room A 11/F Henfa Commercial Building,
348–350 Lockhart Road, Hong Kong;
Izzi Cup DOO, Koste Cukia 14, Zemun
200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur—Bali,
Indonesia;
Alexey Sumchenko, Hong Kong;
Anna Shumakova, Russia;
Branimir Salevic, Koste Cukia 14, Zemun
200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur—Bali,
Indonesia;
Danijela Salevic, Koste Cukia 14, Zemun
200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur—Bali,
Indonesia
Office of the Undersecretary for
Industry and Security, Bureau of
Industry and Security, Commerce.
Before me for my final decision is a
Recommended Decision (‘‘RD’’) issued
on September 4, 2024, by
Administrative Law Judge (‘‘ALJ’’)
Tommy Cantrell. The RD recommends
that I dismiss the appeal filed by Alexey
Sumchenko (‘‘Sumchenko’’) of the
Temporary Denial Order (‘‘TDO’’)
issued against him on June 12, 2024. As
discussed further below, I accept the
findings of fact and conclusions of law
in the ALJ’s RD. As a result,
Sumchenko’s appeal is dismissed and
the TDO issued against him is affirmed.
AGENCY:
I. Background
On June 12, 2024, the Assistant
Secretary of Commerce for Export
Enforcement (‘‘Assistant Secretary’’) of
the Bureau of Industry and Security
(‘‘BIS’’) issued a TDO against
Sumchenko, Hong Fan International
(‘‘Hong Fan’’), Lufeng Limited
(‘‘Lufeng’’), and Skywind International
Limited (‘‘Skywind’’)—three companies
with which Sumchenko was affiliated—
and several other companies and
individuals, including SkyTechnic, a
Russian aircraft parts supplier. 89 FR
51302. The TDO states that SkyTechnic
‘‘developed and continues to utilize a
network of Hong Kong-based shell
companies, including Skywind, Hong
Fan, and Lufeng, to obtain civil aircraft
parts from the United States and
obfuscate the ultimate end users of
those parts in Russia, contrary to the
requirements of the [Export
Administration Regulations (the ‘‘EAR’’
or the ‘‘Regulations’’)].’’ Id.
On July 25, 2024, Sumchenko,
through counsel, filed an appeal with
the U.S. Coast Guard ALJ Docketing
Center pursuant to 15 CFR 766.24(e)(3)
of the EAR. On July 29, 2024, the Chief
ALJ assigned the appeal to ALJ Cantrell.
On August 20, 2024, BIS filed a
response to the appeal. ALJ Cantrell
issued the RD on September 4, 2024,
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which my office received on September
5, 2024. On September 6, 2024, the BIS
Appeals Coordinator requested views
from the parties on extending the time
to issue my Final Decision in this
appeal. Both parties consented to an
extension of time, and, on September
11, 2024, I issued an Order extending
the period of time to issue this Final
Decision to September 30, 2024.
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II. Standard
Section 766.24 of the EAR authorizes
the Assistant Secretary to issue a TDO
for a period of up to 180 days to prevent
an ‘‘imminent violation’’ of the
Regulations. 15 CFR 766.24(b)(l), (b)(4).
The Regulations require that the TDO
define the imminent violation and state
why the TDO was issued without a
hearing. Id. at § 766.24(b)(2). Because all
TDOs are public, ‘‘the description of the
imminent violation and the reasons for
proceeding on an ex parte basis . . .
shall be stated in a manner that is
consistent with national security,
foreign policy, business confidentiality,
and investigative concerns. Id.
A violation may be imminent ‘‘either
in time or in degree of likelihood.’’ Id.
at 766.24(b)(3). Accordingly, ‘‘BIS may
show a violation is about to occur, or
that the general circumstances of the
matter under investigation . . .
demonstrate a likelihood of future
violations.’’ Id. To establish the
likelihood of a future violation, ‘‘BIS
may show that the violation under
investigation . . . is significant,
deliberate, covert and/or likely to occur
again, rather than technical or
negligent.’’ Id.
The Regulations provide that a
‘‘respondent may appeal [the issuance
of a TDO] on the grounds that the
finding that the order is necessary in the
public interest to prevent an imminent
violation is unsupported.’’ Id. at
§ 766.24(e)(2).
III. Discussion
In his appeal, Sumchenko argues that
there is no support for the finding that
the TDO against him is necessary to
prevent an imminent violation of the
EAR. Sumchenko Appeal at 5.
Specifically, Sumchenko argues that the
alleged misconduct outlined in the TDO
occurred after he relinquished
ownership of Hong Fan, Lufeng, and
Skywind, and that there is no evidence
that he was aware of or involved in the
conduct that occurred when he did own
the companies. Sumchenko Appeal at
5–7.
The ALJ makes fourteen
recommended findings of fact in the RD.
RD at 4–5. I accept these recommended
findings of fact. Based on these findings
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of fact, the ALJ concluded in the RD that
BIS successfully demonstrated the TDO
against Sumchenko was necessary to
prevent an imminent violation of the
EAR. RD at 8. For reasons discussed
below, I agree with the ALJ’s
conclusion.
First, the record shows that
Sumchenko was the owner and director
of Hong Fan, Lufeng, and Skywind
during 2022 and 2023. RD at 6.
Specifically, with respect to Hong Fan
and Lufeng, Sumchenko was the owner
of these entities until he transferred his
ownership interest in June 2022.
Sumchenko Appeal at 7 and Exs. E and
F. He was a director of Hong Fan and
Lufeng until he resigned those positions
in November 2022. Sumchenko Appeal
at 6. As noted in BIS’s response to
Sumchenko’s appeal, even though
Sumchenko had transferred his
ownership rights in Hong Fan and
Lufeng in June 2022, Sumchenko was
identified as the beneficial owner of
bank accounts for Hong Fan and Lufeng
until at least September 2023. BIS
Response at 5–6; RD at 4. For Skywind,
Sumchenko was a director and owner
until he resigned his position and
transferred his ownership rights in
Skywind in November 2023.
Sumchenko Appeal at 6; RD at 4.
Second, the record reflects that
between June 2022 and March 2023,
Hong Fan, Lufeng, and Skywind were
involved in transactions or attempted
transactions to deliberately obtain U.S.origin aircraft parts on behalf of Russian
entities, and to conceal the true
identities of the Russian purchasers in
those transactions, in violation of the
Regulations. RD at 8.
Third, as discussed above, during the
time that Hong Fan, Lufeng and
Skywind were involved in violations of
the EAR, Sumchenko was an owner or
director of these companies, or the
beneficial owner of bank accounts
connected to these entities. Sumchenko
argues in his appeal that because he was
no longer the owner of Hong Fan and
Lufeng at the time of some of the
conduct at issue in the TDO, the ‘‘sole
connection’’ between the conduct
outlined in the TDO as it relates to those
entities and Sumchenko ‘‘has been
broken.’’ Sumchenko Appeal at 7. I find
that the other connections established in
the record, such as Sumchenko’s
position as director of Hong Fan and
Lufeng until November 2022 and his
role as beneficial owner of bank
accounts for these companies until at
least September 2023, are enough to
connect Sumchenko to the conduct that
involved Hong Fan and Lufeng through
September 2023. As a result, I agree
with the ALJ’s conclusion that
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Sumchenko shares responsibility for the
conduct of Hong Fan, Lufeng, and
Skywind described in the TDO, which
includes transactions deliberately
designed to evade the prohibitions of
the EAR. RD at 8.
As discussed above, the Regulations
allow BIS to issue a denial order upon
a showing that ‘‘the order is necessary
in the public interest to prevent an
imminent violation of [the EAR.]’’ 15
CFR 766.24(b)(1). A violation may be
considered ‘‘imminent’’ either in time or
‘‘or in degree of likelihood.’’ Id. at
§ 766.24(b)(3). BIS may consider past
participation in deliberate violations of
the EAR as a factor when deciding
whether a person is likely to participate
in future violations of the EAR. See 15
CFR 766.24(b)(3). BIS has established
that Hong Fan, Lufeng, and Skywind
were involved in deliberate violations of
the EAR, and that Sumchenko is
responsible for that conduct based on
his various roles with these companies
at the time the conduct took place. As
a result, I agree with the ALJ’s
conclusion in the RD that, BIS has
established additional violations are
‘‘imminent’’ within the meaning of 15
CFR 766.24(b)(3), and that the TDO
against Sumchenko is necessary to
prevent an imminent violation of the
EAR.
Sumchenko argued in his appeal that
even if he was the owner and director
of companies that violated the EAR, BIS
has not established that he ‘‘was
involved in or even knew about those
events.’’ Sumchenko Appeal at 6. The
ALJ found this argument unpersuasive,
and I find it unpersuasive as well. As
the ALJ notes, Sumchenko made no
effort to refute the allegations against
Hong Fan, Lufeng, or Skywind. RD at 9.
Just as important, Sumchenko makes no
effort to explain his role in these
companies or how each of these
companies could have been involved in
a scheme to violate the EAR without his
knowledge given his various roles,
including as owner or director. In
addition, Sumchenko concedes that in
February 2023, he directed a third party
to pay Lufeng approximately $450,000.
Sumchenko Appeal at 4. Sumchenko
argues, however, that ‘‘it is not clear
how directing ‘a third party to pay
Lufeng’ indicates ownership or control
over Lufeng.’’ Id. Setting aside the fact
that Sumchenko only offers vague
assurances ‘‘based on information and
belief’’ that the transaction was related
to ‘‘the process of divestment that Mr.
Sumchenko was undertaking at the
time,’’ Sumchenko offers no specific
explanation for why he would direct a
third party to make payment to Lufeng
if he no longer had an interest in the
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company. See Sumchenko Appeal at 5.
And since Sumchenko was the
beneficial owner of a bank account for
Lufeng at the time he instructed the
third party to transfer payment, his
potential access to the funds suggests
his financial interest in Lufeng,
including the receipt of any benefits of
the scheme to provide U.S.-origin parts
to entities in Russia without
authorization, continued after he
transferred his ownership and resigned
as director. Indeed, Sumchenko’s efforts
to distance himself from Hong Fan and
Lufeng via changes to corporate
paperwork, while at the same time
maintaining control of related bank
accounts and directing payment to
Lufeng, may have been part of an
attempt to evade detection. For these
reasons, I agree with the ALJ’s
conclusion that Sumchenko may be
held responsible for the actions of Hong
Fan, Lufeng, and Skywind described in
the TDO. RD at 9. I further agree with
the ALJ’s conclusion that ‘‘in the
absence of the TDO, nothing would
prevent [Sumchenko] from creating new
companies to engage in the same
violative conduct.’’ RD at 10.
IV. Conclusion and Order
Based on my review of the record, I
accept the findings of fact and
conclusions of law made by the ALJ in
his RD, and it is therefore ordered:
First, that this appeal is dismissed.
Second, that this Final Decision and
Order shall be served on Appellants and
on BIS and shall be published in the
Federal Register. In addition, the ALJ’s
Recommended Decision shall also be
published in the Federal Register.
This Order, which constitutes the
Department’s final decision with regard
to this appeal, is effective immediately.
Alan F. Estevez,
Under Secretary of Commerce for Industry
and Security.
Bureau of Industry and Security
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Washington, D.C. 20230
In the Matter of:
SkyTechnic, Kiyevskoye Shosse 22–Y,
Moskovsky Settlement, Moscow, Russia
108811
Skywind International Limited, Room 2403A
24/F Lippo CTR Tower One, 89
Queensway, Admiralty, Hong Kong
Hong Fan International, Shop 102, Level 1,
One Exchange Square, Hong Kong, and
Room A 11/F Henfa Commercial Building,
348–350 Lockhart Road, Hong Kong, and
Vistra Corporate Services Centre, Wickhams
Cay II, Road Town, Tortola, British Virgin
Islands
17:26 Oct 03, 2024
Jkt 265001
Recommended Decision and Order
This matter comes before me on
Alexey Sumchenko’s (Respondent)
appeal of the Order Temporarily
Denying Export Privileges (TDO) issued
by the U.S. Department of Commerce
Bureau of Industry and Security (BIS),
through its Office of Export Enforcement
(OEE) on June 12, 2024. OEE issued the
TDO pursuant to the Export
Administration Regulations (EAR),
specifically 15 CFR 766.24.1 After
considering the evidence and arguments
presented by the parties, and in
accordance with the applicable law and
regulations, I find BIS demonstrated the
TDO is necessary in the public interest
to prevent an imminent violation of the
EAR, and I recommend the TDO be
affirmed.
I. Procedural Background
On June 12, 2024, OEE issued a TDO
against Respondent, preventing him
from participating in transactions
subject to the EAR for 180 days. On July
United States of America
VerDate Sep<11>2014
Lufeng Limited, Room A 11/F Henfa
Commercial Building, 348–350 Lockhart
Road, Hong Kong, and
Vistra Corporate Services Centre, Wickhams
Cay II, Road Town, Tortola, British Virgin
Islands
Unical dis Ticaret Ve Lojistik JSC, 34140
Zeytinlik Mh. Halcki Sk, Iten Han Gue
Carsi Blok No 28/58, Bakirkoy, Istanbul,
Turkey, and
Room A 11/F Henfa Commercial Building,
348–350 Lockhart Road, Hong Kong
Izzi Cup DOO, Koste Cukia 14, Zemun
200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur—Bali,
Indonesia
Alexey Sumchenko, Hong Kong
Anna Shumakova, Russia
Branimir Salevic, Koste Cukia 14, Zemun
200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur—Bali,
Indonesia
Danijela Salevic, Koste Cukia 14, Zemun
200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur—Bali,
Indonesia
Respondents
Docket Number: 24–TDO–0001
The Hon. Tommy Cantrell Administrative
Law Judge
1 Title 15 CFR parts 730–774 (EAR), were
promulgated under the Export Administration Act
of 1979 (EAA), formerly codified at 50 U.S.C. 4601–
4623. Although the EAA expired on August 21,
2001, the President, through Executive Order 13222
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. 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.
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25, 2024, Respondent filed an appeal of
the TDO. Thereafter, the Chief
Administrative Law Judge assigned this
matter to me on July 29, 2024, for
adjudication.2 On August 5, 2024, the
parties filed a stipulation extending BIS’
deadline to submit a reply to the appeal.
BIS filed a reply to the appeal on August
20, 2024.
Respondent’s appeal included seven
documentary exhibits (Exhibits A–G),
and a copy of the June 12, 2024, TDO
(Ex. A). OEE’s reply included two
exhibits (Exhibits 1–2).3 The record is
now closed, and the appeal is ripe for
a recommended decision.
II. Recommended Findings of Fact
1. Skywind International Limited
(Skywind), Hong Fan Global Limited
(Hong Fan), and Lufeng Limited
(Lufeng), are companies registered to do
business in Hong Kong. (Exs. B–D,
respectively).
2. Respondent was an owner and
director of Skywind, Hong Fan, and
Lufeng during 2022–2023. (Exs. A–G;
Exs. 1–2).
3. Respondent transferred his
ownership interest in and resigned his
position as director of Skywind on
November 23, 2023. (Ex. G).
4. Respondent resigned his position as
director of Hong Fan on November 14,
2022, but remained a beneficial owner
of Hong Fan until at least September 6,
2023. (Exs. E, and 1).
5. Respondent resigned his position as
director of Lufeng on November 14,
2022, but remained a beneficial owner
of Lufeng until at least September 6,
2023. (Exs. F and 2).
6. SkyTechnic is an aircraft parts
supplier based in Moscow, Russia. (Ex.
A at 3, 7).
7. During May and June 2022, Anna
Shumakova, on behalf of SkyTechnic,
discussed with Izzi Cup (a company
registered in Serbia) methods of
purchasing aircraft parts from the
United States (U.S.) in contravention of
export controls, including by using
Skywind as a straw purchaser of the
items. (Ex. A at 7).
8. In May 2022, Shumakova, on behalf
of Skywind, informed a freight
forwarder Skywind would complete
purchases of aircraft parts on behalf of
Pobeda Airlines, a Russian airline
company that itself became the subject
of a TDO on June 24, 2022. (Ex. A at 7).
9. In June 2022, SkyTechnic began
using Hong Fan to facilitate the
purchase of aircraft parts from the U.S.
(Ex. A at 7).
2 Pursuant to an interagency agreement, United
States Coast Guard (USCG) Administrative Law
Judges are permitted to adjudicate BIS cases.
3 See Attachment A for a listing of exhibits.
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10. Also in June 2022, Lufeng engaged
in a transaction with Izzi Cup and
served as the straw purchaser on an
invoice for aircraft parts meant for
SkyTechnic. (Ex. A at 8).
11. In October 2022, Hong Fan
attempted to ship aircraft parts to the
Maldives for Euro Asia. Euro Asia had
a sales relationship with AeroflotRussian Airlines (Aeroflot), a company
that itself became the subject of a TDO
on April 7, 2022. (Ex. A at 7–8; see PJSC
Aeroflot, 1 Arbat St., 119019, Moscow,
Russia; Order Temporarily Denying
Export Privileges, 87 FR 21611 (Apr. 12,
2022)).
12. In November 2022, Hong Fan
worked with a freight forwarder to
facilitate the purchase of aircraft parts
for Pobeda Airlines, and the associated
invoice was issued to SkyTechnic. (Ex.
A at 8).
13. In February 2023, Respondent
directed a third party to pay Lufeng
approximately $450,000.00 for services
rendered to Skywind. (Ex. A at 5).
14. During February and March 2023,
Hong Fan served as a straw purchaser
for SkyTechnic, for the export of aircraft
parts from the U.S., which were
ultimately delivered to Aeroflot in
Russia. (Ex. A at 8).
III. Opinion and Recommended
Conclusions of Law
BIS issues and enforces the EAR
‘‘under laws relating to the control of
certain exports, reexports, and
activities.’’ 15 CFR 730.1. The EAR is
‘‘intended to serve the national security,
foreign policy, nonproliferation of
weapons of mass destruction, and other
interests of the United States.’’ 15 CFR
730.6. To prevent an imminent violation
of the EAR, BIS may request the EEO
issue a TDO on an ex parte basis. 15
CFR 766.24(a). A TDO is valid for a
maximum of 180 days and the Assistant
Secretary may renew a TDO in
additional 180-day increments as
deemed necessary. 15 CFR 766.24(b)(4),
(d)(4).
A violation may be imminent ‘‘either
in time or in degree of likelihood.’’ 15
CFR 766.24(b)(3). Accordingly, BIS may
attempt to show ‘‘a violation is about to
occur, or that the general circumstances
of the matter under investigation . . .
demonstrate a likelihood of future
violations.’’ Id. With respect to
demonstrating the likelihood of future
violations, BIS ‘‘may show that the
violation under investigation . . . is
significant, deliberate, covert and/or
likely to occur again, rather than
technical or negligent . . .’’ Id.
Ultimately, to obtain a TDO against a
respondent, BIS must show ‘‘the order
is necessary in the public interest to
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prevent an imminent violation’’ of the
EAR. 15 CFR 766.24(b)(1). Conversely,
to prevail on appeal, a respondent must
show ‘‘the finding that the order is
necessary in the public interest to
prevent an imminent violation is
unsupported.’’ 15 CFR 766.24(e)(2).
A. BIS Demonstrated Likelihood of
Imminent Violation
The June 12, 2024, TDO set forth facts
showing a likelihood Respondent would
imminently violate the EAR unless his
export privileges were revoked. It
established that BIS implemented a
license requirement for the export to
Russia of any aircraft or aircraft parts
listed in Export Control Classification
Number (ECCN) 9A991 on February 24,
2022. (Ex. A at 4). See Implementation
of Sanctions Against Russia Under the
Export Administration Regulations
(EAR), 87 FR 12226 (Mar. 3, 2022) (to
be codified at 15 CFR parts 734, 738,
740, 742, 744, 746, and 772). On March
2, 2022, BIS excluded any aircraft
registered in, owned, or controlled by,
or under charter or lease by Russia, or
a national of Russia, from being eligible
for license exception Aircraft, Vessels,
and Spacecraft (AVS). (Ex. A at 5). See
Imposition of Sanctions Against Belarus
Under the Export Administration
Regulations (EAR), 87 FR 13048 (Mar. 8,
2022) (to be codified at 15 CFR parts
734, 738, 740, 742, 744, and 746). The
TDO then established that after those
dates, companies owned and controlled
by Respondent acted to subvert these
export controls to obtain prohibited
aircraft parts for Russian companies.
Specifically, the record shows
Respondent was an owner and director
of Skywind International Limited
(Skywind), Hong Fan Global Limited
(Hong Fan), and Lufeng Limited
(Lufeng), during 2022–2023. (Exs. A–G;
Exs. 1–2). Skywind, Hong Fan, and
Lufeng are, and at all times relevant
were, companies registered to do
business in Hong Kong. (Exs. A–D).
During May and June 2022, Anna
Shumakova, on behalf of a Russian
aircraft parts company called
SkyTechnic, discussed with Izzi Cup, a
company registered in Serbia, methods
of purchasing aircraft parts from the
U.S. in contravention of export controls,
including using Skywind as a straw
purchaser of the items. (Ex. A at 7). In
May 2022, Shumakova, on behalf of
Skywind, informed a freight forwarder
that Skywind would purchase aircraft
parts on behalf of Pobeda Airlines, a
Russian airline company that itself
became the subject of a TDO on June 24,
2022. (Ex. A at 7). See Pobeda Airlines,
108811, Russian Federation, Moscow, p.
Moskovskiy Kievskoe shosse 22nd km,
PO 00000
Frm 00006
Fmt 4703
Sfmt 4703
4/1. Moscow, Russia; Order Temporarily
Denying Export Privileges, 87 FR 38707
(Jun. 29, 2022). Then in June 2022,
SkyTechnic began using Hong Fan to
facilitate the purchase of aircraft parts
from the U.S. (Ex. A at 7). And in June
2022, Lufeng served as the straw
purchaser on an invoice for aircraft
parts meant for SkyTechnic. (Ex. A at 8).
In October 2022, Hong Fan attempted
to facilitate the purchase of aircraft parts
for Euro Asia, a company with a sales
relationship with Aeroflot-Russian
Airlines (Aeroflot), a company that itself
became the subject of a TDO on April
7, 2022. (Ex. A at 7–8). See PJSC
Aeroflot, 1 Arbat St., 119019, Moscow,
Russia; Order Temporarily Denying
Export Privileges, 87 FR 21611 (Apr. 12,
2022). In November 2022, Hong Fan
worked with a freight forwarder to
facilitate the purchase of aircraft parts
for Pobeda Airlines, and the associated
invoice was issued by SkyTechnic. (Ex.
A at 8). During February and March
2023, Hong Fan served as a straw
purchaser for SkyTechnic, for the export
of aircraft parts from the U.S. which
were ultimately delivered to Aeroflot in
Russia. (Ex. A at 8).
Pursuant to the regulations governing
these proceedings, a TDO is appropriate
to prevent an imminent violation of the
EAR. 15 CFR 766.24(b)(1). To show a
violation is ‘‘imminent,’’ BIS may
demonstrate a temporal proximity to a
future violation or may show ‘‘that the
general circumstances of the matter . . .
demonstrate a likelihood of future
violations.’’ 15 CFR 766.24(b)(3). In this
regard, ‘‘BIS may show that the
violation under investigation or charges
is significant, deliberate, covert and/or
likely to occur again, rather than
technical or negligent . . .’’ 15 CFR
766.24(b)(3). Here, the TDO clearly set
out numerous instances of violations of
the export controls imposed on
February 24 and March 2, 2022, wherein
the violations were not technical, but
deliberate. For example, the TDO set
forth in May and June of 2022,
SkyTechnic discussed with Izzi Cup a
strategy for obtaining U.S.-origin aircraft
parts by placing Skywind on the invoice
as the purchaser. (Ex. A at 7). The TDO
then set forth numerous instances
between June and November 2022 in
which Skywind, Hong Fan, and Lufeng
engaged in transactions to deliberately
obtain U.S.-origin aircraft parts and
conceal the actual purchasers (Russian
companies). (Ex. A at 7–8).
Respondent led the companies that
engaged in these violations, and thus
Respondent shares responsibility for
those violations. Having shown
Respondent already violated the EAR in
a deliberate manner, BIS successfully
E:\FR\FM\04OCN1.SGM
04OCN1
Federal Register / Vol. 89, No. 193 / Friday, October 4, 2024 / Notices
VerDate Sep<11>2014
17:26 Oct 03, 2024
Jkt 265001
It is hereby recommended the
Temporary Denial Order be affirmed.
Done and dated September 4, 2024, at
Houston, Texas
The Hon. Tommy Cantrell,
Administrative Law Judge, United States
Coast Guard.
Attachment A: Exhibit List
Attachment A
Respondent’s Exhibits
Exhibit A: Temporary Denial Order
issued Jun. 12, 2024
Exhibit B: Company Particulars—
Skywind International Limited
Exhibit C: Company Particulars—Hong
Fan Global Limited
Exhibit D: Company Particulars—Lufeng
Limited
Exhibit E: Resignation and transfer
instruments—Hong Fan
Exhibit F: Resignation and transfer
instruments—Lufeng
Exhibit G: Resignation and transfer
instruments—Skywind
BIS Exhibits
Exhibit 1: Sep. 6, 2023, email re: Hong
Fan
Exhibit 2: Sep. 6, 2023, email re: Lufeng
Frm 00007
Ericka J. Pollard,
Paralegal Specialist to The Hon. Tommy
Cantrell Administrative Law Judge
United States Coast Guard
[FR Doc. 2024–22549 Filed 10–3–24; 8:45 am]
BILLING CODE 3510–DT–P
DEPARTMENT OF COMMERCE
ORDER
PO 00000
Certificate of Service
I hereby certify that I have transmitted
the above document to the following
persons, as indicated below:
ALJ Docketing Center, U.S Custom
House, Email: aljdocketcenter@
uscg.mil, Phone: (410) 962–5100, Sent
by email
Gregory Michelsen, Esq., Tristan de
Vega, Esq., Office of Chief Counsel for
BIS, U.S. Dept. of Commerce, Sent by
email
George Benaur, Esq., Benaur Law LLC,
Sent by email
Done and dated September 4, 2024, at
Houston, Texas
Fmt 4703
Sfmt 4703
International Trade Administration
[C–557–831]
Crystalline Silicon Photovoltaic Cells,
Whether or Not Assembled Into
Modules, From Malaysia: Preliminary
Affirmative Countervailing Duty
Determination and Alignment of Final
Determination With Final Antidumping
Duty Determination
Enforcement and Compliance,
International Trade Administration,
Department of Commerce.
SUMMARY: The U.S. Department of
Commerce (Commerce) preliminarily
determines that countervailable
subsidies are being provided to
producers and exporters of crystalline
silicon photovoltaic cells, whether or
not assembled into modules (solar
cells), from Malaysia. The period of
investigation is January 1, 2023, through
December 31, 2023. Interested parties
are invited to comment on this
preliminary determination.
DATES: Applicable October 4, 2024.
FOR FURTHER INFORMATION CONTACT:
Preston Cox or Scarlet Jaldin, AD/CVD
Operations, Office VI, Enforcement and
Compliance, International Trade
Administration, U.S. Department of
Commerce, 1401 Constitution Avenue
NW, Washington, DC 20230; telephone:
(202) 482–5041 or (202) 482–4275,
respectively.
SUPPLEMENTARY INFORMATION:
AGENCY:
E:\FR\FM\04OCN1.SGM
04OCN1
EN04OC24.002</GPH>
B. Respondent’s Argument and
Evidence Did Not Diminish BIS’ Case
As stated above, Respondent must
show there is no support for the finding
the TDO is necessary to prevent an
imminent violation of the EAR. 15 CFR
766.24(e)(2). In his appeal, Respondent
presented seven exhibits, one of which
was a copy of the June 12, 2024, TDO
(Ex. A); the remaining six exhibits were
business records showing Respondent’s
transfer of ownership in and resignation
as director of Skywind, Hong Fan, and
Lufeng. (Exs. B–G). With these exhibits
as support, Respondent makes two
arguments. He first argues a TDO is not
necessary to prevent him from
imminently violating the EAR because
he is no longer an owner or director of
Skywind, Hong Fan, and Lufeng.
Specifically, Respondent argues the
TDO ‘‘addresses alleged violations that
occurred after February 2022,’’ and that
Respondent ‘‘was divesting his
ownership and resigning’’ from the
companies during 2022 and 2023.
(Appeal at Para. 14). Respondent asserts
his ‘‘ownership of the companies is the
only allegation that purportedly ties him
to the alleged violations described in the
TDO.’’ (Appeal at Para. 14). I am not
persuaded.
First, I note Respondent never
challenged the truth of the allegations of
the TDO, he merely distances himself
from the conduct by stating he gave up
ownership of two of the companies
(Hong Fan and Lufeng) by June 2022.
(Appeal at Paras. 15, 16). Respondent
conveniently ignores his own exhibits,
which show he was still director of the
companies until November 14, 2022.
(Exs. E, F).
Respondent’s exhibits also show he
remained in control, as owner and
director, of Skywind until November 23,
2023. (Ex. G). Despite Respondent’s
claim that he relinquished control of
Hong Fan and Lufeng by November 14,
2022, BIS presented exhibits in its reply
showing Respondent was listed as a
beneficial owner of Hong Fan and
Lufeng until at least September 6, 2023.
(Exs. E, F; Exs. 1, 2). The TDO set forth
numerous violations of the EAR
committed by Skywind, Hong Fan, and
Lufeng that occurred from May through
November 2022, while Respondent was,
by both his and BIS’ claims, owner and
director of the companies. (Ex. A at 7–
8). As the director and owner of these
companies, it is reasonable to conclude
an order proscribing Respondent’s
export privileges is necessary to prevent
future violations.
Respondent alternatively argues even
if he was in control of the companies
while they were engaged in the illicit
conduct, the TDO does not prove he
‘‘was involved in or even knew about
those events.’’ (Appeal at Para. 14). I
find this argument unpersuasive. As
owner and director of the companies,
Respondent’s role imparts responsibility
on him for the actions of the company.
See Faour v. U.S. Dept. of Agriculture,
985 F.2d 217 (5th Cir. 1993) (petitioner
was responsibly connected to actions of
company because he was an officer,
director, and owner of stock during time
that company committed repeated
violations of the law). Respondent did
not refute any allegations of violative
conduct in the TDO, but instead only
demonstrated he has executed
paperwork to divest from the
companies. In the absence of the TDO,
nothing would prevent Respondent
from creating new companies to engage
in the same violative conduct.
Wherefore,
EN04OC24.001</GPH>
khammond on DSKJM1Z7X2PROD with NOTICES
demonstrated that further violations
were ‘‘imminent’’ within the meaning of
15 CFR 766.24, and an order
temporarily denying Respondent’s
export privileges would be necessary to
prevent them.
80861
]]>Agencies
[Federal Register Volume 89, Number 193 (Friday, October 4, 2024)]
[Notices]
[Pages 80857-80861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22549]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[Docket Number: 24-TDO-0001]
Final Decision and Order
In the Matter of:
SkyTechnic, Kiyevskoye Shosse 22-Y, Moskovsky Settlement, Moscow,
Russia 108811;
Skywind International Limited, Room 2403A 24/F Lippo CTR Tower One,
89 Queensway, Admiralty, Hong Kong;
Hong Fan International, Shop 102, Level 1, One Exchange Square, Hong
Kong, and
Room A 11/F Henfa Commercial Building, 348-350 Lockhart Road, Hong
Kong, and
Vistra Corporate Services Centre, Wickhams Cay II, Road Town,
Tortola, British Virgin Islands;
Lufeng Limited, Room A 11/F Henfa Commercial Building, 348-350
Lockhart Road, Hong Kong, and
Vistra Corporate Services Centre, Wickhams Cay II, Road Town,
Tortola, British Virgin Islands;
Unical dis Ticaret Ve Lojistik JSC, 34140 Zeytinlik Mh. Halcki Sk,
Iten Han Gue Carsi Blok No 28/58, Bakirkoy, Istanbul, Turkey, and
Room A 11/F Henfa Commercial Building, 348-350 Lockhart Road, Hong
Kong;
Izzi Cup DOO, Koste Cukia 14, Zemun 200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur--Bali, Indonesia;
Alexey Sumchenko, Hong Kong;
Anna Shumakova, Russia;
Branimir Salevic, Koste Cukia 14, Zemun 200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur--Bali, Indonesia;
Danijela Salevic, Koste Cukia 14, Zemun 200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur--Bali, Indonesia
AGENCY: Office of the Undersecretary for Industry and Security, Bureau
of Industry and Security, Commerce.
Before me for my final decision is a Recommended Decision (``RD'')
issued on September 4, 2024, by Administrative Law Judge (``ALJ'')
Tommy Cantrell. The RD recommends that I dismiss the appeal filed by
Alexey Sumchenko (``Sumchenko'') of the Temporary Denial Order
(``TDO'') issued against him on June 12, 2024. As discussed further
below, I accept the findings of fact and conclusions of law in the
ALJ's RD. As a result, Sumchenko's appeal is dismissed and the TDO
issued against him is affirmed.
I. Background
On June 12, 2024, the Assistant Secretary of Commerce for Export
Enforcement (``Assistant Secretary'') of the Bureau of Industry and
Security (``BIS'') issued a TDO against Sumchenko, Hong Fan
International (``Hong Fan''), Lufeng Limited (``Lufeng''), and Skywind
International Limited (``Skywind'')--three companies with which
Sumchenko was affiliated--and several other companies and individuals,
including SkyTechnic, a Russian aircraft parts supplier. 89 FR 51302.
The TDO states that SkyTechnic ``developed and continues to utilize a
network of Hong Kong-based shell companies, including Skywind, Hong
Fan, and Lufeng, to obtain civil aircraft parts from the United States
and obfuscate the ultimate end users of those parts in Russia, contrary
to the requirements of the [Export Administration Regulations (the
``EAR'' or the ``Regulations'')].'' Id.
On July 25, 2024, Sumchenko, through counsel, filed an appeal with
the U.S. Coast Guard ALJ Docketing Center pursuant to 15 CFR
766.24(e)(3) of the EAR. On July 29, 2024, the Chief ALJ assigned the
appeal to ALJ Cantrell. On August 20, 2024, BIS filed a response to the
appeal. ALJ Cantrell issued the RD on September 4, 2024,
[[Page 80858]]
which my office received on September 5, 2024. On September 6, 2024,
the BIS Appeals Coordinator requested views from the parties on
extending the time to issue my Final Decision in this appeal. Both
parties consented to an extension of time, and, on September 11, 2024,
I issued an Order extending the period of time to issue this Final
Decision to September 30, 2024.
II. Standard
Section 766.24 of the EAR authorizes the Assistant Secretary to
issue a TDO for a period of up to 180 days to prevent an ``imminent
violation'' of the Regulations. 15 CFR 766.24(b)(l), (b)(4). The
Regulations require that the TDO define the imminent violation and
state why the TDO was issued without a hearing. Id. at Sec.
766.24(b)(2). Because all TDOs are public, ``the description of the
imminent violation and the reasons for proceeding on an ex parte basis
. . . shall be stated in a manner that is consistent with national
security, foreign policy, business confidentiality, and investigative
concerns. Id.
A violation may be imminent ``either in time or in degree of
likelihood.'' Id. at 766.24(b)(3). Accordingly, ``BIS may show a
violation is about to occur, or that the general circumstances of the
matter under investigation . . . demonstrate a likelihood of future
violations.'' Id. To establish the likelihood of a future violation,
``BIS may show that the violation under investigation . . . is
significant, deliberate, covert and/or likely to occur again, rather
than technical or negligent.'' Id.
The Regulations provide that a ``respondent may appeal [the
issuance of a TDO] on the grounds that the finding that the order is
necessary in the public interest to prevent an imminent violation is
unsupported.'' Id. at Sec. 766.24(e)(2).
III. Discussion
In his appeal, Sumchenko argues that there is no support for the
finding that the TDO against him is necessary to prevent an imminent
violation of the EAR. Sumchenko Appeal at 5. Specifically, Sumchenko
argues that the alleged misconduct outlined in the TDO occurred after
he relinquished ownership of Hong Fan, Lufeng, and Skywind, and that
there is no evidence that he was aware of or involved in the conduct
that occurred when he did own the companies. Sumchenko Appeal at 5-7.
The ALJ makes fourteen recommended findings of fact in the RD. RD
at 4-5. I accept these recommended findings of fact. Based on these
findings of fact, the ALJ concluded in the RD that BIS successfully
demonstrated the TDO against Sumchenko was necessary to prevent an
imminent violation of the EAR. RD at 8. For reasons discussed below, I
agree with the ALJ's conclusion.
First, the record shows that Sumchenko was the owner and director
of Hong Fan, Lufeng, and Skywind during 2022 and 2023. RD at 6.
Specifically, with respect to Hong Fan and Lufeng, Sumchenko was the
owner of these entities until he transferred his ownership interest in
June 2022. Sumchenko Appeal at 7 and Exs. E and F. He was a director of
Hong Fan and Lufeng until he resigned those positions in November 2022.
Sumchenko Appeal at 6. As noted in BIS's response to Sumchenko's
appeal, even though Sumchenko had transferred his ownership rights in
Hong Fan and Lufeng in June 2022, Sumchenko was identified as the
beneficial owner of bank accounts for Hong Fan and Lufeng until at
least September 2023. BIS Response at 5-6; RD at 4. For Skywind,
Sumchenko was a director and owner until he resigned his position and
transferred his ownership rights in Skywind in November 2023. Sumchenko
Appeal at 6; RD at 4.
Second, the record reflects that between June 2022 and March 2023,
Hong Fan, Lufeng, and Skywind were involved in transactions or
attempted transactions to deliberately obtain U.S.-origin aircraft
parts on behalf of Russian entities, and to conceal the true identities
of the Russian purchasers in those transactions, in violation of the
Regulations. RD at 8.
Third, as discussed above, during the time that Hong Fan, Lufeng
and Skywind were involved in violations of the EAR, Sumchenko was an
owner or director of these companies, or the beneficial owner of bank
accounts connected to these entities. Sumchenko argues in his appeal
that because he was no longer the owner of Hong Fan and Lufeng at the
time of some of the conduct at issue in the TDO, the ``sole
connection'' between the conduct outlined in the TDO as it relates to
those entities and Sumchenko ``has been broken.'' Sumchenko Appeal at
7. I find that the other connections established in the record, such as
Sumchenko's position as director of Hong Fan and Lufeng until November
2022 and his role as beneficial owner of bank accounts for these
companies until at least September 2023, are enough to connect
Sumchenko to the conduct that involved Hong Fan and Lufeng through
September 2023. As a result, I agree with the ALJ's conclusion that
Sumchenko shares responsibility for the conduct of Hong Fan, Lufeng,
and Skywind described in the TDO, which includes transactions
deliberately designed to evade the prohibitions of the EAR. RD at 8.
As discussed above, the Regulations allow BIS to issue a denial
order upon a showing that ``the order is necessary in the public
interest to prevent an imminent violation of [the EAR.]'' 15 CFR
766.24(b)(1). A violation may be considered ``imminent'' either in time
or ``or in degree of likelihood.'' Id. at Sec. 766.24(b)(3). BIS may
consider past participation in deliberate violations of the EAR as a
factor when deciding whether a person is likely to participate in
future violations of the EAR. See 15 CFR 766.24(b)(3). BIS has
established that Hong Fan, Lufeng, and Skywind were involved in
deliberate violations of the EAR, and that Sumchenko is responsible for
that conduct based on his various roles with these companies at the
time the conduct took place. As a result, I agree with the ALJ's
conclusion in the RD that, BIS has established additional violations
are ``imminent'' within the meaning of 15 CFR 766.24(b)(3), and that
the TDO against Sumchenko is necessary to prevent an imminent violation
of the EAR.
Sumchenko argued in his appeal that even if he was the owner and
director of companies that violated the EAR, BIS has not established
that he ``was involved in or even knew about those events.'' Sumchenko
Appeal at 6. The ALJ found this argument unpersuasive, and I find it
unpersuasive as well. As the ALJ notes, Sumchenko made no effort to
refute the allegations against Hong Fan, Lufeng, or Skywind. RD at 9.
Just as important, Sumchenko makes no effort to explain his role in
these companies or how each of these companies could have been involved
in a scheme to violate the EAR without his knowledge given his various
roles, including as owner or director. In addition, Sumchenko concedes
that in February 2023, he directed a third party to pay Lufeng
approximately $450,000. Sumchenko Appeal at 4. Sumchenko argues,
however, that ``it is not clear how directing `a third party to pay
Lufeng' indicates ownership or control over Lufeng.'' Id. Setting aside
the fact that Sumchenko only offers vague assurances ``based on
information and belief'' that the transaction was related to ``the
process of divestment that Mr. Sumchenko was undertaking at the time,''
Sumchenko offers no specific explanation for why he would direct a
third party to make payment to Lufeng if he no longer had an interest
in the
[[Page 80859]]
company. See Sumchenko Appeal at 5. And since Sumchenko was the
beneficial owner of a bank account for Lufeng at the time he instructed
the third party to transfer payment, his potential access to the funds
suggests his financial interest in Lufeng, including the receipt of any
benefits of the scheme to provide U.S.-origin parts to entities in
Russia without authorization, continued after he transferred his
ownership and resigned as director. Indeed, Sumchenko's efforts to
distance himself from Hong Fan and Lufeng via changes to corporate
paperwork, while at the same time maintaining control of related bank
accounts and directing payment to Lufeng, may have been part of an
attempt to evade detection. For these reasons, I agree with the ALJ's
conclusion that Sumchenko may be held responsible for the actions of
Hong Fan, Lufeng, and Skywind described in the TDO. RD at 9. I further
agree with the ALJ's conclusion that ``in the absence of the TDO,
nothing would prevent [Sumchenko] from creating new companies to engage
in the same violative conduct.'' RD at 10.
IV. Conclusion and Order
Based on my review of the record, I accept the findings of fact and
conclusions of law made by the ALJ in his RD, and it is therefore
ordered:
First, that this appeal is dismissed.
Second, that this Final Decision and Order shall be served on
Appellants and on BIS and shall be published in the Federal Register.
In addition, the ALJ's Recommended Decision shall also be published in
the Federal Register.
This Order, which constitutes the Department's final decision with
regard to this appeal, is effective immediately.
Alan F. Estevez,
Under Secretary of Commerce for Industry and Security.
United States of America
Bureau of Industry and Security
Washington, D.C. 20230
In the Matter of:
SkyTechnic, Kiyevskoye Shosse 22-Y, Moskovsky Settlement, Moscow,
Russia 108811
Skywind International Limited, Room 2403A 24/F Lippo CTR Tower One,
89 Queensway, Admiralty, Hong Kong
Hong Fan International, Shop 102, Level 1, One Exchange Square, Hong
Kong, and
Room A 11/F Henfa Commercial Building, 348-350 Lockhart Road, Hong
Kong, and
Vistra Corporate Services Centre, Wickhams Cay II, Road Town,
Tortola, British Virgin Islands
Lufeng Limited, Room A 11/F Henfa Commercial Building, 348-350
Lockhart Road, Hong Kong, and
Vistra Corporate Services Centre, Wickhams Cay II, Road Town,
Tortola, British Virgin Islands
Unical dis Ticaret Ve Lojistik JSC, 34140 Zeytinlik Mh. Halcki Sk,
Iten Han Gue Carsi Blok No 28/58, Bakirkoy, Istanbul, Turkey, and
Room A 11/F Henfa Commercial Building, 348-350 Lockhart Road, Hong
Kong
Izzi Cup DOO, Koste Cukia 14, Zemun 200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur--Bali, Indonesia
Alexey Sumchenko, Hong Kong
Anna Shumakova, Russia
Branimir Salevic, Koste Cukia 14, Zemun 200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur--Bali, Indonesia
Danijela Salevic, Koste Cukia 14, Zemun 200915, Serbia, and
Jl.Danau Tondano No. 55, 80228 Sanur--Bali, Indonesia
Respondents
Docket Number: 24-TDO-0001
The Hon. Tommy Cantrell Administrative Law Judge
Recommended Decision and Order
This matter comes before me on Alexey Sumchenko's (Respondent)
appeal of the Order Temporarily Denying Export Privileges (TDO) issued
by the U.S. Department of Commerce Bureau of Industry and Security
(BIS), through its Office of Export Enforcement (OEE) on June 12, 2024.
OEE issued the TDO pursuant to the Export Administration Regulations
(EAR), specifically 15 CFR 766.24.\1\ After considering the evidence
and arguments presented by the parties, and in accordance with the
applicable law and regulations, I find BIS demonstrated the TDO is
necessary in the public interest to prevent an imminent violation of
the EAR, and I recommend the TDO be affirmed.
---------------------------------------------------------------------------
\1\ Title 15 CFR parts 730-774 (EAR), were promulgated under the
Export Administration Act of 1979 (EAA), formerly codified at 50
U.S.C. 4601-4623. Although the EAA expired on August 21, 2001, the
President, through Executive Order 13222 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. The EAA was
repealed in 2018, with the enactment of the Export Control Reform
Act (ECRA). See 50 U.S.C. Sec. 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.
---------------------------------------------------------------------------
I. Procedural Background
On June 12, 2024, OEE issued a TDO against Respondent, preventing
him from participating in transactions subject to the EAR for 180 days.
On July 25, 2024, Respondent filed an appeal of the TDO. Thereafter,
the Chief Administrative Law Judge assigned this matter to me on July
29, 2024, for adjudication.\2\ On August 5, 2024, the parties filed a
stipulation extending BIS' deadline to submit a reply to the appeal.
BIS filed a reply to the appeal on August 20, 2024.
---------------------------------------------------------------------------
\2\ Pursuant to an interagency agreement, United States Coast
Guard (USCG) Administrative Law Judges are permitted to adjudicate
BIS cases.
---------------------------------------------------------------------------
Respondent's appeal included seven documentary exhibits (Exhibits
A-G), and a copy of the June 12, 2024, TDO (Ex. A). OEE's reply
included two exhibits (Exhibits 1-2).\3\ The record is now closed, and
the appeal is ripe for a recommended decision.
---------------------------------------------------------------------------
\3\ See Attachment A for a listing of exhibits.
---------------------------------------------------------------------------
II. Recommended Findings of Fact
1. Skywind International Limited (Skywind), Hong Fan Global Limited
(Hong Fan), and Lufeng Limited (Lufeng), are companies registered to do
business in Hong Kong. (Exs. B-D, respectively).
2. Respondent was an owner and director of Skywind, Hong Fan, and
Lufeng during 2022-2023. (Exs. A-G; Exs. 1-2).
3. Respondent transferred his ownership interest in and resigned
his position as director of Skywind on November 23, 2023. (Ex. G).
4. Respondent resigned his position as director of Hong Fan on
November 14, 2022, but remained a beneficial owner of Hong Fan until at
least September 6, 2023. (Exs. E, and 1).
5. Respondent resigned his position as director of Lufeng on
November 14, 2022, but remained a beneficial owner of Lufeng until at
least September 6, 2023. (Exs. F and 2).
6. SkyTechnic is an aircraft parts supplier based in Moscow,
Russia. (Ex. A at 3, 7).
7. During May and June 2022, Anna Shumakova, on behalf of
SkyTechnic, discussed with Izzi Cup (a company registered in Serbia)
methods of purchasing aircraft parts from the United States (U.S.) in
contravention of export controls, including by using Skywind as a straw
purchaser of the items. (Ex. A at 7).
8. In May 2022, Shumakova, on behalf of Skywind, informed a freight
forwarder Skywind would complete purchases of aircraft parts on behalf
of Pobeda Airlines, a Russian airline company that itself became the
subject of a TDO on June 24, 2022. (Ex. A at 7).
9. In June 2022, SkyTechnic began using Hong Fan to facilitate the
purchase of aircraft parts from the U.S. (Ex. A at 7).
[[Page 80860]]
10. Also in June 2022, Lufeng engaged in a transaction with Izzi
Cup and served as the straw purchaser on an invoice for aircraft parts
meant for SkyTechnic. (Ex. A at 8).
11. In October 2022, Hong Fan attempted to ship aircraft parts to
the Maldives for Euro Asia. Euro Asia had a sales relationship with
Aeroflot-Russian Airlines (Aeroflot), a company that itself became the
subject of a TDO on April 7, 2022. (Ex. A at 7-8; see PJSC Aeroflot, 1
Arbat St., 119019, Moscow, Russia; Order Temporarily Denying Export
Privileges, 87 FR 21611 (Apr. 12, 2022)).
12. In November 2022, Hong Fan worked with a freight forwarder to
facilitate the purchase of aircraft parts for Pobeda Airlines, and the
associated invoice was issued to SkyTechnic. (Ex. A at 8).
13. In February 2023, Respondent directed a third party to pay
Lufeng approximately $450,000.00 for services rendered to Skywind. (Ex.
A at 5).
14. During February and March 2023, Hong Fan served as a straw
purchaser for SkyTechnic, for the export of aircraft parts from the
U.S., which were ultimately delivered to Aeroflot in Russia. (Ex. A at
8).
III. Opinion and Recommended Conclusions of Law
BIS issues and enforces the EAR ``under laws relating to the
control of certain exports, reexports, and activities.'' 15 CFR 730.1.
The EAR is ``intended to serve the national security, foreign policy,
nonproliferation of weapons of mass destruction, and other interests of
the United States.'' 15 CFR 730.6. To prevent an imminent violation of
the EAR, BIS may request the EEO issue a TDO on an ex parte basis. 15
CFR 766.24(a). A TDO is valid for a maximum of 180 days and the
Assistant Secretary may renew a TDO in additional 180-day increments as
deemed necessary. 15 CFR 766.24(b)(4), (d)(4).
A violation may be imminent ``either in time or in degree of
likelihood.'' 15 CFR 766.24(b)(3). Accordingly, BIS may attempt to show
``a violation is about to occur, or that the general circumstances of
the matter under investigation . . . demonstrate a likelihood of future
violations.'' Id. With respect to demonstrating the likelihood of
future violations, BIS ``may show that the violation under
investigation . . . is significant, deliberate, covert and/or likely to
occur again, rather than technical or negligent . . .'' Id. Ultimately,
to obtain a TDO against a respondent, BIS must show ``the order is
necessary in the public interest to prevent an imminent violation'' of
the EAR. 15 CFR 766.24(b)(1). Conversely, to prevail on appeal, a
respondent must show ``the finding that the order is necessary in the
public interest to prevent an imminent violation is unsupported.'' 15
CFR 766.24(e)(2).
A. BIS Demonstrated Likelihood of Imminent Violation
The June 12, 2024, TDO set forth facts showing a likelihood
Respondent would imminently violate the EAR unless his export
privileges were revoked. It established that BIS implemented a license
requirement for the export to Russia of any aircraft or aircraft parts
listed in Export Control Classification Number (ECCN) 9A991 on February
24, 2022. (Ex. A at 4). See Implementation of Sanctions Against Russia
Under the Export Administration Regulations (EAR), 87 FR 12226 (Mar. 3,
2022) (to be codified at 15 CFR parts 734, 738, 740, 742, 744, 746, and
772). On March 2, 2022, BIS excluded any aircraft registered in, owned,
or controlled by, or under charter or lease by Russia, or a national of
Russia, from being eligible for license exception Aircraft, Vessels,
and Spacecraft (AVS). (Ex. A at 5). See Imposition of Sanctions Against
Belarus Under the Export Administration Regulations (EAR), 87 FR 13048
(Mar. 8, 2022) (to be codified at 15 CFR parts 734, 738, 740, 742, 744,
and 746). The TDO then established that after those dates, companies
owned and controlled by Respondent acted to subvert these export
controls to obtain prohibited aircraft parts for Russian companies.
Specifically, the record shows Respondent was an owner and director
of Skywind International Limited (Skywind), Hong Fan Global Limited
(Hong Fan), and Lufeng Limited (Lufeng), during 2022-2023. (Exs. A-G;
Exs. 1-2). Skywind, Hong Fan, and Lufeng are, and at all times relevant
were, companies registered to do business in Hong Kong. (Exs. A-D).
During May and June 2022, Anna Shumakova, on behalf of a Russian
aircraft parts company called SkyTechnic, discussed with Izzi Cup, a
company registered in Serbia, methods of purchasing aircraft parts from
the U.S. in contravention of export controls, including using Skywind
as a straw purchaser of the items. (Ex. A at 7). In May 2022,
Shumakova, on behalf of Skywind, informed a freight forwarder that
Skywind would purchase aircraft parts on behalf of Pobeda Airlines, a
Russian airline company that itself became the subject of a TDO on June
24, 2022. (Ex. A at 7). See Pobeda Airlines, 108811, Russian
Federation, Moscow, p. Moskovskiy Kievskoe shosse 22nd km, 4/1. Moscow,
Russia; Order Temporarily Denying Export Privileges, 87 FR 38707 (Jun.
29, 2022). Then in June 2022, SkyTechnic began using Hong Fan to
facilitate the purchase of aircraft parts from the U.S. (Ex. A at 7).
And in June 2022, Lufeng served as the straw purchaser on an invoice
for aircraft parts meant for SkyTechnic. (Ex. A at 8).
In October 2022, Hong Fan attempted to facilitate the purchase of
aircraft parts for Euro Asia, a company with a sales relationship with
Aeroflot-Russian Airlines (Aeroflot), a company that itself became the
subject of a TDO on April 7, 2022. (Ex. A at 7-8). See PJSC Aeroflot, 1
Arbat St., 119019, Moscow, Russia; Order Temporarily Denying Export
Privileges, 87 FR 21611 (Apr. 12, 2022). In November 2022, Hong Fan
worked with a freight forwarder to facilitate the purchase of aircraft
parts for Pobeda Airlines, and the associated invoice was issued by
SkyTechnic. (Ex. A at 8). During February and March 2023, Hong Fan
served as a straw purchaser for SkyTechnic, for the export of aircraft
parts from the U.S. which were ultimately delivered to Aeroflot in
Russia. (Ex. A at 8).
Pursuant to the regulations governing these proceedings, a TDO is
appropriate to prevent an imminent violation of the EAR. 15 CFR
766.24(b)(1). To show a violation is ``imminent,'' BIS may demonstrate
a temporal proximity to a future violation or may show ``that the
general circumstances of the matter . . . demonstrate a likelihood of
future violations.'' 15 CFR 766.24(b)(3). In this regard, ``BIS may
show that the violation under investigation or charges is significant,
deliberate, covert and/or likely to occur again, rather than technical
or negligent . . .'' 15 CFR 766.24(b)(3). Here, the TDO clearly set out
numerous instances of violations of the export controls imposed on
February 24 and March 2, 2022, wherein the violations were not
technical, but deliberate. For example, the TDO set forth in May and
June of 2022, SkyTechnic discussed with Izzi Cup a strategy for
obtaining U.S.-origin aircraft parts by placing Skywind on the invoice
as the purchaser. (Ex. A at 7). The TDO then set forth numerous
instances between June and November 2022 in which Skywind, Hong Fan,
and Lufeng engaged in transactions to deliberately obtain U.S.-origin
aircraft parts and conceal the actual purchasers (Russian companies).
(Ex. A at 7-8).
Respondent led the companies that engaged in these violations, and
thus Respondent shares responsibility for those violations. Having
shown Respondent already violated the EAR in a deliberate manner, BIS
successfully
[[Page 80861]]
demonstrated that further violations were ``imminent'' within the
meaning of 15 CFR 766.24, and an order temporarily denying Respondent's
export privileges would be necessary to prevent them.
B. Respondent's Argument and Evidence Did Not Diminish BIS' Case
As stated above, Respondent must show there is no support for the
finding the TDO is necessary to prevent an imminent violation of the
EAR. 15 CFR 766.24(e)(2). In his appeal, Respondent presented seven
exhibits, one of which was a copy of the June 12, 2024, TDO (Ex. A);
the remaining six exhibits were business records showing Respondent's
transfer of ownership in and resignation as director of Skywind, Hong
Fan, and Lufeng. (Exs. B-G). With these exhibits as support, Respondent
makes two arguments. He first argues a TDO is not necessary to prevent
him from imminently violating the EAR because he is no longer an owner
or director of Skywind, Hong Fan, and Lufeng. Specifically, Respondent
argues the TDO ``addresses alleged violations that occurred after
February 2022,'' and that Respondent ``was divesting his ownership and
resigning'' from the companies during 2022 and 2023. (Appeal at Para.
14). Respondent asserts his ``ownership of the companies is the only
allegation that purportedly ties him to the alleged violations
described in the TDO.'' (Appeal at Para. 14). I am not persuaded.
First, I note Respondent never challenged the truth of the
allegations of the TDO, he merely distances himself from the conduct by
stating he gave up ownership of two of the companies (Hong Fan and
Lufeng) by June 2022. (Appeal at Paras. 15, 16). Respondent
conveniently ignores his own exhibits, which show he was still director
of the companies until November 14, 2022. (Exs. E, F).
Respondent's exhibits also show he remained in control, as owner
and director, of Skywind until November 23, 2023. (Ex. G). Despite
Respondent's claim that he relinquished control of Hong Fan and Lufeng
by November 14, 2022, BIS presented exhibits in its reply showing
Respondent was listed as a beneficial owner of Hong Fan and Lufeng
until at least September 6, 2023. (Exs. E, F; Exs. 1, 2). The TDO set
forth numerous violations of the EAR committed by Skywind, Hong Fan,
and Lufeng that occurred from May through November 2022, while
Respondent was, by both his and BIS' claims, owner and director of the
companies. (Ex. A at 7-8). As the director and owner of these
companies, it is reasonable to conclude an order proscribing
Respondent's export privileges is necessary to prevent future
violations.
Respondent alternatively argues even if he was in control of the
companies while they were engaged in the illicit conduct, the TDO does
not prove he ``was involved in or even knew about those events.''
(Appeal at Para. 14). I find this argument unpersuasive. As owner and
director of the companies, Respondent's role imparts responsibility on
him for the actions of the company. See Faour v. U.S. Dept. of
Agriculture, 985 F.2d 217 (5th Cir. 1993) (petitioner was responsibly
connected to actions of company because he was an officer, director,
and owner of stock during time that company committed repeated
violations of the law). Respondent did not refute any allegations of
violative conduct in the TDO, but instead only demonstrated he has
executed paperwork to divest from the companies. In the absence of the
TDO, nothing would prevent Respondent from creating new companies to
engage in the same violative conduct.
Wherefore,
ORDER
It is hereby recommended the Temporary Denial Order be affirmed.
Done and dated September 4, 2024, at Houston, Texas
[GRAPHIC] [TIFF OMITTED] TN04OC24.001
The Hon. Tommy Cantrell,
Administrative Law Judge, United States Coast Guard.
Attachment A: Exhibit List
Attachment A
Respondent's Exhibits
Exhibit A: Temporary Denial Order issued Jun. 12, 2024
Exhibit B: Company Particulars--Skywind International Limited
Exhibit C: Company Particulars--Hong Fan Global Limited
Exhibit D: Company Particulars--Lufeng Limited
Exhibit E: Resignation and transfer instruments--Hong Fan
Exhibit F: Resignation and transfer instruments--Lufeng
Exhibit G: Resignation and transfer instruments--Skywind
BIS Exhibits
Exhibit 1: Sep. 6, 2023, email re: Hong Fan
Exhibit 2: Sep. 6, 2023, email re: Lufeng
Certificate of Service
I hereby certify that I have transmitted the above document to the
following persons, as indicated below:
ALJ Docketing Center, U.S Custom House, Email:
[email protected], Phone: (410) 962-5100, Sent by email
Gregory Michelsen, Esq., Tristan de Vega, Esq., Office of Chief Counsel
for BIS, U.S. Dept. of Commerce, Sent by email
George Benaur, Esq., Benaur Law LLC, Sent by email
Done and dated September 4, 2024, at Houston, Texas
[GRAPHIC] [TIFF OMITTED] TN04OC24.002
Ericka J. Pollard,
Paralegal Specialist to The Hon. Tommy Cantrell Administrative Law
Judge United States Coast Guard
[FR Doc. 2024-22549 Filed 10-3-24; 8:45 am]
BILLING CODE 3510-DT-P
