BIS Levies $125K in Fines for Conspiracy to Export Controlled Carbon Fiber to China
The Bureau of Industry and Security announced that Ping Cheng and Prime Technology Corporation, both of New York State, have agreed to $125,000 fines and two-year denial of export privileges for each to settle allegations that they conspired to violate the Export Administration Regulations (EAR). The two-year denial period, as well as $75,000 in fines for each, will be suspended as long as neither commits additional export control violations during the two year period. According to BIS, the violations involve attempts to export carbon fiber to China for use by the China Academy of Space Technology (CAST) without the required U.S. government authorizations.
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BIS Warned that Carbon Fiber Materials Controlled for NP, NS
BIS said the carbon fiber materials involved are controlled by BIS for nuclear nonproliferation (NP) and national security (NS) reasons and are valued at about $315,000. BIS alleged that from February 2007 through at least April 2008, Cheng and Prime Technology Corporation conspired with others to export two types of this material to CAST in China, via Hong Kong and Singapore, without the required Department of Commerce export licenses.
As part of this conspiracy, according to BIS, Cheng traveled to Minnesota to inspect the carbon fiber and prepared reports regarding the authenticity of the material. During the inspection, Cheng was provided a letter from BIS which said “[T]his [material] has been classified under Export Control Classification Number (ECCN) 1C210.a. and is controlled for export for Nuclear Non-Proliferation and Anti-Terrorism reasons. As such, a license would be required to export the item to most destinations, including China and Singapore."
Despite Warning, Cheng Attempted Export to China via HK & Singapore
BIS says that despite those warnings, Cheng, acting on the instructions of a co-conspirator, attempted to export the unlicensed carbon fiber to Hong Kong and Singapore, for ultimate shipment to CAST. The items were stopped prior to being exported, and Cheng was arrested by special agents from the BIS Office of Export Enforcement and the Department of Homeland Security.
Employees Must Attend Export Compliance Training, Retain Classification Sheet
According to BIS, under the terms of the BIS Order, $75,000 in fines for each is suspended, and both are subject to a two-year denial order, fully suspended. Cheng and Prime Technology export compliance officers and employees, including the company’s President, will also attend export control compliance training, and, for a period of two-years, Prime Technology will retain an Item Classification Sheet for every item exported or to be exported from the U.S. that is subject to the EAR, and is the subject of a transaction in which Prime Technology has an interest.