Appeals Court Upholds Export Violations for Electronics Managers
The 1st U.S. Circuit Court of Appeals affirmed the 2008 convictions of Zhen Hour Wu and Guofeng Wei for numerous counts of export violations, but vacated convictions related to the duo’s alleged violations of the U.S. Munitions List because of flawed jury instructions. In their defense, Wu and Wei, Chinese nationals who ran an electronics parts broker company, attacked the U.S. arms export control system as so vague it violates the Fifth Amendment’s Due Process Clause.
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The Court dismissed that argument -- citing instances of specificity and direction in export regulations, as well as leeway for innocent violators of the law -- but did agree with Wu and Wei on their Due Process claim, which stemmed from an after-the-fact decision about which USML category an item belongs to. This precedent could mean that, in future cases, juries will have to tackle determinations of an item’s US ML category, wrote Chief Judge Sandra Lynch in the court’s decision. Though complex, this is not “out of the ordinary,” she wrote. “Although permitting juries to decide questions like these may complicate enforcement of our nation’s export control regime, the constitutional rights at issue … are of surpassing importance.”
Court disagrees with claims that export regulations are too vague
Wu and Wei were sentenced to prison time for illegally exporting USML parts and restricted sensitive electronics used in military systems to China: twice exporting USML-controlled phase shifters and exporting multiple CL-controlled dual-use electronic components from May 2004-07. They were also convicted of conspiracy charges related to those violations. (See 11020439 and 11020229 for more on the initial convictions.)
In their appeal, Wu and Wei argued that USML restrictions are unconstitutionally vague, but Judge Lynch said US ML disagreed. “Defense article” is defined with considerable specificity in the USML, she said, and even the specific category in this case, Category XI, links to other categories with other examples covered under the International Trade in Arms Regulations.
Wu and Wei also argued that Category XI’s broad language and lack of technical parameters do not give “fair notice” to a “person of ordinary intelligence.” But Wu and Wei were not ordinary people, the court said. “They managed a multimillion-dollar enterprise; their company, Chitron, specifically pursued military customers; and Wu promoted himself as both an exporter of military supplies and an export compliance expert,” Lynch wrote. The court also said that the duo repeatedly attempted to disguise the fact they were exporting to China and that they lacked licenses to do so. Wu and Wei listed Hmong Kong -- where their company had a branch office -- as the country of ultimate destination and ultimate consignee, even though shipments were eventually sent to China, court documents said.
CL violations also upheld
The CL items at issue in the case are digital-to-analog and analog-to-digital converters. Wei and Wu allegedly exported converters rated for operation at a temperature range consistent with military systems, not household appliances, court documents said. Wu and Wei claimed that, as they read the license exception for additional permissive reexports, no license was required when these converters were exported to Hmong Kong and then reexported to China. The Court disagreed, calling it a misreading of the exception. There is also plenty of evidence to show that Wu and Wei knew the items were heading to China, Lynch said.
Court Agrees with Wu and Wei on claim of failed jury instructions
During the initial trial, the jury was instructed to accept without question the State Department’s determination that phase shifters were actually controlled by the USML. State made that determination after the fact, which Wu and Wei claimed violated their right to a fair trial. The court generally agreed. Lynch wrote that the question of whether phase shifters were controlled by Category XI “was a question for the jury -- not a question that could be decided [after the fact] by the State Department as a matter of law.” Based off this decision, the court vacated two counts each for Wu and Wei on the USML convictions. The case now heads back to the lower court for sentencing.