BIS Charges Business Owner With Export Violations
The Bureau of Industry and Security last week charged a Montana resident and his two companies with violating U.S. export controls after BIS said he tried to ship controlled items knowing they would be used in Iran. Kenneth Scott and his companies, Scott Communication and Mission Communications, also made false or misleading statements to agents, failed to file Electronic Export Information and didn’t maintain the required export records, BIS said.
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The violations began in 2017, when an undercover FBI agent asked Scott for a price quote for two Motorola XTS 2500, 800 or 900 Mhz radios, BIS said in a June 7 charging letter. The agent said the items were destined for Iran and would be transshipped through Jordan, BIS said, and at one point asked Scott if he could export the items directly to Iran.
Although Scott agreed to export the items to Jordan “with knowledge that they would then be transshipped to Iran,” BIS said he declined to ship them directly to Iran. “I have never shipped to IRAN, and the way the politics here are concerned, I would guess not,” Scott said in an email to the undercover agent, according to BIS. “Where else could we ship them to, [p]rior to them going to IRAN. Do you have a broker here in the US?”
Scott eventually agreed to ship the items, sending about $2,000 worth of the radios through the U.S. Postal Service. U.S. authorities detained the shipment in Montana with the help of USPS.
When special agents with the FBI and BIS reached out to Scott more than a year later for an interview, Scott said he was “familiar” with BIS regulations and regularly checked the BIS website for updates. He also said he had recently completed a sale involving a portable radio destined for a customer in Iran, but the export was “made through an individual in Florida,” BIS said. During the interview, a BIS agent explained the agency’s voluntary self-disclosure process, but Scott never filed a disclosure for the radio export, the charging letter said.
Later that day, however, Scott forwarded BIS emails related to the radio sale but “failed to include any of the emails with the [undercover agent] referencing Iran or discussing possible transshipment,” BIS said. Scott also edited the emails to “support his claim that he did not export anything to Iran,” BIS said, and specifically inserted two sentences in one email that weren’t initially there: “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.”
BIS said Scott also made several false statements while speaking with the agent, including that the customer involved in the radio sale told him the radios’ “end-use was for oil exploration.” He also didn’t comply with EEI reporting requirements for the radios and told agents that he has never “kept a record or a file on this stuff, as I had no idea I had to.” He also said some of his shipping records were on an “old” computer, which had been damaged three years ago by a “lightning strike.”
BIS said the two Motorola Astro XTS 2500 Digital Portable Radios exported by Scott were controlled under Export Control Classification Number 5A991.g and controlled for anti-terrorism reasons. The agency can impose a maximum civil penalty against Scott of $330,947 per violation of the Export Administration Regulations or twice the value of the transactions at the center of the violations. It can also revoke Scott’s export privileges. BIS said Scott has 30 days to respond to the charges. Scott didn’t respond to a request for comment.