Tell me if this scenario raises any red flags. Your U.S. company produces complicated Industrial Microwave Systems (IMS). These systems can be used for things like food and beverage processing. With some modifications, they can also be used to create high-power directed-energy weapons systems. One day, you’re contacted by a representative from a company you’ve never heard of, who wants to buy one of your IMS systems for $400,800. The money comes from Dubai to Canada via three separate wire transfers (but you don’t know that part … yet), then from Canada to your U.S. bank account. The buyer snaps some photos of the wire transfers and sends them to you as proof of the funds. The buyer insists that the IMS is destined for an ultimate end user in the UAE. The shipment is detained by Customs prior to being exported, and your buyer begins to regularly contact you and the freight forwarder about why the system is being held by Customs. (Are you nervous yet?)
Last month, the Department of Justice announced a guilty plea agreement with Saber Fakih, 46, a UK citizen, for attempting to do everything described above. The only problem is that Mr. Fakih and his co-conspirators were really trying to export the IMS to Iran.
The details include some hefty evidence of Mr. Fakih’s guilt. Specifically:
- Around May 2017, Fakih was contacted by Alireza Taghavi, an Iranian national, about obtaining the IMS in exchange for a handsome commission of $15,000.
- During multiple conversations, Taghavi explained to Fakih that he could not purchase the IMS directly because he was an Iranian national.
- Taghavi sent Fakih a purchase and sale agreement outlining the terms of the deal, which included the name and address of the buyer in Tehran. The agreement also stipulated that the price included “the price of equipment, export and shipping costs from USA to Dubai and re-export charges from Dubai to Iran and all insurance costs.” (Side Note: the agreement does not appear to have contained any reimbursement for the fines/penalties/imprisonment associated with this illegal activity. But I digress.)
- A co-conspirator instructed Fakih to list a company in Dubai on the Bill of Lading, even though Fakih and others involved knew the ultimate destination was, in fact, Iran.
- As if all this weren’t enough, Taghavi also asked Fakih to add information to a report about how the funds were transferred from UAE to “overcome money laundering issues.”
Around the same time this was going down, Saber and Bader Fakih were in negotiations with a Maryland company to procure two Counter Drone Systems (CDS) worth approximately $1 million. They requested that Taghavi pay them a commission of $20,000 for this deal, because “the company in Canada [Ipaxiom] is taking a huge risk.” Unsurprisingly, this equipment was also destined for Iran, although Fakih represented to the Maryland company that it would be shipped to the UAE.
According to Assistant Attorney General Matthew G. Olsen of the Justice Department:
“Fakih and his coconspirators attempted to evade U.S. sanctions and obtain highly sensitive pieces of equipment for Iran from unwitting U.S. suppliers. In doing so, Fakih jeopardized not only U.S. national security, but the national security of any other nation Iran decides to target. The Department of Justice can and will act to disrupt and prosecute such criminal conduct.”
Mr. Fakih faces up to 20 years imprisonment and/or a fine of $1 million for violating U.S. export control laws and regulations.
If your compliance system could use a tune-up to help identify and avoid bad actors like Mr. Fakih, then we can help! Schedule a no-charge consultation with one of our experts today.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.