China
Former Marine Indicted for Violating the AECA after Training Chinese Pilots
Those involved. Daniel Edmund Duggan, a former Marine Corps Aviator.
Charges and penalties. Conspiracy (maximum of 5 years); Violating the AECA (maximum of 10 years and a fine up to $1,000,000); and Conspiracy to Launder Money (maximum of 20 years and a fine up to $500,000 or twice the value of the property, whichever is greater). What happened? On December 9, the DOJ unsealed a 2017 indictment against Daniel Duggan, a former Marine Corps pilot, alleging that Duggan and eight unnamed co-conspirators operated a South African flight school that trained Chinese military pilots. Such flight training is deemed a “defense service” subject to the International Traffic in Arms Regulations (ITAR) and thus must be licensed by the State Department’s Directorate of Defense Trade Controls (DDTC). The U.S. government has long maintained a policy of denial for ITAR export licenses to China, including for providing defense services to Chinese nationals in a third country. Duggan also allegedly aided Chinese and South African companies in fraudulently obtaining a T-2 Buckeye training airplane to use in their training. Duggan was arrested in Australia in October, and a U.S. request for extradition has been approved by Australian officials.
The indictment can be found here.
Notably. The term “defense services” is broadly defined under the ITAR. Companies and individuals – including retired military personnel – must proceed carefully when consulting on defense issues abroad or with non-U.S. armed forces. Even providing publicly available information in the context of training a foreign military can trigger ITAR licensing requirements.
Massachusetts Man Sentenced for Wire Fraud and Illegally Exporting Defense Articles to Turkey (DOJ Action)
Those involved. Arif Ugur, sole managing partner of the Anatolia Group Limited Partnership.
Charges with penalties. Wire Fraud, Violating the AECA (33 months in prison and two years of supervised release).
What happened? On December 15, Arif Ugur was sentenced to prison for violating U.S. export control laws. Mr. Ugur prepared bids for and won contracts to supply the Defense Department (DOD) with parts required to be manufactured in the United States. Mr. Ugur falsely claimed the parts he was supplying the DOD were manufactured in the U.S. when in fact the parts were being made in Turkey. Mr. Ugur sent the Turkish manufacturer the specifications and even gave the company’s employees access to the DOD online library of technical specifications and drawings. The parts were designated as defense articles under the ITAR, meaning that technical data related to the parts would generally require an ITAR license for export to Turkey.
The press release can be found here.
Notably. First, it is important to recognize that exports do not necessarily require physical objects crossing borders. As was the case here, sharing technical specifications and allowing a foreign national to access the DOD’s online library of technical specifications resulted in jail time. Additionally, this is the second indictment in two months for a DOD contractor that illegally exported technical information to a non-U.S. manufacturer. The first indictment can be found here. The November 2022 International Trade Enforcement Roundup detailing the first case can be found here. Government contractors must be aware of and strictly adhere to contract terms. DOJ has seemingly prioritized enforcement against this type of conduct, and we expect similar actions going forward.
4 International Trade Enforcement Roundup |
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