BIS Penalizes Companies for Illegal Exports to Iran, Russia, Ukraine

The Bureau of Industry and Security issued more than $100,000 in combined penalties against two companies for illegally exporting thousands of dollars worth of goods to Iran, Russia and Ukraine. BIS imposed a $60,000 fine and temporarily denied the export privileges for Kleiss & Co., a Netherlands-based company that BIS said illegally shipped “extruded butyl sealants” from the U.S. to Iran. The agency also fined Texas-based TeleDynamics $55,000 for illegally exporting rifle scopes from the U.S. to Russia and Ukraine.

In 2016 and 2017, BIS said Kleiss ordered, bought and “concealed details” of its exports of the sealants from the U.S. “on behalf” of its Iranian customer, according to a May 3 enforcement order released this week. BIS said Kleiss knew or had “reason to know” the approximately $20,000 worth of sealants were subject to the Export Administration Regulations and designated as EAR99.

Despite this, Kleiss bought the sealants for its Iranian customer but was initially unable to ship the items after a U.S. freight forwarder explained that it couldn’t directly or indirectly ship to Iran. Soon after, Kleiss gave its U.S. supplier “new invoices” for the order, which included a new company and address in the United Arab Emirates, BIS said. Although Kleiss deleted all references to Iran from the packing list, the invoice number, quantity of items and price remained the same as the original order, and the goods were eventually sent to Iran.

About one year later, Kleiss tried to buy another shipment of the sealants for Iran and told the U.S. supplier to go along with the scheme. “[J]ust tell [U.S. Customs] what you knew at the time of shipment: Your customer is Kleiss & Co. and destination is Dubai,” the company said in an email to the supplier. “Our client in Iran is fully informed of the situation.” BIS said it was able to stop the export before it left the U.S.

In a separate May 17 enforcement order, BIS said TeleDynamics committed 10 violations of the EAR when it illegally exported about $1,000 worth of rifle scopes to Russia and Ukraine. The company was “aware” of the licensing requirements because it was “notified on a number of occasions” by CBP, which had previously detained the company’s exports for not having the required license.

BIS revoked Kleiss’ export privileges for two years and may impose more restrictions on the company if it doesn’t pay its fine within 30 days of the date of the order. The agency also said it may revoke TeleDynamics’ export privileges if it doesn't pay its penalty within 30 days of the date of the order. Kleiss and Teledynamics didn’t immediately comment.