BIS Fines Tech Company, US Contractor for Illegal Wafer Exports

The Bureau of Industry and Security fined a Texas semiconductor component manufacturer nearly $500,000 for illegally exporting controlled wafers to Russia via Bulgaria (see 2012210013), the agency said in a Sept. 28 order. The company, Silicon Space Technology Corporation, which began doing business as Vorago Technologies in 2015, worked with a Russian engineering firm to export “rad-hard 16MB Static Random-Access Memory (SRAM) wafers,” which were controlled under the Export Administration Regulations for spacecraft and related components.

Vorago -- which had contracts with the U.S. Air Force, NASA, the Defense Department and other government agencies -- first met with officials from Russia-based Kosmos Komplekt (Cosmos) in 2014, BIS said. The meeting was arranged by Vorago’s vice president of international sales, who oversaw a Cosmos account in his last job as a sales engineer for a microelectronics company. Vorago met with two Cosmos officials, Ilias Kharresovich Sabirov and Dimitar Dimitrov, despite being advised by its export control lawyer that BIS was highly unlikely to approve export license applications to Russia “beyond anything very basic.”

But the lawyer said Vorago could export the SRAM wafers, which were controlled under Export Control Classification Number 9A515.e.1, to Bulgaria without an export license. “[W]e will want to be careful to ensure that the chips are, in fact, delivered to and used in Bulgaria,” the lawyer told Vorago officials, according to BIS.

Vorago officials eventually met again with Sabirov in Paris to discuss a purchase orders plan involving a “business model based in Bulgaria,” BIS said. The agency examined emails between Vorago officials that said Cosmos, which also worked with Russia-based Sovtest Comp, was “trying to purchase an existing company in Bulgaria” called Multi Technology Integration Group (MTIG) and “move their operations there.” Vorago’s export control lawyer told company executives “unless Cosmos is adding substantial value in Bulgaria, it is likely that a US export license is still required for the export of these products to Russia.”

BIS said Vorago officials sent several questions to Sabirov about Cosmos’ “role in MTIG,” which was described by Sabirov as “more of a workshop” and “an attempt to diversify our activity beyond the framework of sanctions.” Vorago’s lawyer advised the company that shipping goods to Cosmos in Bulgaria “would not be a violation, in and of itself. The concern is, what are they doing with the items, and where are they going?” The lawyer said an end-user agreement would be “helpful,” but wouldn’t offer Vorago “much protection” from a BIS enforcement action if “Cosmos went ahead and shipped” the goods to Russia without a license. BIS could determine that Vorago knew the item would eventually be exported to Russia, the lawyer said.

As a result, Vorago asked Mariana Gargova, the wife of Dimitrov and the registered owner of MTIG, to complete a BIS-711 ultimate consignee form. In the form, Gargova wrote that the wafers would be incorporated into motion control systems for heavy industry machines to be manufactured in Bulgaria and distributed in the European Union. Soon after, Vorago completed a 2015 purchase order from MTIG for one 16Mb SRAM wafer, BIS said, which was worth about $125,000.

BIS said Vorago completed additional purchase orders for MTIG and Cosmos, shipping six SRAM wafers worth about $497,000. In one 2015 email to Sabirov, Vorago’s CEO said the sale was “the most important biz opportunity for us this year and we are very committed to do whatever necessary to help you.”

Under its settlement agreement with BIS, Vorago must pay $250,000 of its $497,000 fine in several installments by Sept. 1, 2023. BIS said it will waive the remaining $247,000 if the company adheres to the agreement. If Vorago violates the deal or commits another export violation, it will be subject to more fines and won’t be allowed to export any EAR-controlled items for two years. "We regret the circumstances that led to this action by BIS that originated with a business relationship initiated by our former CEO," a Vorago spokesperson said Sept. 28. "We have worked diligently to improve our export controls."

BIS added Sovtest Comp, Cosmos Complect, MTIG, Dimitrov, Dimitrov, Sabirov, and Gargova to the Entity List last year (see 2012180039). “BIS vigorously pursues companies that conspire with foreign actors to subvert export licensing requirements,” said Kevin Kurland, BIS' acting sssistant secretary for export enforcement. “The use of a ‘front-company’ to conceal the actual illicit export of radiation-hardened electronic components to Russia cannot be tolerated and those responsible for serious violations will be held accountable.”