BIS Announces First Nonmonetary Settlement Agreement for Export Violations

The Bureau of Industry and Security entered into a settlement agreement with a Nogales, Arizona, business owner after he tried to illegally export about $4,000 worth of items to Mexico, including ballistic helmets and rifle scopes. Under a settlement agreement, Luis Fernando Gracia must conduct an internal audit of his company’s export compliance procedures and complete compliance training or else face the suspension of his export privileges.

The agreement, announced Aug. 1, was the first resolution without a monetary fine under BIS’s new enforcement policies previewed in June (see 2206300069). The settlement also didn’t include a no-admit, no-deny clause -- BIS said Garcia “admitted committing the alleged conduct” described in the enforcement order.

BIS said Garcia -- who owns GE Equipos de Seguridad, a company in Nogales and in Sonora, Mexico -- tried to export the helmets and rifle scopes in 2018 without a license, even though they were listed on the Commerce Control List and subject to crime-control licensing restrictions. Garcia ordered the items from a Los Angeles-based supplier and gave them to a person in Arizona, who then tried to drive the products into Mexico, BIS said.

CBP stopped the car and seized the shipment at Nogales’ port of entry to Mexico before Garcia could resell them to Mexican customers, BIS said. Garcia told BIS he intended to sell the helmets to a Mexican company that would then sell them to Mexican government customers. He planned to sell the rifle scopes to Mexican “retailers and distributors with which he regularly conducts business,” BIS said.

As part of the settlement agreement, Garcia agreed to complete an internal audit of GE Equipos de Seguridad’s export compliance program and share the results with BIS. The audit will cover a 12-month period beginning Aug. 1 and must be reported to BIS’s L.A. field office within 15 months. If the audit reveals any potential violations of the Export Administration Regulations, Garcia must give the field office “pertinent air waybills and other export control documents” associated with those shipments.

Garcia also will have to undergo export compliance training within the next 12 months and notify BIS about the course he chose. He will also have to submit a course attendance certificate to BIS. If Garcia violates the settlement agreement or commits another violation during a two-year probationary period, BIS may revoke his export privileges.

BIS said the case was an example of a violation that is “relatively less serious from a national security perspective” and therefore didn’t rise to the level of a fine. “To be eligible for such treatment, respondents must accept responsibility, including by admitting to the underlying conduct, and also agree to other remediation-oriented measures such as participation in training programs and compliance audits,” BIS said.