Federal Register: December 30, 2010 (Volume 75, Number 250)

DOCID: fr30de10-104 FR Doc 2010-32563

SUBJECT CATEGORY:

Yuri I. Montgomery, Respondent; Final Decision and Order

DOCUMENT SUMMARY:

This matter is before me upon a Recommended Decision and Order (``RDO'') issued by the Administrative Law Judge (``ALJ''), and a settlement proposal subsequently submitted by the parties.

In a charging letter filed on July 1, 2008, the Bureau of Industry and Security (``BIS'') alleged that Respondent Yuri I. Montgomery (``Respondent'' or ``Montgomery'') \1\ had committed fourteen violations of the Export Administration Regulations (currently codified at 15 CFR parts 730774 (2010) (``Regulations'')), issued pursuant to the Export Administration Act of 1979, as amended (50 U.S.C. app. 2401 2420) (the ``EAA'' or ``Act''),\2\ by participating in transactions involving the export or attempted export from the United States of items subject to the Regulations, while knowing that he was subject to a BIS order denying his export privileges. On January 15, 2010, BIS unilaterally withdrew Charge 10, leaving thirteen charges for consideration by the ALJ.
\1\ Montgomery is also known as ``Yuri Malinkovski.''
\2\ Since August 21, 2001, the Act has been in lapse, and the President, through Executive Order 13,222 of August 17, 2001 (3 CFR 2001 Comp. 783 (2002)), which has been extended by successive Presidential Notices, the most recent being that of August 12, 2010 (75 FR 50681 (Aug. 16, 2010)), has continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. (2000)). The unlawful conduct at issue here occurred in 2003. The Regulations governing the violations at issue are found in the 2003 version of the Code of Federal Regulations (15 CFR parts 730774 (2003)). The 2010 Regulations govern the
procedural aspects of this case.

Charges 17 of the Charging Letter allege that:

As described in further detail in the attached schedule of violations, which is incorporated herein by reference, on seven occasions between on or about July 2, 2003, and on or about October 8, 2003, Montgomery took actions prohibited by a BIS order denying export privileges under Sec. 766.25 of the Regulations (Denial Order). Specifically, Montgomery carried on negotiations concerning, ordered, bought, sold and/or financed various items exported or to be exported from the United States that are subject to the Regulations, and/or benefited from transactions involving items exported or to be exported from the United States that are subject to the Regulations. At the time Montgomery engaged in the described actions, his export privileges had been denied under the Regulations by a Denial Order dated September 11, 2000, and published in the Federal Register on September 22, 2000 (65 FR 57,313). Under the terms of the Denial Order, Montgomery ``may not directly or indirectly, participate in any way in any transaction involving any [item] exported or to be exported from the United States, that is subject to the Regulations, or in any other activity subject to the Regulations, including * * * [c]arrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or * * * [b]enefiting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.'' That Denial Order is effective until January 22, 2009, and continued in force at the time of the aforementioned actions taken by Montgomery. In so doing, Montgomery committed seven violations of Section 764.2(k) of the Regulations.

Charges 89, and 1114 allege that Montgomery acted with knowledge of violations of the Denial Order in connection with the items exported or to be exported from the United States to Macedonia, as follows:

As described in further detail in the attached schedule of violations, on seven occasions between on or about July 2, 2003, and or about October 8, 2003, Montgomery carried on negotiations concerning, ordered, bought, sold and on or financed various items subject to the Regulations with knowledge that a violation of an Order issued under the Regulations had occurred, was about to occur, or was intended to occur in connection with the items. Specifically, Montgomery carried on negotiations concerning, ordered, bought, sold and/or financed various items that were exported from the United States to a Macedonian company with knowledge that he was or would be violating a Denial Order imposed against him dated September 11, 2000, and published in the Federal Register on September 22, 2000 (65 FR 57,313). Montgomery knew that he was the subject of the Denial Order because, inter alia, he had been provided notice of the Denial Order when it issued in September 2000, and he had on October 24, 2000, written to thenBIS Under Secretary for Export Enforcement Reinsch to request reinstatement of his ``export privileges denied on September 11, 2000 * * *.'' That request for reinstatement had been denied by the Under Secretary on December 21, 2000, and the Denial Order continued in force at the time of aforementioned actions taken by Montgomery. In so doing, Montgomery committed seven violations of Sec. 764.2(e) of the Regulations.

The schedule of violations attached to the Charging Letter provided additional detail as to each of the seven transactions involved, including the dates of the transactions, the items involved and their values, and the consignee.

On October 28, 2010, the ALJ issued an RDO in accordance with Sec. 766.17 of the Regulations. The RDO provides a detailed summary of the procedural background and preRDO case activity, including the seven stays or extensions of time sought or stipulated to by Respondent during the course of the litigation below. Montgomery filed his answer to the Charging Letter on April 2, 2009, and pursuant to part 766 of the Regulations was permitted to take discovery during the litigation and to present evidence and rebuttal evidence concerning the charges and the defenses he raised. Because no party had demanded a hearing as provided in Sec. 766.6(c) of the Regulations, the RDO issued on the record by the ALJ in accordance with Sec. 766.6(c) and Sec. 766.15.

The ALJ served the RDO on the parties as required in Sec. 766.17(b)(2). On November 10, 2010, however, the ALJ issued a Supplemental Certificate of Service, stating that the RDO initially served on the Respondent on October 28, 2010, via overnight carrier, had been returned as undeliverable, and that he was attempting service of the RDO a second time. On November 17, 2010, I received a delivery confirmation from the ALJ showing that Respondent received a copy of the RDO on November 11, 2010.

The delivery confirmation that I received on November 17, 2010, demonstrated that the ALJ had fulfilled his obligation under Section 766.17(b)(2) of the Regulations to certify the full record for my review in accordance with Section 766.22. As such, and in the interest of avoiding confusion and ensuring that the parties had the full time allotted to them by the Regulations to make any submissions, I ordered that the deadlines for the parties' various filings be established using the November 17, 2010 date as the date the RDO was issued. Thereafter, Respondent Montgomery retained new legal counsel and subsequently filed, and I granted, three unopposed motions seeking a stay of the proceedings to allow the parties to conduct settlement negotiations.

As part of the settlement agreement, Respondent Montgomery admits to the violations of the Regulations alleged in Charges 19 and 1114 of the Charging Letter. In addition, Montgomery has consented to my affirming the RDO, as modified with regard to the RDO's Recommended Sanction in order, instead, to impose the sanctions agreed
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to by Montgomery and set forth in the parties' settlement proposal.

I have the authority, pursuant to Sec. 766.22(c) of the Regulations, to affirm, modify or vacate the RDO. Where a case is pending before me pursuant to Sec. 766.22, I also have the authority, under Sec. 766.18(b)(2), to approve or reject a settlement proposal submitted to me by the parties.

Based on my review of the record, including the RDO and the settlement proposal submitted by the parties, I hereby affirm the RDO, including its findings of fact and conclusions of law concerning Respondent Montgomery's seven violations of Section 764.2(k) of the Regulations and his six violations of Section 764.2(e); except that I hereby modify the RDO's recommended sanctions such that the sanctions imposed against Montgomery are consistent with the parties' settlement proposal, which I hereby approve.

Accordingly, it is therefore ordered:

First, that a civil penalty of $340,000.00 is assessed against Montgomery. Of this civil penalty, $17,500 shall be paid by Montgomery to the U.S. Department of Commerce in 12 installments as follows: $1,458 no later than January 1, 2011; $1,458 no later than the first day of each month from February, 2011 through and including November, 2011; and $1,462 shall be due no later than December 1, 2011. Payment of the remaining $322,500 shall be suspended for a period of ten (10) years from the date of this Order, provided that during the period of suspension, Montgomery has committed no violation of the Act, or any regulation, order, or license issued thereunder, and has made full and timely payment of the $17,500 as set forth above. If any of the twelve installment payments is not fully and timely made, any remaining scheduled installment payments and the remaining $322,500 shall become due and owing immediately.

Second, pursuant to the Debt Collection Act of 1982, as amended (31 U.S.C. 37013720E (2000)), the civil penalty owed under this Order accrues interest as more fully described in the attached Notice, and, if payment is not made by the due dates specified herein, Montgomery will be assessed, in addition to the full amount of the civil penalty and interest, a penalty charge and administrative charge.

Third, for a period of thirty (30) years from the date of this Order, Yuri I. Montgomery, a/k/a Yuri Malinkovski, with a last known address of 2912 10th Place West, Seattle, WA 98119, and when acting for or on behalf of Montgomery, his representatives, assigns, agents or employees (hereinafter collectively referred to as ``Denied Person''), may not participate, directly or indirectly, in any way in any transaction involving any commodity, software or technology (hereinafter collectively referred to as ``item'') exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations, including, but not limited to:

A. Applying for, obtaining, or using any license, License Exception, or export control document;

B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or

C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.

Fourth, that no person may, directly or indirectly, do any of the following:

A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;

B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;

C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;

D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or

E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.

Fifth, that, after notice and opportunity for comment as provided in Sec. 766.23 of the Regulations, any person, firm, corporation, or business organization related to the Denied Person by affiliation, ownership, control, or position of responsibility in the conduct of trade or related services may also be made subject to the provisions of the Order.

Sixth, that this Order does not prohibit any export, reexport, or other transaction subject to the Regulations where the only items involved that are subject to the Regulations are the foreignproduced direct product of U.S.origin technology.

Seventh, that Montgomery shall have an opportunity to request that the Under Secretary reinstate his export privileges after a period of ten (10) years from the date of the Order, provided that Montgomery has committed no violation of the Act, or any regulation, order, or license issued thereunder prior to the submission of his request for reinstatement. BIS shall in its sole unreviewable discretion determine whether to grant, or deny, in whole or in part Montgomery's request for reinstatement of his export privileges.

Eighth, that the final Decision and Order shall be served on Montgomery and on BIS and shall be published in the Federal Register. In addition, the ALJ's Recommended Decision and Order, except for the section related to the Recommended Order, shall also be published in the Federal Register.

This Order, which constitutes the final agency action in this matter, is effective immediately.

Dated: December 21, 2010.
Eric L. Hirschhorn,
Under Secretary of Commerce for Industry and Security.

Certificate of Service

I hereby certify that, on this 21st day of December, 2010, I have served the foregoing DECISION AND ORDER signed by Eric L. Hirschhorn, Under Secretary of Commerce for Industry and Security, in the matter of Yuri I. Montgomery (Docket No: 08BIS0004) to be sent via United Parcel Service postage prepaid to:
Douglas N. Jacobson, Esq., Law Offices of Douglas N. Jacobson, PLLC, 1725 I Street, NW., Suite 300, Washington, DC 20006. Facsimile: 202 6882782.
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(By Facsimile and United Parcel Service.)
Eric Clark, Joseph Jest, John Masterson, Attorneys for Bureau of Industry and Security, Office of Chief Counsel for Industry and Security, U.S. Department of Commerce, Room HCHB 3839, 14th Street and Constitution Ave., NW., Washington, DC 20230. Facsimile: 2024820085. (Served via hand delivery.)
ALJ Docketing Center, Attention: Hearing Docket Clerk, 40 S. Gay Street, Room 412, Baltimore, MD 202124022. (By United Parcel Service.)

A copy of this Order has also been sent via United Parcel Service to:
Yuri I. Montgomery, 2912 10th Place West, Seattle, WA 98119. (By United Parcel Service.)
Andrea A. Monroe,
Office of the Under Secretary for Industry and Security.
Recommended Decision and Order \3\
\3\ For proceedings involving violations not relating to Part 760 of the Export Enforcement Regulations, 15 CFR 766.17(b) and (b)(2) prescribe that the Administrative Law Judge's decision be a ``Recommended Decision and Order.'' The violations alleged in this case are found in Part 764. Therefore, this is a ``Recommended Decision and Order.'' That section also prescribes that the Administrative Law Judge make recommended findings of fact and conclusions of law that the Under Secretary for Export
Administration, Bureau of Industry and Security, U.S. Department of Commerce, must affirm, modify or vacate. 15 CFR 766.22. The Under Secretary's action is the final decision for the U.S. Commerce Department. 15 CFR 766.22(e).

Issued by: Hon. Walter J. Brudzinski, Administrative Law Judge.

Issued: October 28, 2010.

On behalf of Bureau of Industry and Security:
John T. Masterson, Esq., Chief Counsel for Industry and Security, Joseph V. Jest, Esq., Chief of Enforcement and Litigation, Parvin R. Huda, Esq., Senior Counsel, Eric Clark, Esq., Attorney Advisor, Attorneys for Bureau of Industry and Security, Office of Chief Counsel for Industry and Security, United States Department of Commerce, Room H3839, 14th Street & Constitution Avenue, NW., Washington, DC 20230.

On behalf of Respondent:
Yuri I. Montgomery, Pro se, 2912 10th Place West, Seattle, WA 98119. Table of Contents
Preliminary Statement

Charging Letter

Schedule of ViolationsYuri Montgomery

Denial Order of September 11, 2000

Jurisdiction of U.S. Coast Guard Administrative Law Judges.

PreDecisional Motion Practice

Outstanding Motion
Determination of Respondent's Failure To Comply with Discovery

Authority for Sanction for Failure To Comply With Discovery

Sanction on Respondent's Refusal to Disclose Discovery Materials

Paragraph IV of the Denial Order
Time for Decision
Recommended Findings of Fact

General Findings and Background

Charges 1 and 8, 61 pairs of Magnum boots

Charges 2 and 9, firing range clearing devices

Charge 3

Charges 4 and 11

Charges 5 and 12

Charges 6 and 13

Charges 7 and 14
Discussion

Burden of Proof

Respondent's Prior Criminal Conviction

Denial Order

Law

Applying the Denial Order and the Law to the Findings of Fact Ultimate Findings of Fact and Conclusions of Law
Affirmative Defenses
Respondent's Two Objections
Respondent's Remaining Affirmative Defenses
Recommended Sanction
Recommended Order

Attachment ASummary of PreDecision Motion Practice

Activity Prior To Respondent's Answer to Charging LetterCase to be Adjudicated on the Record

The November 10, 2009 Memorandum and Order
Attachment BLists of Exhibits
Attachment CRulings on Proposed Findings of Fact
Attachment DNotice to the Parties Regarding Review by the Under Secretary
Certificate of Service

Preliminary Statement

On July 1, 2008, the Bureau of Industry and Security (BIS) charged Respondent, Yuri Montgomery, with 14 counts of violating two (2) separate code sections of the Export Administration Regulations (EAR).\4\ The EAR is issued under the authority of the Export Administration Act (EAA) of 1979.\5\
\4\ The Regulations are currently codified in the Code of Federal Regulations at 15 CFR parts 730774 (2008). The violations charged occurred in 2003. The Regulations governing the violations here are found in the 2003 version of the Code of Federal
Regulations (15 CFR parts 730774 (2003)). The 2008 Regulations govern the procedural aspects of this case.
\5\ Title 50 U.S.C. app. 24012420 (2000). Since August 21, 2001, the Act has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR 2001) Comp. 783 (2002)), which has been extended by successive Presidential Notices, the most recent being that of August 15, 2007, 72 FR 46137 (Aug. 16, 2007), has continued the Regulations in effect under the Emergency Economic Powers Act (50 U.S.C. 17011706 (2000)) (``IEEPA'').

Charging Letter

The fourteen (14) Count Charging Letter alleges seven (7) violations of EAR code section 764.2(k), ``Acting Contrary to the Terms of a Denial Order,'' and seven (7) violations of EAR code section 764.2(c), ``Acting with Knowledge of a Violation'' as follows: Charges 17, 15 CFR 764.2(k): Acting Contrary to the Terms of a Denial Order

As described in further detail in the attached schedule of violations, which is incorporated herein by reference, on seven occasions between on or about July 2, 2003, and on or about October 8, 2003, Montgomery took actions prohibited by a BIS order denying export privileges under Section 766.25 of the Regulations (Denial Order). Specifically, Montgomery carried on negotiations concerning, ordered, bought, sold and/or financed various items exported or to be exported from the United States that are subject to the Regulations, and/or benefitted from transactions involving items exported or to be exported from the United States that are subject to the Regulations. At the time Montgomery engaged in the described actions, his export privileges had been denied under the Regulations by a Denial order dated September 11, 2000, and published in the Federal Register on September 22, 2000 (65 FR 57,313). Under the terms of the Denial Order, Montgomery: May not directly or indirectly, participate in any way in any transaction involving an (item) exported or to be exported from the United States, that is subject to the Regulations, or in any other activity subject to the Regulations, including * * * [c]arrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations; or * * * [b]enefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations.'' That Denial Order is effective until January 22, 2009, and continued in force at the time of the aforementioned actions taken by Montgomery. In so doing, Montgomery committed seven violations of Section 764.2(k) of the Regulations. Charges 814, 15 CFR 764.2(e): Acting with Knowledge of a Violation

As described in further detail in the attached schedule of violations, on seven occasions between on or about July 2, 2003, and [on] or about October 8, 2003, Montgomery carried on negations concerning, ordered, bought, sold and/or financed various items subject to the Regulations with knowledge that a violation of an Order issued under the Regulations had occurred, was about to occur, or was intended to occur in connection with the items. Specifically, Montgomery carried on negotiations concerning, ordered, bought, sold and/or financed various items that were
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exported from the United States to a Macedonian company with knowledge that he was or would be violating a Denial Order because, inter alia, he had been provided notice of the Denial Order when it issued in September 2000, and he had on October 24, 2000, written to thenBIS Under Secretary for Export Enforcement Reinsch to request reinstatement of his ``export privileges denied on September 11, 2000 * * * .'' That request for reinstatement had been denied by the Under Secretary on December 21, 2000, and the Denial Order continued in force at the time of aforementioned actions by Montgomery. In so doing, Montgomery committed seven violations of Section 764.2(e) of the Regulations.

The Charging Letter further detailed Charges 17 as violations of 15 CFR 764.2(k) and Charges 814 as violations of 15 CFR 764.2(e) as follows:
\6\ BIS withdrew Charge Ten on January 15, 2010.
Schedule of ViolationsYuri Montgomery Date Charges Items Value Violation Consignee 7/2/03.......................... 1, 8 61 prs Magnum $3,355 764.2(k); Micei, Int'l boots. 764.2(e) 7/18/03......................... 2, 9 2 firing range $1,136 764.2(k); Micei, Int'l clearing Devices. 764.2(e) 8/5/03.......................... 3, 10 \6\ 10,800 pairs of RFQ 764.2(k); Micei, Int'l boots. 764.2(e) 8/5/03.......................... 4, 11 45 pairs Oxford $2,562 764.2(k); Micei, Int'l shoes, 5 Remote 764.2(e) strobe tubes. 8/13/03......................... 5, 12 150 shirts........ $1,744 764.2(k); Micei, Int'l 764.2(e) 9/9/03.......................... 6, 13 2 load binder,1 $147.53 764.2(k); Micei, Int'l ratchet strap, 1 764.2(e) binder chain, 1 safety shackle. 10/8/03......................... 7, 14 Items in Order $5,723.31 764.2(k); Micei, Int'l 25473620/ 764.2(e) 017.

The Charging Letter advised the maximum civil penalty is up to the greater of $250,000 per violation or twice the transaction value that forms the basis of the violation, plus a denial of export privileges and/or exclusion from practice before BIS. The Charging Letter concluded that failure to answer the charges within thirty (30) days will be treated as a default, and, although Respondent is entitled to an agency hearing, he must file a written demand for one with his answer.

Denial Order of September 11, 2000

The pleadings, discovery, and affidavits in the administrative record reflect that on January 22, 1999, Respondent, Yuri I. Montgomery, also known as Yuri I. Malinskovski, was convicted in U.S. District Court for the District of Columbia of knowingly and willfully exporting and causing the export of prohibited items to Macedonia and Slovenia without applying for and obtaining the required export licenses in violation of the International Emergency Economic Powers Act and the Export Administration Act of 1979.

Pursuant to Section 11(h) of the Export Administration Act and 5 CFR 766.25 (2000) the Director, Office of Exporter Services, Bureau of Export Administration, issued an order (Denial Order) on September 11, 2000 denying Respondent export privileges effective through January 22, 2009.\7\
\7\ Through an internal organizational order, the Department of Commerce changed the name of Bureau of Export Administration to Bureau of Industry and Security. See, Industry and Security Programs: Change of Name, 67 FR 20,630 (Apr. 26, 2002). Pursuant to the Savings Provision of the Order, ``Any actions undertaken in the name of or on behalf of the Bureau of Export Administration, whether taken before, on, or after the effective date of this rule, shall be deemed to have been taken in the name of or on behalf of the Bureau of Industry and Security.'' Id. at 20,631.

The Denial Order states, in pertinent part, Respondent ``may not, directly or indirectly, participate in any way in any transaction involving any * * * [item] exported or to be exported from the United States, that is subject to the Regulations, or in any other activity subject to the Regulations, or in any other activity subject to the Regulations.'' The Denial Order detailed nonexclusive examples of conduct included in the broad prohibition including ``[c]arrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving an item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.'' (65 FR 57,313 (Sept. 22, 2000)). Paragraph IV of the Denial Order states, ``[t]his Order does not prohibit any export, reexport, or other transaction subject to the Regulations where the only items involved that are subject to the Regulations are the foreignproduced direct product of U.S.origin technology.'' (Id.). Respondent's pleadings claim that the exported items in question fall into this exception.

Jurisdiction of U.S. Coast Guard Administrative Law Judges

The Charging Letter states the U.S. Coast Guard is providing Administrative Law Judge services for these proceedings. Accordingly, BIS forwarded the Charging Letter to the U.S. Coast Guard
Administrative Law Judge Docketing Center for adjudication. The ALJ Docketing Center subsequently issued its Notice of Docket Assignment to the Respondent and BIS. The administrative file reflects that at the time of the Charging Letter and continuing to the present, Memoranda of Agreement (MOA) and Office of Personnel Management letters issued in accordance with 5 U.S.C. 3344 and 5 CFR 930.230 authorize the detail of U.S. Coast Guard Administrative Law Judges to adjudicate BIS cases involving export control regulations on a reimbursable basis. PreDecisional Motion Practice

Throughout the course of this proceeding, Respondent filed dozens of motions, including numerous motions to stay. Respondent eventually filed his Answer ``under protest, duress, and compulsion of the Order Denying Respondent's Motion for More Definite Statement.'' Respondent's Answer included 19 affirmative defenses. Neither Respondent nor BIS demanded a hearing. Therefore, the undersigned
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issued an Order stating the matter will be adjudicated on the record in accordance with 15 CFR 766.6(c). A summary of Respondent's motions, BIS' replies, and the undersigned's decisions on those motions is detailed in Attachment A.

Outstanding Motion

Respondent filed his Declaration in Support of Defenses on September 22, 2010, seven (7) months after the February 24, 2010 deadline for filing his evidence in support of his defenses. The Declaration included 43 attachments and a letter dated April 29, 2010 stating Respondent has suffered severe mental stress as a result of these proceedings. Respondent's Declaration explained his relationship with Micei International, summarized the events that occurred prior to the issuance of the Denial Order, and explanations of the attached exhibits. The majority of the evidence submitted supported Respondent's assertion that he did not violate the EAR because the country of origin for some of the items in question was China.

BIS filed its response on October 7, 2010, objecting to Respondent's Declaration. Specifically, the Agency argues that the submission of this Declaration along with its attachments are in direct violation of this court's discovery orders; that all exhibits except Ex. 7 are dated prior to the discovery deadline and are thus untimely and should not be considered. BIS also argues that several of the exhibits submitted by Respondent raise authenticity and accuracy concerns, including the fact that two of the emails sent by separate people contained identical wording and grammatical mistakes. Furthermore, the exhibits in question do not provide any probative value because the items' country of origin is not the issue because the items were exported from the United States. BIS requests the undersigned disregard Respondent's Declaration and the attached exhibits because the filling further demonstrates Respondent's refusal to comply with the ALJ's orders and the rules that govern this proceeding.

After careful review of Respondent's Declaration and BIS' response, the undersigned rejects Respondent's Declaration as untimely because it was filed approximately 7 months after his evidence was due and violates discovery procedures. Respondent was repeatedly accorded stays and additional time to file evidence and submissions. Respondent repeatedly ignored these deadlines. Even if the undersigned accepted Respondent's Declaration and exhibits, they would carry no probative value. As discussed in detail below, all items in question were shipped from the United States in violation of the EAR. Accordingly, Respondent's Declaration in Support of Defenses and its attached exhibits is rejected.
Determination on Respondent's Failure To Comply With Discovery

On June 19, 2009, BIS served all discovery requests on Respondent but Respondent replied only to BIS's Requests for Admission on July 6, 2009. He did not respond to BIS's Interrogatories and Requests for Production of Documents. Instead, Respondent asserted preliminary objections on June 30, 2009 and renewed objections on September 3, 2009. In my Order of August 20, 2009, Respondent was again ordered to respond to the interrogatories and document requests. To date, he has not replied to BIS's Interrogatories and Requests for Production of Documents, nor did he submit copies of his discovery requests as previously ordered to determine if enforcement is appropriate. Authority for Sanction for Failure To Comply With Discovery

The Discovery Rules at 15 CFR 766.9 (d) provide as follows:

Enforcement. The administrative law judge may order a party to answer designated questions, to produce specified documents or things or to take any other action in response to a proper discovery request. If a party does not comply with such an order, the administrative law judge may make a determination or enter any order in the proceeding as the judge deems reasonable and appropriate. The judge may strike related charges or defenses in whole or in part or may take particular facts relating to the discovery request to which the party failed or refused to respond as being established for purposes of the proceeding in accordance with the contentions of the party seeking discovery. [Emphasis added.] In addition, enforcement by a district court of the United States may be sought under section 12(a) of the EAA.

On October 26, 2009, BIS filed its Supplemental Submission in Response to the October 15, 2009 Order that the parties submit copies of their respective discovery requests to the undersigned to determine if enforcement pursuant to Section 766.9(d) of the Regulations is appropriate. In its Supplemental Submission, BIS claims, among other things, that Respondent's Answer to BIS's Motion for Summary Decision contained information and references to documents upon which Respondent is relying that should have been disclosed in BIS's discovery requests but were not disclosed. BIS avers that Respondent ``should be barred from offering as evidence or otherwise seeking to make use of this material, as well as any other responsive material that he failed to produce, whether responsive documents or information that is responsive to any interrogatory.'' (BIS's October 26, 2009 Supplemental Submission in Response to October 15, 2009 Order, at 3.)

Specifically, the information in question is a Declaration from Sanja Milic of Micei and a purported email from Range Systems. BIS argues that the email contains information that was responsive to its discovery requests pertaining to Respondent's Defense No. 16 found in on page 3 of ``Declaration of Yuri Montgomery in Opposition to Bureau of Industry and Security's Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen'' dated October 12, 2009. Defense No. 16 states, ``[w]hen I contacted Maintenance Products, Inc. to inquire of the availability of the products which are listed in the [sic] charges 6 and 13 of the Charging Letter herein, I was informed by Maintenance Products, Inc. that all of the products Micei was interested in purchasing were made in China and were very cheap and I did not even inquire of their prices.'' BIS further averred that the Court should strike Respondent's defense number 16 and any argument or purported evidence related to that defense. BIS ended with the recommendation that the Court postpone ruling on any discovery sanction until after ruling on the Motion for Summary Decision because that Motion can be resolved without discovery sanctions. The undersigned also notes that Respondent's Affirmative Defense No. 16 filed on April 2, 2009 with his Corrected Answer to Charging Letter avers ``[t]he goods subject to the Charging Letter are of foreign origin and are therefore not subject to the prohibitions of the purported Denial Order.'' Respondent's affirmative defense no. 11, filed in his original Answer, reads ``[t]he goods subject to the Charging Letter are of foreign origin and are therefore not subject to the Charging Letter.''

The undersigned denied BIS's Motion for Partial Summary Decision. BIS asked in its January 15, 2010 ``Memorandum on Evidence Submitted in Support of Charges'' that Respondent be barred from offering as evidence or otherwise seeking to make use of any responsive material that he failed to produce, whether the information is a responsive document or answer to an interrogatory. In addition, BIS asks the Court to strike Respondent's Defense No. 16 and any argument or purported evidence related
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to that defense pursuant to 15 CFR 766.9(d).

The November 10, 2009 memorandum and Order stated that the undersigned will make a determination or enter an Order deemed reasonable and appropriate in accordance with 15 CFR 766.9(d) on the issue of Respondent's continued refusal to comply with BIS's Interrogatories and Requests for Production of Documents despite previous Orders to do so. That determination follows:
Sanction on Respondent's Refusal To Disclose Discovery Materials

Respondent's arguments, email, and Declaration contain information that should have been disclosed during discovery. Respondent failed to disclose this information despite being ordered to do so and then used those undisclosed discovery materials in his defense against BIS's Motion for Summary Decision. His arguments that the items in question are foreign made and therefore excluded from the Denial Order still remain in his affirmative defense filed with his Answer. Therefore, in consideration of the forgoing and in accordance with 15 CFR 766.9(d), the following are stricken from the record: (1) Respondent's Defense No. 16 in his ``Declaration of Yuri Montgomery in Opposition to Bureau of Industry and Security's Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen'' dated October 12, 2009; (2) the Declaration from Sanja Milic of Micei; (3) the email from Range Systems; (4) Affirmative Defense No. 16 in Respondent's Corrected Answer to Charging Letter which states ``[t]he goods subject to the Charging Letter are of foreign origin and are therefore not subject to the prohibitions of the purported Denial Order;'' (5) Affirmative Defense No. 11 which states, ``[t]he goods subject to the Charging Letter are of foreign origin and are therefore not subject to the Charging Letter;'' and (6) any argument related to that basic defense. Paragraph IV of the Denial Order

Even if Respondent complied with discovery as previously ordered, and if the arguments and documents were found credible and give appropriate weight, they do not show that the items in question fall into the Paragraph IV exception to the Denial Order based only on their purported foreign origin. Paragraph IV of the Denial Order states, ``[t]his Order does not prohibit any export, reexport, or other transaction subject to the Regulations where the only items involved that are subject to the Regulations are the foreignproduced direct product of U.S.origin technology.'' This language does not amend the specific language in Paragraph I of the Denial Order which prohibits any participation of any kind in the export from the United States of any items subject to the Regulations.

Paragraph I prohibits participation in transactions involving items exported or to be exported from the United States. Items located in the United States are subject to the Regulations, regardless of where they are produced. See, 15 CFR 734.3(a). Since the items in this case were located in the United States at the time of Respondent's transactions and were not subject to the exclusive jurisdiction of another agency, Respondent was prohibited from participating in those transactions. The items in question are subject to the EAR as shown below:

Respondent claims that the Paragraph IV exemption applies if the items in question were manufactured abroad. As shown above, items subject to the EAR include items located in the United States regardless of where they have been manufactured or produced. In this case, jurisdiction is based on the fact that the items in question were located in the United States at the time of the transactions or the attempted or intended transactions, regardless of their origin. Once jurisdiction of the items in question is established based on the location of the items in the United States, such as in this case, it is not necessary to consider any other basis. The origin of an item must be determined only if the item happens to be located abroad at the time of the transaction. In this case, the items were located in the United States.

In summary, Paragraph IV of the Denial Letter provides a narrow exception to transactions involving only items subject to the Regulations by reason of the foreign direct product rule which does not apply here because the items in question were not located abroad. In this case, jurisdiction over these items exists under Section 734.3. The items were subject to the Regulations and were exported or attempted or intended to be exported from the United States. Therefore, Respondent's affirmative defense that foreign origin of the goods exempts them from the Regulations is rejected even in the absence of sanction.

Time for Decision

Title 15 CFR 766.17(d) provides that administrative enforcement proceedings not involving Part 760 of the EAR shall be concluded within one year from submission of the Charging Letter unless the Administrative Law Judge extends such period for good cause shown. In light of the attached detailed activity in these proceedings evidencing several stays, the time consumed to adjudicate disputed discovery issues, and the additional time consumed to adjudicate numerous motions, the undersigned finds that good cause exists for not concluding these proceedings within the time prescribed and that these proceedings are extended to October 28, 2010. This matter is now ripe for decision.

As detailed in Attachment A, the parties have raised many issues and the undersigned has ruled on most of them in previously issued Orders. This Recommended Decision and Order also rules on the affirmative defenses and any outstanding issues. As noted above, BIS filed its Notice of Withdrawal of Charge 10, concerning the 10,800 pairs of boots described in the charging Letter's Schedule of Violations. Therefore, seven (7) counts of section 764.2(k) and six (6) counts of Section 764.2(e) of the Regulations remain for decision. After careful review of the entire record, I find that BIS has proved, by the preponderance of reliable, probative, and credible evidence, on seven (7) occasions, from July 2, 2003 and October 8, 2003, that Respondent violated EAR code Section 764.2(k), ``Acting Contrary to the Terms of a Denial Order,'' and on six (6) occasions that Respondent violated EAR code Section 764.2(e), ``Acting with Knowledge of a Violation.''

Recommended Findings of Fact

The Findings of Fact and Conclusions of Law are based on a thorough and careful analysis of the documentary evidence, exhibits, and the entire record as a whole.

General Findings and Background

1. Respondent Yuri I. Montgomery, also known as Yuri I. Malinkovski was convicted in the U.S. District Court for the District of Columbia of violating the International Emergency Economic Powers Act (50 U.S.C. 17011706 (1991 & Supp. 2000) and the Export Administration Act of 1979, as amended (currently codified at 50 U.S.C. app. 24012420 (1991 & Supp. 2000)). (BIS Ex. B)

2. Specifically, Respondent's conviction was for knowingly and willingly exporting and causing the export of U.S.origin stun guns to Macedonia and U.S. origin laser gun sights to Slovenia without applying for and obtaining the required export licenses from the Department of Commerce, and of knowingly and willfully exporting and causing the [[Page 82470]]
export of U.S.origin PAGST military helmets to Slovenia and U.S. origin handcuffs, laser gun sights, and laser mountings to Macedonia without applying for and obtaining the required export licenses from the Department of Commerce. (BIS Ex. B)

3. Section 11(h) of the Export Administration Act of 1979 provides that, at the discretion of the Secretary of Commerce, no person convicted of violating the International Emergency Economic Powers Act or the Export Administration Act, or certain other provisions of the U.S. Code, shall be eligible to apply for or use any export license issued pursuant to, or provided by, the Export Administration Act or the Export Administration Regulations for a period of up to 10 years from the date of the conviction. (BIS Ex. B)

4. Pursuant to Sections 766.25 and 750.8(a) of the Regulations and upon notification that a person has been convicted of violating the International Emergency Economic Powers Act or the Export
Administration Act, the Director, Office of Exporter Services, in consultation with the Director, Office of Export Enforcement, shall determine whether to deny that person's export privileges for a period up to 10 years from the date of conviction and shall also determine whether to revoke any license previously issued to such person. (BIS Ex. B)

5. Having received notice of Respondent's conviction and after providing Respondent with notice and opportunity to make written submission before issuing an Order denying his export privileges, the Director, Office of Exporter Services, Bureau of Export Administration, issued an Order (Denial Order) on September 11, 2000 denying Respondent export privileges effective through January 22, 2009 and publishing it in the Federal Register.\8\ (65 FR 57,313 (Sept. 22, 2000) (BIS Ex. B)) \8\ Through an internal organizational order, the Department of Commerce changed the name of Bureau of Export Administration to Bureau of Industry and Security. See, Industry and Security Programs: Change of Name, 67 FR 20,630 (Apr. 26, 2002). Pursuant to the Savings Provision of the Order, ``Any actions undertaken in the name of or on behalf of the Bureau of Export Administration, whether taken before, on, or after the effective date of this rule, shall be deemed to have been taken in the name of or on behalf of the Bureau of Industry and Security.'' Id. at 20,631.

6. Paragraph I of the Denial Order states that ``Until January 22, 2009, Yuri I. Montgomery, also known as Yuri I. Malinkovski, [home address redacted] may not, directly or indirectly, participate in any way in any transaction involving any Commodity, software or technology (hereinafter collectively referred to as `item') exported or to be exported from the United States, that is subject to the Regulations, or in any other activity subject to the Regulations * * *. '' (BIS Ex. B, at paragraph I)

7. The Denial Order specifically listed as nonexclusive examples of prohibited participation, ``[c]arrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations * * *.'' (BIS Ex. B)

8. The Denial Order also provided that Respondent was prohibited from ``[b]enefiting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations. (BIS Ex. B)

9. Respondent received actual notice of the Denial Order by letter on or about September 13, 2000 from BIS that included a copy of the Denial Order. (BIS Ex. E, page 4, Request/Response 3; BIS Ex. F)

10. On October 24, 2000, Respondent wrote to then Under Secretary William Reinsch requesting reinstatement of his ``export privileges denied on September 11, 2000.'' (BIS Ex. E, page 4, Request/Response 5; BIS Ex. G)

11. Under Secretary Reinsch denied the request on Dec. 21, 2000. (BIS Ex. H)

12. Respondent had notice of the Denial Order no later than October 24, 2000. (BIS Ex. E, pages 416, Requests/Responses Nos. 2, 5, 7m, 8m, 9h, 10m, 11m, 12m, and 13m)

13. Respondent knew that the Denial Order was in effect at all times from September 11, 2000 until January 22, 2009. (BIS Ex. E, page 4, Request/Response 2)

14. Respondent knew that he was subject to the Denial Order at the time of each transaction at issue. (BIS Ex. E, pages 416, Requests/ Responses Nos. 2, 5, 7m, 8m, 9h, 10m, 11m, 12m, and 13m)

15. Respondent encouraged Micei ``to use my credit card for Micei purchases as much as possible as it would allow me to accumulate United Airline miles through the use of my United Visa credit card * * *'' (October 12, 2009 Declaration of Yuri Montgomery in Opposition to BIS's Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen, at paragraph 12)

16. On several occasions, Respondent ``made inquiries for Micei of the availability on some of the products purchased for Micei.'' (Id. at paragraph 14)

17. Respondent benefited from all the purchases by stating, ``[t]he charges made with my credit card directly attribute to the `violations' alleged Micei in the Charging Letter herein amount to approximately $15,000, which allowed me to accumulate approximately $15,000 [sic] miles with United Airlines.'' (BIS Ex. J, page 3, paragraph 18; BIS Ex. E, page 6, admission 7j)

The preceding Findings of Fact are incorporated in the following, specific Findings of Fact as set for below:

Charges 1 and 8, 61 Pairs of Magnum boots

18. On or about June 9, 2003 Respondent placed an order for 61 pairs of Magnum boots with the Modesto, California Division of HiTec Retail, Inc., manufacturer and retailer of footwear. (BIS Exhibit E, page 4, admission 7a; BIS Exhibits L and M)

19. The issuing bank declined HiTec's initial attempt to charge Montgomery's credit card for the order which caused R. Uber at HiTec to seek assistance from Respondent. (BIS Ex. O).

20. Micei employee Sanja Milic advised HiTec via email that according to Respondent, VISA had put a security block on its payment which he had already removed so that HiTec can charge the amount without any problem. (BIS EX. P)

21. With the payment issue resolved, Respondent paid for the boots with his credit card. (BIS Ex. Q; BIS Ex. 5 at page 4, admission 7b)

22. Micei reimbursed Respondent for purchasing the boots. (BIS Ex. E, page 5, admission 7i(iii))

23. Respondent intended the boots, which are subject to the Regulations, to be exported to Macedonia. (BIS Ex. E at page 7, admission 7e; BIS Exhibits N, R, and S; BIS Ex. I, 15 CFR 734.3(a))

24. The boots were exported from the United States to Macedonia on or about July 2, 2003. (BIS Exhibits R and S)

25. The boots are items subject to the Regulations. (15 CFR 734.3(a); BIS Ex. I)

26. At the time of the transaction, Respondent knew he was subject to the Denial Order. (BIS Ex. E at Request/Response 7m)

Charges 2 and 9, Firing Range Clearing Devices

27. At Micei's request, Respondent telephonically contacted Range Systems, a New Hope, Minnesota manufacturer of firing range equipment, ``to inquire of the availability and price
[[Page 82471]]
for their product * * *.'' (October 12, 2009 Declaration of Yuri Montgomery in Opposition to BIS's Motion for Summary Decision as to Charges Two, Six, Nine, and Thirteen, paragraph 20)

28. In a July 8, 2003 email inquiry sent to Range Systems describing himself as Micei's regional office, Respondent stated that ``currently we have one [bid] which calls for various products including 510 clearing traps such as your RRI Guardian (GDN) model * * *. Please quote the price of your RRR GUARDIAN (GDN) model and e/m me a complete price list if possible * * *.'' (BIS Ex. T, page 2)

29. Range Systems provided the requested price quote in a reply e mail sent on July 11, 2003. (BIS Ex. T, page 1)

30. Respondent placed an order for two of the gun clearing devices via email sent on July 15, 2003. (BIS Ex. E, page 6, admission 8a; BIS Exhibits T, U, and V)

31. Respondent paid Range Systems, Inc. for the gun clearing devices with his VISA credit card. (BIS Ex. T; BIS Ex. E, page 6, admission 8b)

32. Respondent directed Ranges Systems to export the gun clearing devices to Micei in Macedonia via their freight forwarder, requesting that he be advised of the weight and size of the boxes via email with a copy to Micei representatives. (BIS Ex. T, page 1)

33. Micei reimbursed Respondent for the purchase of the gun clearing devices. (BIS Ex. E, page 7, admission 8i)

34. On or about July 18, 2003, Range Systems exported the gun clearing devices from the United States to Macedonia. (BIS Ex. E, page 7, admission 8e; BIS Ex. T; X, and W)

35. The gun clearing devices were manufactured in the United States. (BIS Ex. Y, Z, and AA)

36. The gun clearing devices are items subject to the Regulations. (BIS Ex. I; 15 CFR 734.3(a))

37. At the time of the transaction, Respondent knew he was subject to the Denial Order. (BIS Ex. E, page 8, admission 8k and 8m)

38. Respondent benefited from the purchase of the gun clearing devices. (BIS Ex. E, page 7, admission 8j)

Charge 3

39. On August 5, 2003, Respondent sent an email to Galls, Inc., a Lexington, Kentucky based distributor of police equipment, military equipment, and apparel, identifying himself as ``Micei Int'l U.S. Operations'' and requesting a price quotation for 10,800 pairs of shoes and boots. (BIS Ex. E, page 8, admission 9a; BIS Ex. BB, EE, and FF)

40. Respondent intended to export the boots and shoes from the United States to Macedonia. (BIS Ex. E, page 8, admission 9d; BIS Ex. BB)

41. Respondent carried on negotiations concerning the shoes and boots, stating in an email to Galls ``our [Micei] HQ will be putting up the performance bond at 20% in cash. Therefore, please make sure you quote the best possible price so you can so we can win this one, too.'' (BIS Ex. BB)

42. The boots and shoes are items subject to the Regulations (BIS Ex. I; 15 CFR 734.3(a))

43. Respondent knew he was subject to the Denial Order on or about August 5, 2003, at or about the time he requested a quotation. (BIS Ex. E, page 9, admission 8f)

Charges 4 and 11

44. Micei's account number at Galls is 2547320. (BIS Ex. CC)

45. On or about August 5, 2003, Respondent contacted Galls to pay for order 25473620/016, previously placed. (BIS Ex. DD)

46. The items in that order number consist of shoes and remote strobe tubes.\9\ (BIS Ex. EE and FF)
\9\ Remote strobe tubes are components of the flashing emergency lights found on vehicles such as police cars.

47. In Respondent's August 5, 2003 email to Galls, he provided his credit card account information to pay for the $2,562.44 order, stating that Micei advised him to pay for the items with his VISA card. (BIS Ex. DD and BIS Ex. E, page 9, admission 10b)

48. Micei reimbursed Respondent for purchasing the shoes and remote strobe tubes. (BIS Ex. E, page 10, admission 10i(iii))

49. Respondent intended to export the shoes and strobe tubes from the United States to Macedonia. (BIS Ex. E, page 9, admission 10e; BIS Exhibits EE, FF, and GG)

50. The shoes and remote strobe tubes were exported from Galls's Inc. in Lexington, Kentucky, United States to Macedonia on or about September 5, 2003. (BIS Exhibits EE and GG)

51. The shoes and remote strobe tubes are items subject to the Regulations. (BIS Ex. I; 15 CFR 734.3)

52. At the time of the transaction, Respondent knew he was subject to the Denial Order. (BIS Ex. E, page 11, admission 10m)

53. Respondent benefited from the VISA card purchase of the shoes and remote strobe tubes from Galls by earning credit towards the purchase of airline tickets. (BIS Ex. E, page 10, admission j and finding of fact 17 above)

Charges 5 and 12

54. On July 31, 2003, Respondent placed on order for 150 golf/polo shirts from Save On Promotional Products of Sandy, Oregon. (BIS Ex. HH and II)

55. Upon receiving Respondent's order, Save On ordered the shirts from its supplier, TriMountain Gear Corp. of Baldwin Park, California. (BIS Ex. LL)

56. Respondent ordered the shirts for or on behalf of Micei and intended them to be exported from the United States to Macedonia. (Ex. E at Request/Response 11e); BIS Ex. HH: BIS Ex. II; BIS Ex. KK; BIS Ex. LL; BIS Ex. MM; BIS Ex. BIS NN)

57. Respondent paid for the order with his credit card. (BIS Ex. JJ; BIS Ex. E at Request/Response 11b)

58. Micei reimbursed Respondent for purchasing the shirts. (BIS Ex. E, page 12, admission 11i(iii))

59. The shirts were exported from the United States to Macedonia on or about August 13, 2003. (BIS Ex. MM; BIS Ex. NN)

60. The shirts are items subject to the Regulations. (BIS Ex. I; (15 CFR 734.3(a))

61. At the time of the transaction, Respondent knew he was subject to the Denial Order. (BIS Ex. E, page 12, admission 11m)

62. Respondent benefited from purchasing the shirts from a U.S. supplier using his VISA card by earning credit towards the purchase of airline tickets. (BIS Ex. E, page 12, admission 11j; Finding of Fact 17, above)

Charges 6 and 13

63. Respondent ordered two load binders, one ratchet strap, one binder chain, and one safety shackle from Maintenance Products, Inc. of Lowell, Indiana, on or about September 9, 2003. (BIS Ex. E, page 13, admission 12a; BIS Ex. OO and QQ)

64. Respondent paid Maintenance Products, Inc. for the load binders, ratchet strap, binder chain, and safety shackle, including freight charges of $21.52, with his VISA credit. (BIS Ex. E, page 13, admission 12b; BIS Ex. PP and QQ)

65. Micei reimbursed Respondent for purchasing the binder, ratchet strap, binder chain, and safety shackle. (BIS Ex. E, page 14, admission 12i(iii))

66. As Respondent intended, the load liners, ratchet strap, binder chain, and safety shackle exported from the United States to Macedonia on or about September 15, 2003. (BIS Ex. E, page 13, admission e; BIS Ex. RR and SS)

67. The load binders, binder chain, and safety shackle were manufactured
[[Page 82472]]

in the United States. (BIS Ex. TT and UU)

68. The load binders, ratchet strap, binder chain and safety shackle are items subject to the Regulations. (BIS Ex. I and 49 CFR 734.3(a))

69. At the time of the transaction, Respondent knew he was subject to the Denial Order. (BIS Ex. E, page 14, admission 12m; BIS Ex. B, paragraph I and BIS Ex. F, paragraph I on page 3 of the Order Denying Export Privileges)

70. By charging the purchase from the U.S. supplier of the load binders, ratchet strap, binder chain and safety shackle on his VISA card, Respondent benefitted by earning credit towards the purchase of airline tickets. (BIS Ex. E, page 14, admission 12j; see also, Finding of Fact 17, above)

Charges 7 and 14

71. In October 2003, Respondent, describing himself as ``Micei Int'l (N/America Op's), placed an order for uniform pants with Galls (Galls 5473720/017). (BIS Ex. VV)

72. Again describing himself as representing Micei, Respondent paid for the order with his VISA credit card. (BIS Ex. E, page 14, admission 13b; BIS Ex. WW)

73. The uniform pants were to be shipped from Galls' supplier, Liberty Uniform of Spartanburg, South Carolina, to Micei in Macedonia. (BIS Ex. E, page 15, admission 13e; BIS Ex. XX)

74. Micei reimbursed Respondent for purchasing the uniform pants. (BIS Ex. E, pages 15 and 16, admission 13i(iii))

75. The uniform pants are items subject to the Regulations. (BIS Ex. I; 15 CFR 734.3(a))

76. At the time of the transaction, Respondent knew he was subject to the Denial Order. (BIS Ex. E, page 16, admission 13m)

77. Respondent benefitted from his purchase of the uniform pants with his VISA credit card by earning airline frequent flier miles. (BIS Ex. E, page 16, admission 13j; see also, Finding of Fact 17, above) Discussion

Burden of Proof

The burden in this proceeding lies with the Bureau of Industry and Security to prove the charges instituted against the Respondents by a preponderance of reliable, probative, and substantial evidence. Steadman v. SEC., 450 U.S. 91, 102 (1981); In the Matter of Abdulmir Madi, et al, 68 FR 57406 (October 3, 2003). In the simplest terms, the Agency must demonstrate that the existence of a fact is more probable than its nonexistence. Concrete Pipe & Products v. Construction Laborers Pension Trust, 508 U.S. 602, 622 (1993).

Respondent's Prior Criminal Conviction

The evidence shows that on January 22, 1999, Respondent, Yuri I. Montgomery, also known as Yuri I. Malinkovski, was convicted in the U.S. District Court for the District of Columbia of knowingly and willingly exporting and causing the export of U.S. origin stun guns to Macedonia and U.S. origin laser gun sights to Slovenia without applying for and obtaining the required export licenses from the Department of Commerce, and of knowingly and willfully exporting and causing the export of U.S. origin PAGST military helmets to Slovenia and U.S. origin handcuffs, laser gun sights, and laser mountings to Macedonia without applying for and obtaining the required export licenses from the Department of Commerce, in violation of the International Emergency Economic Powers and the Export Administration Act of 1979.

Denial Order

The Export Administration Act of 1979 provides that no person convicted of violating the International Emergency Economic Powers Act or the Export Administration Act, among other provisions of the U.S. Code, shall be eligible for any export license for a period of up to 10 years from the date of the conviction. Therefore, pursuant to the Regulations at Sections 766.25 and 750.8(a) and upon notification to Respondent and an opportunity to be heard, the Director, Office of Exporter Services, Bureau of Export Administration, issued an Order (Denial Order) on September 11, 2000 denying Respondent export privileges effective through January 22, 2009.

In pertinent part, the Denial Order states at paragraph I that ``Until January 22, 2009, Yuri I Montgomery, also known as Yuri I. Malinkovski * * * may not, directly or indirectly, participate in any way in any transaction involving any * * * [item] exported or to be exported from the United States, that is subject to the Regulations, or in any other activity subject to the Regulations.'' The Denial Order detailed that Respondent may not, directly or indirectly, participate in any way in any transaction involving any * * * [item] exported or to be exported from the United States, that is subject to the Regulations, or in any other activity subject to the Regulations or * * * [b]benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations.''

The Denial Order detailed nonexclusive examples of conduct included in the broad prohibition including ``[c]arrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving an item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.''

On October 24, 2000, Respondent requested that his exporting privileges be reinstated; the Under Secretary denied his req

SUMMARY:

Commerce Department, Industry and Security Bureau

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