Crossing all lines: new justice division keeps an eye on the international supply chain.(international feature)

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As technology advances, the world seems to grow smaller and smaller. Communication gets faster, transactions happen half a world away in the blink of an eye and the majority of business is now done electronically, operating on a global scale without pause or delay for country borders. Unfortunately, the events of September 11th, the wars in Afghanistan and Iraq and the fears brewing over Iran and North Korea also demonstrate how tiny our world is.

It has been five decades since the U.S. Department of Justice (DOJ) established a new division, the last being the Civil Rights division created on December 9, 1957. But when Congress reauthorized the Patriot Act in 2005, the legislation called for the creation of a fifth arm of the DOJ, the National Security Division (NSD), designed to aid in counterterrorism and counterespionage efforts, though its crosshairs are set on export controls. With 230 members, the NSD became official in March 2006 and barreled forward full-steam ahead into enforcement actions.

"They're doing counterterrorism and counterespionage cases, but how many of them are there?" asked Larry Christensen of Miller & Chevalier Chartered to attendees at FCIB's recent Annual Global Conference (see the January 2008 issue for full coverage of this event). "Not many, but if you go onto their website, you'll see a lot of new export control cases. These are new, substantial changes at the Justice Department and I think it means that they'll likely bring cases that they wouldn't have in the past."

There were 33 major U.S. enforcement actions between October 4, 2006 and October 11, 2007 filed by the NSD, in conjunction with the Department of Commerce's Bureau of Industry and Security (BIS), the Federal Bureau of Investigation (FBI), the Department of Homeland Security's U.S. Immigration and Customs Enforcement (ICE) and several other federal law enforcement agencies. Some of these violations were for selling weapons, aircraft parts, restricted technology and information, as well as outsourcing the manufacture of armaments to embargoed countries, resulting in record-setting fines as high as $100 million.

On the coattails of this period's enforcement actions was a move by Congress in October 2007 to double criminal penalties for export control violations from $500,000 to $1 million and to increase sentencing to up to 20 years in prison. According to Christensen, each illegal shipment to and from the United States is typically hit with between two and four violations. Congress also increased the administrative fines five-fold, from a maximum of $50,000 to a maximum of $250,000 per violation.

"The U.S. system is basically a re-export system from one country to another. And that re-export jurisdiction is being increasingly enforced," explained Christensen. "Civil penalties, which are really easy for the government to prove, have been kicked up to $250,000 per violation. And the bad news is that they are going to try to apply all of these retroactively. Now, on the criminal side I don't think that's constitutional, but on the civil side it probably is."