November 19, 2019

November 18, 2019

Subscribe to Latest Legal News and Analysis

Export Controls Action by the U.S. Department of State Relating to H-1B Visa Holder

Between December 2009 and June 2010, a Chinese national and H-1B visa holder working at Microwave Engineering Corporation, a U.S. company located in Massachusetts, (Microwave) was provided with technical data which otherwise would have required a license from the U.S. State Department’s Directorate of Defense Trade Controls (DDTC).  Specifically, the technical data to which the Chinese national employee was provided access is a defense article that is controlled for export from the United States under the International Traffic in Arms Regulations (ITAR).  DDTC is responsible for licensing exports and reexports of defense articles, defense services, and technical data.  Providing a non-U.S. person with access to ITAR-controlled technical data, even if the non-U.S. person is located in the United States, is deemed an export under the U.S. export laws and regulations (deemed export), and generally requires DDTC authorization.

During the time period noted above, the president of Microwave and other individuals repeatedly provided the H-1B visa holder with ITAR-controlled technical data, activity which would generally require a license under the ITAR. This particular instance is further compounded because the H-1B visa holder is a Chinese national, and the U.S. maintains an arms embargo with the People’s Republic of China.  Further, during the time in which the unauthorized exports occurred, Microwave was working under a Technology Control Plan (TCP) approved by the Defense Security Service which stated that no foreign person could be provided access to classified material or unclassified information that involved the disclosure of export-controlled technical data.

Microwave self-disclosed the violation to DDTC in early 2012, which led to the State Department charging Microwave with a single violation of the Arms Export Control Act (AECA) and the ITAR.

On June 22, 2016, the State Department announced it had entered into Consent Agreement with Microwave whereby Microwave agreed to pay a $100,000 civil penalty. In assessing the penalty, the State Department took into account the violation itself as well certain inadequacies with Microwave’s export compliance program.

As mitigating factors, DDTC took into account Microwave’s submission of a voluntary self-disclosure, cooperation with the DDTC, and implementation of extensive remedial measures. In the Consent Agreement, DDTC specifically noted that these mitigating factors directly contributed to Microwave not being subject to more harsh penalties, such as debarment.

DDTC’s response to Microwave’s violation highlights the importance of a rigorous export compliance program when dealing with export-controlled items, services and technical data, especially when employing foreign nationals. Activity such as merely discussing certain technical information with a foreign national may be prohibited under the various U.S. export control laws and regulations.

©2019 Greenberg Traurig, LLP. All rights reserved.

TRENDING LEGAL ANALYSIS


About this Author

Dillon Colucci, Greenberg Traurig Law Firm, Los Angeles, Immigration Law Attorney
Associate

Dillon R. Colucci practices and handles U.S. immigration concerns and helps individuals, families, professionals, skilled workers, investors, and businesses live, work, invest and do business in the United States. Dillon works extensively on EB-5 immigrant investor matters. He regularly works with developers across a variety of industries, as well as private equity funds on developing new projects that qualify for EB-5 investments. This includes the creation of new Regional Centers, having projects adopted by existing Regional Centers or through pooled individual EB-5...

310-586-7749
Cyril Brennan, Greenberg Traurig Law Firm, Washington DC, International Trade Law Attorney
Shareholder

Cyril (Cy) Brennan focuses his practice on international trade regulation and compliance, with an emphasis on U.S. export controls and economic sanctions. Cy handles matters regarding the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), U.S. sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s anti-boycott regulations. In addition, he represents clients before the Committee on Foreign Investment in the United States (CFIUS), and advises clients on the Foreign Corrupt Practices Act (FCPA), the foreign direct investment reporting requirements of the Bureau of Economic Analysis (BEA), and other trade and investment-related regulations in the context of mergers and acquisitions.

Concentrations

  • Export controls and economic sanctions

  • Committee on Foreign Investment in the United States (CFIUS)

  • Anticorruption compliance

  • Foreign direct investment reporting

  • Regulatory due diligence

  • Foreign ownership, control or influence (FOCI)

202-533-2342
Renee Latour, Greenberg Traurig Law Firm, Washington DC, Corporate Law Attorney
Shareholder

Renee A. Latour focuses her practice on international trade regulation with an emphasis on compliance with U.S. export controls and economic sanctions. Renee assists clients on matters related to international trade that arise under the jurisdiction of various U.S. governmental agencies, including the Departments of Commerce, State, Treasury, and Defense. She advises on U.S. export control laws, anti-boycott laws and special sanctions maintained by the U.S. Government against various countries including Iran, Cuba and Sudan.

Renee also assists...

202-533-2358