Tetrabal Corporation, Inc., 605 Trail Lake Drive, Richardson, Texas 75081 and Ihsan Medhat “Sammy” Elashi, 316 Candlewood Place, Richardson, Texas 75081; Related persons—Appellants.
Decision and Order
On November 2, 2001, the Administrative Law Judge (hereinafter the “ALJ”) issued a Recommended Decision and Order in the above-captioned matter. The Recommended Decision and Order, a copy of which is attached hereto and made a part hereof, has been referred to me for final action. The Recommended Decision and Order sets forth the procedural history of the case, the facts of the case, and the detailed findings of fact and conclusions of law. The findings of fact and conclusions of law concern whether Tetrabal Corporation, Inc. (“Tetrabal”) and Ihsan Medhat “Sammy” Elashi (“Elashi”) are “related persons” to Infocom Corporation, Inc. (“Infocom”). The findings of fact and conclusions of law also concern whether the issuance Start Printed Page 58113of the September 6, 2001 order by the Assistant Secretary for Export Enforcement temporarily denying the export privileges of Tetrabal and Elashi because they are “related persons” to Infocom is justified and necessary to prevent evasion of that order.
Based on my review of the record and pursuant to § 766.23(c) of the Export Administration Regulations (15 CFR 766.23(c)), I affirm the ALJ's finding that Tetrabal and Elashi are “related persons” to Infocom as that term is defined in 15 CFR 766.23. Moreover, I affirm the ALJ's finding that the order issued by the Assistant Secretary for Export Enforcement of September 6, 2001 denying the export privileges of Tetrabal and Elashi because they are “related persons” to Infocom is justified and necessary to prevent evasion of that order. Accordingly, the ALJ's Recommended Decision and Order is affirmed, the September 6, 2001 temporary denial order issued by the Assistant Secretary of Commerce for Export Enforcement is affirmed, and the appeal filed by Tetrabal and Elashi is denied.
This order is effective immediately.Start Signature
Dated: November 10, 2001.
Kenneth I. Juster,
Under Secretary of Commerce for Export Administration.
In the matter of: Tetrabal Corporation, 605 Trail Lake Drive, Richardson, Texas 75081
Ihsan Medhat “Sammy” Elashi, 316 Candlewood Place, Richardson, Texas 75081, Related persons—Appellants
Before: Hon. Joseph N. Ingolia, Chief Administrative Law Judge, United States Coast Guard; Recommended Decision
(I) Preliminary Statement
This appeal is taken by Tetrabal Corporation (“Tetrabal”) and, its Chief Executive Officer and sole owner, Ihsan Medhat “Sammy” Elashi in accordance with the Bureau of Export Administration (“BXA” or “Agency”) laws and regulations codified at 50 U.S.C. app. sec. 2412(d) and 15 CFR 766.23 and 766.24.
Pursuant to 50 U.S.C. app. sec. 2412(d), 5 U.S.C. 3344, 5 CFR § 930.213, a letter dated October 15, 2001 from the United States Office of Personnel Management, and an interagency agreement entered into between the Coast Guard and BXA, the United States Coast Guard Administrative Law Judge Program has authority to adjudicate cases brought under the Export Administration Act of 1979 (“EAA” or “Act”) codified at 50 U.S.C. app. sec. 2401-2420 (1994 & Supp. IV 1998), and the underlying procedural regulations codified at 15 CFR part 766.
(II) Procedural Background
By order dated September 6, 2001, the Assistant Secretary for Export Enforcement (“Secretary) temporarily denied for a period of 180 Days (“Temporary Denial Order”) all U.S. export privileges of Infocom Corporation, Inc. (“Infocom) and various closely related persons, including Tetrabal Corporation, Ihsan Medhat “Sammy” Elashi, and five other natural persons, who are all interconnected by ownership, control, or affiliation with Infocom. The Secretary found that:
(1) Infocom deliberately and covertly committed repeated violations of the Export Administration Regulations (“EAR”) between 1997 and 2000 by making three shipments and attempting to ship computer equipment to Libya and Syria without obtaining required BXA export licenses, and by attempting to conceal the shipments to Librya and Syria by undervaluing the goods and by filing false and deceptive shipping documents;
(2) Infocom's principals have actively sought to engage in further export transactions; and
(3) Given the nature of the item shipped, future violations could go undetected.
Based on the aforementioned, the Secretary determined that a temporary denial order issued on an ex parte basis, without a hearing, was necessary and in the public interest to preclude future EAR violations. The Temporary Denial Order was served on Infocom and all related persons by mail on September 7, 2001, and was published in 66 FR 47630 on September 13, 2001.
On October 3, 2001, the United States Coast Guard Administrative Law Judge Docketing Center (“ALJ Docketing Center”) received a letter dated September 28, 2001, appealing the temporary denial of export privileges. A copy of the letter was not served on BXA. The Appellants Tetrabal and Mr. Ihsan Elashi were advised that the appeal would not be considered perfected and action would not be taken until BXA was served with a copy of the letter.
On October 10, 2001, BXA notified the ALJ Docketing Center that the appeal had been received. BXA filed an opposition to the appeal on October 17, 2001.
In this case, the appeal was considered perfected once BXA was served with a copy of the appeal letter on October 10, 2001. Thus, pursuant to the time limitations established in 15 CFR § 766.24(e)(4), the recommended decision in the case was to be issued on October 24, 2001. However, since Respondent Elashi supplemented his appeal on October 22nd, two days before the recommended decision was going to be issued, by filing a response to BXA's answer, the time period for issuing the recommended decision was extended in order to allow BXA an opportunity to file a response. BXA filed a reply to the Appellants' supplemental pleading on October 30, 2001. The appellate record is now closed and the appeal is now ripe for decision.
Upon careful review of the pleadings and documentary evidence in this case, I recommend that the appeal filed by Tetrabal Corporation and Ihsan Mehat “Sammy” Elashi be Denied, and the Temporary Denial Ordered issued by the Affirmed.
(III) Findings of Fact
1. Infocom Coporation, Inc. is a reseller of computers and computer-related equipment, which was incorporated in the State of Texas on March 16, 1992 by Mr. Bayan Medhat Elashi. (Agency's Opposition to Appeal, Exhibit 2).
2. Infocom is located at 630 International Parkway, Suite 100, Richardson, Texas, (Id.).
3. Mr. Bayan Elashi is the owner and Chief Executive Officer of Infocom. (Id.).
4. Infocom is operated by: (a) Mr. Bayan Elashi; (b) his mother Fadwa Elafrangi, who serves as majority owner; and (c) his four brothers; (i) Ghassan Elashi, Vice President of Marketing; (ii) Basman Medhat Elashi, Logistics Manager; (iii) Hazin Elashi, Manager of Personal Computers Division; and (iv) Start Printed Page 58114Appellant Ihsan Medhat (“Sammy” Elashi, Systems Consultant, (Id.; Agency's Opposition to Appeal, Exhibit 1).
5. Appellant Ihsan Elashi is a United States citizen, who resides at 316 Candlewood Place, Richardson, Texas. He is the father of four boys, ranging in ages from 1 to 8 years old. (Agency's Opposition to Appeal, Exhibit 2; Appellants' Supplemental Pleading).
6. Appellant Ihsan Elashi was employed by Infocom until sometime well into 2000 and was very active in Infocom's business. (Agency's Opposition to Appeal, Exhibit 2; Appellants' Supplemental Pleading).
7. Computer parts and accessories are regularly shipped to Infocom at Appellant Ihsan Elashi's home address. (Id.; Agency's Reply to Appellants' Supplemental Pleading, Exhibit 2, 4-12).
8. Infocom uses Appellant Ihsan Elashi's home address on preprinted domestic and international Federal Express shipping labels. (Id.).
9. Infocom does not possess a license from either BXA or the Department of Treasury's Office of Foreign Assets Control to export or re-export computers or computer-related equipment to Libya or Syria. (Agency's Opposition to Appeal, Exhibit 1 and 2).
10. In February of 1997, Mr. Ihsan Elashi of Infocom knowingly sold computer equipment to Yousef Elamri, the director, shareholder, and representative of Computers & Information Technology, Ltd., a Libyan based company that has a presence in Malta. (Agency's Opposition to Appeal, Exhibit 2; Agency's Reply to Appellants' Supplemental Pleading, Exhibit 1, 12 and 13).
11. Mr. Ihsan Elashi had direct telephone contact with Mr. Elamri in Libya in February of 1997 and arranged for the computer equipment to be shipped to SMS Air Cargo (“SMS”), a freight forwarder in Valletta, Malta, and thereafter redirected to Libya. (Agency's Reply to Appellants' Supplemental Pleading, Exhibit 1 and 12).
12. Infocom shipped the computer equipment to SMS in Malta on March 5, 1997. (Agency's Opposition to Appeal, Exhibit 2).
13. The Shipper's Export Declaration (“SED”), which was signed by Basman Elashi, identified SMS as the ultimate consignee of the goods when, in fact, the true ultimate consignee was Computers & Information Technology, Ltd. in Libya. (Id.).
14. The computer equipment arrived in Malta on March 17, 1997 and was immediately loaded on a ferry and shipped to Tripoli, Libya on March 20, 1997. (Id.).
15. Tetrabal Corporation is a computer and computer-related equipment reseller that was incorporated by the Appellant Ihsan Elashi on July 20, 2000. (Agency's Opposition to Appeal, Exhibit 2; Appellants' Supplemental Pleading).
16. Mr. Ihsan uses his home address as the business address for Tetrabal. He also uses the following addresses in letters and other correspondence: (a) 605 Trail Lake Drive, Richardson, Texas 75081; and (b) 908 Audelia Rd, Suite 200, PNB# 245, Richardson, Texas 75081.
17. Tetrabal and Infocom conduct business with the same vendors that sell computers and computer-related equipment to both companies. (Id.).
18. Tetrabal and Infocom maintain the same customers and business contacts. (Id.).
19. Tetrabal has, on at least three occasions, sold computer products and equipment to Infocom on several occasions. (Id.).
20. On September 6, 2001, the Assistant Secretary for Export Enforcement issued an order temporarily denying all export privileges of Infocom, Appellant Tetrabal, Bayan Elashi, Ghassan Elashi, Basman Elashi, Appellant Ihsan Elashi, Hazim Elashi, and Fadwa Elafrangi for a period of 180 days upon finding that Infocom and its corporate officers and employees illegally shipped computer equipment between 1997 and 2000 to Libya and Syria without the required export licenses, and the company attempted to conceal the shipment by undervaluing the goods and filing false SEDs. (Agency's Opposition to Appeal, Exhibit 1).
21. On September 19, 2001, thirteen days after the Temporary Denial Order was issued, Appellant Ihsan Elashi delivered a Tetrabal Corporation check to Salinas International Freight, a freight forwarder in Dallas, Texas, to pay for shipment of 82 computers to Saudi Arabia, which was previously ordered from Dell on August 20, 2001 and sent to the freight forwarder on August 30, 2001. Upon receiving payment, Salinas International Freight exported the computers on September 22, 2001. Tetrabal undervalued the goods in this shipment on the SEDs. (Agency's Opposition to Appeal, Exhibit 2; Agency's Reply to Appellants' Supplemental Pleading, Exhibit 3; Appellants' Supplemental Pleading).
22. In a letter dated September 28, 2001 that was addressed to Ingram Micro, Inc., a computer product vendor and drafted by an employee or representative of Ingram Micro, Inc., Appellant Ihsan Elashi certified, by signing the letter, that he represents Infocom Corp. and Tetrabal Corp and all related persons cited in the Temporary Denial Order and Provides assurances that all products purchased from Ingram Micro, Inc. are intended for use or resale within the United States and will not be exported or re-exported except by express authorization of the U.S. Government. (Agency's Opposition to Appeal, Exhibit 2 and 3; Appellants' Supplemental Pleading).
23. Infocom has now shifted its business efforts to being an Internet service provider, while Tetrabal maintains the computer sales business. (Agency's Opposition to Appeal, Exhibit 2).
(IV) Ultimate Findings of Fact and Conclusions of Law
1. Appellants Tetrabal Corporation and Ihsan Medahat “Sammy” Elashi are related persons to Infocom Corporation, Inc. within the meaning of 15 CFR 766.23.
2. The Temporary Denial Order issued by the Assistant Secretary for Export Enforcement is justified and necessary to prevent evasion.
In support of foreign policy against terrorism, BXA and the Department of Treasury's Office of Foreign Assets Control has established comprehensive controls on export and re-export of goods to Libya and Syria from the United States. Virtually all exports and re-exports of U.S. origin goods, technology, or services to Libya are prohibited, unless specifically authorized. See 15 CFR 764.4; see also 31 CFR 550.202 and 550.409. A license is specifically required for the export and re-export from the United States to Libya of virtually all items, except, among other things, “publications and donated articles intended to relieve human suffering, such as food, clothing, medicine and medical supplies intended strictly for medical purposes.” 31 CFR 550.202; see also 15 CFR 764.4(b)(1) and (2). Similarly, for anti-terrorism purposes, a license is required for the export and re-export of certain goods, such as computer equipment (ECCN 3A001), to Syria. 15 CFR 742.9 and 774, Supp. 1.
The Assistant Secretary for Export Enforcement has authority to issue a temporary denial order on an ex parte basis “upon a showing by BXA that the order is necessary in the public interest to prevent an imminent violation of the EAA, the EAR, or any order, license or authorization issued thereunder.” 15 Start Printed Page 58115CFR 766.24(b). The Temporary Denial Order may be issued against a respondent and any “related persons.” 15 CFR 766.23(a) and 766.24(c). The term “related persons” is defined as “persons then or thereafter related to the respondent by ownership, control, position of responsibility, affiliation or other connection in the conduct of trade or business.” 15 CFR 766.23(a). “Person” is defined in the EAA as any individual, partnership, corporation, or other form of association. 50 U.S.C. App. sec. 2415(1).
In these proceedings, a “related person” may file an appeal with the administrative law judge. 15 CFR 766.23(c). The sole issues to be decided on appeal by the administrative law judge are: (a) Whether the person(s) is related to the respondent; and (b) whether the order is justified in order to prevent evasion. Id.
The facts in this case establish that Tetrabal and Ihsan Elashi are related persons within the meaning of 15 CFR 766.23(a) and the Temporary Denial Order is justified in order to prevent evasion.
I. Tetrabal Corporation and Ihsan Elashi Are Related Persons to Infocom
The Appellants' argument that Tetrabal Corporation and Ihsan Elashi are separate entities and there is no relationship with Infocom is rejected. The Temporary Denial Order and the documentary evidence submitted by BXA on appeal clearly establish an intimate business relationship between Infocom, Tetrabal Corporation, and Mr. Ihsan Elashi. Tetrabal Corporation and Mr. Ihsan Elashi are affiliated or interconnected with Infocom.
Mr. Bayan Elashi incorporated Infocom on March 16, 1992 and employed his brother, Ihsan Elashi to serve as the Systems Consultant. Mr. Ihsan Elashi worked for Infocom well into 2000 and represented Infocom until well after the issuance of the Temporary Denial Order on September 7, 2001. There is no evidence to support a finding that Mr. Ihsan Elashi was a mere employee.
To the contrary, Mr. Ihan Elashi was very active in Infocom's business. For instance, in March of 1997, Mr. Ihsan Elashi directly participated in the illegal and fraudulent sale and export of computer equipment to Libya, through Malta, without first obtaining the required BXA export license. He also used his home address on preprinted Federal Express shipping labels for Infocom and regularly accepted shipment of goods to his home address on behalf of Infocom.
Furthermore, after Ihsan Elashi incorporated Tetrabal Corp. on July 20, 2000, he continued to maintain an intimate business relationship with Infocom. Infocom and Tetrabal both shared use of Mr. Ihsan Elashi's home address for shipment and other purposes. The two companies maintain common computer vendors and customers. In addition, Tetrabal has sold computer components and equipment to Infocom on at least three occasions. Moreover, on September 28, 2001, Mr. Ihsan Elashi provided a written statement to Ingram Micro, Inc indicating that he represents Infocom, Tetrabal, and all related persons identified in the Temporary Denial Order.
There is no evidence that the statement in the September 28, 2001 letter was made under duress or that Mr. Ihsan Elashi was otherwise forced to make the statement. The mere fact that Ingram Micro, Inc. drafted the September 28, 2001 letter that was provided to Mr. Ihsan Elashi by electronic mail for signature is, by itself, insufficient to establish duress.
II. The Temporary Denial Order Is Justified
BXA has established that the Temporary Denial Order is justified. BXA procedural regulations provide that a Temporary Denial Order may be issued to prevent an “imminent” violation of export laws, regulations, or any order, license, or authorization issued thereunder. 15 CFR 766.24(b)(1). The procedural regulations provide:
A violation may be “imminent” in either time or in degree of likelihood. To establish grounds for the temporary denial order, BXA may show either that a violation is about to occur, or that the general circumstances of the matter under investigation or case under criminal or administrative charges demonstrate a likelihood of future violations. To indicate the likelihood of future violations, BXA may show that the violation under investigation or charges is significant, deliberate, covert and/or likely to occur again, and that it is appropriate to give notice to companies in the United States and abroad to cease dealing with the person * * * in order to reduce the likelihood that a [the] person continues to export * * * (U.S.-origin) items, risking subsequent disposition contrary to export control requirements.
15 CFR 766.24(b)(3).
In this case, BXA has established that because of the deliberate and covert nature of the Appellants' actions, there exists a likelihood of future violations. The record shows that Infocom has recently focused its business efforts on being an Internet service provider while Mr. Ihsan Elashi and Tetrabal maintains the computer sales business. The purpose of the regulations that authorize the issuance of Temporary Denial Orders against related persons is to prevent respondents from evading the order by using an alter ego to conduct and continue exporting goods and other items. The record shows that Mr. Ihsan Elashi and Tetrabal have a propensity to commit future violations of the export regulations. As a matter of fact, on September 22, 2001, Mr. Ihsan Elashi, doing business as Tetrabal, violated the Temporary Denial Order, issued several weeks earlier, by exporting 82 personal computers to Saudi Arabia and undervaluing the goods on the SED. This most recent violation lends further justification for the Temporary Denial Order.
For the reasons stated above, I recommend that the appeal filed by Tetrabal Corporation and Ihsan Medhat “Sammy” Elashi be Denied, and the Temporary Denial Order issued by the Secretary be Affirmed.Start Signature
Done and dated this 2nd day of November 2001, Baltimore, Maryland.
Joseph N. Ingolia,
Chief Administrative Law Judge, United States Coast Guard.
1. The Export Administration Regulations codified at 15 CFR parts 730-774 were enacted in accordance with the Export Administration Act of 1979, as amended, which lapsed on August 20, 2001. However, pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706 (1994 & Supp. IV 1998)), the President, through Executive Order 13,222 of August 17, 2001 (66 FR 44,025 (Aug. 22, 2001)), has continued the Regulations in full force and effect.Back to Citation
1. The Appellant's appeal letter dated September 28, 2001 maintained that the address for Tetrabal Corp. is 908 Audelia Rd., Suite 200, PMB #245, Richardson, Texas 75801. The return address on the envelope accompanying the appeal letter maintained that the address is 605 Trail Alke Drive, Richardson, Texas 75801. On October 22, 2001, Appellant Ihsan Elashi verified that the true address for Tetrabal Corp. is 605 Trail Lake Drive, Richardson, Texas 78501.Back to Citation
2. The Appellants have used several different spellings for “Elashi” including: El Ashi, Elashye, Ashi, and Elashyi.Back to Citation
3. The Export Administration Regulations codified at 15 CFR part 766 were enacted in accordance with the EAA. The Act lapsed on August 20, 2001. However, pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706 (1994 & Supp. IV 1998)), the President, through Executive Order 13222 of August 17, 2001 (66 FR 44025 (August 22, 2001)), has continued the Regulations in full force and effect.Back to Citation
[FR Doc. 01-28940 Filed 11-19-01; 8:45 am]
BILLING CODE 3510-JT-M