Action Affecting Export Privileges; Dmitry N. Chernyshenko; Decision and Order

DEPARTMENT OF COMMERCE

Bureau of Export Administration

Action Affecting Export Privileges; Dmitry N. Chernyshenko;

Decision and Order

In the Matters of: Dmitry N. Chernyshenko, Director, SFT

Advertising Agency, 35 Altufievskoe Avenue, Moscow, 127410, Russia,

and SFT Advertising Agency, 35 Altufievskoe Avenue, Moscow, 127410,

Russia, Respondents.

On May 14, 1998, the Office of Export Enforcement, Bureau of Export

Administration, United States Department of Commerce (hereinafter

``BXA''), issued separate charging letters initiating administrative

proceedings against Dmitry N. Chernyshenko and SFT Advertising Agency,

(hereinafter) ``Chernyshenko'' and ``SFT'').\1\ The charging letters

alleged that Chernyshenko and SFT each committed three violations of

the Export Administration Regulations (currently codified at 15 CFR

Parts 730-774 (1999)) (hereinafter the ``Regulations''),\2\ issued

pursuant to the Export Administration Act of 1979, as amended (50

U.S.C.A. app. Secs. 2401-2420 (1991 & Supp. 1998)) (hereinafter the

``Act'').\3\

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\1\ In light of the fact that the enforcement proceedings

against Chernyshenko and SFT arose out of the same transaction, and

as the evidence supporting BXA's allegations in both cases is the

same, BXA has consolidated the proceedings and filed a single

default submission.

\2\ The violations at issue occurred in 1993. The Regulations

governing those violations are found in the 1993 version of the Code

of Federal Regulations (15 CFR Parts 768-799 (1993)) and referred to

hereinafter as the former Regulations. Since that time, the

Regulations have been reorganized and restructured; the restructured

Regulations establish the procedures and apply to these matters.

\3\ The Act expired on August 20, 1994. The Executive Order

12924 (3 CFR, 1994 Comp. 917 (1995)), extended by Presidential

Notices of August 15, 1995 (3 CFR, 1995 Comp. 501 (1996)), August

14, 1996 (3 CFR, 1996 Comp. 298 (1997)), August 13, 1997 (3 CFR,

1997 Comp. 306 (1998)), and August 13, 1998 (3 CFR, 1998 Comp. 294

(1999)), continued the Regulations in effect under the International

Emergency Economic Powers Act (50 U.S.C.A. Secs. 1701-1706 (1991 &

Supp. 1999)).

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Specifically, the charging letters alleged that, beginning in March

1993 and continuing through September 1993, Chernyshenko and SFT

engaged in a scheme to cause the export of a Hewlett-Packard Apollo

Model 735 Workstation with a 99 MHz PA RISC processor chip (hereinafter

collectively referred to as ``HP-Workstation'') from the United States

through Germany to Russia, the ultimate destination, without first

obtaininig the authorizations that Chernyshenko and SFT knew or had

reason to know were required. BXA alleged that, by ordering commodities

exported or to be exported from the United States, and that, by

financing that transaction, with knowledge or reason to know that a

violation of the Act, or any regulation, order, or license issued

thereunder occurred, was about to occur, or was intended to occur with

respect to the transaction, both Chernyshenko and SFT violated Section

787.4(a) of the former Regulations.

Furthermore, the charging letters alleged that, in connection with

that transaction, on or about May 14, 1993, using a German business

affiliate's stationery and signing that affiliate's president's name

without his permission, Chernyshenko, acting in his capacity as

Director of SFT, drafted a letter of assurance which stated, among

other things, that the HP-Workstation would not be shipped outside GCT-

eligible countries, without prior authorization from the appropriate

national authorities and, in particular, that ``this workstation [will

not be reexported] from Germany to Russia or any other portion of the

former Soviet Union without the permission of the U.S. Commerce

Department.'' BXA alleged that, by falsifying information in

[[Page 40818]]

the letter of assurance, both Chernyshenko and SFT (through

Chernyshenko, its Director) concealed material facts directly or

indirectly from a United States agency for the purpose of or in

connection with effecting an export from the United States, and thereby

violated Section 787.5(a) of the former Regulations.

Finally, the charging letters alleged that, in connection with the

transaction and the activities described above, on or about July 20,

1993, both Cherynshenko and SFT caused, counseled or induced a third

party to state on a Shipper's Export Declaratio, an export control

document as defined in Section 770.2 of the former Regulations, that

the shipment of the HP-Workstation was authorized for export from the

United States to Germany under General License GCT, when in fact the

shipment required a validated license, as the HP-Workstation was

ultimately destined for Russia. BXA alleged that, in so doing, both

Chernyshenko and SFT caused, counseled, or induced the making of a

false statement of material fact either directly or indirectly to a

United States agency on an export control document, an act prohibited

by Section 787.5(a) of the former Regulations, and thereby violated

Section 787.2 of the former Regulations.

BXA presented evidence that the changing letters were served on

Chernyshenko and SFT. Neither Chernyshenko nor SFT has answered the

charging letters, as required by Section 766.7 of the Regulations, and

each respondent is therefore in default. Thus, pursuant to Section

766.7 of the Regulations, BXA moved that the Administrative Law Judge

(hereinafter the ``ALJ'') find the facts to be as alleged in the

charging letters and render a Recommended Decision and Order.

Following BXA's motion, the ALJ issued a Recommended Decision and

Order in which he found the facts to be as alleged in the charging

letters, and concluded that those facts constitute three violations of

the former Regulations by both Chernyshenko and SFT, as BXA alleged.

The ALJ also agreed with BXA's recommendation that the appropriate

penalty to be imposed for those violations is that Chernyshenko and SFT

each be denied all U.S. export privileges for a period of 10 years. As

provided by Section 766.22 of the Regulations, the Recommended Decision

and Order has been referred to me for final action.

Based on my review of the entire record, I affirm the findings of

fact and conclusions of law in the Recommended Decision and Order of

the ALJ.

Accordingly, it is therefore ordered,

First, that, for a period of 10 years from the date of this Order,

Dmitry N. Chernyshenko, Director, SFT Advertising Agency, 35

Altufievskoe Avenue, Moscow, 127410 Russia, and SFT Advertising Agency,

35 Altufievskoe Avenue, Moscow, 127410 Russia, and all of SFT's

successors, assigns, officers, representatives, agents and employees

when acting for or on behalf of SFT, 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, 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. Benefiting 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.

Second, that no person may, directly or indirectly, do any of the

following:

A. Export or reexport to or on behalf of either denied person any

item subject to the Regulations;

B. Take any action that facilitates the acquisition or attempted

acquisition by either 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 either 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 either denied person or any item subject

to the Regulations that has been exported from the United States;

D. Obtain from either 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 that is owned, possessed or controlled by either denied person, or

service any item, of whatever origin, that is owned, possessed or

controlled by either 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.

Third, that, after notice and opportunity for comment as provided

in Section 766.23 of the Regulations, any person, firm, corporation, or

business organization related to either 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

this Order.

Fourth, 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 foreign-produced

direct product of U.S.-origin technology.

Fifth, that this Order shall be served on both Chernyshenko and

SFT, as well as on BXA, and shall be published in the Federal Register.

This Order, which constitutes the final agency action in this

matter, is effective immediately.

Dated: July 21, 1999.

William A. Reinsch,

Under Secretary for Export Administration.

[FR Doc. 99-19248 Filed 7-27-99; 8:45 am]

BILLING CODE 3510-DT-M