The Joplin Globe, Joplin, MO

Business

February 13, 2014

Iranian satellite case in NY takes complex turn

HOPEWELL, Va. — Federal agents intercepted the wealthy Iranian entrepreneur at a U.S. airport, questioned him about his business and charged him with illegal export of American-made satellite equipment to his native country.

Seyed Amin Ghorashi Sarvestani pleaded guilty soon afterward, but changed circumstances now have encouraged him to challenge his 30-month prison sentence.

Since his plea, the federal government has approved for export to Iran the very products he was convicted of helping ship, his lawyers say. Then federal prosecutors in New York told a judge after the sentencing hearing that they had mistakenly exaggerated the equipment’s capabilities. The judge hasn’t moved to change the sentence, though lawyers for both sides are continuing to press their arguments.

Whatever happens, the case illustrates the complexity of laws in which actions banned one year may become legal the next and where one government priority, controlling exports in the name of national security, can brush up against another — in this case, promoting Internet freedom for Iranian citizens.

“I am neither an activist nor politically motivated,” Sarvestani, 47, wrote from prison in an email to The Associated Press explaining his business of providing satellite-based Internet communications to Iran. “I am simply a citizen of the Earth who believe the Internet is a true miracle in mankind history.”

The Justice Department has stepped up enforcement of export restrictions in recent years, winning convictions in the illegal export of microwave amplifiers to China, defense missile batteries to Iran and military aircraft engines to Venezuela, among others. While the U.S. imposes stringent restrictions on doing business in Iran, the “devil is in the details” in this area of law because both regulations and U.S. foreign-policy interests can change, said Chicago attorney Daniel Collins, an export controls expert and former federal prosecutor.

“Knowing what you can and can’t do is not as straightforward as you might think,” he said.

In Sarvestani’s case, there’s no dispute that he broke the law, though he contended in an interview at prison that his crimes were more the result of negligence than intent.

Prosecutors say the millionaire entrepreneur, with an electronics background and diverse business holdings that over the years have included edible oils, marine equipment, pizza shops and food distribution, understood the law and intentionally subverted it through his dealings with interrelated companies in the United Arab Emirates. They say he conspired over the course of several years to ship the technology through other nations to conceal that it was destined for Iran and urged employees to be careful to avoid getting caught. He’s been in custody since his 2012 arrest at Washington’s Dulles International Airport.

On May 30 of last year, three weeks after his guilty plea, the Treasury Department’s Office of Foreign Assets Control legalized for export to Iran smartphones, satellite phones, anti-viral software and other technology related to Internet communication.

The policy change was billed as part of an effort to connect the Iranian public to the world through communications. President Barack Obama, in a March 2012 statement, warned that Iran’s “electronic curtain” was cutting off the country’s citizens from the rest of the world, blamed the government for jamming satellite signals to shut down television broadcasts and said the “freedom to connect with one another” was a basic right.

Collins said that while the administration pursues that goal, there’s a competing concern that communications equipment with multiple uses “can be used for a purpose that might be beneficial, but it also can be misused for a purpose that is detrimental to the United States and, quite frankly, the world’s interest.”

The Justice Department typically focuses on cases involving large quantities of illegal exports and prioritizes nuclear technology, munitions and materials related to weapons of mass destruction, said federal prosecutor Ryan Fayhee, who previously served as the department’s national export control coordinator.

Sarvestani’s lawyer, Bill Coffield, conceded that the new regulations, issued after his client had broken the law, did not negate the crimes. But he urged the judge to take into account that the communications gear was for a private company — not the government or the military — that provided satellite-based Internet access. He said the new export license encompasses the technology Sarvestani provided and said his actions were consistent with U.S. foreign policy. He said prosecutors made a critical error at the sentencing hearing in saying the technology could control an orbiting satellite and therefore wasn’t covered under the new export license.

The government corrected its mistake in a subsequent letter to the judge, saying the devices help in the monitoring and positioning of satellite antennae but do not themselves control satellites, though prosecutors have not taken a position on whether the parts at issue are now legal and say that determination falls within the Commerce Department’s purview and has yet to be made.

The case is unfolding as the Obama administration pursues broad-based export control changes to correct a system the government has said is too complicated. Separately, the U.S. and other global powers are also in talks with Iran on a pact that would stop certain Iranian nuclear activities in exchange for ending sanctions on the Islamic republic.

Experts say the Sarvestani case raises an intriguing policy discussion, even if the new regulations cannot negate his crimes.

“If you export something on Day 1, and Day 15 the government changes the classification of the item based on some regulatory change, you’re still stuck on Day 1,” said former Commerce Department official Christopher Wall, a lawyer focused on export control law.

U.S. District Judge Paul Gardephe has been weighing defense arguments that the prison term was disproportionately harsh and based in part on prosecutors’ mistaken representations. He’s so far appeared disinclined to change the prison sentence, writing in an order last month that his sentence accounted for a broad range of factors, including “the level of deception employed by the defendant, the intentional nature of his acts” and “his high level of sophistication.”

Meanwhile, Sarvestani passes time at his low-security prison reading and speaking with his wife. He says his bank accounts have been closed and his businesses have folded. Though apologetic at his sentencing hearing — “No words can express how guilty I feel,” he said then — he has since struck a more defiant tone in an interview and emails.

“I think it should be consider as one of the strangest fraud cases, if what we did was exactly in line with the U.S. government policies and also it would be against the Iranian government policies!” he wrote.

 

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