Bert Sacks' reply to OFAC (June 17, 2002)
OFAC penalty notice (May 17, 2002)
Bert Sacks' reply to OFAC (December 28, 1998)
OFAC pre-penalty notice (December 3, 1998)
OFAC Nos. IQ-162016 and IQ-162433 December 3, 1998
Dear Ms. Kelly and Messrs. Handelman, Mullins, Sacks, and Zito:
The Office of Foreign Assets Control ("OFAC") has reasonable cause to believe that you and Voices in the Wilderness ("VW") have engaged in certain prohibited transactions, detailed below, relating to the embargo against Iraq in 1997. Inasmuch as no license or approval had been issued by OFAC prior to such transactions, they violated the Iraqi Sanctions Regulations, 31 CFR Part 575 (the "Regulations"), and underlying statutes and Executive orders. See, specifically, §§ 575.204-.207 and 575.211 of the Regulations.
The violations of the regulations and underlying statutes and Executive Orders for which this Notice is issued concern your and VW's exportation of donated goods, including medical supplies and toys, to Iraq absent specific prior authorization by OFAC and transactions relating to travel to Iraq and activities in Iraq. Additionally, the violations involve transactions for the purpose of , or which have the effect of, evading or avoiding, or which facilitate the evasion or avoidance of any of the prohibitions of the Regulations, as well as a conspiracy formed for the purpose of engaging in transactions prohibited by the Regulations. In this regard, VW has organized members to deliver goods to Iraq in violation of the embargo and made express statements of the organization's knowledge of its violative actions. As to Messrs. Handleman and Mullins, the violations also concern the importation of goods and services of Iraqi origin. Specifically, the violations are as follows:
1. In March 1996, VW exported goods, including medical supplies, valued at approximately $18,000, to Iraq absent prior specific license or other authorization issued by OFAC;
2. In August 1996, VW exported goods, including medical supplies, valued at approximately $8,000, to Iraq absent prior specific license or other authorization issued by OFAC;
3. In November 1996, VW exported goods, including medical supplies, valued at approximately $10,000, to Iraq absent prior license or other authorization issued by OFAC;
4. In November 1997, VW exported goods, including medical supplies and toys, valued at approximately $30,000-40,000, to Iraq absent prior license or other authorization issued by OFAC;
5. On or about November 21, 1997, Mr. Handelman exported film and videotape to Iraq, through Jordan;
6. Between on or about November 21-30, 1997, Messrs. Handelman, Mullins, Sacks, and Zito, engaged in currency travel-related transactions to/from/within Iraq absent prior license or other authorization from OFAC. These currency transactions included, but are not limited to, the purchase of food, lodging, ground transportation, and incidentals;
7. On December 3, 1997, Mr. Handelman imported goods and/or services, into the United States at Detroit, Michigan. Upon entry of the goods, the Untied States Customs Service ("USCS") seized them (District Case Nos. 98-3801-000235). The goods included an Iraqi water bottle label, an Iraqi stamp, photographic film, video and audio tapes and/or cassettes, postcards, and assorted papers;
8. On December 3, 1997, Mr. Mullins imported goods and/or services, into the United States at Detroit, Michigan. Upon entry of the goods, the USCS seized them (District case No. 98-3801-00238). The goods included a necklace, a wooden drum, audio tapes, a computer disc, notebooks, pictures, and miscellaneous papers and cards;
9. In July 1998, VW exported goods to Iraq absent prior specific license or other authorization issued by OFAC; and
10. In September 1998, VW exported goods, including medical supplies, to Iraq absent prior specific license or other authorization issued by OFAC.
Section 206 of IEEPA, 50 U.S.C. § 1705, provides, in part, for a civil penalty not to exceed $10,000 per violation. section 586E of the Iraq Sanctions Act of 1990, PL.101-513, 104 Stat. 2049, provides, in part, for a civil penalty not to exceed $250,000 for each violation occuring after Nov. 5 1990*. See, Regulations § 575.701. Pursuant to § 575.702 of the Regulations, you are hereby notified that OFAC intends to issue a claim against each of you and VW for a monetary penalty in the amounts set forth below:
As to VW : $120,000, computed at $20,000 for each Counts 1-4, 9 and 10
As to Mr. Handelman: $12,000, computed at $1,000 for each of Counts 5 and 7, plus $10,000 for Count 6
As to Mr. Mullins: $11,000, computed at $1,000 for Count 8, plus $10,000 for Count 6
As to Mr. Sacks: $10,000 for Count 6
As to Mr. Zito: $10,000 for Count 6
With respect to the disposition of goods seized in the above-cited USCS District Cases from Messrs. Handelman and Mullins, we recommend that, inasmuch as goods have been involved in the violation of U.S. law by U.S. persons, such goods be forfeited to the United States in accordance with USCS procedures.
Election of Proceedings:
1. You have the right to make a written presentation to FAC within thirty (30) days of the mailing of this Notice. Such written presentation in response to this Notice need not be in any particular form, but it should contain a response to the allegations herein, and set forth the reasons why the penalty should not be issued, or if issued, why the amount should be less than proposed in this Notice. Such response should be addressed to the Office of Foreign Assets Control (Attention: Civil Penalties), U.S. Department of the Treasury, 1500 Pennsylvania Avenue, N.W., Washington, D.C. 20220.
2. In the event that you elect not to respond, OFAC will conclude that you have decided not to submit any new facts or explanations for our consideration. In such instance, OFAC will issue a Penalty Notice in accordance with § 575.704 (b) of the Regulations, finding a violation and assessing a penalty generally in the amount proposed herein.
3. Should you elect to resolve this matter informally absent any final agency finding of violation, you may initiate settlement negotiations by telephoning the OFAC staff member named below under "Contact Person" at any time before you are issued a Penalty notice. If the negotiations result in settlement, you are not required to make a written response to this Notice, which will be withdrawn without a formal determination of violation, provided settlement occurs within the time period set in this Notice.
Section 575.705 of the Regulations provides that this matter shall be referred to the United States Department of Justice for collection if the penalty is not paid within thirty (30) days of the mailing of a Penalty Notice, should one be issued imposing a penalty pursuant to § 575.704 of the Regulations. Prior to such referral, OFAC may undertake administrative collection through the Office of Financial Management of the U.S. Treasury Department.
In view of the short response time, if you have any questions concerning this matter, please feel free to contact the appropriate member of my staff, Mrs. B.S. Scott, Chief, Civil Penalties program, at telephone number (202) 622-6140.
R. Richard Newcomb
Office of Foreign Assets Control
*Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub.L. 101-410, 104 Stat. 890, 28 U.S.C. 2461 note), as amended by the debt Collection Improvement Act of 1996 (Pub.L. 104-134, sec. 31001 (s)1), Apr. 26, 1996, 110 Stat. 1321-373 -- jointly, the "FCPIA"), requires each Federal agency with statutory authority to assess civil monetary penalties ("CMPs") for inflation according to a formula described in § 5 of the FCPIA. Accordingly, on October 23, 1996, OFAC published in the Federal register the required amendment, effective October 21, 1996, to the Regulations adjusting its CMP to $275,000. See 61 FR 54936 at 54939.
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