Bush Administration Freezes Iranian Money

The Bush administration has moved to financially clamp down on a general in Iran's nationally powerful military wing, a Syrian TV station, and three other individuals accused of helping insurgents in Iraq.^[1] The Treasury Department's action means that any bank accounts or other financial assets found in the United States belonging to those named must be frozen, and Americans also are prohibited from doing business with them.^[2]

Ahmed Foruzandeh, a brigadier general in Iran's Revolutionary Guard Corps' Quds Force was one of the people named in the department's order.^[3] The Quds Force, Iran's special operations unit, is part of the Guard Corps, the country's military wing.^[4] The United States asserts that Foruzandeh and his associates provided financial and material support for violent acts against U.S.-led coalition forces in Iraq as well as Iraqi security forces.^[5]

''Iran and Syria are fueling violence and destruction in Iraq….Iran trains, funds and provides weapons to violent Shia extremist groups, while Syria provides safe haven to Sunni insurgents and financiers,'' said Stuart Levey, Treasury's under secretary for terrorism and financial intelligence.^[6]

Also mentioned in the order was Abu Mustafa al-Sheibani, the asserted leader of a network of Shia extremists that provide logistical and material support for acts of violence in Iraq; Ismail Hafiz al Lami, accused of directing acts of violence against Iraqi civilians, and Mishan Rakin Thamin al-Jaburi.^[7]

Al-Zawra TV station in Syria, which the U.S. says is owned and controlled by al-Jaburi, also was named in the department's order; it has been alleged the station has received money from al-Qaida, and has aired coded messages through patriotic songs to the Sunni terrorist group, the Islamic Army of Iraq.^[8]

Federal criminal defense attorney Douglas McNabb has previously discussed the growing national security issues in Iran, here.

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^[1] Jeannine Aversa, U.S. Moves to Freeze Assets of Iranian Military Quds Force General, Syrian TV Station, Associated Press Newswire, January 9, 2008, available at LEXIS, News Library, Wire News Services.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.

Humayun Arrested for Allegedly Selling Aircraft Parts to Iran

A Long Island man was arrested Thursday on charges that he illegally exported weapons to a company in Malaysia weapons which allegedly included fighter jet parts that were likely to end up in the hands of Iran.^[1]

Jilani Humayun, was arrested at his home and charged with 11 counts of violating the Arms Export Control Act, one count of conspiracy to commit mail fraud and one count of conspiracy to commit money laundering; the charges carry a potential jail term upon conviction of 150 years in prison.^[2]

In papers filed in U.S. District Court in Manhattan, federal authorities said Humayun formed a company, Vash International Inc., in January 2004 to export defense equipment including tanks, guided missiles and rocket launchers; it is alleged that on 11 separate occasions between January 2004 and May 2006, Humayun used Vash to export to an unidentified company in Malaysia F-5 and F-14 fighter jet parts and Chinook Helicopter parts.^[3]

Federal criminal prosecutors said Humayun admitted to federal agents that he did not know who the ''end users'' were for the items that were shipped, but U.S. Attorney Michael J. Garcia said it is well documented in public reports that the sole customer of F-14 parts is the Iranian Air Force.^[4]

Charles W. Beardall, director of the criminal investigative service in the U.S. Department of Defense, called the illegal export of U.S. military technology and weapons ''one of the most significant and growing threats to our national security.''^[5] Humayun was expected to appear in federal court later Thursday. It was not immediately clear who would be his federal criminal defense counsel.^[6]

Arms Export Control Act
The Arms Export Control Act is codified at 22 U.S.C. § 2778. Under this section it is illegal for a person to export articles which are designated on the U.S. Munitions List without first obtaining a license or written authorization from the Department of State.^[7]

Some of the expected weapons on the munitions list include rifles, shotguns, silencers, and riflescopes manufactured to military specifications;^[8] flamethrowers, kinetic energy weapons systems;^[9] warships, tanks, aircraft (including "non-expansive balloons");^[10] and even military training equipment.^[11] However the list also contains some unexpected items, such as Body armor, anti-gravity suits, pressure suits, helmets, goggles "designed to protect against lasers or thermal flashes," and even technical data on those items; As well as certain types of electronics and computers that are related to fire-control systems or cryptology.^[12]

Any person who willfully violates section 2778, or willfully, in a registration or license application, makes any untrue statement of a material fact or omits to state a material fact to make the statements not misleading, can be fined up to $1,000,000, imprisoned up to 10 years, or both. ^[13]

Federal criminal defense attorney Douglas McNabb has previously discussed, at length, the federal crimes of money laundering in his blog, here.

Federal criminal defense attorney Douglas McNabb has also previously discussed mail fraud in his blog, here.

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^[1] Larry Neumeister, New York Man Accused of Illegally Exporting Fighter Jet Parts to Possible Iranian Supplier, Associated Press Newswire, July 19, 2007, LEXIS, News Library, Wire News Services File.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] 22 U.S.C. § 2778(b)(1)(A)(ii)(III).
^[8] 22 C.F.R. § 121.1
^[9] Id.
^[10] Id.
^[11] Id.
^[12] Id.
^[13] 22 U.S.C. § 2778(c).

Iran Makes Counter-Offer to Western Nuclear Demands

Officials from Iran said Sunday they would work to settle disputes over its atomic program if its case went back to the U.N., a stance that is far from the Western demands that it completely suspend all uranium enrichment.^[1] Foreign Ministry spokesman Mohammad Ali Hosseini asserted that Iran could agree to settle outstanding issues with the International Atomic Energy Agency, but only if the U.N. Security Council turned the country's nuclear file over to the U.N. nuclear regulatory agency, the International Atomic Energy Agency, and dropped preparations to debate further sanctions.^[2]

If Iran was to follow through on that pledge, it could help the IAEA wrap up years of efforts to establish whether Iran's past nuclear strivings were exclusively peaceful in nature — as Iran insists.^[3] But Hosseini's comments and the offer fell drastically short of Security Council's demands that Iran freeze uranium enrichment.^[4]

The Security Council first imposed sanctions on Iran in December and modestly increased them in March over Iran's refusal to suspend enrichment.^[5] The council is now preparing to debate more punitive measures. Hosseini asserted that possible future sanctions will not alter Iran's ultimate stated goal of running 54,000 centrifuges to churn out enriched uranium for what it says is power generation.^[6]

The U.S. and Israel have their doubts and accuse Iran of seeking to use the technology to develop nuclear weapons, a notion that is not without merit considering that President Mahmoud Ahmadinejad lashed out, on Sunday June 3, at Israel saying the world would witness the Jewish state's destruction soon.^[7] "God willing, in the near future we will witness the destruction of the corrupt occupier regime," Ahmadinejad said on Sunday, yet Iran remains steadfast in their assertion that they are not a security threat to the west.^[8]

For more on the already tense U.S./Iran relations see our previous posts here.

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^[1] Nasser Karimi, Iran counters Western nuclear demands, Associated Press Newswire, June 3, 2007, available at LEXIS, News Library, Wire News Services File.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id,
^[6] Id,
^[7] Id.
^[8] Id.

President Demands Iran Release American Captives

President Bush on Friday demanded that Iran "immediately and unconditionally" release the four Iranian-American scholars and activists who have been arrested and held on suspicion of spying.^[1]

"I strongly condemn their detention at the hands of Iranian authorities," the president said in a statement.^[2] The United States has denied that the four are spies or employees of the U.S. government; the State Department on Thursday warned U.S. citizens against traveling to Iran, and further accused Islamic authorities in Iran of a "disturbing pattern" of harassment of Iranian-Americans.^[3]

The four detained scholars and activists are Haleh Esfandiari, director of the Middle East Program at the Washington-based Woodrow Wilson Center for Scholars; Kian Tajbakhsh with George Soros' Open Society Institute; journalist Parnaz Azima from the U.S.-funded Radio Farda; and Ali Shakeri, a peace activist and founding board member at the University of California, Irvine, Center for Citizen Peacebuilding.^[4] "These individuals have dedicated themselves to building bridges between the American and Iranian people, a goal the Iranian regime claims to support," Bush said. "Their presence in Iran — to visit their parents or to conduct humanitarian work — poses no threat."^[5]

State Department deputy spokesman Tom Casey asserted that Tehran has still not responded to repeated requests for access to the detainees by Swiss officials.^[6] The Swiss act as intermediaries for the United States in Iran because the two nations do not have diplomatic relations.^[7]

"This is hardly the stuff of espionage, this is hardly the stuff of government disputes…………….It is absolutely incredible to us to think that there could be any possible doubt in the Iranians' minds that these individuals are there simply to conduct normal, basic human interactions, including family visits," Casey said.^[8]

A fifth American citizen, former FBI agent Robert Levinson, has been missing in Iran since early March and Washington has cast severe doubts on Iranian claims to have no information about him in response to repeated requests through the Swiss and others.[9]


See our section on Intelligence Operatives and the classification thereof on our website, here.

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^[1] Jae-Soon Chang, Bush demands Iran release Americans, Associated Press Newswire, June 1, 2007, available at LEXIS, News Library, Wire News Services File.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Matthew Lee, U.S. warns against Iran visits as fourth Iranian-American detained, Associated Press Newswire, June 1, 2007, available at LEXIS, News Library, Wire News Services File.

Iran Wants U.S. Nuclear Engineer Released

The Iranian government is making its demands for the immediate release of a former Palo Verde Nuclear Power station engineer, Mohammad Alavi.^[1] Alavi is an Iranian native who lived in the United States as a naturalized citizen for 30 years; the former nuclear engineer was arrested for taking Palo Verde software to Iran.^[2]

Iran's foreign minister Wednesday sent a letter to U.S. officials asking for details about the arrest of Alavi, who is being held without bail at a federal detention facility in Arizona.^[3] The State Department said Wednesday that the office had not had an opportunity to research the letter that called for Alavi's release and asked that the United States provide full details of the case against him.^[4]

Alavi is being prosecuted by the U.S. Attorney's Office in Phoenix and has been charged with one count of violating the trade embargo with Iran, which carries a maximum penalty of 24 months in prison.^[5]In August, Alavi quit Palo Verde and moved to Tehran. He was arrested April 8 as he stepped off a plane in Los Angeles along with his wife. ^[6] Authorities allege that weeks before he left the U.S., he bought a laptop and downloaded training software containing diagrams and details of the Palo Verde nuclear facility; he then took the computer and software to Iran.^[7]

According to Arizona Public Service Co., which operates Palo Verde, the software was not classified and posed no threat to the security of the nuclear facility.^[8] Arizona Public Service Co. said the software can't be used to access plant workings or operations.^[9] Arizona Public Service Co. did not know that Alavi had left the country with the information until the software manufacturer reported that attempts had been made to access the Palo Verde training system from Tehran.^[10]

Violation of sanctions against Iran is a violation of Executive Orders 12959, and 13059, which prohibit trading or dealing with Iran. Violating these executive orders of the president is made criminal by the International Economic Emergency Powers Act (IEEPA),^[11]we have previously discussed IEEPA in this blog, here.

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^[1] AP Newswire, Iran wants former Palo Verde engineer released from custody, Associated Press Newswire, May 24, 2007, available at LEXIS, News Library, Wire News Services File.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Id.
^[10] Id.
^[11] 50 U.S.C. §§1702, 1705 (2007).

U.S. To Use IEEPA To Stop Iranian Banking Domestically

Today, March 29, Under Secretary for Political Affairs, Nicholas Burns, gave a statement to the Senate Foreign Relations Committee on the current state of affairs between the U.S. and Iran.^[1] He was direct in his assertions that “Iran must know that the world is united in our aim to deny it a nuclear weapon…..[and many nations] – including India, Egypt, and Brazil – support [this effort].”^[2]

However the U.S. is not troubled about acting against Iran on our own, under the International Emergency Economic Powers Act (IEEPA), we have sanctioned Iran’s Bank Sepah and cut off state-owned Iranian Bank Saderat from all access to the U.S. financial system. These steps have had a “snowball effect, as banks and businesses worldwide are recognizing the serious risk associated with Iran” and are starting to scale back their activities with Iran.^[3]

Burns asserted that Iran is one of the central bankers of global terrorism, and “the Departments of State and the Treasury have enlisted foreign support in efforts to deny suspect Iranian individuals and entities access to the international financial system.^[4] The termination of Iranian Bank Saderat’s U.S. authorization effectively prohibits one of Iran’s largest banks from conducting business in U.S. dollars.^[5]

The International Emergency Economic Powers Act (IEEPA) is a United States federal law that allows the President to identify any “unusual extraordinary threat” that originates outside the United States and to confiscate property and prohibit transactions in response.^[6] IEEPA falls under the National Emergencies Act, thus if an emergency is declared, under the act it must be renewed annually to remain in effect, and can be terminated by Congressional legislation.

Any authority granted to the President by § 1702 of IEEPA “may be exercised to deal with any unusual and extraordinary threat,^[7] but this may only be exercised to “deal with an unusual and extraordinary threat with respect to which a national emergency has been declared.”^[8] There is no doubt that terrorism and threats to our national security can be declared an emergency or extraordinary threat, thus since the president has the power to prescribe, by means of instructions, licenses, or otherwise investigate, regulate, or prohibit; i) any transactions in foreign exchange;^[9] ii) transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or a national thereof;^[10] (iii) the importing or exporting of currency or securities, by any person, or with respect to any property, subject to the jurisdiction of the United States.^[11]

The fascinating part of IEEPA is that is has a seldom used (until recently) criminal provision that states, whoever willfully violates, or willfully attempts to violate, any license, order, or regulation issued under this chapter shall, upon conviction, be fined not more than $50,000, or, if a natural person, may be imprisoned for not more than twenty years, or both; and any officer, director, or agent of any corporation who knowingly participates in such violation may be punished by a like fine, imprisonment, or both.^[12] The result of this is that since the President may issue regulations, including “definitions, as may be necessary for the exercise” of IEEPA, he can effectively create federal national security crimes by executive order.^[13]

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^[1] R. Nicholas Burns, Under Secretary for Political Affairs, United States Policy Towards Iran, Testimony Before the Senate Foreign Relations Committee, March 29, 2007, available at http://www.state.gov/p/us/rm/2007/82374.htm (last visited March 29, 2007).
^[2] Id. He continued saying “The governments of Russia, China, Japan and our many European allies are [also] committed to our joint effort to thwart Iran from crossing the nuclear threshold.” These nations are all participating in an effort through the International Atomic Energy Agency.
^[3] Id. In 2006, several leading European banks reduced lending to Iran.
^[4] Id.
^[5] Id.
^[6] International Emergency Economic Powers Act, 50 U.S.C. § 1701 et. seq. (2007).
^[7] Id., at § 1701(a); it state further that the threat must have its “source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.”
^[8] Id., at §1701(b)
^[9] Id., at §1702 (a)(1)(A)(i)
^[10] Id., at §1702 (a)(1)(A)(ii)
^[11] Id., at §1702 (a)(1)(A)(iii); §1702 (a)(1)(C) states that "when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals, confiscate any property, subject to the jurisdiction of the United States, of any foreign person, foreign organization, or foreign country that he determines has planned, authorized, aided, or engaged in such hostilities or attacks against the United States; and all right, title, and interest in any property so confiscated shall vest, when, as, and upon the terms directed by the President, in such agency or person as the President may designate from time to time, and upon such terms and conditions as the President may prescribe, such interest or property shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States, and such designated agency or person may perform any and all acts incident to the accomplishment or furtherance of these purposes."
^[12] Id at § 1705(b)
^[13] Id., at §1704

Doing Business with Iran—Warning

Western financial institutions have been warned “of the risks of doing business with Iranian companies allegedly trafficking in weapons of mass destruction.”^[1] According to the new Secretary of the Treasury, Henry Paulson, he has “evidence of links between reputable banks and more than 30 bogus companies acting as fronts to import the materials into Iran needed to make nuclear weapons.”^[2]

He also mentioned that the front companies may not necessarily be obvious about their alleged ties to Iran’s alleged weapons procurement desires: “These front companies are not called Nuclear Acquisition Corp or Weapons Production Corp.,” he said. “These are mundane-sounding businesses that do mainly legal activities but in addition have these untoward and illicit activities.”^[3]

Earlier this month, “the Treasury barred Americans from doing business with Bank Saderat, one of Iran’s biggest state-owned lenders.”^[4] And Iran is not the only country whose institutions have been targeted; two financial companies, Bayt al-Mal and Yousser Company, and an individual, Bayt al-Mal’s head Husayn al-Shami, have been designated “Global Terrorists” for their business dealings with Hezbollah.^[5]

Bars to financial transactions are conducted under the Iranian Transactions Regulations. Under 31 C.F.R. § 560.204, the exportation of goods or services, whether directly or indirectly, is prohibited. Furthermore, investment in Iran or entities owned or controlled by the Government of Iran is prohibited by section 560.207. A willful violation of the Iranian Transaction Regulations can be punished with a fine of up to $50,000, imprisonment for up to ten years, or both; officers, directors, and agents of corporations face exposure to these penalties, as well.^[6] Note, too, that an increase in the fine is possible.^[7]

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[1] Larry Elliott, US Warns Banks Against Iranian Nuclear Firms, Guardian (UK), Sep. 18, 2006.
[2] Id.
[3] Id.
[4] Kevin Carmichael, Paulson Was Stunned by Iran “Front” Companies’ Access to Funds, Bloomberg, Sep. 16, 2006.
[5] US Dept. of Treas., Treasury Designation Targets Hizballah’s Bank, Sep. 7, 2006.
[6] 31 C.F.R. § 560.701(a)(2).
[7] Id. § 560.701(b) (citing 18 U.S.C. § 3571.).

Iranian Efforts to Obtain Weapons Technology—New Concerns

According to United States Federal law enforcement authorities, Iran “has intensified efforts to illegally obtain weapons technology from the United States, contracting with dealers across the country for spare parts to maintain its aging American-made air force planes, its missile forces and its alleged nuclear weapons program.”^[1] Over the past two years, Iran’s “weapons acquisition program” has expanded dramatically with arms dealers exporting experimental aircraft, machines used for testing steel strength, assembly kits for Iran’s F-14 fleet, and components used in missile systems and fighter-jet engines.^[2]

Stephen Bogni, the acting chief of ICE’s Arms and Strategic Technology Investigations Unit, says that Iran is “looking for more varied and sophisticated technology,” including night-vision equipment, drones, missile technology, and weapons of mass destruction.^[3] Some of these weapons systems may have been demonstrated in recent weeks, such as radar-defeating missiles, rocket-propelled torpedoes,^[4] and stealthy flying boats.^[5] Interestingly enough, at the same time US authorities are obviously raising alarms about Iran’s efforts to obtain weapons and parts, they “have questioned Iran’s assertions about its capabilities.”^[6]

San Diego and Los Angeles are considered “to be the two centers of the illicit Iranian weapons trade.”^[7] While Iran’s armed forces are composed of “aging technology”—such as F-14s, F-5s, F-4s, and C-130s—some officials state that “it’s technology that could still hurt the United States and its allies today.^[8]

In 1995, President Clinton signed an order “effectively prohibiting almost all trade and investment between the two countries.” Executive Order No. 12959 states that exportation from the United States to Iran “of any goods, technology (including technical data or other information subject to the Export Administration Regulations…, or services” is prohibited.^[9] It was partially revoked by Executive Order No. 13059 in 1997. This Executive Order loosened the trade restrictions on Iran somewhat, adding scienter requirements to the prohibitions.^[10] The prohibitions, however, have not kept businesses with ties to Iran from being “on a hunt in the United States for anything that can keep Iran’s military machine moving”; since 2002, “there have been 17 major cases involving the illegal shipment of weapons technology to Iran, outpacing the 15 cases involving China.”^[11]
On March 16, ICE agents arrested Mohammad Fazeli after he allegedly “tried to export a box of pressure sensors [which are normally used in black-box data recorders] to Iran via the United Arab Emirates.”^[12] The following day, Arif Ali Durrani was convicted in San Diego on five counts involving the illegal export of fighter-jet components to Iran.^[13] We previously discussed Mr. Durrani in October. Because Iran seems to be the new primary enemy for the United States, any attempt to export materiel to Iran is going to be viewed as a serious national security violation.

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[1] John Pomfret, Iran Has Raised Efforts to Obtain U.S. Arms Illegally, Officials Say, Wash. Post, Apr. 17, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Iran Tests “Flying Boat,” Al Jazeera, Apr. 4, 2006.
[6] Id. See also Pomfret, supra note 1.
[7] Pomfret, supra note 1.
[8] Id.
[9] Exec. Order No. 12,959, 60 Fed. Reg. 24,757 (May 6, 1995).
[10] Exec. Order No. 13,059, 62 Fed. Reg. 44,531 (Aug. 21, 1997).
[11] Pomfret, supra note 1.
[12] Id.
[13] Id.