French Corporation Pleads Guilty to Conspiracy to Illegally Export Goods

According to authorities, Cryostar SAS, a French corporation, headquartered in Hesingue, France, has pleaded guilty to charges of conspiracy, illegal export, and attempted illegal export of cryogenic submersible pumps to Iran.^[1]

CRYOSTAR pled guilty before the U.S. District Court for the District of Columbia to one count of Conspiracy, one count of Export without an Export License, and one count of Attempted Export without an Export License. Under the written plea agreement, CRYOSTAR is to be fined $500,000 and be subject to corporate probation for two years once the company is sentenced in July 2008.^[2]

The evidence in this case stated that CRYOSTAR, a corporation conducting business all worldwide, specializes in the design and manufacture of cryogenic equipment, such as pumps, turbines, compressors and automatic filling stations that are used to transport and process natural gases at extremely cold temperatures.^[3]

Ebara International Corp., Inc. (“Ebara”) was a Delaware corporation with its principal place of business in Nevada.^[4] Ebara engaged in the business of designing and manufacturing cryogenic pumps for various uses, including for pumping fluid hydrocarbons that have been cooled to cryogenic temperatures. “TN” was a French company with a U.S. subsidiary.^[5]

In 2001, TN arranged to purchase cryogenic submersible pumps from Ebara for delivery to an Iranian company for installation at the Olefin Petrochemical Complexes in Iran.^[6] CRYOSTAR served as the middleman for TN and Ebara by purchasing the pumps from Ebara, then reselling them. In addition, CRYOSTAR would also falsely indicate that the final purchaser was a French company that would install the pumps in France, when all parties to the transaction knew that the ultimate and intended destination of the pumps was Iran.^[7]

The parties set forth their plan on a “matrix,” which they used as a roadmap. The “matrix” included various procedures to be followed by each company to protect their conduct from detection by United States law enforcement.^[8]

Following the procedures set forth in the “matrix,” the conspirators manufactured four pumps, and shipped them, in January 2003, for installation at the 9th Olefin Petrochemical Complex in Iran, (“First CRYOSTAR Order”). The total value of the First CRYOSTAR Order was approximately $746,756.^[9]

The conspirators prepared additional pumps for shipment to Iran in the fall of 2003. The total value of this second order was approximately $1,125,055, however this second shipment was halted once the investigation began.^[10]

According to investigators, the corporations attempted to cover up their illegal conduct by creating false correspondence confirming that none of the pumps were sent, or were intended to be sent, to Iran. None of the parties sought and obtained export licenses for either order.^[11]

18 U.S.C. § 371 covers conspiracy and that law states that if two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.^[12] If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.^[13]

Illegal exportation of goods or technology is penalized under the Export Administration Act of 1979.^[14] The statutes under this act make it unlawful for a defendant to export goods or technology from the United States when that exportation is in contravention to applicable law.^[15] Punishment under this act can include a fine of whichever is greater between up to five times the value of the exports involved or $50,000, or up to five year imprisonment or both.^[16]
Federal criminal defense attorney Douglas McNabb has previously written about the crime of conspiracy here.

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[1] Press Release, United States Department of Justice, French Corporation Pleads Guilty to Conspiracy, Illegal Export, and Attempted Illegal Export of Cryogenic Submersible Pumps to Iran (April 10, 2008) (available at http://www.bis.doc.gov/news/2008/doj04_10_08.html).
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] 18 U.S.C. § 371.
[13] Id.
[14] 50 U.S.C. §§ 2401-2410.
[15] Id.
[16] 50 U.S.C. § 2410.