International Trade Law News

Published by Jacobson Burton Kelley PLLC

The following article that appeared in Texas Lawyer discusses the InfoCom trial that began yesterday in Dallas. The case involves unlicensed shipments of computers and related equipment to Syria and Libya. Details on the alleged violations of the EAR are contained in the BIS order denying InfoCom's export privileges that is found at http://efoia.bis.doc.gov/ExportControlViolations/e705.pdf.

Texas Lawyer, 06-08-2004
By Mary Alice Robbins

Set against the backdrop of continuing violence and unrest in the Middle East, the first trial of five brothers -- all Palestinian-born Muslims arrested in December 2002 for allegedly shipping computers to designated terrorist countries and money-laundering –- began Monday in a federal courtroom in Dallas.

The legal problems the Elashi brothers face began less than a week before the Sept. 11, 2001, terrorist attacks on America. On Sept. 5, 2001, the North Texas Joint Terrorism Task Force -- made up of agents of the FBI, Customs Service and other federal agencies -- began searching InfoCom Corp., the brothers' Richardson-based Internet services company, according to a report published the following day in the Dallas Morning News.

In December 2002, a grand jury for the U.S. District Court for the Northern District in Dallas indicted the brothers; their cousin, Nadia Elashi; her husband, Mousa Abu Marzook, who was designated a terrorist in 1995 by then-President Bill Clinton; and InfoCom. An August 2003 indictment in United States of America v. Bayan Elashi, et al. supersedes the 2002 indictment.

Prosecutors allege in the 46-count superseding indictment that the brothers and InfoCom exported computers and computer components to two designated terrorist countries, Libya and Syria; made false statements on forms accompanying some shipments; and engaged in money laundering. Prosecutors further allege that three of the brothers -- Bayan, Ghassan and Basman Elashi -- engaged in unlawful financial dealings and money laundering with Marzook.

"It's a case that has a lot of great perception benefits to the prosecution," says Tom Melsheimer, a former Assistant U.S. Attorney in Dallas. "You mention terrorist and you mention terrorist organization, and you feel like you have 12 votes."

But Melsheimer, now a partner in Dallas' Fish & Richardson, says prosecutors will have to do a lot more to convict the Elashi brothers.

"This probably will end up like most white-collar criminal cases; it's going to be a case about the documents," Melsheimer says.

But he says prosecutors probably also need someone from inside the company or familiar with its operations to "help them tell the story."

The Elashi brothers deny all the allegations. "Our clients have maintained their innocence from the time this has started," says Jeff Kearney, attorney for Hazim Elashi.

Kearney says the brothers were educated in the United States and have been in this country for a number of years. He says that Ghassan Elashi and Ihsan Elashyi, who uses a different spelling for his last name than his brothers, are U.S. citizens, and the other brothers are in this country on work visas.

Marzook and his wife have not made an appearance in the case, Kearney says. According to a reply memorandum supporting the government's motion to take depositions, the couple is believed to be living in Damascus, Syria.

Tom Schneider, spokesman for the U.S. Marshals Service in Dallas, says the case has attracted news media interest. Between 20 and 25 reporters have notified him that they will be present for the beginning of the trial, Schneider says.

Schneider says the marshals service will beef up security for the trial, but he declines to discuss specifics. "We're going to have security that's appropriate for the setting," he says.

The high-profile case, which will be tried before U.S. District Judge Sam Lindsay, also involves a team of prominent criminal defense attorneys.

Fort Worth solo Tim Evans, attorney for Ghassan Elashi, says he realized that a lot of prejudice and stereotyping was going on against members of the Muslim community (when he represented another Muslim client in an earlier unrelated case).

"When society gets in that mode or that atmosphere, it's a recipe for injustice," Evans says.

Evans says Ghassan Elashi contacted him about the brothers' case. After agreeing to represent Ghassan Elashi, Evans says he asked three other prominent criminal defense attorneys Kearney, the principal in the Kearney Law Firm in Fort Worth; Michael Gibson, a partner in Dallas' Burleson Pate & Gibson; and Richard A. Anderson, of counsel at Burleson Pate -- to defend three of the other Elashi brothers for substantially reduced fees. The Muslim community in the Dallas area is trying to raise the money to pay the attorneys, Evans says.

Gibson, who represents Bayan Elashi and InfoCom, did not return two phone calls seeking comment.

Rounding out the brothers' defense team is Marlo Cadeddu, a partner in Dallas' Sorrels & Udashen. U.S. Magistrate Judge Paul Stickney of Dallas appointed Cadeddu to represent Ihsan Elashyi.

First Assistant U.S. Attorney James T. Jacks and Assistant U.S. Attorney Nathan Garrett, both of Dallas, are prosecuting the case with Special Assistant U.S. Attorney Barry Jonas of the U.S. Department of Justice Tax Division.

The prosecutors decline to comment. "When we're close to trial, we can't discuss the case," says Kathy Colvin, spokeswoman for the U.S. Attorney's Office in Dallas.

TRIAL NO. 1

The first trial won't deal with the most inflammatory charges against the Elashis. In an April 20 order, Lindsay severed charges, related to the alleged unlawful shipments, from the charges alleging unlawful business dealings with Marzook.

"All the claims and accusations that the Elashis somehow supported a terrorist have been severed out of this trial. What we're dealing with now are just accusations of shipping and export violations," Evans says.

A motion filed by Hazim Elashi and Ihsan Elashyi to further sever the charges for the alleged shipping violations from the charges related to the alleged false statements on the export declarations forms remained pending before Lindsay as of presstime on June 3. If Lindsay grants that motion, two more trials will be necessary.

Attorneys for the brothers claim their clients are being prosecuted on criminal charges for alleged shipping violations similar to violations for which a number of major U.S. companies paid only civil fines.

"I'm concerned that this prosecution may be politically motivated because the vast majority [of companies] when export violations are alleged to have occurred are pursued administratively and then civil penalties are imposed," Cadeddu says.

According to the superseding indictment, the International Emergency Economic Powers Act, 50 U.S.C. §§1701-1706, authorizes the president to deal with unusual or extraordinary threats to U.S. national security and foreign policy through executive orders, and violating an executive order is a criminal act.

Prosecutors allege in the superseding indictment that the Elashi brothers and InfoCom knowingly and willfully conspired to violate Executive Orders 12,924 and 12,543 and regulations that prohibit exporting computers and computer components from the United States to Syria or Libya without a U.S. license.

The superseding indictment further alleges that the defendants conspired in 1997 to fill an order from a Libyan-based customer by shipping computers and computer components to a company in Malta, which then shipped the goods to Libya. The Libyan customer instructed the defendants to use that Maltese shipping company, the indictment alleges.

As alleged in the indictment, the brothers and their company also contracted with a customer based in the United States in 1999 to ship computers through Italy to a customer in Libya.

"The government has to prove we knew, in fact, that the goods were going to Libya," says Kearney, attorney for Hazim Elashi.

Dallas attorney Jay Vogelson, a former chairman of the American Bar Association's International Law Section, says that it is sometimes hard to prove that defendants knew that goods would be shipped on from a wayside stop.

If the defendants contend they thought the shipment was going to a lawful recipient, the prosecution must prove that isn't so, says Vogelson, a senior member of Dallas' Stutzman, Bromberg, Esserman & Plifka. "Simply proving what the recipient did doesn't prove what the sender knew," he says.

Another allegation is that the brothers reported significantly less than the true values of the goods they shipped on the export declaration forms. According to the indictment, the U.S. Department of Commerce uses the forms to track the United States' foreign trade for economic and trade policy purposes.

Anderson, attorney for Basam Elashi, says the government's theory is that the undervaluation keeps the U.S. Bureau of the Census from determining the trade imbalance. "That somehow deprives the government of the opportunity to have statistics," he says.

The indictment also alleges that the brothers engaged in money laundering when they deposited $55,703, derived from an illegal shipment, into a financial institution -- a violation of 18 U.S.C. §§1957 and 2.

Because some potential jurors may have strong feelings about Muslims and people from the Middle East, Kearney says that voir dire will be critical in the case. "We're trying to identify feelings about sensitive issues that come up in a case like this," he says.

Kearney says the defense team is using jury consultant Michael Ford of Dallas. "He will be there to consult with us on individual jurors," Kearney says.

In a May 28 order, Lindsay granted the defendants' motion to submit questionnaires to the jury panel before voir dire. Kearney says defense attorneys and prosecutors submitted proposed questionnaires to Lindsay, who is creating his own questionnaire.

Also in the May 28 order, Lindsay agreed to allow individual questioning of jurors if circumstances warrant it. Evans says that in his 26 years of practicing law, he knows of only one federal judge who allowed the separate questioning of members of a jury panel.

Notes Evans, "It's extremely rare."