International Trade Law News

Published by Jacobson Burton Kelley PLLC

On July 7, 2004, a federal court jury in the Northern District of Texas convicted five Palestinian brothers of conspiring to use InfoCom Corp., their Dallas, Texas area computer services company, to make illegal shipments of high-tech goods to Libya and Syria and making false statements to the U.S. Government. After deliberating more than 18 hours over three days, the nine-woman, three-man jury concluded that Ghassan Elashi and his brothers, Bayan, Basman, Hazim and Ihsan, repeatedly violated U.S. export laws between 1995 and 2000. The verdict was announced after a four week trial in which several government witnesses contended that the Elashi brothers had run InfoCom like an "outlaw enterprise" with little or no regard for export laws or lying to the government.

In 2002, the U.S. government indicted the Elashi brothers of two dozen counts of conspiracy, money laundering and making false statements to the government. Specifically, they were alleged to have knowingly shipped computers to Libya through Malta and Italy, and of failing to obtain export license to ship controlled U.S. technology to Syria. During the trial federal agents also said InfoCom routinely misstated the value of shipments made to their customers in the Middle East to help them avoid paying customs duties. Prosecutors also charged the men with filing false shippers export declarations (SEDs) that understated the value of their exports from 1995 to 2000 by at least $380,000.

After the prosecution put on more than two weeks of testimony, defense attorneys for Bayan, Ghassan, Basman, Hazim and Ihsan Elashi called only two witnesses before resting their cases. Basman Elashi was the lone defendant who testified.

While all of the brothers were convicted of making shipments to Syria and Libya and conspiring to undervalue shipments to other countries, all but one brother was acquitted on the charges alleging individual false statements.

Basman Elashi, who served as InfoCom's shipping clerk, was convicted on all 23 counts brought against him. In his testimony during the trial he acknowledged undervaluing shipments of computer goods from his family's business and sending other goods that ended up in Libya and Syria. But he maintained that he did not believe he was breaking any laws. Mr. Elashi said agents for shipping companies and their documents led him to believe it was permissible to assign lesser values to products on shipper's export declaration forms to help customers avoid higher customs duties. "From what I've heard and what I've seen from freight forwarders, the SED document is just another document that goes with the shipment. It's not important," Mr. Elashi said under questioning from his attorney. Mr. Elashi echoed arguments made earlier in the trial by attorneys for his brothers that they were not aware shipments to Malta and Rome ended up in Libya and did not believe that export licenses were needed for the shipments made to Syria. During the trial, the attorneys for the other brothers suggested that Basman Elashi was to blame if shipping documents contained false information.

Ihsan Elashi, who handled all the sales of goods in the Libyan and Syrian shipments, was convicted on 15 counts and acquitted on eight others.

Bayan Elashi, the president and chief executive officer of InfoCom, was convicted on 12 counts, including three for conspiracy. He was acquitted on 11 other counts, several of them involving false values on shipping documents.

Hazim Elashi, the company's purchasing agent who also handled some sales of goods, was convicted on nine counts and acquitted on 11 others. He was singled out in testimony by a brother-in-law testifying for the government as knowing that a man InfoCom was shipping goods to in Rome was operating his business from Libya.

Ghassan Elashi, InfoCom's vice president of international marketing, was convicted of three counts of conspiracy, one county of money laundering and two counts of making false statements about shipments.

Some of the convictions carry a maximum penalty of five years in prison. Convictions on other charges carry the possibility of a 10-year term. A sentencing date has not yet been set.

Three of the brothers face a separate federal trial on multiple charges alleging they did business with Mousa Abu Marzook, the deputy political leader of the pro-Palestinian terrorist group Hamas. No date has been set for that trial.

Several of the brothers had ties to the Holy Land Foundation for Relief and Development, an alleged Hamas financial front. They face a separate trial on allegations that they did business with a leader of the Palestinian terrorist group. Before the trial, federal District Court Judge Sam A. Lindsay barred prosecutors from mentioning Hamas or the Holy Land Foundation, a Muslim charity located across the street from InfoCom's offices in Richardson, Texas. The Treasury Department closed the charity in December 2001 and accused it of financing terrorists. Ghassan Elashi was the chairman of the Holy Land Foundation.

Each of the remaining 23 counts against the men carries a maximum penalty of five or 10 years in prison and top fines ranging from $50,000 to $500,000.

Ghassan and Ihsan Elashi are U.S. citizens. The other three are not, and they have been in custody facing immigration violation charges and could be deported even if acquitted on all counts, according to their lawyers.

An interesting footnote to this story is that InfoCom had been the ICANN-designated body responsible for administering the ".iq" domain name for Iraq. However, the indictment brought against InfoCom placed the .iq domain name registration process on indefinite hold. Both the Coalition Provisional Authority and Iraq's National Communications and Media Commission have urged ICANN to assign a new registrar to administer the .iq domain names as soon as possible, partly so government ministries can standardize their Web addresses. Several groups have applied to ICANN to administer the ".iq" registry and ICANN is in the process of evaluating the applicants.