International Trade Law News

Published by Jacobson Burton Kelley PLLC

A multiagency task force, including the U.S. Attorney for the District of Columbia, the Bureau of Industry and Security, U.S. Immigration and Customs and the Federal Bureau of Investigation, today announced that it had obtained an indictment and a guilty plea against two individuals involved in a conspiracy to export unlicensed oscilloscopes and triggered spark gaps.

First, a federal grand jury in the District of Columbia returned an indictment charging Humayun A. Khan, 47, of Islamabad, Pakistan, with conspiring to violate and, on three separate occasions, violating U.S. export restrictions on commodities that are controlled for nuclear non-proliferation reasons. The indictment alleges that Khan violated the federal conspiracy statute, 18 U.S.C. section 371, and the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. sections 1701-1706. According to the U.S. Attorney, Khan faces a maximum period of incarceration of 35 years under the statute and a likely range of 78 to 97 months in prison under the federal sentencing guidelines if he is convicted of these crimes.

In addition, the U.S. Government also announced the unsealing of the guilty plea of Asher Karni, an Israeli national residing in Capetown, South Africa, before his arrest in 2004, to a five count Information charging him with conspiracy and export violations arising out of his unlawful exports to Pakistan and India of U.S. origin commodities that are controlled for nuclear non-proliferation reasons.

According to the indictment, Khan was the owner and chief executive officer of an Islamabad, Pakistan, business known as Pakland PME Corporation. Sometime around August 2002, he approached Asher Karni, an Israeli national then residing in Cape Town, South Africa, and inquired whether Karni would help him acquire certain models of oscilloscopes manufactured by Tektronix, Inc., of Beaverton, Oregon. Because these particular models of oscilloscopes have applications in the testing and development of nuclear weapons and missile delivery systems, the Department of Commerce requires anyone seeking to export them to certain countries, including Pakistan, to obtain a license. The indictment claims that Khan, who was an authorized distributor for Tektronix in Pakistan, was aware of that licensing requirement. Karni was the owner of a firm in Cape Town, South Africa, known as Top-Cape Technology. The indictment claims that he agreed to assist Khan in obtaining the Tektronix oscilloscopes, even though Khan told him that they were subject to U.S. export controls and warned him not to disclose the true destination of the products.

In March 2003, Karni obtained one of the models of controlled oscilloscopes from a firm in Plainview, New York. He directed that the firm send the oscilloscope to Top-Cape in Cape Town, South Africa. Shortly after its arrival in South Africa, Karni re-exported the product to a company in Pakistan that Khan had designated. At no time during this transaction did either Karni or Khan obtain a license from the Department of Commerce for this export to Pakistan. In August 2003, Karni acquired two additional controlled Tektronix oscilloscopes in the United States and diverted them to a Khan customer in Pakistan through South Africa without obtaining the necessary license. In addition, throughout 2003, Karni and Khan worked to fill a $1.3 million order for controlled Tektronix oscilloscopes for a third Khan client in Pakistan.

In June 2003, Khan sent an e-mail to Karni asking him to purchase triggered spark gaps for a customer in Pakistan. Triggered spark gaps are high speed electrical switches that are often used in a medical device known as a lithotripter, which doctors utilize in treating kidney stones. Triggered spark gaps also have military applications. One such application is as a detonator for nuclear weapons. Exports of triggered spark gaps to South Africa, unlike Pakistan, are not prohibited.

The triggered spark gaps that Khan sought were manufactured by Perkin Elmer Optoelectronics of Salem, Massachusetts ("Perkin Elmer"). At Khan's direction, Karni first made inquiries of Perkin Elmer's French sales representative. The sales representative quoted Karni a price, but also advised him that the spark gaps required a U.S. export license and that Karni needed to certify both that the product would remain in South Africa and that it would not be used for any nuclear purposes. Karni forwarded this information to Khan and initially declined to pursue the order. Khan, however, prevailed upon Karni to continue to find a source for the triggered spark gaps.

In July 2003, an anonymous source informed agents of the Office of Export Enforcement ("OEE") of the Department of Commerce and Immigration and Customs Enforcement ("ICE") of the Department of Homeland Security that Karni was in the process of using a broker in Secaucus, New Jersey, to obtain 200 PerkinElmer triggered spark gaps for ultimate shipment to Pakistan through South Africa. The agents approached Perkin Elmer, which agreed to cooperate in the investigation and to render inoperable the triggered spark gaps that the New Jersey broker was in the process of ordering.

In October 2003, the OEE and ICE agents were able to track the first installment of 66 triggered spark gaps as the package traveled from the United States to Top-Cape in South Africa and then on to Pakistan through the United Arab Emirates. On December 11, 2003, OEE and ICE agents searched the offices in New Jersey of the broker that Karni was using to acquire the triggered spark gaps. Simultaneously, in coordination with U.S. authorities, members of the South African Police Service executed a search warrant at Karni's office in Cape Town, South Africa, which led to the seizure of emails and documents that furthered this investigation.

On January 1, 2004, agents arrested Karni as he entered the United States at Denver International Airport. On September 14, 2004, he pled guilty under seal to five federal felonies, including conspiracy to export controlled nuclear technology items to Pakistan. He also agreed to cooperate with the on-going investigation.

The press release announcing the indictment and guilty plea in this case can be found at: www.bis.doc.gov/News/2005/khan_pressrelease.pdf.