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February 24, 2008 

Huntsville Defense Contractor, Charged with Violating Arms Export Control Act, Lost His Livelihood and Savings to False U.S. Prosecution

Today's Birmingham News contains a detailed story on the saga and aftermath of the failed prosecution of Alexander Latifi, owner of Huntsville, Alabama-based Axion Corporation. The article notes:

Once lauded by defense procurement officers for going above and beyond contract specifications, Axion Corp. is now a silent hulk of sheet metal buildings in what was once a cotton field on Huntsville's northeast side. Legal fees have drained Latifi's bank account.

It all began to disappear - the $4 million in annual sales, the 60 employees - in 2003. That's when the U.S. attorney's office for the Northern District of Alabama showed up and accused Latifi, an Iranian-born U.S. citizen, of crimes that included violating the Arms Export Control Act.

His main alleged offense: sending a schematic drawing of the Army's Black Hawk utility helicopter to a prospective subcontractor in China. His main accuser: a disgruntled employee who began informing on him only after she had stolen thousands of dollars and was facing prosecution for forging checks.

After four years of investigation and two raids by federal agents, none of the charges against Axion or Latifi stuck. U.S. District Judge Inge Johnson said the main witness lacked credibility. The Black Hawk drawings Latifi was accused of sending to China weren't marked as classified, and his lawyers argued they were readily available for viewing on the Internet. And the technology is hardly a secret to China, which already owns more than 20 of the freight and troop transporters made by Stratford, Conn.-based Sikorsky Aircraft Corp.

In October [2007], after a seven-day trial in U.S. District Court in Birmingham, the judge dismissed the case. Johnson ruled there was no way federal prosecutors from Alice Martin's U.S. attorney's office in Birmingham, were going to meet their burden of proof in the criminal trial.

On December 28, 2007, the Justice Department announced that as a result of the acquittal Mr. Latifi and Axion Corporation were reinstated as government contractors in good standing.

The article indicates that Mr. Latifi's counsel has filed a claim for compensation from the government under the Hyde Amendment (18 USC 3006A) for legal fees that resulted from the wrongful prosecution. The Hyde Amendment permits federal courts to award attorneys' fees and court costs to criminal defendants "where the court finds that the position of the United States was "vexatious, frivolous, or in bad faith". A hearing on the matter is schedule for April 15, 2008.




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