On June 28, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a Settlement Agreement with Patriot 3 Inc. – a Virginia-based military equipment company – for $200,000 after the BIS alleged that Patriot 3 violated Section 764.2(e) of the Export Administration Regulations (EAR). Specifically, BIS alleged that on October 2014, the company violated Section 764.2(e) of the EAR when it knowingly sold and transferred maritime jet boots with underwater propulsion systems valued at $329,760 for export destined for Russia’s Federal Guard Service.

Section 744.21 of the EAR restricts the unlicensed exports of any item subject to EAR for military end use or to military end users in Russia – such as Russia’s Federal Guard Service – as well as in Burma, China, and Venezuela.

Despite Patriot 3 receiving email notifications from BIS in September 2014 notifying the company of the license requirement, plus the publication of the license requirement in the Federal Register in September 2014, Patriot 3 proceeded with the sale of the jet boots – breaching Section 764.2(e) for acting with knowledge of a violation. As a result, Patriot 3 and BIS agreed to settle the matter through a $200,000 civil penalty to be paid by Patriot 3 in four installments of $50,000.

The Proposed Charging Letter, Settlement Agreement, and Order is available here.

For more information on actions related to Russia and EAR, contact our team and see previous posts below.

BIS Issues Interim Final Rule with Corrections/Changes to Military Intelligence End Uses and End-Users | International Trade Law (cmtradelaw.com)

BIS Rule on Military Intelligence End User Restrictions Becomes Effective Despite White House Regulatory Review | International Trade Law (cmtradelaw.com)