The Justice Department announced that it will not be prosecuting Universities Space Research Association (USRA) for violations of U.S. export control laws, citing prompt self-disclosure and cooperation.
EAR Violation
In 2016, USRA was granted a contract with NASA to license and distribute aeronautics-related and U.S. Army-owned flight control software. Jonathan Soong was employed by USRA and was responsible for performing due diligence on prospective purchasers. Soong willfully exported software subject to the Export Administration Regulations (EAR) to Beijing University, knowing that an export control license was required for the export because it was on the Entity List.
Soong used an intermediary to avoid detection, and embezzled tens of thousands of dollars in software license sales. He ultimately plead guilty to willfully violating the EAR. He was sentenced to 20 months in prison.
Company Disclosure & Remediation
Within days of learning of Soong's actions, USRA self-disclosed the violation to the Department's National Security Division (NSD). The company fully cooperated with the ensuing criminal investigation, which eventually established that Soong had acted alone.
USRA's cooperation included proactively collecting and disclosing evidence and providing detailed and timely responses to the government's requests for information. USRA remediated the root cause of the misconduct by disciplining an employee who failed to appropriately supervise Soong, and by improving its internal controls and compliance program.
USRA also compensated the government both for the funds Soong embezzled, and for the time Soong had spent embezzling funds instead of performing his duties under the contract with NASA.
The DoJ cited the timely disclosure, cooperation, and remediation as factors in their decision to not prosecute.
When You Should Self-Disclose an EAR Violation
The decision by the DoJ to prosecute an employee of the company but not the company itself highlights the importance and significance of self-disclosing a violation. If you discover an EAR violation in your company, it is critical to work with an attorney to navigate a potential disclosure. How and when you disclose the violation can make all the difference in the ultimate outcome. Diaz Trade Law has significant experience filing voluntary self-disclosures and mitigating penalties and can help you identify the best course of action.
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