International Fraud Uncovered!

INTERNATIONAL FRAUD DISCOVERED!

24-count indictment has been unsealed today charging four corporations and five individuals with facilitating the illegal export of high-tech microelectronics, uninterruptible power supplies and other commodities to Iran in violation of the International Emergency Economic Powers Act (IEEPA). 

The announcement was made by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Assistant Director Randall Coleman of the FBI’s Counterintelligence Division, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Under Secretary of Commerce Eric L. Hirschhorn of the Department of Commerce, Special Agent in Charge Tracy E. Martin of the Department of Commerce’s Office of Export Enforcement’s Dallas Field Office and Special Agent in Charge Lucy Cruz of the IRS’ Houston Field Office. 

“The Office of Export Enforcement and our law enforcement partners will continue to investigate, pursue and dismantle these procurement networks that violate U.S. export control laws whether they operate within our borders or anywhere else in the world,” said Special Agent in Charge Martin.

The indictment alleges Houston-based company Smart Power Systems Inc. (SPS); Bahram Mechanic, 69, and Tooraj Faridi, 46, both of Houston; and Khosrow Afghahi, 71, of Los Angeles, were all members of an Iranian procurement network operating in the United States.  Also charged as part of the scheme are Arthur Shyu, and the Hosoda Taiwan Limited Corporation in Taiwan; Matin Sadeghi, 54, and Golsad Istanbul Trading Ltd. in Turkey; and the Faratel Corporation, co-owned by Mechanic and Afghahi in Iran.

 

According to the indictment, Mechanic and Afghahi are the co-owners of Iran-based Faratel and its Houston-based sister company SPS.  Faratel designs and builds uninterruptible power supplies for various Iranian entities, including Iranian government agencies such as the Iranian Ministry of Defense, the Atomic Energy Organization of Iran, and the Iranian Centrifuge Technology Company.  SPS designs and manufactures uninterruptible power supplies in cooperation with Faratel.  Faridi currently serves as a vice president of SPS.  Shyu is a senior manager at the Hosoda Tawain Limited Corporation, a trading company located in Taiwan, while Sadeghi is an employee of Golsad Istanbul Trading, a shipping company located in Turkey.

The indictment alleges that between approximately July 2010 and the present, Mechanic and the others engaged in a conspiracy to obtain various commodities, including controlled United States-origin microelectronics.  They then allegedly exported these to Iran, while carefully evading the government licensing system set up to control such exports.  The microelectronics shipped to Iran allegedly included microcontrollers and digital signal processors.  According to the indictment, these commodities have various applications and are frequently used in a wide range of military systems, including surface-air and cruise missiles.  Between July 2010 and the present, Mechanic’s network allegedly sent at least $24 million worth of commodities to Iran.

According to court documents, Mechanic, assisted by Afghahi and Faridi, regularly received lists of commodities, including United States-origin microelectronics, sought by Faratel in Iran.  Mechanic would approve these orders and then send the orders to Shyu in Taiwan, according to the indictment.  Shyu would allegedly purchase the commodities utilizing Hosoda Taiwan Limited and then ship the commodities to Turkey, where Sadeghi would act as a false buyer via his company, Golsad Istanbul Trading Ltd.  The indictment further alleges that Sadeghi would receive the commodities from Shyu and then ship them to Faratel in Iran.  Mechanic required his co-conspirators to notify him and obtain his approval for each of the transactions completed by the network, according to the allegations.

The individual defendants each face up to 20 years in federal prison, while the corporate defendants face fines of up to $1 million for each of the IEEPA counts, upon conviction.

Mechanic, Afghahi and Shyu are also charged with conspiring to commit money laundering and substantive money laundering violations, each charge carries a maximum potential term of imprisonment of 20 years.  Mechanic further faces a charge of willful failure to file foreign bank and financial accounts for which he faces up to five years in federal prison.  The charges also carry the possibility of substantial fines upon conviction.