U.K. Firm Pleads Guilty to Illegally Exporting Boeing 747 Aircraft to Iran

Firm Agrees to Pay $15 Million in Fines

Balli Aviation Ltd., a subsidiary of the United Kingdom-based Balli Group PLC, pleaded guilty today in the U.S. District Court for the District of Columbia to a two-count criminal information in connection with its illegal export of commercial Boeing 747 aircraft from the United States to Iran, announced David Kris, Assistant Attorney General for National Security; Channing D. Phillips, U.S. Attorney for the District of Columbia; Thomas Madigan, Acting Deputy Assistant Secretary of Commerce for Export Enforcement; and Adam J. Szubin, Director of the Department of Treasury's Office of Foreign Assets Control.

Under the plea agreement, Balli Aviation Ltd. agreed to pay a $2 million criminal fine and be placed on corporate probation for five years. The $2 million fine, combined with a related $15 million civil settlement among Balli Group PLC, Balli Aviation Ltd., the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), that was also announced today, represents one of the largest fines for an export violation in BIS history. Under the terms of the related civil settlement, Balli Group PLC and Balli Aviation Ltd. have agreed to pay a civil penalty of $15 million of which $2 million will be suspended if there are no further export control violations. In addition, Balli Aviation Ltd. and Balli Group PLC are denied export privileges for five years, although this penalty will be suspended provided that neither Balli Aviation nor Balli Group commits any export violations and pays the civil penalty. Under the terms of the settlement, Balli Group PLC and Balli Aviation, Ltd. will also have to submit the results of an independent audit of its export compliance program to BIS and OFAC for each of the next five years.

According to count one of the information filed with the court, beginning in at least October 2005, through October 2008, Balli Aviation Ltd. conspired to export three Boeing 747 aircraft from the United States to Iran without first having obtained the required export license from BIS or authorization from OFAC, in violation of the Export Administration Regulations (EAR) and the Iranian Transactions Regulations. More particularly, the information states that Balli Aviation Ltd., through its subsidiaries, the Blue Sky Companies, purchased U.S.-origin aircraft with financing obtained from an Iranian airline and caused these aircraft to be exported to Iran without obtaining the required U.S. government licenses. Further, Balli Aviation Ltd. entered into lease arrangements that permitted the Iranian airline to use the U.S.-origin aircraft for flights in and out of Iran.

Count two of the information states that Balli Aviation Ltd. violated a Temporary Denial Order (TDO) issued by BIS on March 17, 2008, that prohibited the company from conducting any transaction involving any item subject to the EAR. Starting in or about March 2008 and continuing through about August 2008, Balli Aviation Ltd. willfully violated the TDO by carrying on negotiations with others concerning buying, receiving, using, selling and delivering U.S.-origin aircraft which went to the Export Administration Regulations.

"As this case demonstrates, corporations that conduct business with Iran in violation of U.S. export laws and sanctions face serious consequences," said David Kris, Assistant Attorney General for National Security. "The many agents, analysts and attorneys who worked on this successful investigation and prosecution deserve special thanks for their efforts."

"These charges reflect the commitment of the United States to vigorously enforce our laws against corporations that illegally seek to acquire U.S. aircraft from the U.S. on behalf of Iranian customers," said Channing Phillips, Acting U.S. Attorney for the District of Columbia. "Those who seek to profit by violating and circumventing U.S. trade laws should take heed of today’s guilty plea by Balli Aviation."

"The significant fine is a direct consequence of the level of deception used to mislead investigators," said Thomas Madigan, Acting Deputy Assistant Secretary of Commerce for Export Enforcement. "The case agents worked through a complex corporate maze to obtain the facts and bring the violators to justice."

"Today’s case should serve as further warning of Iran’s continued efforts to circumvent sanctions and obtain U.S. technology. Together with our colleagues from the Justice and Commerce departments, OFAC will continue to aggressively pursue both domestic and foreign entities that seek to violate U.S. sanctions programs by exporting goods to Iran from the United States." said Adam J. Szubin, Director, Office of Foreign Assets Control.

In announcing the plea, Assistant Attorney General Kris, Acting U.S. Attorney Phillips, Acting Deputy Assistant Secretary Madigan and OFAC Director Szubin commended Assistant Director for Operations John Sonderman, Special Agent in Charge Rick Shimon, Special Agent Joseph Varga, and Chief Counsel Attorney Gregory Michelsen, all of the Department of Commerce’s Bureau of Industry and Security. They also thanked Trial Attorney Jonathan C. Poling of the Counterespionage Section of the Justice Department’s National Security Division, and Assistant U.S. Attorney Anthony Asuncion of the U.S. Attorney’s Office for the District of Columbia, who are prosecuting this matter.

Gates Remembers Murtha as Champion of Troops

By Donna Miles
American Forces Press Service

Feb. 9, 2010 - Defense Secretary Robert M. Gates said he will remember U.S. Rep. John P. Murtha of Pennsylvania as a patriot and long-time champion of the nation's men and women in uniform. The 77-year-old Vietnam War veteran died yesterday of complications following gall bladder surgery.

Gates issued a statement after learning of Murtha's death while traveling in Europe. "America has lost a true patriot who served his country faithfully," he said, "first in uniform as a decorated combat Marine, and then as an elected representative."

Murtha was the first Vietnam War combat veteran elected to Congress, and he rose to become chairman of the House Appropriations Committee's subcommittee on defense. Gates noted that he had worked with Murtha for more than two decades, since the Reagan administration, when Gates worked at the CIA.

"I will always remember and be grateful for Congressman Murtha's personal efforts on behalf of the Afghan resistance fighting the Soviets - efforts that helped bring about the end of the Cold War," he said.

But the two did not always see eye to eye, Gates acknowledged. Murtha initially advocated the war in Iraq, but reversed his position in 2005, before the troop surge helped to turn the situation there around.

"In our dealings over the years, Jack and I did not always agree, but I always respected his candor and knew that he cared deeply about the men and women of America's military and intelligence community," Gates said in his statement. "My condolences to Joyce and the rest of the Murtha family."

According to his congressional biography, Murtha joined the Marine Corps in 1952, and served as a drill instructor at Parris Island, S.C., before attending Officer Candidate School at Quantico, Va. He later served with the 2nd Marine Division at Camp Lejeune, N.C.

He left active duty in 1955, but continued his service in the Marine Corps Reserve, volunteering for service in Vietnam in 1966 to serve as a battalion staff officer for the 1st Battalion, 1st Marine Regiment, 1st Marine Division. During his Vietnam service, he earned the Bronze Star with valor device, two Purple Hearts and the Vietnamese Cross of Gallantry.

Murtha attained the rank of colonel before retiring in 1990, when he was awarded the Navy Distinguished Service Medal.