US Manufacturer Fined $3.3M for Illegal EAR99 Exports to Russia

Integra sold $6.67 million worth of the products last year to third-party distributors, which then supplied the items to Russian end-users. Many of the exports were transistors and “related products” used in avionics or radar systems, BIS said, including items on the U.S. Common High Priority List -- the list of microelectronics, industrial inputs and other low-level technology goods that Russia is seeking to sustain its war against Ukraine.

The company voluntarily disclosed the violations, which BIS said led to a “significant reduction” in its penalty. BIS also said it’s suspending $1.5 million of the penalty because of Integra’s “limited ability to pay.”

Matthew Axelrod, the BIS assistant secretary for export enforcement, said the agency has been “crystal clear about the need for corporate vigilance” for items designated on the Common High Priority List. The penalty “should send a strong signal to other CHPL exporters of the consequences that will flow from violations of controls on these critical items,” he said in a statement Dec. 18.

The announcement comes days after Axelrod said BIS was planning to release more enforcement actions before the Biden administration exits next month (see 2412120039).

The agency isn’t done. BIS has other active investigations that it hopes to conclude in “early 2025,” Axelrod told Export Compliance Daily in a Dec. 18 interview.

“I expect to see them continue to develop,” he said, “and for some of them to reach resolution in the not too distant future.”

BIS said Integra’s 94 export violations took place between February and October 2023. The company said it knew it was sending those items to Russian end-users at the time, but it didn’t realize the items needed a license under the Export Administration Regulations. BIS said it imposed new Russia-related license requirements on those items in February 2023, and it officially added them to the Common High Priority List in July 2023.

But Integra didn’t catch those updates because the company’s export compliance program “lacked procedures requiring regular review of revisions to the EAR,” BIS said. The company specifically told BIS that it thought the EAR99 items it was shipping to Russia -- items that generally aren't subject to specific license requirements -- “were technologically suitable only for civil end use, rather than military end use.”

The company, which engineers and makes advanced microwave power designs for high performance systems, specifically sold “L and S band Radio Frequency transistors and related products” designated as EAR99, including transistors with Harmonized Tariff Schedule code 8541.29, according to the settlement it reached with BIS. The agency said those products can be used in radar to detect and track aircraft, and they can help transmit radio signals between aircraft and ground stations.

Integra said it didn’t realize it had been illegally shipping those items until October 2023, when the agency said it “promptly stopped” the sales and self-reported to BIS.

In total, the company sent 94 shipments, all designated as EAR99, to eight different Russian end-users. BIS also noted that Integra didn’t make any direct sales to Russia -- the company sold the items to two distributors and shipped them using foreign freight forwarders. But it still knew its products were being sent to Russia because Integra required the distributors to provide it with the end-users’ names and country, along with the end use of the items, BIS said.

John Sonderman, director of the BIS Office of Export Enforcement, said the case highlights the importance of exporters staying up to date with U.S. export control changes. “As these controls continued to evolve, it was critical for any U.S. company that made the decision to continue to export to Russia to closely track and implement updates to the controls,” he said.

Integra didn’t immediately respond to a request for comment.