On June 20, 2007, the U.S. Department of Justice announced the appointment of Steven W. Pelak as the first-ever National Export Control Coordinator. Mr. Pelak’s job is "to improve the investigation and prosecution of illegal exports of U.S. arms and sensitive technology." The creation of this position follows on a number of recent high profile enforcement actions in which companies and individuals have sold high-end military technology to foreign companies. Most notable among these recent enforcement actions is the guilty plea entered by ITT Corp. earlier this year, in connection with which ITT may be fined up to $100 million for the illegal export of night vision technology to China. While most enforcement actions for export violations involve administrative fines, with a maximum of $50,000 per violation, criminal convictions can add a $1 million penalty and up to 20 years in prison. Increasingly, the Government is pursuing actions against both the offending company and its management.
Prior to his new appointment, Mr. Pelak was an Assistant U.S. Attorney in the District of Columbia, focusing on National Security-related issues. In his new role, Mr. Pelak is responsible for coordinating all enforcement actions between the U.S. Attorney’s offices across the country, the Department of Justice, and the various other government agencies responsible for administering U.S. export controls (including the Departments of Commerce, State, and Treasury).
In its press release announcing the creation of Mr. Pelak’s new office, the Department of Justice warned that "the threat posed by illegal exports of controlled U.S. technology is substantial." Considering the complicated and labyrinthine regulatory system currently in place — with no less than three separate federal agencies controlling different (and sometimes overlapping) export requirements — it seems that Mr. Pelak will find many potentially inviting targets for his efforts, if only because many companies are unaware specifically of the kinds of licensing restrictions that apply to their various products. The Department of Justice often takes advantage of regulatory confusion to press its "enforcement agenda," and export laws are no different. Companies and individuals selling in international markets — and those employing foreign persons within the United States — are well advised to ensure that they have policies and procedures in place to manage the risks associated with export compliance. International companies are advised that, even though they do business overseas, the extra-territorial reach of U.S. export laws may still impact their business.