Order Relating to Eric Baird
| Published date | 20 December 2018 |
| Citation | 83 FR 65340 |
| Record Number | 2018-27572 |
| Section | Notices |
| Court | Industry And Security Bureau |
Federal Register, Volume 83 Issue 244 (Thursday, December 20, 2018)
[Federal Register Volume 83, Number 244 (Thursday, December 20, 2018)]
[Notices]
[Pages 65340-65342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27572]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Order Relating to Eric Baird
In the Matter of: Eric Baird, 647 Norsota Way Sarasota, FL 34242;
Respondent; 16-BIS-0002.
The Bureau of Industry and Security, U.S. Department of Commerce
(``BIS''), has notified Eric Baird, of Sarasota, Florida (``Baird''),
that it has initiated an administrative proceeding against Baird
pursuant to Section 766.3 of the Export Administration Regulations (the
``Regulations''),\1\ through the issuance of an Amended Charging Letter
to Baird that alleges that Baird committed one hundred sixty-six (166)
violations of the Regulations.\2\ Specifically, the charges are:
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\1\ The Regulations originally issued under the Export
Administration Act of 1979, as amended, 50 U.S.C. 4601-4623 (Supp.
III 2015) (``the EAA''), which lapsed on August 21, 2001. The
President, through Executive Order 13,222 of August 17, 2001 (3 CFR,
2001 Comp. 783 (2002)), which has been extended by successive
Presidential Notices, the most recent being that of August 8, 2018
(83 FR 39,871 (Aug. 13, 2018)), continued the Regulations in full
force and effect under the International Emergency Economic Powers
Act, 50 U.S.C. 1701, et seq. (2012) (``IEEPA''). On August 13, 2018,
the President signed into law the John S. McCain National Defense
Authorization Act for Fiscal Year 2019, which includes the Export
Control Reform Act of 2018, Public Law 115-232, tit. 17, subtitle B,
132 Stat. 2208 (2018) (``ECRA''). While Section 1766 of ECRA repeals
the EAA (except for three sections which are inapplicable here),
Section 1768 of ECRA provides, in pertinent part, that all rules and
regulations that were made or issued under the EAA, including as
continued in effect pursuant to IEEPA, and were in effect as of
ECRA's date of enactment (August 13, 2018), shall continue in effect
according to their terms until modified, superseded, set aside, or
revoked through action undertaken pursuant to the authority provided
under ECRA.
\2\ The Regulations are currently codified in the Code of
Federal Regulations at 15 CFR parts 730-774 (2018). The charged
violations occurred in 2011-2013. The Regulations governing the
violations at issue are found in the 2011-2013 versions of the Code
of Federal Regulations (15 CFR parts 730-774). The 2018 Regulations
set forth the procedures that apply to this matter.
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Charges 1-166 15 CFR 764.2(b)--Causing, Aiding or Abetting a Violation
1. On at least one hundred sixty-six (166) occasions beginning
on or about August 1, 2011, and continuing through on or about
January 7, 2013, Baird caused, aided, abetted, commanded, induced
and/or permitted (``caused, aided or abetted'') the doing of an act
prohibited by, or the omission of an act required by, the
Regulations. As further alleged below, Baird caused, aided or
abetted the filing of false or misleading export control documents,
namely Shipper's Export Declarations and Automated Export System
filings (``SED/AES filings''), and the failure to make required SED/
AES filings, in connection with the export or attempted export of
items subject to the Regulations. Baird also caused, aided or
abetted the export and attempted export without the required BIS
licenses of items subject to the Regulations and listed on the
Commerce Control List (``CCL'').
2. At all times pertinent hereto, Baird was Chief Executive
Officer (``CEO'') of Access USA Shipping, LLC, d/b/a MyUS.com and f/
k/a Access USA Shipping, Inc. (``Access''), a company originally
registered in Florida that he founded in 1997. Baird was directly or
indirectly Access's primary shareholder until on or about August 28,
2012. After a partial sale of Access on or about August 28, 2012,
Baird continued to serve as its CEO and maintained a minority equity
stake in the company with the right to appoint two members of
Access's board of directors. Baird was replaced as CEO of Access in
or about September 2013. Baird's interests, however, were not fully
divested until on or about March 22, 2016, at which time he no
longer had an equity interest in Access or the right to appoint
board members.
3. Access provided foreign customers with a U.S. physical
address for items purchased from U.S. merchants for ultimate export
from the United States. For a fee, Access provided
[[Page 65341]]
such customers a ``suite,'' which was a designated place or space at
Access's warehouse facilities to which customers could have items
delivered from U.S. merchants. When Access received items that a
foreign customer had ordered from a U.S. merchant, Access employees
entered into Access's order management system information regarding
the name of the merchant, shipment tracking number, a detailed
description of the item, and the value of the item. Before the
shipment was exported from the United States, however, Access
employees would revise the original item information, including the
item's value and/or its description, to generate an invoice that
contained false or misleading information for use in connection with
the export of the items. At times, Access's order system included
account notes that directed packaging or price tags be removed or
that a shipment's declared value be kept below a certain dollar
amount.
4. Baird established, directed, controlled, and/or authorized
Access's policy and practice of falsifying the value and description
of items being exported or intended for export, including items
listed on the CCL. Baird also at times personally participated in
the undervaluing and mis-description of such items.
5. Access routinely undervalued items using multiple different
strategies or schemes, including, for example, by lowering values of
items by 25%-50% depending on the country of destination. The extent
of undervaluation reached or exceeded 75% on some occasions, and for
some customers maximum declared values of no more than, for example,
$50 or $100, were used, regardless of the true value of the items.
6. Similarly, on numerous occasions, descriptions of CCL items
or other items subject to the Regulations were altered to help avoid
export control scrutiny and detection by law enforcement, including
on occasions when the items also were undervalued. For example, a
night vision lens converter was described as ``camera lenses'';
laser sights as ``tools and hardware''; and rifle scopes as
``sporting goods'' or ``tools, handtools.'' In one instance, rifle
stocks and grips were described as ``toy accessories.'' Access's
October 2010 and October 2012 Customer Service Training Manuals
illustrate the pervasiveness of altering descriptions of items, in
part, to avoid export control scrutiny and detection, including
those related to firearms and related parts that were considered
prohibited or restricted items.
7. Baird also established, directed, controlled, and/or
authorized Access's ``personal shopper program'' or ``alternative
program.'' Under this program, Access or an Access employee was
presented to U.S. merchants as the purchaser and/or end-user of the
items in situations where foreign customers were seeking products
from U.S. merchants that did not accept foreign payment methods or
had raised concerns that Access was not an end user and refused to
sell or ship to Access because they wished to prevent the export of
their goods, such as companies that sell weapons or weapon parts.
Through this evasive program, Access purchased items for export to
its foreign customers without informing the U.S. merchants that the
items were intended for export. Foreign customers would email an
Access employee their shopping list, and the Access employee would
purchase the items using credit cards in Baird's name, or using a
credit card account or other payment mechanisms opened in the name
of the individual employee, whom Access would subsequently
reimburse. At times, shipments were delivered to the homes of Access
employees so that, in addition to being misled to believe that a
domestic customer was involved, the U.S. merchant would be misled to
believe that Access itself was not involved in the transaction.
8. As part of this ``personal shopper program,'' Baird directed
or authorized Access employees to use his credit cards and driver's
license information to make purchases of items for export. In
addition, Baird personally asked Access employees to apply for
credit card accounts and have customer deliveries sent to their
personal addresses to make the shipments appear as if they were for
domestic customers.
9. At all times relevant hereto, Baird knew of the Regulations
and Access's export control compliance obligations, including the
need for items to be accurately valued and described for purposes of
SED/AES filing requirements and the need to determine licensing
requirements. Baird received this information through, for example,
outreach visits from and other communications with BIS special
agents and other federal law enforcement agents, as well as at
various occasions through other Access officials or personnel and
through companies that regularly served as freight forwarders or
carriers in connection with export transactions involving Access.
10. For example, on or about July 11, 2007, BIS's Office of
Export Enforcement (``OEE'') conducted an outreach visit to Access,
during which a BIS Special Agent provided detailed oral and written
information regarding compliance with the EAR and other U.S. export
control laws and regulations. As part of this outreach visit, the
BIS Special Agent met with Baird, including explaining that items
should be checked for export license requirements and that customers
should be screened. In addition, Access documents indicate that by
no later than January 2008, Baird knew that false or misleading
statements on SED/AES filings could lead to penalties of up to
$250,000 per violation,\3\ and that by March 2008, Baird knew that a
SED/AES filing must be made for each export when the value of the
items under a single Schedule B number is more than $2,500.\4\
Access subsequently received Shield America outreach visits from the
Department of Homeland Security, Homeland Security Investigations
(``HSI'') on March 27, 2009, June 9, 2010, and January 10, 2012,
respectively, during which HSI special agents provided compliance
information. Baird attended the January 10, 2012 outreach visit. In
addition, the BIS Special Agent provided detailed information on
properly valuing items on export control documents during a
telephone discussion with CEO Eric Baird on January 18, 2012, and a
related follow-up email with him.
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\3\ The maximum penalty figure that currently applies in this
case is $295,141 per violation. See 15 CFR 6.3(b); 83 FR 706 (Jan.
8, 2018). Since January 2008, the maximum penalties have been
adjusted for inflation multiple times pursuant to the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015, Sec.
701 of Public Law 114-74, enacted on November 2, 2015. See also 15
CFR 6.5.
\4\ A Schedule B number is a ten-digit number used in the United
States to classify physical goods for export to another country.
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11. Access documents also include correspondence among Baird and
Access's then-Chief Technology Officer (``CTO'') and other company
officials indicating that Baird remained fully aware at and around
the time of the violations alleged herein of SED/AES filing
requirements and the potential significant sanctions for false or
misleading statements on SED/AES filings. In emails in September
2011 to Baird, the CTO, who is Baird's sister, provided information
on a BIS enforcement case involving false or misleading reporting of
declared value on export documents. In an email dated September 20,
2011, she included information describing BIS's imposition of civil
penalties as part of the settlement of a case involving repeat
undervaluing of exports on Shipper's Export Declarations and stated,
inter alia: ``I will not be a party to [undervaluation]. I know
we're doing it now. I know we have the means to avoid doing it. I
know we are WILLINGLY AND INTENTIONALLY breaking the law.''
(Emphasis in original). In the same email chain later that day,
Baird suggested that Access could undervalue by 25% and if Access
was ``warned by [the U.S.] government,'' then it ``can stop ASAP.''
12. Baird, however, did not stop Access's undervaluing of
exports or its or his related violations of the Regulations. Rather,
almost immediately following this September 20, 2011 email exchange,
Baird and the CTO discussed on September 21, 2011, how Access's
order system would be modified to either automatically or manually
undervalue where there was no merchant invoice. The order system
would be and was in fact modified to enable undervaluing by a set
percentage based on the country of destination for the export, if
there was no U.S. merchant's invoice or no value listed on the U.S.
merchant's invoice. Additionally, when a U.S. merchant's invoice was
included in a package received from a U.S. merchant, Access would
remove the invoice at its customer's request, both before and after
the September 2011 modification of the order system.
13. While Access for a short time did reduce the extent it
engaged in its unlawful undervaluing activities, it fully resumed
and even expanded those activities in no later than January 2012,
pursuant to Baird's direction and/or authorization. Beginning no
later than on or about January 16, 2012, Baird directed or
authorized that Access customers be notified that Access's order
system was being modified to remove the recent limitation on
undervaluing and that Access would work together with them so that
false values could be declared and undervalued to the extent of the
customers' choosing.
[[Page 65342]]
14. In doing the foregoing, Baird caused, aided or abetted
Access, as well as forwarders and carriers involved in export
transactions with Access, to make false or misleading SED/AES
filings with the U.S. Government. Such false or misleading filings
violate Section 764.2(g) of the Regulations. Baird also caused,
aided or abetted the failure by Access and its forwarders and
carriers to make required SED/AES filings. The failure to make a
required SED/AES filing violates Section 764.2(a) of the
Regulations. Baird also caused, aided or abetted the export and
attempted export of items classified under Export Control
Classification Number (``ECCN'') 0A987 and controlled for Crime
Control reasons without the BIS licenses required pursuant to
Section 742.7 of the Regulations to export the items to Argentina,
Austria, Hong Kong, Indonesia, Libya, Saudi Arabia, South Africa and
Yemen. Such unlicensed exports and attempted exports violated
Section 764.2(a) and 764.2(c), respectively, of the Regulations.
15. In so doing, Baird committed one hundred sixty-six
violations of Section 764.2(b) of the Regulations.
Whereas, BIS and Baird have entered into a Settlement Agreement
pursuant to Section 766.18(b) of the Regulations, whereby they
agreed to settle this matter in accordance with the terms and
conditions set forth therein;
Whereas, I have taken into consideration the admission of
liability by Baird set forth in the Settlement Agreement with regard
to the violations in the Amended Charging Letter;
Whereas, I have also taken into consideration the plea agreement
that Baird has entered into with the U.S. Attorney's Office for the
Middle District of Florida (``the plea agreement''); and
Whereas, I have approved of the terms of such Settlement
Agreement;
It is therefore ordered:
First, Baird shall be assessed a civil penalty in the amount of
$17,000,000. Baird shall pay the U.S. Department of Commerce
$10,000,000 not later than 30 days from the date of this Order.
Payment of the remaining $7,000,000 shall be suspended for a period
of five (5) years from the date of this Order, and thereafter shall
be waived, provided that during this five-year payment probationary
period, Baird has made full and timely payment of $10,000,000 as set
forth above and has otherwise complied with the provisions of the
Settlement Agreement and this Order, has complied in full with the
plea agreement and any sentence imposed upon him following his
conviction, and has committed no violation of the Export Control
Reform Act of 2018 (``ECRA'') \5\ or the Regulations or any order,
license, or authorization issued thereunder. If Baird fails to
comply with the terms of the Settlement Agreement or of this Order,
or the terms of the plea agreement or sentence, or commits a
violation of ECRA or the Regulations or any order, license, or
authorization issued thereunder, during the five-year payment
probationary period under this Order, the suspension of the civil
penalty may be modified or revoked by BIS and the remaining
$7,000,000 may become due and owing immediately.
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\5\ See note 1, supra.
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Second, pursuant to the Debt Collection Act of 1982, as amended
(31 U.S.C. 3701-3720E (2012)), the civil penalty owed under this
Order accrues interest as more fully described in the attached
Notice, and if payment is not made by the due date specified herein,
Baird will be assessed, in addition to the full amount of the civil
penalty and interest, a penalty charge and an administrative charge,
as more fully described in the attached Notice.
Third, for a period of five (5) years from the date of this
Order, Eric Baird, with a last known address of 647 Norsota Way,
Sarasota, FL 34242, and when acting for or on his behalf, his
successors, assigns, representatives, agents, or employees
(hereinafter collectively referred to as the ``Denied Person''), may
not, directly or indirectly, participate in any way in any
transaction involving any commodity, software or technology
(hereinafter collectively referred to as ``item'') exported or to be
exported from the United States that is subject to the Regulations,
or in any other activity subject to the Regulations, including, but
not limited to:
A. Applying for, obtaining, or using any license, license
exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying,
receiving, using, selling, delivering, storing, disposing of,
forwarding, transporting, financing, or otherwise servicing in any
way, any transaction involving any item exported or to be exported
from the United States that is subject to the Regulations, or
engaging in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any
item exported or to be exported from the United States that is
subject to the Regulations, or from any other activity subject to
the Regulations.
Fourth, no person may, directly or indirectly, do any of the
following:
A. Export or reexport to or on behalf of the Denied Person any
item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted
acquisition by the Denied Person of the ownership, possession, or
control of any item subject to the Regulations that has been or will
be exported from the United States, including financing or other
support activities related to a transaction whereby the Denied
Person acquires or attempts to acquire such ownership, possession or
control;
C. Take any action to acquire from or to facilitate the
acquisition or attempted acquisition from the Denied Person of any
item subject to the Regulations that has been exported from the
United States;
D. Obtain from the Denied Person in the United States any item
subject to the Regulations with knowledge or reason to know that the
item will be, or is intended to be, exported from the United States;
or
E. Engage in any transaction to service any item subject to the
Regulations that has been or will be exported from the United States
and which is owned, possessed or controlled by the Denied Person, or
service any item, of whatever origin, that is owned, possessed or
controlled by the Denied Person if such service involves the use of
any item subject to the Regulations that has been or will be
exported from the United States. For purposes of this paragraph,
servicing means installation, maintenance, repair, modification or
testing.
Fifth, after notice and opportunity for comment as provided in
Section 766.23 of the Regulations, any person related to the Denied
Person by ownership, control, position of responsibility,
affiliation, or other connection in the conduct of trade or business
may also be made subject to the provisions of this Order.
Sixth, the five-year denial period set forth above shall be
active for a period of four (4) years from the date of this Order.
As authorized by Section 766.18(c) of the Regulations, the remaining
one (1) year of the denial period shall be suspended, and shall
thereafter be waived five (5) years from the date of this Order,
provided that Baird has made full and timely payment as set forth
above, has otherwise complied with the provisions of the Settlement
Agreement and this Order, has complied with the plea agreement and
any sentence imposed upon or following the entry of his plea and
conviction, and has committed no other violation of ECRA or the
Regulations or any order, license, or authorization issued
thereunder. If Baird does not make full and timely payment as set
forth above or otherwise fails to comply with the Settlement
Agreement or this Order, does not fully and timely comply with the
plea agreement or sentence, or commits another violation of ECRA or
the Regulations or any order, license, or authorization issued
thereunder, the suspension of the remaining one year of the denial
period may be modified or revoked by BIS. If Baird fails to comply
with any of the above conditions after the four-year active portion
of the denial period but before five years from the date of this
Order, the full one year suspended portion of the denial order may
be imposed from the date BIS determines such violation occurred, and
any license issued pursuant to ECRA or the Regulations in which the
Denied Person has an interest at that time will be revoked.
Seventh, Baird shall not take any action or make or permit to be
made any public statement, directly or indirectly, denying the
allegations in the Amended Charging Letter or this Order.
Eighth, the Amended Charging Letter, the Settlement Agreement,
and this Order shall be made available to the public.
Ninth, this Order shall be served on Baird, and shall be
published in the Federal Register.
This Order, which constitutes the final agency action in this
matter, is effective immediately.
Issued on December 14, 2018.
Douglas Hassebrock,
Director, Office of Export Enforcement, performing the non-exclusive
functions and duties of the Assistant Secretary of Commerce for Export
Enforcement.
[FR Doc. 2018-27572 Filed 12-19-18; 8:45 am]
BILLING CODE P
