PENALTY NOTICE FROM TREASURY --November 4, 2002: Dan Handelman

Department of the Treasury
Washington, DC 20220

Nov 4, 2002

FAC Nos. IQ-162016 and IQ-162433

PENALTY NOTICE
Dear Mr. Handelman:

A Prepenalty Notice ("Notice") dated December 3, 1998, was issued to you by the Office of Foreign Assets Control ("OFAC") for having engaged in certain prohibited transactions relating to Iraq, as detailed in the Notice. No license or approval was issued by OFAC for these transactions. Accordingly, such transactions violated the Iraqi Sanctions Regulations, 31 CFR Part 575 (the "Regulations"), promulgated pursuant to the International Emergency Economic Powers Act, 50 U.S.C. 1701 et seq ("IEEPA") and underlying statutes and Executive Orders. See зз 575.204-207 and 575.211 of the Regulations.

Section 206 of IEEPA, 50 U.S.C. з 1705, provides, in part, for a civil penalty not to exceed $10,000 for each such violation. Section 586E of the Iraq Sanctions Act of 1990, PL.101-513, 104 Stat. 2049, provides in part, for a civil penalty not to exceed $250,000 for each violation occurring after November 5, 1990.[1] Pursuant to з 575.702 of the Regulations, the Notice proposed a penalty against you in the amount of $10,000. You were advised of your right to make a written presentation to OFAC setting forth reasons why the penalty should not be issued or, if issued why the amount should be less than that proposed. Such written response was required to be made within thirty (30) days of the mailing of the Notice.

OFAC mailed the Notice to you on December 3, 1998. Delivery is evidenced by a signed United States Postal Service Form 3811, Domestic Return Receipt.

By response dated December 27, 1998, you made a written presentation setting forth reasons why you engaged in certain transactions relating to the embargo against Iraq. You stated that you traveled to Iraq in violation of the U.S. embargo, and you asserted the purpose of your travel precluded your participation in the licensing process as prescribed under the Regulations for travel transactions. You stated that your First Amendment right to peaceably assemble included your right to travel abroad notwithstanding the licensing requirements of the Regulations.

OFAC notes that you have settled your litigation with U.S. Customs Service ("USCS") concerning goods USCS seized. Inasmuch as Counts 5 and 7 of the Notice contain allegations relating to your transactions to/from Iraq concerning those goods, OFAC has determined not to proceed with a final determination for the transactions therein. Count 6 alleged your engaging in currency travel-related transactions to/from/within Iraq absent prior license or other authorization from OFAC. With respect to your assertion that the purpose of your travel-related transactions took precedence over the Regulations' requirement to apply for and be granted a specific license from OFAC prior to your engaging in those transactions, OFAC points out that, under the Regulations, authorization by license
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[1] Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub.L. 101-410, 104 Stat. 890, 28 U.S.C. 4261 note), as amended by the Debt Collection Improvement Act of 1996 [Pub.L. 104-234, sec. 31001(s)(1), Apr. 26, 1996, 110 Stat. 1321-373 -- jointly, the "FCPIA"], requires each Federal agency with statutory authority to assess civil monetary penalties ("CMPs") to adjust CMPs for inflation according to a formula described in () 5 of the FCPIA. Accordingly, on October 23, 1996, OFAC published in the Federal Register the required amendment, effective October 21, 1996, to the Regulations adjusting its CMP to $275,000, for offenses committed after October 21, 1996. See 61 FR 54936 at 54939.

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or other authorization is the sole exception to the prohibition against a U.S. person engaging in transactions relating to travel to Iraq. See з 575.207 of the Regulations. The allegations in the Notice included your travel-related transactions to/from/within Iraq absent prior license or other authorization from OFAC. Notwithstanding the purpose of your travel, the Regulations prohibited your travel-related transactions as alleged in the Notice.

As regards your statement that your First Amendment right to assemble peaceably, including a right to travel, OFAC notes that the U.S. government's right to regulate international travel is well established. See e.g. California v. Torres, 435 U.S 1, 4 n. 6 (1978); Haig v. Agee, 435 U.S. 280, 307 (1981).

After a careful review of the entire file, it is determined that you did violate IEEPA and the Regulations as alleged in Count 6 of the Notice. It is further determined that, while some relief may be warranted to take into account the fact that the instant violation was your first offense on record at OFAC, such relief must be balanced against an aggravating factor present, specifically your willful violation of the Regulations. Accordingly, the proposed civil penalty in the amount of $10,000 against you in Count 6 is hereby imposed upon you pursuant to з 560.704 of the Regulations.

A check payable to the "U.S. Treasury" in the amount of $10,000 should be sent within 30 days of the mailing of this Penalty Notice to the U.S. Treasury Department, 1500 Pennsylvania Avenue, N.W., Attn: (1310 G Street, Suite 200E), Washington, D.C. 20220. Please note that interest, administrative charges and late fees will commence to accrue after 30 days of the mailing of the Penalty Notice. Under Public Law 97-365, 31 U.S.C. з 2717, interest at an annual rate inter of 5% and an administrative charge of $12 will be added monthly if the amount is not paid by the due date. Should the amount not be paid within ninety (90) days, an additional late charge of 6% will be added.

Please note that з 560.706 of the Regulations provides that this matter shall be referred for administrative collection measures or to the United States Department of Justice for collection if the penalty is not paid within 30 days of the mailing of the Penalty Notice.

Please further note that 31 U.S.C. з 7701 requires that a person assessed a penalty by a Federal agency furnish a taxpayer identification number/Social Security Number and also requires the agency to disclose that we intend to use such number for the purposes of collecting and reporting on any delinquent penalty amount in the event of a failure to pay the penalty imposed.

Sincerely,

R. Richard Newcomb
Director
Office of Foreign Assets Control

cc:   U.S. Customs Service
     Fines, Penalties and Forfeitures Office
     (Attn: Mr. Don Zainea)
     Patrick V. McNamara Bldg.
     477 Michigan Avenue, Rm 200
     Detroit, Michigan 48226

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