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BIS Issues Denial Order for Domestic Freight Forwarder Alleging Multiple Violations of Settlement Agreement Terms

This blog post was co-authored by Daniela Melendez, an Associate with The Volkov Law Group.

On June 14, 2024, U.S. Department of Commerce Assistant Secretary for Export Enforcement, Matthew Axelrod, officially issued an order activating the suspended portion of a civil penalty that was imposed on U.S-based freight forwarder USGoBuy, LLC (“USGoBuy”) for repeated, seemingly flagrant, violations of the Export Administration Regulations (“EAR”). USGoBuy—a package forwarding company based in Portland, Oregon—had previously been in the business of allowing foreign customers to purchase commodities from domestic retailers and have them shipped to its facilities for export to their final destinations abroad. 

In June 2021, USGoBuy entered into a settlement agreement (“Agreement”) with the Department of Commerce’s Bureau of Industry and Security (“BIS”), pursuant to which it admitted to facilitating the export of riflescopes—classified under ECCN 0A987.a and subject to export regulation for crime control purposes—to locations in the People’s Republic of China (“PRC”) and the United Arab Emirates (“UAE”) without the required license. The underlying Agreement called for USGoBuy to pay a total civil monetary penalty of $20,000 with $15,000 suspended for a probationary period of three (3) years. The Agreement further called on USGoBuy to rectify notable deficiencies with its export compliance program and to submit the results of an independent, external audit of its compliance program to BIS covering the twelve (12) month period that immediately followed the Agreement’s effective date. USGoBuy was further required to promptly disclose any additional violations of the EAR and to apprise BIS of any corrective measures taken in response to those violations. Significantly, BIS further chose to suspend that portion of the June 2021 order that would have resulted in the outright denial of export privileges to USGoBuy provided that the entity complied with all other terms and conditions. 

Axelrod’s June 14, 2024 order indicates that USGoBuy wholly failed to comply with the requirements of the original Agreement. Among other things, external audit results furnished by USGoBuy to the federal government approximately eighteen (18) months following approval of the June 2021 Agreement identified significant gaps in its compliance program that resulted in the organization’s continued inability to properly identify items for which export authorization may be required. In addition, the audit noted one hundred seventy-six (176) instances of USGoBuy failing to submit Electronic Export Information (“EEI”) reports, and other cases where it failed to maintain appropriate records of its export activity, consistent with the EAR’s requirements. In one instance, USGoBuy even allowed a package ostensibly containing controlled commodities and marked conspicuously with export control language to be exported to the PRC unencumbered. Unbeknownst to USGoBuy, the original package had been intercepted by Homeland Security Investigations (“HSI”) and replaced with commodities that did not require a license for export. 

As a result of its failure to abide by the terms of the 2021 Agreement, Axelrod activated a denial order that officially suspends the export privileges of USGoBuy, its successors and assigns, for a period of three (3) years. During the relevant period, USGoBuy is prohibited from applying for, or receiving any export license or other authorization from BIS. The order similarly prohibits the entity from engaging in any other activities related to the business of freight forwarding and revokes any previously-issued export licenses. 

While the outright denial of export privileges is still a relatively rare occurrence, the USGoBuy case illustrates the importance of completely fulfilling any obligations incurred in connection with an administrative settlement. By failing to take the terms of the June 2021 Agreement seriously, USGoBuy effectively ensured that the government would be required to revoke its export privileges, or face the real possibility that its credibility would be undermined. As we have noted ad nauseam in the context of prior blog postings (including, but not limited to, a recent blog post that addressed the issuance of official BIS guidance), freight forwarders and logistics services providers in particular are charged with exercising increased vigilance in the wake of the federal government’s decision to prioritize the enforcement of sanctions and trade controls regulations over other laws. The decision of BIS to temporarily suspend the export privileges of USGoBuy should force all freight forwarders to critically examine whether their export compliance programs are sufficient to mitigate the potential for costly violations.

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3 Responses

  1. John Noell says:

    USGoBuy is now holding a LOT of packages that cannot be forwarded at all (even to a USA address). They claim to allow things to be RETURNED to the vendor (IF the vendor is in the USA) and IF you provide them with a pre-paid return shipping label. But it does not look as if they are actually doing so. If you got something from overseas and want it sent to another address, you are completely out of luck (and money). Getting return labels can be very costly, even when possible. BIS is not saying if they can let current packages out or if USGoBuy gets to keep them. (“Anything left over 65 days is destroyed” or they get to keep it.) Part of me wants to see them permanently out of business; part of me wants my stuff! (9 boxes, incl. iPhone and PC)

  2. Kanaan says:

    Thanks for this post. I am one of USGobuy customer whose packages remain with USGobuy. It was unfortunate that we no nothing of the company misconduct and non-compliance that led to this. I was about to ship my items out of the US but unfortunately they emailed me a while ago about the situation.

    I am trying to find other means to take my package from them but they are not responsive to my email. I requested compensation but they are silent. Do you have any advice on how to get assistance?