BIS Denies Temporary Denial Order Appeal Involving Alleged Russia Export Violations
The Bureau of Industry and Security rejected an appeal from Alexey Sumchenko for a temporary denial order issued against him in June after an administrative law judge said BIS “successfully demonstrated” that the denial order was needed to prevent an “imminent” violation of U.S. export controls.
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The order said Hong Kong-based Sumchenko and others used Sumchenko’s businesses -- Hong Fan International, Lufeng Limited and SkyTechnic -- to ship aircraft parts and other controlled items to Russia (see 2406170039). The order temporarily blocks Sumchenko and companies from participating in transactions subject to the Export Administration Regulations.
In an appeal filed July 25, Sumchenko argued that BIS had no evidence he violated or was at risk of violating the EAR, and said his “alleged misconduct” occurred only after he ceded ownership control in the three companies. But BIS and an administrative law judge disagreed, saying Sumchenko had control of the companies -- or was the beneficial owner of bank accounts tied to the companies -- when they tried to illegally buy U.S. aircraft parts on behalf of Russia.
The agency also noted that it may consider “past participation in deliberate violations of the EAR as a factor” when deciding whether a person is likely to violate the EAR in the future. BIS said it established that all three companies were involved in EAR violations and that Sumchenko “is responsible for that conduct based on his various roles with these companies at the time the conduct took place.”
BIS added that Sumchenko, in his appeal, “made no effort to refute” the agency’s allegations against Hong Fan, Lufeng and SkyTechnic and didn’t explain his role in the companies. He also didn’t fully explain why he directed a third party to pay Lufeng about $450,000 in February 2023, only making “vague assurances” that the money was connected to his effort to divest from the company, BIS said. The payment “suggests his financial interest in Lufeng,” the agency said, “including the receipt of any benefits of the scheme to provide U.S.-origin parts to entities in Russia without authorization, continued after he transferred his ownership and resigned as director.”