9th Circuit Rejects Claim That Circuits Shouldn't Have Been Subject to Nat'l Security Controls
The U.S. Court of Appeals for the 9th Circuit rejected an argument from a Chinese engineering professor who said his illegal export shouldn't have been subject to national security controls, which made the export subject to a higher base offense (U.S. v. Yi-Chi Shih, 9th Cir. # 23-3718).
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The decision came as part of an appeal by former UCLA engineering professor Yi-Chi Shih, who was convicted for violating the International Emergency Economic Powers Act. Shih exported monolithic microwave integrated circuits, an export-controlled item, to China as part of a collaboration with Chinese engineers to conduct research for a Chinese enterprise that develops military weapons (see 2307260080).
If Shih is found to have evaded national security controls, he is subject to a higher base offense. The professor appealed on the grounds that a district court wrongly found the Export Control Classification Numbers for the controlled circuits to be national security controls, arguing that ECCNs added only to satisfy treaty obligations -- such as the Wassenaar Arrangement, a multilateral export control regime -- are foreign policy controls.
The three-judge panel disagreed with this claim, noting that the Bureau of Industry and Security controlled the items for national security, missile technology, nuclear nonproliferation and anti-terrorism reasons. And the Wassenaar members' reasons for controlling the items included the promotion of "responsibility and transparency in the global arms trade" and the prevention of "destabilizing accumulations of conventional weapons," said the opinion, written by Judge Andrew Hurwitz.
Hurwitz said that as a result, the district court didn't err in finding that the relevant export controls were "implemented for national security reasons."
Shih also said the lower base offense applies to his case because federal sentencing guidelines imply that evasion of national security controls "must involve conduct as egregious as the other conduct penalized by the higher base offense level." This "other" conduct includes evasion of controls related to the "proliferation of nuclear, biological, or chemical weapons or materials" or offenses related to a financial transaction with a terrorism-supporting nation.
Hurwitz again sided with the U.S., noting the court previously held that the higher base offense level applied "when the defendant evaded national security controls by exporting thermal imaging cameras without a license." He also noted that there is a difference between a "mere failure to comply with regulatory requirements and the harm that can stem from that violation" because "recordkeeping or reporting" offenses are subject to a lower base offense level.
The court rejected Shih's argument that the violation was a "recordkeeping or reporting" offense, citing Shih's business dealings with a Chinese company "whose 'business involved missiles.'" Other evidence in the case, including Shih's efforts to hide his identity and representations that the goods aren't export controlled, "amply supports the district court's conclusion that this was not a mere recordkeeping offense," Hurwitz held.