Iranian Citizens Indicted for Illicit Procurement and Transshipment of Controlled Technology to Iran

October 31, 2017

Publication Type: 

  • International Enforcement Actions

Weapon Program: 

  • Missile
  • Military

Mentioned Suspect Entities & Suppliers: 

Related Country: 

  • Malaysia

Author: 

Mana Mostatabi and Valerie Lincy

On June 6, 2017, Iranian citizen Alireza Jalali was arrested at New York’s John F. Kennedy airport upon his arrival from Malaysia. Ten days later, Australian authorities made a related arrest of another Iranian citizen, Negar Ghodskani, based on a U.S. extradition request. Both Jalali and Ghodskani were apprehended for illegally procuring and sending export-controlled technology from the United States to Iran between 2010 and 2012. Within weeks of their arrests, a nearly two year-old indictment charging Kuala Lumpur-based Greenwave Telecommunication, Jalali, and Ghodskani was unsealed.

Two Iranian firms are named in court documents as the end-users of the U.S.-origin dual-use technology: Fanavari Moj Khavar (Fana Moj) and its subsidiary, Rastafann Ertebat Engineering Company. On October 13, 2017, the U.S. Department of the Treasury added both firms to its Specially Designated Nationals (SDN) list for supporting Iran’s military, including the Islamic Revolutionary Guard Corps (IRGC) and the Naval Defense Missile Industry Group (Cruise Missile Industry Group). Ghodskani is an employee of Fana Moj but represented herself as an employee of Greenwave to U.S. companies.

The U.S. export enforcement case and related designations illustrate a pattern of Iranian illicit procurement and underscore the need for U.S. companies to exercise continued vigilance in exporting dual-use technology to countries of concern for transshipment to Iran. While the 2015 nuclear agreement loosened international restrictions on nuclear trade with Iran, prohibitions on almost all U.S. trade with Iran remain in place.

Case Details: Alleged Violations and Technology Involved
The 2015 indictment details seven counts against Greenwave, Jalali, and Ghodskani, including money laundering, smuggling, and conspiracy to export U.S.-origin technology to Iran without the required licenses. The defendants’ actions violate the International Emergency Economic Powers Act (IEEPA), the Export Administration Regulations (EAR), and the Iranian Transactions and Sanctions Regulations (ITSR).  
Between August 2010 and March 2012, the defendants allegedly conspired to acquire from U.S. suppliers dual-use synthesizers and analog devices with applications in weapon guidance systems, on behalf of the Iranian companies. Four shipments of these technologies were made from Greenwave in Malaysia to Iran in 2011, including 150 synthesizers and four analog-to-digital devices. Ultimately, Greenwave made nearly $65,000 in payments to two U.S. companies for the technology.  

The analog-to-digital devices are controlled by the Wassenaar Arrangement (WA). Through this multilateral arrangement, participating countries control transfers of conventional arms and related dual-use goods and technology to prevent the development or enhancement of military capabilities that undermine security and stability. The devices are listed on the WA’s List of Dual-Use Goods and Technologies as they have multiple uses, ranging from use in cellular communication networks to aerospace applications.

Analog-to-digital devices are also export-controlled by the U.S. Department of Commerce (ECCN 3A001)  for national security and anti-terrorism reasons, as well as for the risks posed by the technology for use in nuclear and missile development. The synthesizers generate a range of frequencies and are used in a number of devices, including radio receivers, cell phones, GPS systems, and satellite communications systems.

Ghodskani’s Role: Procurement
Ghodskani allegedly facilitated the unlawful procurement and export of U.S.-origin goods to Greenwave in Malaysia by misleading two U.S.-based suppliers about the end-user and ultimate destination of the goods.

Between August 2010 and March 2012, Ghodskani represented herself to U.S. companies as a Greenwave employee based in Malaysia. When communicating with the U.S. companies, she used an e-mail address assigned to Greenwave’s domain and a signature that noted a Malaysian address and telephone number. In communications with Jalali, however, it became clear that Ghodskani was not based in Kuala Lumpur, but in Tehran; she used an e-mail address associated with Fana Moj and an e-mail signature with an Iranian telephone number and address. By representing herself as an employee of Greenwave, despite also being an employee of Fana Moj, Ghodskani enabled export-controlled technology to reach two Iranian firms closely linked to entities that materially support the IRGC and the Iranian military.

Jalali’s Role: Transshipment
Ghodskani’s co-conspirator, Jalali, however, was residing in Malaysia. He successfully exploited the country’s vulnerability and facilitated illicit transshipments by re-exporting the controlled goods to Iran.  

After receiving the U.S.-origin goods procured by Ghodskani, Jalali unlawfully re-packaged them and sent them via commercial air freight to Fana Moj or Rastafann in Iran. Jalali, who assisted Ghodskani in making payments to the U.S. companies, also falsified invoices and understated the value of the items being shipped to Iran. Whereas the value of the items sent from Malaysia to Iran approached $15,000, Jalali reflected the value of the items as totaling just under $90. According to the indictment, four specific instances occurred between February and August 2011, wherein Jalali used these methods to evade detection by Malaysian customs authorities.

The End Users: Fana Moj and Rastafaan
Tehran-based Fana Moj specializes in products and technology for terrestrial and satellite broadcasting. Its subsidiary, Rastafann, researches, manufactures, and installs high-frequency telecommunications equipment. Both firms have ties to organizations connected to Iran's military, including the Naval Defense Missile Industry Group (SAIG), Iran Electronics Industry (IEI), and Iran Communications Industry (ICI).

IEI and its eight subsidiaries, including ICI, are controlled by Iran’s Ministry of Defense Armed Forces Logistics (MODAFL) and believed to act as procurement agents for Iran's Ministry of Defense. IEI and ICI were added to the Treasury Department’s SDN list in 2008 as part of a broader crackdown on Iranian military end-users that procured sensitive U.S.-origin goods via Iranian front companies. The European Union similarly listed IEI (in 2008) and ICI (in 2010) for their connections to Iran’s proliferation-sensitive nuclear activities and development of nuclear weapon delivery systems. A number of governments have also restricted transactions with IEI and/or ICI and frozen their assets, including Australia, Canada, and Japan.  

According to the Treasury Department, Rastafann has provided financial and material support to U.N.-sanctioned SAIG, including radar systems, and to the IRGC, including communications systems. SAIG develops and produces cruise missiles, and is responsible for naval missiles, according to the United Nations. Fana Moj has provided financial and material support to the IRGC and has designed missile components, according to the Treasury Department.

Case Status
As of October 2017, Jalali remains detained at Minnesota’s Sherburne County Jail, awaiting trial. At his June 2017 arraignment, Jalali entered a not guilty plea.

Ghodskani remains detained by Australian authorities pending their decision on a U.S. extradition request. The Iranian government has stepped up calls for her release on bail, arguing that she is pregnant and in poor health. Iranian officials have summoned the Australian ambassador to Tehran four times since Ghodskani’s arrest, insisting that she not be extradited to the United States. Despite this pressure, an Australian court rejected a request for Ghodskani to be released on bail.

Footnotes: 

[1] Affidavit in Support of Request for Extradition of Negar Ghodskani, Case Number 0:15-cr-00329-JNE-FLN, U.S. District Court, District of Minnesota, August 9, 2017, available via PACER, accessed on October 11, 2017.

[2] Indictment, United States of America v. Green Wave Telecommunication, Sdn Bhn, Alireza Jalali, and Negar Ghodskani, Case Number 0:15-cr-00329-JNE-FLN, U.S. District Court, District of Minnesota, December 8, 2015, available via PACER, accessed on October 6, 2017.

[3] Motion for Order Changing Agency Responsible for Custody of Defendant, Case Number 0:15-cr-00329-JNE-FLN, U.S. District Court, District of Minnesota, August 3, 2017, available via PACER, accessed on October 23, 2017.

[4] "Treasury Designates the IRGC under Terrorism Authority and Targets IRGC and Military Supporters under Counter-Proliferation Authority," Press Release, U.S. Department of the Treasury, October 13, 2017, https://www.treasury.gov/press-center/press-releases/Pages/sm0177.aspx, accessed on October 20, 2017.

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