- International Enforcement Actions
Arthur Shyu, a senior manager of Hosoda Taiwan Co. Ltd., was indicted on April 16, 2015, along with eight other defendants, as part of a procurement network that allegedly supplied at least $24-million worth of U.S.-origin microelectronics to end users in Iran. The exported items allegedly included electronics with application in surface-to-air and cruise missiles.
Shyu was charged with 12 counts, including illegally exporting controlled electronics to Iran in violation of the International Emergency Economic Powers Act (IEEPA) and money laundering. Shyu was also added, on April 23, 2015, to the U.S. Entity List of end users subject to heightened export license requirements due to their involvement in proliferation activities or other activities of national security concern.
According to the indictment, Shyu received orders for goods from Bahram Mechanic, owner of Faratel Co. in Tehran, Iran and Smart Power Systems in Houston, Texas, and procured the items from the United States and suppliers in other countries. Shyu then allegedly shipped the goods either directly to Iran or through Turkey, using an Istanbul-based company called Golsad Istanbul Trading. As part of the conspiracy, Shyu allegedly instructed others in the network in how to falsify documents, conceal the origin of funds, and re-route payments in order to evade export controls and avoid drawing attention from regulatory authorities.
The end user for the controlled electronics in Iran was allegedly Faratel Co., which designs and produces uninterruptible power supplies (UPS), including for the Ministry of Defense, Atomic Energy Organization of Iran (AEOI), and Iranian Centrifuge Technology Company. The network was allegedly active between July 2010 and April 2015.
The other defendants indicted in the case included Mechanic, Khosrow Afghahi, Tooraj Faridi, Matin Sadeghi, Faratel Co, Golsad Istanbul Trading Ltd., Hosoda Taiwan Co. Ltd., and Smart Power Systems Inc. Hosoda is a Taipei-based trading company. Afghani is a dual U.S. and Iranian citizen who was the managing director and part owner of Faratel and the minority owner of its sister company, Smart Power Systems. Faridi is a dual U.S. and Iranian citizen who was a vice president of operations at Smart Power Systems and an engineer at Faratel. Sadeghi is a Turkish national who operated Golsad Istanbul Trading Ltd., which allegedly served as the as the transshipment point for the dual-use U.S.-origin electronics exported illegally to Iran.
As part of the prisoner exchange agreement with Iran, President Barack Obama granted clemency in January 2016 to Mechanic, Faridi, and Afghani—all dual U.S. and Iranian citizens who had pleaded not guilty to the charges and had been awaiting trial. Federal prosecutors subsequently moved to dismiss charges against Faratel, Golsad Istanbul, and Smart Power Systems. The charges against Shyu and Hosoda Taiwan Co. have not been dropped. As of February 2016, Shyu has not been arrested.
 Indictment, United States of America v. Bahram Mechanic, Khosrow Afghahi, Tooraj Faridi, Faratel Co., Smart Power Systems Inc., Arthur Shyu, Hosoda Taiwan Co., Ltd., Matin Sadeghi, and Golsad Istanbul Trading Ltd., U.S. District Court, Southern District of Texas, Case No. 15 CR 204, April 16, 2015,available at http://www.justice.gov/sites/default/files/opa/press-releases/attachments/2015/04/17/ieepa_indictment.pdf, accessed on February 24, 2016
 "Four Companies and Five Individuals Indicted for Illegally Exporting Technology to Iran," U.S. Department of Justice, April 17, 2015, available at http://www.justice.gov/opa/pr/four-companies-and-five-individuals-indicted-illegally-exporting-technology-iran, accessed on February 24, 2016.
 "Addition of Certain Persons to the Entity List," U.S. Department of Commerce, Bureau of Industry and Security, Federal Register Vol. 80, No. 78, April 23, 2015, available at http://www.gpo.gov/fdsys/pkg/FR-2015-04-23/pdf/2015-09442.pdf, accessed on April 28, 2015.
 Adam Sege, “Feds Drop More Charges in $24M Iran Export Suit,” Law 360, February 10, 2016, available at https://www.law360.com/articles/757446/feds-drop-more-charges-in-24m-iran-export-suit, accessed on February 24, 2016.