Ellman International, Inc. OFAC Settlement: $191.7K

Under its prior ownership and management, Ellman sold and exported medical equipment to Iran, in apparent violation of § 560.204 of the ITR, and engaged the services of a physician in Iran, in apparent violation of § 560.201 and § 560.206 of the ITR. The value of the relevant transactions totaled $317,211, occurring over approximately three years from early 2005 to February 2008. Ellman entered into an agreement with a Dubai company to act as a middleman for the sale of Ellman products to Iran, apparently for the purpose of evading sanctions. Senior management prior to the 2008 change in ownership actively participated in the conduct giving rise to the apparent violations. OFAC had previously been notified of a rejected transaction between Ellman and a customer located in Iran but did not at that time learn the full scope of the activity because Ellman's prior owners failed to properly respond to OFAC's inquiry.

The submission by Ellman's new owners was determined not to be a voluntary disclosure as defined by OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, App. A. The apparent violations do not constitute an egregious case. The base penalty amount was $426,000. The settlement amount of $191,700 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines: the transactions appear to have been undertaken by Ellman's prior owners willfully, with knowledge that such transactions likely constituted violations of U.S. law; Ellman did not have a sanctions compliance program in place at the time of the apparent violations; the transactions likely would have been eligible for an OFAC license; Ellman's purchasers and new owners/management substantially cooperated with the investigation by promptly bringing to OFAC's attention the full scope of the prohibited conduct, providing all requested information in a responsive and well-organized fashion, and agreeing to toll the statute of limitations and extend the tolled period several times; OFAC has no record of prior sanctions enforcement matters involving Ellman; and the new owners/management undertook significant remedial measures, including implementing a sanctions and export compliance program.

Ellman entered into an agreement with a Dubai company to act as a middleman for the sale of Ellman products to Iran, apparently for the purpose of evading sanctions. The transactions likely would have been eligible for an OFAC license. Ellman did not have a sanctions compliance program in place at the time of the apparent violations. OFAC had previously been notified of a rejected transaction between Ellman and a customer in Iran but did not learn the full scope of the activity because Ellman's prior owners failed to properly respond to OFAC's inquiry. After acquiring Ellman and discovering the violations, the new owners promptly brought to OFAC's attention the full scope of the prohibited conduct, provided all requested information in a responsive and well-organized fashion, agreed to toll the statute of limitations and extend the tolled period several times, and implemented a sanctions and export compliance program, contributing to a settlement well below the $426,000 base penalty.

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