Pinnacle Aircraft Parts, Inc. OFAC Settlement: $225K

OFAC issued Pinnacle an administrative subpoena pursuant to section 501.602 of the RPPR in connection with its investigation of Pinnacle's February 2004 sale and delivery of a jet engine valued in excess of $1 million that appears to have been destined for Iran. The subpoena directed Pinnacle to provide a detailed written report regarding the jet engine transaction and "copies of all transactional documents such as invoices, shipping documents, airway bills, correspondence, and all other documents pertaining to the payment or transportation of this shipment." In its November 9, 2007 response, Pinnacle, through its outside counsel, submitted more than 260 pages of responsive documents but failed to submit a copy of a post-sale e-mail (which Pinnacle had provided to its counsel) indicating that the aircraft engine was likely destined for Iran, as well as other responsive documents concerning the terms of sale.

This matter was not voluntarily self-disclosed to OFAC. OFAC determined that the failure to produce the responsive documents, including the e-mail referencing Iran, constituted an egregious case, resulting in a base penalty amount of $250,000. The settlement amount of $225,000 reflects OFAC's consideration of the following General Factors: the e-mail and other documentation was clearly responsive to the subpoena; Pinnacle was aware of, and knowingly withheld, the e-mail at the time it responded to the subpoena; the e-mail concerned the sale of an aircraft engine valued at over $1 million and impeded OFAC's investigation into the apparent delivery of that engine to Iran; Pinnacle had no prior OFAC enforcement history; Pinnacle apparently relied in good faith on the advice of legal counsel in determining not to produce the e-mail and other documents in response to the subpoena; and Pinnacle agreed to settle this matter. Although Pinnacle relied on the advice of counsel, Pinnacle is the party legally responsible for compliance with OFAC's subpoena, and the actions of its counsel are attributable to Pinnacle for purposes of calculating a base penalty and settlement amount.

Reliance on outside legal counsel does not shift legal responsibility for OFAC subpoena compliance. Pinnacle is the party legally responsible for compliance with OFAC's subpoena, and the actions of its counsel, including the determination that clearly responsive documents need not be produced, are attributable to Pinnacle for purposes of calculating a base penalty and settlement amount. Withholding a single responsive document that directly referenced Iran and impeded OFAC's investigation into the delivery of a $1 million aircraft engine was sufficient for an egregious case determination.

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