82 FR 46480 - In the Matter of: Mark Henry (a/k/a Weida Zheng, a/k/a Scott Russel, a/k/a Bob Wilson, a/k/a Joanna Zhong), Inmate Number: 75602-053, FCI Schuylkill, Federal Correctional Institution, Satellite Camp, P.O. Box 670, Minersville, PA 17954; Respondent; Dahua Electronics Corporation (a/k/a Bao An Corporation), 134-12 59th Avenue, Flushing, NY 11355, Related Person Order Denying Privileges

DEPARTMENT OF COMMERCE
Bureau of Industry and Security

Federal Register Volume 82, Issue 192 (October 5, 2017)

[Federal Register Volume 82, Number 192 (Thursday, October 5, 2017)]
[Notices]
[Pages 46480-46481]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-21475]


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 DEPARTMENT OF COMMERCE

Bureau of Industry and Security


In the Matter of: Mark Henry (a/k/a Weida Zheng, a/k/a Scott 
Russel, a/k/a Bob Wilson, a/k/a Joanna Zhong), Inmate Number: 75602-
053, FCI Schuylkill, Federal Correctional Institution, Satellite Camp, 
P.O. Box 670, Minersville, PA 17954; Respondent; Dahua Electronics 
Corporation (a/k/a Bao An Corporation), 134-12 59th Avenue, Flushing, 
NY 11355, Related Person Order Denying Privileges

A. Denial of Export Privileges of Mark Henry, a/k/a Weida Zheng, a/k/a 
Scott Russel, a/k/a Bob Wilson, a/k/a Joanna Zhong

    On November 19, 2015, in the U.S. District Court for the Eastern 
District of New York, Mark Henry, a/k/a Weida Zheng, a/k/a Scott 
Russel, a/k/a Bob Wilson, a/k/a Joanna Zhong (``Henry''), was convicted 
of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 
(2012)) (``AECA''). Specifically, Henry was convicted of willfully and 
knowingly exporting, causing to be exported, and attempting to export 
from the United States to Taiwan defense articles listed on the United 
States Munitions List, specifically, ablative materials for use, among 
other things, as a protective coating for rocket nozzles, without the 
required State Department license. Henry was sentenced to 78 months in 
prison for violating Sections 38(b)(2) and (c) of the AECA, along with 
three years of supervised release and a $200 assessment.\1\
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    \1\ Henry also was convicted of a second count, specifically, 
conspiracy in violation of 18 U.S.C. Section 371. He was sentenced 
on this count to 60 months in prison and three years of supervision 
release. His sentence on this count runs concurrently with his 
sentence, disused in the text above, for violating Section 38 of the 
AECA.
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    Section 766.25 of the Export Administration Regulations (``EAR'' or 
``Regulations'') \1\ provides, in pertinent part, that ``[t]he Director 
of the Office of Exporter Services, in consultation with the Director 
of the Office of Export Enforcement, may deny the export privileges of 
any person who has been convicted of a violation of the EAA [Export 
Administration Act of 1979], the EAR, or any order, license or 
authorization issued thereunder; any regulation, license, or order 
issued under the International Emergency Economic Powers Act (50 U.S.C. 
1701-1706); 18 U.S.C. 793, 794 or 798; section 4(b) of the Internal 
Security Act of 1950 (50 U.S.C. 783(b)), or section 38 of the Arms 
Export Control Act (22 U.S.C. 2778).'' 15 CFR 766.25(a); see also 
Section 11(h) of the EAA, 50 U.S.C. 4610(h). The denial of export 
privileges under this provision may be for a period of up to ten (10) 
years from the date of the conviction. 15 CFR 766.25(d); see also 50 
U.S.C. 4610(h). In addition, Section 750.8 of the Regulations states 
that the Bureau of Industry and Security (``BIS'')'s Office of Exporter 
Services may revoke any BIS licenses previously issued pursuant to the 
EAA or the Regulations in which the person had an interest at the time 
of his/her conviction.
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    \1\ The Regulations are currently codified in the Code of 
Federal Regulations at 15 CFR parts 730-774 (2017). The Regulations 
issued pursuant to the Export Administration Act of 1979 (50 U.S.C. 
4601-4623 (Supp. III 2015) (available at http://uscode.house.gov)) 
(``EAA'' or ``the Act''). Since August 21, 2001, the Act has been in 
lapse and the President, through Executive Order 13222 of August 17, 
2001 (3 CFR, 2001 Comp. 783 (2002)), which has been extended by 
successive Presidential Notices, the most recent being that of 
August 15, 2017 (82 FR 39005 (Aug. 16, 2017)), has continued the 
Regulations in effect under the International Emergency Economic 
Powers Act (50 U.S.C. 1701, et seq. (2012)).
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    BIS received notice of Henry's conviction for violating Section 38 
of the AECA, and has provided notice and an opportunity for Henry to 
make a written submission to BIS, as provided in Section 766.25 of the 
Regulations. BIS has not received a submission from Henry. Based upon 
my review and consultations with BIS's Office of Export Enforcement, 
including its Director, and the facts available to BIS, I have decided 
to deny Henry's export privileges under the Regulations for a period of 
ten (10) years from the date of Henry's conviction. I have also decided 
to revoke all licenses issued pursuant to the Act or Regulations in 
which Henry had an interest at the time of his conviction.

B. Denial of Export Privileges of Related Person Dahua Electronics 
Corporation, a/k/a Bao An Corporation

    Section 766.25(h) of the Regulations provides that the Director of 
BIS's Office of Exporter Services, in consultation with the Director of 
BIS's Office of Export Enforcement, may take action in accordance with 
Section 766.23 of the Regulations to make applicable to related persons 
a denial order that is being sought or has issued under Section 766.25. 
Section 766.23 provides, in turn, that in order to prevent evasion of a 
denial order issued pursuant to Part 766 of the Regulations, including 
pursuant to Section 766.25, the denial order made be made applicable 
not only to the respondent, but also to other persons related to the 
respondent by ownership, control, position of responsibility, 
affiliation, or other connection in the conduct of trade or business.
    As provided in Section 766.23, BIS gave notice to Dahua Electronics 
Corporation a/k/a Bao An Corporation (``Dahua'') that it intended to 
deny Mark Henry's export privileges pursuant to Section 766.25 for a 
period of up to ten (10) years from the date of his conviction and 
intended to make that denial order applicable to Dahua pursuant to 
Sections 766.25 and 766.23.\2\ BIS also provided notice that it has 
reason to believe that Dahua is related to Henry as set forth in 
Section 766.23, that is, by ownership, control, position of 
responsibility, affiliation, or other connection in the conduct of 
trade or business, and reason to believe that naming Dahua as a person 
related to Henry would be necessary to prevent evasion of a denial 
order imposed against Henry. BIS gave Dahua an opportunity to oppose 
its addition as a related party by informing Dahua that it could make a 
written submission describing why Dahua is not related to Henry or why 
a denial order against Henry should not be applied to Dahua.
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    \2\ BIS provided notice to Dahua via Henry.
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    Having received no submission from or on behalf of Dahua, I have 
decided, following consultations with BIS's Office of Export 
Enforcement, including its Director, to name Dahua as a Related Person 
and make this Denial Order applicable to Dahua, thereby denying its 
export privileges for ten (10) years from the date of Henry's 
conviction, that is, until November 19, 2025. I have also decided to 
revoke all licenses issued pursuant to the Act or Regulations in which 
Dahua had an interest at the time of Henry's conviction.

[[Page 46481]]

    Dahua was incorporated in New York State, and remains listed there 
as an active corporation. Henry, a naturalized U.S. citizen born in 
China, operated Dahua out of his residence in Flushing, New York, and 
is believed to own Dahua. He used Dahua to purchase various items from 
companies located in the United States, including tools, machine parts, 
materials used in machinery, and industrial chemicals, for export to 
end users or customers located in Asia, including China and Taiwan. 
Operating through Dahua, Henry received requests for products from 
customers located overseas and solicited orders for those products from 
suppliers and manufacturers located in the United States, including in 
connection with the violation of the AECA for which he was convicted. 
Thus, I find that Dahua is related to Henry within the meaning of 
Section 766.23, and that Dahua should be added as a related person to 
prevent evasion of this order.
    Accordingly, it is hereby ordered:
    First, from the date of this Order until November 19, 2025, Mark 
Henry, a/k/a Weida Zheng, a/k/a Scott Russel, a/k/a Bob Wilson, a/k/a 
Joanna Zhong, with a last known address of FCI Schuylkill, Federal 
Correctional Institution, Satellite Camp, P.O. Box 670, Minersville, PA 
17954, and when acting for or on his behalf, his successors, assigns, 
employees, agents, or representatives, and Dahua Electronics 
Corporation, a/k/a Bao An Corporation, with a last known address of 
134-12 59th Avenue, Flushing, NY 11355, and when acting for or on its 
behalf, its successors, assigns, directors, officers, employees, 
agents, or representatives (each ``a Denied Person'' and collectively 
``the Denied Persons'') may not, directly or indirectly, participate in 
any way in any transaction involving any commodity, software or 
technology (hereinafter collectively referred to as ``item'') exported 
or to be exported from the United States that is subject to the 
Regulations, or in any other activity subject to the Regulations, 
including but not limited to:
    A. Applying for, obtaining, or using any license, license 
exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
United States that is subject to the Regulations, or engaging in any 
other activity subject to the Regulations; or
    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the Regulations, or from any other activity subject to the Regulations.
    Second, no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of a Denied Person any item 
subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by a Denied Person of the ownership, possession, or control 
of any item subject to the Regulations that has been or will be 
exported from the United States, including financing or other support 
activities related to a transaction whereby a Denied Person acquires or 
attempts to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from a Denied Person of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from a Denied Person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the 
Regulations that has been or will be exported from the United States 
and which is owned, possessed or controlled by a Denied Person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by a Denied Person, if such service involves the use of any 
item subject to the Regulations that has been or will be exported from 
the United States. For purposes of this paragraph, servicing means 
installation, maintenance, repair, modification or testing.
    Third, in addition to the Related Person named above, after notice 
and opportunity for comment as provided in section 766.23 of the 
Regulations, any other individual, firm, corporation, or other 
association or organization or other person related to a Denied Person 
by ownership, control, position of responsibility, affiliation, or 
other connection in the conduct of trade or business may also be made 
subject to the provisions of this Order if necessary to prevent evasion 
of this Order.
    Fourth, in accordance with Part 756 and Section 766.25(g) of the 
Regulations, Henry may file an appeal of the issuance of this Order 
against him with the Under Secretary of Commerce for Industry and 
Security. The appeal must be filed within 45 days from the date of this 
Order and must comply with the provisions of Part 756 of the 
Regulations.
    Fifth, in accordance with Part 756 and Section 766.23(c) of the 
Regulations, Dahua may file an appeal of its being named as a related 
person in this Order with the Under Secretary of Commerce for Industry 
and Security.\3\ This appeal must be filed within 45 days from the date 
of this Order and must comply with the provisions of Part 756 of the 
Regulations.
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    \3\ As set forth in Section 766.23(c), the only issues that may 
be raised in such an appeal are whether the person so named is 
related to the respondent and whether the order is justified in 
order to prevent evasion. Thus, Dahua may not appeal the issuance of 
the denial order against Henry.
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    Sixth, a copy of this Order shall be delivered to Henry and Dahua 
and shall be published in the Federal Register.
    Seventh, this Order is effective immediately and shall remain in 
effect until November 19, 2025.

     Issued this 28th day of September, 2017.
Karen H. Nies-Vogel,
Director, Office of Exporter Services.
[FR Doc. 2017-21475 Filed 10-4-17; 8:45 am]
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