U.S. Department of State Concludes $840,000 Settlement of Alleged Export Violations by Torrey Pines Logic, Inc. and Dr. Leonid B. Volfson
The U.S. Department of State has concluded an administrative settlement with Torrey Pines Logic, Inc. (TPL) of San Diego, California and Dr. Leonid B. Volfson, to resolve alleged violations of the Arms Export Control Act (AECA), 22 U.S.C. § 2751 et seq., and the International Traffic in Arms Regulations (ITAR), 22 C.F.R. Parts 120-130. The Department of State, TPL, and Dr. Volfson have reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the Department’s Bureau of Political-Military Affairs.
This agreement pursuant to ITAR § 128.11 resolves alleged ITAR violations involving the attempted unauthorized export of defense articles; the unauthorized export of defense articles to various countries, including the People’s Republic of China and Lebanon, which are proscribed destinations under ITAR § 126.1, and Russia, a country that was, at the time of the violations, subject to restrictive measures on defense exports per the Department of State public announcement on April 28, 2014; the involvement in ITAR-regulated activities while ineligible; and the failure to maintain and produce records.
The settlement demonstrates the Department’s role in strengthening U.S. industry by protecting U.S.-origin defense articles from unauthorized exports. The settlement also highlights the importance of obtaining appropriate authorization from the Department before exporting ITAR-controlled defense articles.
Under the terms of the 36-month Consent Agreement, TPL and Dr. Volfson will pay a civil penalty of $840,000. The Department has agreed to suspend $420,000 of this amount on the condition that the funds will be used for Department-approved Consent Agreement remedial compliance measures to strengthen TPL’s compliance program. In addition, for the duration of the Consent Agreement, an external Special Compliance Officer will be engaged by TPL to oversee the Consent Agreement, which will also require the company to conduct one external audit of its compliance program and implement additional compliance measures.
These terms reflect the cooperation TPL and Dr. Volfson provided to the Department. They submitted a voluntary disclosure, which included a third-party audit report that identified various export violations; cooperated with the Department’s investigation by responding to numerous requests for additional information; and entered into successive agreements with the Department extending the statute of limitations period for certain violations.
The Consent Agreement and related documents will be available for public inspection in the Public Reading Room of the Department of State and on the Penalties and Oversights Agreements section of the Directorate of Defense Trade Controls’ website.