4.14.2023 China 301 Litigation Update - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
On April 11, 2023, the U.S. Court of International Trade (CIT) three-judge panel assigned to the Section 301 cases held a hearing with members of the Plaintiffs’ Steering Committee and the U.S. Department of Justice. The purpose of the hearing was to discuss the status of the cases that were stayed pending the resolution of the sample case (HMDX, et al. v. United States, et al.) in light of the CIT’s decision of March 17, 2023, in favor of the government. Previously, the CIT had ordered that all other 301 cases would be stayed pending the resolution of the lead case.
There was consensus among the court and the parties that nearly all of the other cases should remain stayed pending the appeal that is going to be taken by the lead plaintiffs. The appeal will be filed by May 16, 2023. The only remaining question related to the very small handful of cases that raised claims that are distinct from the challenges to List 3 and List 4A brought by the lead plaintiffs. The CIT is considering whether to lift the stay for that very small number of cases.
The CIT may be issuing an order that would clarify this issue and we will continue to keep you updated on developments in this case. GDLSK is an active member of Plaintiffs’ Steering Committee and appeared at the hearing. The Steering Committee will also be involved with developing the arguments to be presented in the appeal. Should you have any questions, please contact one of our attorneys.
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Federal Register Notices:
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Polyethylene Retail Carrier Bags From the People's Republic of China: Final Determination of No Shipments; 2021-2022
• Investigations; Determinations, Modifications, and Rulings, etc.: Tool Chests and Cabinets From China and Vietnam; Scheduling of Expedited Five-Year Reviews
• Investigations; Determinations, Modifications, and Rulings, etc.: Circular Welded Pipe and Tube From Brazil, India, Mexico, South Korea, Taiwan, Thailand, and Turkey; Notice of Commission Determination To Conduct Full Five-Year Reviews
• Certain Automated Put Walls and Automated Storage and Retrieval Systems, Associated Vehicles, Associated Control Software, and Component Parts Thereof; Notice of Request for Submissions on the Public Interest
• Softwood Lumber Products From Canada; Scheduling of Full Five-Year Reviews
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Refillable Stainless Steel Kegs From the People's Republic of China: Final Results of Countervailing Duty Administrative Review; 2020
• Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof From the People's Republic of China: Final Results of Changed Circumstances Review and Continuation of the Order
• Forged Steel Fittings From the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Final Determination of No Shipments; 2020-2021
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel From India: Final Results of the Expedited First Sunset Review of the Countervailing Duty Order
• Certain Hot-Rolled Steel Flat Products From the Republic of Korea: Final Results of Antidumping Duty Administrative Review; 2020-2021
• Investigations; Determinations, Modifications, and Rulings, etc.: Cold-Drawn Mechanical Tubing From China, Germany, India, Italy, South Korea, and Switzerland; Notice of Commission Determination To Conduct Full Five-Year Reviews
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Pure Magnesium From the People's Republic of China: Final Results of Antidumping Duty Administrative Review; 2021-2022
• Paper Clips From the People's Republic of China: Continuation of Antidumping Duty Order
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OFAC-Designated Hezbollah Financier and Eight Associates Charged with Multiple Crimes Arising Out of Scheme to Evade Terrorism-Related Sanctions - Department of Justice
Nazem Ahmad, a Diamond Smuggler and Art Collector, Dealt in Millions of Dollars of Goods and Services in Violation of the Global Terrorism Sanctions Regulations
A nine-count indictment was unsealed today in the Eastern District of New York charging Nazem Ahmad and eight co-defendants with conspiring to defraud the United States and foreign governments, evade U.S. sanctions and customs laws and conduct money laundering transactions by securing goods and services for the benefit of Ahmad, a Lebanese resident and dual Belgian-Lebanese citizen who was sanctioned by the United States for being a financier for Hezbollah, a foreign terrorist organization.
According to court documents, despite being sanctioned and prohibited from engaging in transactions with U.S. persons since December 2019, Ahmad and his co-conspirators relied on a complex web of business entities to obtain valuable artwork from U.S. artists and art galleries and to secure U.S.-based diamond-grading services all while hiding Ahmad’s involvement in and benefit from these activities. Approximately $160 million worth of artwork and diamond-grading services were transacted through the U.S. financial system. One defendant was arrested today in the United Kingdom at the request of the United States, and the eight remaining defendants, including Ahmad, are believed to reside outside the United States and remain at large. The government obtained seizure warrants for millions of dollars in assets that include a diamond ring, cash in an account and artwork.
“Despite being sanctioned for his dealings with a terrorist organization, Mr. Ahmad remained active in the U.S.-based art and diamond trade while concealing his illicit involvement,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Today, we hold Ahmad and his associates accountable and demonstrate that those who would flout our sanctions cannot hide from U.S. justice.”
“The United States implemented terrorism sanctions so that terrorist organizations like Hezbollah would be cut off from the goods and services needed to fund violent acts of terrorism,” said U.S. Attorney Breon Peace for the Eastern District of New York. “As alleged, Nazem Ahmad and his co-defendants benefitted from the multimillion-dollar trade in diamonds and artwork even after Ahmad was sanctioned for his involvement with a terrorist organization. Our office will continue to prosecute individuals who evade these sanctions and thereby offer a lifeline to designated foreign terrorist organizations.”
“Let this action against Nazem Ahmad’s international criminal organization serve as a reminder that the U.S. government and its allies will tirelessly prosecute those who are sanctioned for illicitly financing terrorist activities and wantonly violate those sanctions in order to continue accruing substantial wealth that can be used to continue financing Hezbollah,” said Deputy Secretary John K. Tien of Department of Homeland Security. “We are grateful to our partners across the federal government and our partnership with the United Kingdom that demonstrates international commitment and cooperation to preventing future atrocities by dismantling illicit financial networks supporting terrorism.”
“The funding of foreign terrorist organizations like Hezbollah is illegal, regardless of whether that funding comes in the form of cash or the export of high-priced diamonds and art,” said Assistant Secretary Export Enforcement Matthew S. Axelrod of the Department of Commerce. “We are proud to have partnered with the Justice Department and HSI to bring this significant enforcement action.”
As alleged, Ahmad was involved in real estate development, the international trade of diamonds, and the international acquisition and sale of artwork, and operated these enterprises through a complex web of business entities. Ahmad was also an associate of high-level members of Hezbollah, a Lebanon-based terrorist group that was designated by the United States as a Foreign Terrorist Organization and Specially Designated Global Terrorist. On Dec. 13, 2019, pursuant to the International Emergency Economic Powers Act (IEEPA) and the Global Terrorism Sanctions Regulations, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) designated Ahmad and 11 businesses associated with Ahmad as Specially Designated Nationals (SDNs) for Ahmad’s material support of, and provision of goods and services to, Hezbollah. At the time of the designation, OFAC explained that Ahmad was “considered a major Hezbollah financial donor who laundered money through his companies for Hezbollah and provided funds personally to Hezbollah Secretary-General Hassan Nasrallah” and was also “involved in ‘blood diamond’ smuggling” who “stores some of his personal funds in high-value art.”
Despite being sanctioned and prohibited from engaging in most transactions with U.S. persons, Ahmad continued to secure valuable goods and services from U.S. persons notwithstanding that such transactions constituted violations of U.S. sanctions and other federal laws. Specifically, Ahmad, together with his son Firas Michael Ahmad, daughter Hind Nazem Ahmad and brother-in-law Rami Yaacoub Baker, as well as associates Mohamad Hijazi, Mohamad Hassan Ismail, Sarya Nemat Martin, Ali Said Mossalem Sundar Nagarajan and others, used numerous corporate entities and individuals to disguise Ahmad’s control and beneficial interest in the companies and in financial transactions, and facilitate the acquisition of multiple pieces of valuable artwork and diamond-grading services for millions of dollars’ worth of diamonds from U.S. persons.
Evasion of Terrorism Sanctions in the Diamond Trade
As alleged, the defendants conspired to violate and evade U.S. sanctions by obtaining grading determinations and other services from a U.S.-based diamond grading company (Diamond Grading Company-1). The services of Diamond Grading Company-1, which were secured through multiple entities operating for Ahmad’s benefit, were valuable to the defendants because the services provided can affect the sales price of those diamonds and thus increase the amount that Ahmad can receive for the sale of his property. Collectively, the defendants and other conspirators sent approximately 482 diamond submissions to Diamond Grading Company-1 facilities after Ahmad was designated by OFAC in December 2019. The total weight of the diamonds submitted and graded post-sanctions was approximately 1,546 carats. For example, on or about March 18, 2021, an entity operating for the benefit of Ahmad shipped an approximately 45-carat diamond – valued at $80 million – to a facility belonging to Diamond Grading Company-1 in New York. Following the receipt of services from Diamond Grading Company-1, the 45-carat diamond was exported from the United States on April 26, 2021, back to the same entity.
Evasion of Terrorism Sanctions in the Art Market
The defendants also conspired to violate and evade U.S. sanctions by acquiring contemporary art from the United States, from U.S. persons outside the United States, or through U.S.-based financial transactions, on behalf of and for the benefit of Ahmad, despite his status as an OFAC-sanctioned SDN. Artwork allegedly obtained from the United States after Ahmad was sanctioned in December 2019 was valued at more than $450,000, while an additional $780,000 in artwork from U.S. persons located outside the United States was also acquired in violation of terrorism sanctions.
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New Video Explains Charge Complaint Process - The Federal Martime Commission
A new multimedia presentation provides the public with instructions on how to file charge complaints at the Federal Maritime Commission.
Charge Complaints were established by the Ocean Shipping Reform Act of 2022 and provide an expedited process for disputing charges which may have been wrongly assessed by a common carrier.
The primer provides viewers with background on the process that includes the types of charges that can be contested, the materials needed to file a complaint, how investigations are conducted, and potential outcomes.
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Consumer Alert: Ads for Fake AI and Other Software Spread Malicious Software - Federal Trade Commission
There’s a lot of hype around artificial intelligence (AI) these days. And cybercriminals are taking advantage of people’s interest in AI to spread harmful malware through online ads.
The criminals run bogus ads for AI tools and other software on social media sites and on search engines. These savvy cybercriminals can evade detection by systems designed to ferret out malicious advertising. They can also evade anti-virus software.
If you click on a malicious ad, you end up on a cloned site that downloads malware onto your device. But some ads take you to the real software and download the malware through a “backdoor,” which makes it hard to know you got hacked. Then, the criminals could steal your information and sell it to other hackers on the dark web, or get access to your online accounts and scam others.
So, how do you avoid clicking on malicious ads that install malware?
Don't click on ads to download software. If you see an ad for software that piques your interest, don’t click on it. Instead, go to the website by typing in the address.
If you don’t know the website address, search for it. But remember that scammers also place ads on search engines. They’ll appear at the top of your search results page and might have a label that says “Ad” or “Sponsored”. Scroll past those to get to your search results.
Malicious ads might evade anti-virus software, but it’s still a good idea to make sure your computer’s security software, operating system, and Internet browser, and your phone, are up to date. And turn on automatic updates to keep up with the latest protections.
If you run into problems, follow these steps to remove malware or recover a hacked account.
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Advertising Without Proper Proof Can Prove Costly Under New Notice of Penalty Offenses - Federal Trade Commission
To borrow a phrase the Supreme Court coined in a different context, if there is a “fixed star” in the consumer protection constellation, it’s the advertising substantiation doctrine. In place for decades and explained in a 1984 Policy Statement, the underlying legal requirement is clear: companies must have a reasonable basis to support their advertising claims before those claims are disseminated. Multiple litigated decisions have added detail to that standard, especially in the context of health and safety claims. And yet FTC law enforcement actions demonstrate that some advertisers still flout their long-standing obligation to substantiate their representations with solid proof. The FTC just announced a Notice of Penalty Offenses Concerning Substantiation of Product Claims that could add a costly consequence for non-compliance.
Under Section 5(m)(1)(B) of the FTC Act, if the FTC determines in a litigated proceeding that conduct is deceptive or unfair, the agency may seek civil penalties from a company that engages in that practice in the future with actual knowledge that it was unlawful. To trigger this provision, the FTC can send companies a Notice of Penalty Offenses – a document listing the conduct found to be deceptive or unfair. A company that receives a Notice and nonetheless engages in that unlawful practice can face civil penalties of $50,120 per violation.
As FTC watchers know, the agency has issued Notices of Penalty Offenses covering a wide range of illegal conduct, including three recent NPOs related to endorsements, money-making opportunities, and education. The Notice announced today – and sent to approximately 670 companies involved in the marketing of OTC drugs, homeopathic products, dietary supplements, or functional foods – ensures they’re aware of the FTC’s established standards regarding product substantiation and warns them of the substantial financial ramifications if they break the law.
You’ll want to read the Notice of Penalty Offenses Concerning Substantiation of Product Claims for the specifics, but it focuses on five practices that violate the FTC Act, with citations to FTC cases:
• Making an objective product claim without relying on competent and reliable evidence to support it;
• Making a health or safety claim without relying on competent and reliable scientific evidence conducted and evaluated in an objective manner by qualified persons and that is generally accepted in the profession to yield accurate and reliable results;
• Representing expressly or by implication that a product is effective in the cure, mitigation, or treatment of any serious disease without relying on at least one human clinical trial of the product that: 1) is randomized, 2) is well controlled, 3) is double-blinded (unless the marketer can prove blinding can’t be effectively implemented); 4) is conducted by qualified people; 5) measures disease end points or validated surrogate markers, and 6) yields statistically significant results;
• Misrepresenting the level or type of substantiation for a claim; and
Representing that a claim has been scientifically or clinically proven unless the advertiser relies upon evidence sufficient to satisfy the relevant scientific community of the claim’s truth.
Receiving a Notice isn’t an indication that the FTC thinks the company has violated the law. Rather, the goals are to ensure that marketers understand their legal obligations and to establish a basis for civil penalties for any future violations. Furthermore, although the initial recipients are companies making health claims, the Notice isn’t limited to that sector. The caselaw cited in the Notice covers all objective efficacy or performance representations.
Whether or not your business received the Notice of Penalty Offenses, savvy marketers will take it as a cue to conduct a compliance check. A good place to start: the FTC’s Health Products Compliance Guidance