WASHINGTON – (Special to ZennieReport.com) Farhad Nafeiy, 70, of Alamo, California, and of Alpha Management Consulting, was charged with and pleaded guilty yesterday to a violation of the International Emergency Economic Powers Act (IEEPA) in the Northern District of California.
Under IEEPA, the President of the United States is granted authority to address unusual and extraordinary threats to the national security, foreign policy or economy of the United States. Under that law, the President and other parts of the executive branch have issued orders and regulations prohibiting Americans from engaging in certain activities and transactions with Iran and Iranian persons.
The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) issued sanctions on Iran, referred to as the Iranian Transactions and Sanctions Regulations (ITSR). OFAC sanctions on Iran prohibited Americans from engaging in a variety of conduct, including in many instances exporting or facilitating the export of American products to Iran, or providing services to Iran.
Farhad Nafeiy Illegally Provided Software To Telecommunications Clients In Iran
According to court documents, Farhad Nafeiy obtained licenses – or approvals – from OFAC for advising non-Iranian telecommunications companies on doing business with Iran. However, those licenses did not authorize Nafeiy to provide any hardware, software or technology directly to Iran. Mr. Nafeiy exceeded his OFAC licenses, thereby violating the ITSR and IEEPA, by directly providing software upgrades to telecommunications equipment in Iran.
Farhad Nafeiy admitted in his plea agreement that he knew he exceeded these licenses when he did so. In his plea agreement, Nafeiy further admitted that the total amount of sales of such software upgrades to Iran was approximately $400,000. Mr. Nafeiy separately was charged with, and admitted to, evading his federal income taxes, and specifically not paying income tax on some of the proceeds of these sales.
On Aug. 10, Farhad Nafeiy was charged by information with one count of violating IEEPA and one count of tax evasion. Sentencing is set before the Honorable Aracelli Martínez-Olguín on Jan. 24, 2024.
Homeland Security Investigations and the IRS-Criminal Investigation are investigating the case.
Assistant U.S. Attorney Benjamin Kingsley for the Northern District of California and Trial Attorney David Ryan of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case, with assistance from Kathleen Turner of the U.S. Attorney’s Office for the Northern District of California. Former Trial Attorney Elizabeth Abraham provided valuable assistance in prior phases of the prosecution.
What Legal Software Can Be Provided To Iran?
Farhad Nafeiy’s situation of sending illegal software to clients in Iran does open up a question: what legal software is allowed? According to OFFICE OF FOREIGN ASSETS CONTROL, Iranian Transactions and Sanctions Regulations, 31 CFR part 560, the following is permitted:
(1) Fee-based or no-cost services. The exportation or reexportation, directly or
indirectly, from the United States or by a U.S. person, wherever located, to Iran of fee-based or
no-cost services incident to the exchange of communications over the Internet, such as instant
messaging, chat and email, social networking, sharing of photos and movies, web browsing,
blogging, social media platforms, collaboration platforms, video conferencing, e-gaming, e-
learning platforms, automated translation, web maps, and user authentication services, as well as
cloud-based services in support of the foregoing or of any other transaction authorized or exempt
under the ITSR.
(2) Fee-based or no-cost software. (i) Software subject to the EAR. The exportation,
reexportation, or provision, directly or indirectly, to Iran of fee-based or no-cost software subject
to the Export Administration Regulations, 15 CFR parts 730 through 774 (EAR), that is incident
to, or enables services incident to, the exchange of communications over the Internet, such as
instant messaging, chat and email, social networking, sharing of photos and movies, web
browsing, blogging, social media platforms, collaboration platforms, video conferencing, e-
gaming, e-learning platforms, automated translation, web maps, and user authentication services,
as well as cloud-based services in support of the foregoing or of any other transaction authorized
or exempt under the ITSR, provided that such software is designated EAR99 or classified by the
U.S. Department of Commerce on the Commerce Control List, 15 CFR part 774, supplement No.
1 (CCL), under export control classification number (ECCN) 5D992.c.
(ii) Software that is not subject to the EAR because it is of foreign origin and is located
outside the United States. The exportation, reexportation, or provision, directly or indirectly, by
a U.S. person, wherever located, to Iran of fee-based or no-cost software that is not subject to the
EAR because it is of foreign origin and is located outside the United States, that is incident to, or
enables services incident to, the exchange of communications over the Internet, such as instant
messaging, chat and email, social networking, sharing of photos and movies, web browsing, blogging, social media platforms, collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, and user authentication services, as well as cloud-based services in support of the foregoing or of any other transaction authorized or exempt under the ITSR, provided that such software would be designated EAR99 if it were located in the
United States or would meet the criteria for classification under ECCN 5D992.c if it were subject
to the EAR.