The Bureau of Industry and Security (BIS), part of the U.S. Department of Commerce, has issued an order denying export privileges to Ghacham, Inc., a California-based company, for a decade following its criminal conviction. On March 28, 2024, the U.S. District Court for the Central District of California convicted Ghacham, Inc. of conspiring to defraud the United States through false customs documents and dealing in properties linked to designated narcotics traffickers. The denial, effective immediately and lasting until March 28, 2034, prohibits the company and related parties from participating in any transactions involving items subject to U.S. export regulations. This development highlights the intersection of criminal law enforcement and export controls, aiming to safeguard U.S. trade integrity and national security interests.
Background of the Conviction
Ghacham, Inc., located at 7340 Alondra Blvd. in Paramount, California, faced charges stemming from activities that began no later than July 2011 and continued until at least February 2021. The company was convicted under 18 U.S.C. 371 for conspiring with others to knowingly and willfully defraud the United States by creating and passing false, forged, and fraudulent invoices and documents through U.S. customs houses. Additionally, the conviction included violations of 21 U.S.C. 1904(c)(2) and 1906(a)(1), which involve conspiracy to engage in transactions or dealings with properties of a specially designated narcotics trafficker.
Court records indicate that these actions were intentional efforts to mislead customs authorities, potentially facilitating illicit trade. The sentencing, handed down by the district court, imposed five years of probation on the company. This case fits into a broader pattern of federal prosecutions targeting customs fraud, where entities exploit documentation loopholes to evade duties, sanctions, or other regulatory requirements. For context, similar convictions have involved companies in industries like import-export, where false invoicing can mask the true nature or value of goods to avoid tariffs or restrictions.
Legal Basis for the Export Denial
The denial order is grounded in Section 1760(e) of the Export Control Reform Act (ECRA), enacted in 2018 as part of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 and codified at 50 U.S.C. 4819(e). This provision allows BIS to deny export privileges to any person convicted of specified offenses, including 18 U.S.C. 371, for up to 10 years from the conviction date. ECRA empowers BIS to revoke any existing licenses or authorizations held by the convicted party.
BIS followed procedural requirements outlined in Section 766.25 of the Export Administration Regulations (EAR), codified at 15 CFR Parts 730-774. After receiving notice of the conviction, BIS provided Ghacham, Inc. an opportunity to submit a written response, which the agency reviewed. Steven Fisher, Acting Director of the Office of Export Enforcement, issued the order after consultations within BIS, including with the Office of Exporter Services. This process ensures due process while enabling swift enforcement to prevent further risks to U.S. export controls.
Precedents for such denials include cases like those involving violations of the International Emergency Economic Powers Act or the Arms Export Control Act, where convictions for fraud or sanctions evasion lead to similar restrictions. For instance, BIS has previously imposed denial orders on entities convicted under 18 U.S.C. 371 in export-related conspiracies, emphasizing the government's commitment to deterring circumvention of trade laws.
Details of the Denial Order
The order comprehensively restricts Ghacham, Inc.'s involvement in U.S. export activities. It defines the 'Denied Person' as the company, its successors, assigns, employees, agents, or representatives, and prohibits them from directly or indirectly participating in transactions involving any commodity, software, or technology subject to the EAR. Specific prohibitions include applying for or using export licenses, negotiating or servicing export-related deals, and benefiting from such transactions.
Furthermore, the order extends to third parties, barring them from exporting, reexporting, or transferring items to the Denied Person, facilitating their acquisition of controlled items, or servicing items owned by them if it involves U.S.-exported goods. To prevent evasion, BIS can apply the order to related persons or entities connected by ownership, control, or business affiliation, pursuant to Sections 766.23 and 766.25 of the EAR.
Ghacham, Inc. retains the right to appeal the order to the Under Secretary of Commerce for Industry and Security within 45 days, as per Part 756 of the EAR. The order, published in the Federal Register on November 26, 2025, takes effect immediately and revokes any BIS-issued licenses in which the company held an interest at the time of conviction.
Implications and Perspectives
This denial could significantly impact Ghacham, Inc.'s operations, particularly if the company relies on international trade. Short-term effects include potential business disruptions, loss of revenue from export activities, and challenges in fulfilling existing contracts. Long-term, it may affect the company's reputation and ability to engage in global markets, even after the denial period ends.
From a policy perspective, supporters of strict export controls view such measures as essential for protecting U.S. interests against fraud and narcotics-related threats, aligning with broader efforts to combat transnational crime. Critics, however, might argue that blanket denials could overly penalize companies, especially if individual executives were primarily responsible, potentially stifling legitimate business without proportional deterrence.
In the political landscape, this action reflects ongoing federal priorities in trade enforcement, influenced by legislative frameworks like ECRA, which expanded BIS's authority post-2018. It also intersects with anti-narcotics initiatives, as the conviction ties into designations under the Foreign Narcotics Kingpin Designation Act, which targets significant foreign narcotics traffickers.
Forward-Looking Conclusion
The BIS denial order against Ghacham, Inc. reinforces the U.S. commitment to robust export controls in response to criminal convictions involving fraud and sanctions evasion. Key aspects include the 10-year restriction period, procedural adherence, and broad prohibitions to prevent circumvention. Potential next steps involve the company's possible appeal, which could test the order's application or seek modifications. Ongoing debates may center on balancing enforcement with business impacts, while future challenges include adapting export regulations to evolving global trade risks and ensuring consistent application across similar cases.
