A British Virgin Islands-based company allegedly controlled by Russians now faces a $15,000-a-day fine until it retrieves a pair of General Electric jet engines thought to be bound for Iran.
And no, a federal judge says, a comparable pair of jet engines located in Miami won’t suffice as an alternative.
In a case that combines asset forfeiture with a hint of international intrigue, U.S. District of Columbia District Court Judge Gladys Kessler imposed the fine this week on Evans Meridians, Ltd, after rejecting the company’s offer to turn over instead what Kessler called “the Miami engines.”
Such sales would be legal today, in the wake of the Iran nuclear deal.
The stakes could be more than financial, even as the United States begins lifting certain economic sanctions on Iran.
The Justice Department contends, Kessler noted, that the two jet engines being sought were “destined for Iran, and more specifically, the Islamic Revolutionary Guard Corps-Qods Force, a designated Foreign Terrorist Organization.”
“If correct, each day that the defendant engines remain outside the United States increases the risk that they will arrive at their intended destination, and thereby benefit a hostile organization,” Kessler reasoned.
Kessler held the BVI-based Evans Meridians to be in civil contempt over its failure to either get back the two G.E. aircraft engines, or, as an alternative, post a $6 million bond. The company’s proposal to substitute an unrelated set of engines found in Miami never got off the ground.
“By Evans’ owns admission, it lacks physical possession of the Miami Engines, and the third party that does have possession of them has some sort of monetary claim against Evans which clouds Evans’ title to them,” Kessler noted.
For its part, the company “denies the existence of a scheme” to evade U.S. export controls, the firm’s original attorneys stated in a 2015 court filing.
Evans has not produced even one shred of evidence in support of its argument that it is unable to comply with the court’s repatriation order. U.S. District Judge Gladys Kessler
The case of the missing jet engines already is trickier than the standard asset forfeiture effort, of which there are many each year. More than $1.6 billion was deposited in the federal asset forfeiture fund in Fiscal 2015, including $95 million from Florida.
Many of the seized assets are mundane: cash, cars or real estate, for instance.
The two G.E. airplane engines, with serial numbers 695244 and 705112, are more exotic.
According to the initial asset forfeiture complaint, an “Iranian airline company used a Russian intermediary and at least three shell companies in different countries” to manage the jet engine sale in 2013 that violated U.S. restrictions on trade with Iran.
At the time, U.S. law prohibited the sale, directly or indirectly, of any goods, technology or services to Iran. Following the Iran nuclear deal last year, such sales became legal, with exporters allowed to apply for a license to sell Iran “spare parts and components for commercial passenger aircraft,” according to Treasury Department guidance.
But in 2014, before the export restrictions were lifted, the Commerce Department had concluded that Evans Meridians had joined several other companies in an alleged scheme to skirt restrictions.
“Evans is believed to be owned, managed, affiliated or controlled by persons or entities in Russia,” the Justice Department stated in its Dec. 30, 2014, court filing, which characterized Evans as a “shell company.”
Despite the U.S. government’s claims on the engines, the company’s president, Jonathan Betito, reported in an affidavit last year that they were moved from Turkey to a “proper storage facility” in Shanghai, China, where they could receive “proper servicing.”
An attorney representing Evans Meridians – who Kessler noted was “from Russia” – told the judge at an Oct. 24 hearing that the company already has asked the Chinese firm that “allegedly possesses” the jet engines to return them.
Failing that, the attorney futilely offered up the two other engines in Miami.
If the company pays $15,000 a day for a year, it would roughly cover the value of the engines, although the Russian attorney, Kessler observed, “stated that he did not have any information regarding Evans’ assets.”