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In The Loop
Mar 27, 2025
Illegal Tech Export Attempt to China: Bohmerwald
Illegal Tech Export Attempt to China: Bohmerwald
00:00
11:10
Transcript
0:00
You ever think about export compliance? And you're probably thinking fighter jets, you know, big companies shipping complicated stuff across borders. Yeah.
0:09
It's easy to assume it's not something most businesses need to worry about. But the world's way more interconnected than it used to be, and technology's constantly evolving.
0:18
Uh, what gets shipped overseas and who needs to worry about regulations is changing too. It's not just the big guys anymore. Exactly.
0:25
And the scary part is, you can get caught up in these export rules even if you're just doing business as usual. Totally.
0:31
We're gonna do a deep dive today into how easy it can be to slip up with export compliance, even without meaning to, and we've got some pretty eye-opening stuff to cover.
0:40
We're gonna be looking at some insights from ExCheck. Yeah. It's this AI-powered platform for export compliance.
0:45
And, uh, we've also got a news release from the Department of Justice, uh, about a guy in North Carolina who just plead guilty to some pretty serious export violations. Yeah.
0:55
And this case is a real wake-up call for businesses that think they're too small or too, uh, you know, under the radar for these regulations to apply to them.
1:04
It shows how everyday business can turn into a legal nightmare if you're not careful. Definitely.
1:10
By looking at this case and what ExCheck does, we wanna show you how someone can end up breaking these rules without even realizing it. All right. So let's jump right into it.
1:20
This case from North Carolina, it involves a guy named David C. Bomerwald and his company, Components Cooper, Inc, out of Raleigh. Okay. Not some giant corporation or anything. They were just reselling electronics.
1:32
Sounds pretty normal, right? Yeah, totally. Well, it turns out the kind of technology you're dealing with and where it's going, those are the things that really matter when it comes to export compliance. Yeah.
1:40
It's not always obvious. In this case, Mr. Bomerwald tried to export 100 accelerometers to China without getting the right license, and that right there is a violation of the Export Control Reform Act. ECRA.
1:53
And he's facing some really serious consequences for this, up to 20 years in prison. Wow. Yeah, it's a huge deal. That's a long time. Yeah. So we're not talking about some harmless little gadgets here. No.
2:05
What are accelerometers, and why are they such a big deal when it comes to exporting, especially to a country like China? These things are fascinating because they have a ton of uses, both civilian and military.
2:16
That's what we call dual use technology. Oh, interesting. Okay. Yeah. They're used in research and development, but also in military stuff because they can measure motion and force really precisely.
2:27
Think, like, testing aircraft or the flight control systems in drones or even, you know, guiding missiles and munitions. Mm-hmm.
2:34
Because they can be used for these sensitive military applications, exporting them to certain countries, like China, is super tightly controlled. You almost always need a license.
2:44
So even though this guy was basically just a middleman reselling electronics, the fact that these little accelerometers have these potentially military uses meant they were under strict export controls for China.
2:56
And, you know, looking at the details, it seems like this might not have been just a simple mistake. There were some pretty suspicious things going on. Yeah, that's the thing with this case.
3:04
There are some red flags that suggest it wasn't just an oversight. The company he bought the accelerometers from, they got suspicious because the order was so weird.
3:12
He told them the end user was in Missouri, but when investigators checked it out, that Missouri company said they never placed an order like that. Hmm.
3:21
And then after he got the accelerometers, he shipped them off to China, but he put a totally fake value on the customs forms. He said the package was only worth $100, but the real value was closer to $20,000. Oh, wow.
3:33
So he was trying to sneak them out. Seems like it. Hmm. And to make matters worse, when investigators talked to Mr.
3:39
Bomerwald, he admitted that he knew these accelerometers were export controlled and that he was supposed to get a license. So he knew he was breaking the rules. Yeah, looks like it.
3:49
Well, even though this seems like it was intentional, this case shows how important it is to know what you're dealing with and where it's going when you're shipping anything overseas.
3:56
The penalties for messing up can be really serious, even if you don't mean to break any rules. Yeah. It's a stark reminder that export compliance isn't something you can afford to ignore.
4:07
Especially with technology changing so fast. Like you were saying, there's so much gray area now with what's considered sensitive and what's not. It's tough to keep up.
4:16
That's where something like ExCheck can really make a difference. Right. Because ExCheck is all about using AI to help businesses navigate this complicated world of export controls. Exactly.
4:28
Imagine you're a smaller business trying to expand internationally, but you don't have a whole team of experts to tell you what you can and can't ship. ExCheck steps in to fill that gap. That makes sense.
4:39
Okay, so how does ExCheck actually help businesses avoid these kinds of export pitfalls, especially the unintentional ones? Well, their main thing is they use AI to take all these complicated export rules- Right...
4:51
make them way easier to understand. So, like, in the case we were just talking about with the accelerometers. Okay, yeah.
4:56
If that company had been using ExCheck, the platform could have analyzed the specs of those accelerometers- Right...
5:02
and seen right away that, oh, these are probably gonna need an export license if you're shipping them to China.
5:07
So it's like having an expert looking over your shoulder, telling you to pump the brakes before you ship something you shouldn't. Exactly.
5:13
And another thing that's really tough for businesses to keep up with is that export rules are constantly changing. Oh, yeah. You're always hearing about new sanctions and trade wars and stuff. It's a lot to track.
5:24
ExCheck gives you real-time updates on all these regulations from the big agencies, like the Bureau of Industry and Security, BIS, and the Directorate of Defense Trade Controls, DDTC. Right.
5:34
Those are the main US agencies that control exports. Exactly. So if the rules suddenly change and now you need a license for something you didn't before, ExCheck will let you know right away. That's huge.
5:46
You don't wanna get blindsided by some rule change you didn't even know about. Nope. What about making sure you're not shipping stuff to people or companies that are on those restricted lists?
5:56
That seems like a nightmare to keep track of manually. Yeah. Denied party screening is a huge part of export compliance, and it can be a real headache.But ExCheck automates the whole thing.
6:08
It checks all your shipments against these constantly updated lists, so you don't accidentally send anything to someone you shouldn't.
6:14
So in that case, with the accelerometers, if they had run the recipient in China through ExCheck, it might have raised a red flag even if they didn't catch the other shady stuff. Exactly.
6:23
It's an extra layer of protection. And the best part is ExCheck is designed to be super user-friendly, even if you don't know all the ins and outs of export compliance. Okay, so it's not just for experts.
6:35
Someone who handles shipping at a company could use it without having to become a trade lawyer. Right.
6:40
It makes compliance accessible to everyone, and they have these dashboards that put all your compliance info in one place, so you can see the big picture and spot any potential problems before they turn into violations.
6:50
That's smart. So it's like a centralized command center for all things export compliance. Pretty much. Okay, so we've seen how ExCheck could have flagged some of the issues in that case with the accelerometers.
7:01
But let's shift gears a little bit- Yeah... and talk more about how someone could accidentally break these export rules without even knowing it. Like, they have zero bad intentions, but they still end up in trouble.
7:12
How does that even happen? It happens more often than you'd think. Like, say, a company develops a new software program. Okay. They might just see it as a regular commercial product, something anyone can use.
7:24
But what they might not realize is that there's some code buried in there, or maybe a specific way to use the software that triggers export restrictions.
7:33
So, like, there's some hidden functionality that makes it sensitive. Right. Like encryption technology that's super tightly controlled, especially for certain countries.
7:42
They might not even know they've stumbled into a restricted area. That makes sense. Or think about a small manufacturing company that uses a certain type of bearing in their machines. Okay.
7:50
They're just standard industrial parts to them. But those same bearings might also be used in military vehicles. Oh, wow.
7:57
So when they ship their machines overseas, they could be violating export controls without even realizing it. So it's not always about weapons or obvious military stuff.
8:05
It can be these everyday components that have a secret life in the military world. Exactly. And sometimes it's not even about the product itself, but about who ends up using it. What do you mean?
8:17
Well, you could sell something to a perfectly legitimate customer in a country where it's allowed, but then that customer turns around and ships it to a restricted country or uses it for something that's prohibited.
8:29
You might not even know they're doing it, but you could still be held responsible. So even if you do your due diligence, you could get in trouble because of what your customer does with your product. Unfortunately, yeah.
8:39
That's a real risk. Yeah. And another common mistake is thinking that the rules are the same everywhere. Right, because different countries have different restrictions on imports and exports. Exactly.
8:49
You might know all the rules for one country you ship to, but then you try expanding to a new market, and bam, you run into a whole new set of regulations you weren't prepared for.
8:58
So what seems perfectly fine in one country could get you in big trouble in another. Yep. And then there's the issue of misclassifying your goods. Right, like putting the wrong code on the shipping paperwork.
9:10
It's more than just paperwork. Those export control classification numbers. Mm. ECCNs are super specific, and if you get them wrong, you could end up needing a license when you didn't think you did.
9:21
So it's like a secret code where one wrong digit can throw everything off. Pretty much. And of course, there's the whole denied party screening thing we talked about before.
9:30
If you're not checking those lists regularly and thoroughly, you could end up doing business with someone who's blacklisted by the government.
9:38
So to sum it all up, someone who's completely clueless about export controls could break the rules by them. Let's see. They could misjudge what their product can be used for.
9:48
They could not realize where their product is really ending up. They could misclassify their product on the paperwork, or they could miss a restricted party on one of those lists. Exactly.
9:56
It's easy to make a mistake, even if you have the best intentions. And that's why ExCheck is so valuable. It helps you avoid all those pitfalls. Exactly.
10:05
It's like your safety net in this complicated world of export compliance. The AI can help you classify your products correctly.
10:13
You get real-time updates on the rules, so you're always in the know, and the automated screening keeps you from dealing with the wrong people. So it takes a lot of the guesswork and risk out of the equation.
10:23
That's the goal. Okay, so for everyone listening out there, hopefully you're starting to see that export compliance isn't just some abstract thing that only applies to giant corporations.
10:32
It affects businesses of all shapes and sizes, and even honest mistakes can have some pretty serious consequences. Don't wait until you're in trouble to figure it out. Be proactive. So think about your own business.
10:45
What are you shipping overseas? Do you really know all the rules that apply to your products? Could you be at risk without even realizing it? It's worth taking a closer look. Definitely.
10:54
And if you're not sure where to start, ExCheck has a free Guardian Compliance audit that can give you a good overview of your compliance situation.
11:02
It's a great way to be proactive and make sure you're not accidentally breaking any rules. Couldn't hurt to check it out. Yeah. Better safe than sorry.
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