In a recent case that has captured attention in the telecommunications industry, Farhad Nafeiy, a Bay Area telecommunications consultant, has pleaded guilty to violating sanctions on Iran. The charges were brought forth by the U.S. Attorney’s Office for the Northern District of California, alleging that Nafeiy exported software upgrades for commercial-grade telecommunications servers to the Islamic Republic of Iran and committed tax evasion. This plea comes as a result of an investigation by Homeland Security Investigations and the Internal Revenue Service-Criminal Investigation. Nafeiy now faces potential prison time, fines, and restitution, highlighting the serious consequences of violating sanctions and evading taxes. This case serves as a reminder of the importance of adherence to international rules and regulations in the telecommunications industry.
Summary
Farhad Nafeiy, a Bay Area telecommunications consultant, has pleaded guilty to violating sanctions on Iran and tax evasion. Nafeiy exported software upgrades for commercial-grade telecommunications servers to Iran, which is prohibited under the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR). He obtained licenses from the Office of Foreign Assets Control (OFAC) for advising non-Iranian telecommunications companies, but he exceeded these licenses by directly providing software upgrades to Iran. Nafeiy admitted to knowing that he exceeded the licenses and that the total amount of sales to Iran was approximately $400,000. He also admitted to evading his federal income taxes. Nafeiy faces potential penalties including prison terms, fines, and restitution. The sentencing hearing is scheduled for January 29, 2024.
Background on the Case
The U.S. Attorney’s Office for the Northern District of California announced the charges against Farhad Nafeiy for violating sanctions on Iran and tax evasion. The plea was accepted by Judge Araceli Martínez-Olguín. The announcement was made by the United States Attorney for the Northern District of California, the Assistant Attorney General, the Special Agent in Charge of Homeland Security Investigations (HSI), and the Special Agent in Charge of the IRS Criminal Investigation’s Oakland Field Office.
Violation of Sanctions on Iran
Charges against Farhad Nafeiy
Farhad Nafeiy was charged with violating the International Emergency Economic Powers Act (IEEPA). This act grants the President of the United States authority to address threats to national security, foreign policy, or the economy. Under IEEPA, certain activities and transactions with Iran and the Government of Iran are prohibited. Nafeiy was charged with exporting software upgrades for telecommunications servers to Iran, which violated the sanctions.
Plea accepted by Judge Araceli Martínez-Olguín
Judge Araceli Martínez-Olguín accepted Farhad Nafeiy’s guilty plea to violating IEEPA and tax evasion charges. The plea agreement was reached between Nafeiy and the prosecution team.
Announcement by United States Attorney for the Northern District of California
The United States Attorney for the Northern District of California, Ismail J. Ramsey, made the announcement of the charges and guilty pleas against Farhad Nafeiy. The announcement emphasized the seriousness of the violations and the potential penalties Nafeiy could face.
Involvement of Assistant Attorney General Mathew G. Olsen
Assistant Attorney General Mathew G. Olsen was involved in the announcement of the charges against Farhad Nafeiy. Olsen’s role was to emphasize the importance of enforcing sanctions and prosecuting individuals who violate them.
Role of Homeland Security Investigations
Homeland Security Investigations (HSI) was involved in the investigation of Farhad Nafeiy’s violations of sanctions on Iran. HSI is responsible for investigating a wide range of criminal activities, including violations of economic sanctions.
IRS Criminal Investigation’s Oakland Field Office’s involvement
The IRS Criminal Investigation’s Oakland Field Office played a role in the investigation of Farhad Nafeiy’s tax evasion charges. The office is responsible for investigating financial crimes, including tax evasion.
The International Emergency Economic Powers Act (IEEPA)
The International Emergency Economic Powers Act (IEEPA) grants the President of the United States authority to address threats to national security, foreign policy, or the economy. It allows the President to issue orders prohibiting certain activities and transactions with countries like Iran. Violating IEEPA can result in severe penalties, including fines and imprisonment.
Restrictions on Activities and Transactions with Iran
Orders issued by the President under IEEPA
Under IEEPA, the President of the United States has issued orders prohibiting certain activities and transactions with Iran and the Government of Iran. These orders are aimed at addressing threats to national security, foreign policy, and the economy.
Iranian Transactions and Sanctions Regulations (ITSR) implemented by the Department of Treasury’s Office of Foreign Assets Control (OFAC)
The Iranian Transactions and Sanctions Regulations (ITSR) are regulations implemented by the Department of Treasury’s Office of Foreign Assets Control (OFAC) to enforce the orders issued by the President under IEEPA. These regulations prohibit, among other things, exporting or facilitating the export of U.S.-origin products to Iran and providing services to Iran.
Nafeiy’s Violation of OFAC Licenses
Licenses obtained by Nafeiy for advising non-Iranian telecommunications companies
Farhad Nafeiy obtained licenses from the Office of Foreign Assets Control (OFAC) for advising non-Iranian telecommunications companies on doing business with Iran. These licenses allowed him to provide advice and guidance on certain activities and transactions.
Nafeiy’s unauthorized provision of software upgrades to Iran
Despite his licenses only authorizing him to provide advice and guidance, Farhad Nafeiy exceeded his authority by directly providing software upgrades to telecommunications equipment in Iran. This violated the Iranian Transactions and Sanctions Regulations (ITSR) and the International Emergency Economic Powers Act (IEEPA).
Admission of exceeding the licenses in his plea agreement
As part of his guilty plea, Farhad Nafeiy admitted that he knew he exceeded the licenses granted by OFAC when he provided software upgrades to Iran. This admission strengthens the case against him and supports the charges brought against him.
Approximate amount of sales made to Iran
Farhad Nafeiy admitted in his plea agreement that the total amount of sales of software upgrades to Iran was approximately $400,000. This information is crucial for determining the severity of the violations and the potential penalties Nafeiy may face.
Tax Evasion Charges
In addition to violating sanctions on Iran, Farhad Nafeiy was also charged with tax evasion. He admitted to evading his federal income taxes and specifically not paying income tax on some of the proceeds from his sales to Iran. These tax evasion charges further compound the seriousness of his offenses.
Charges and Plea Agreement
Charges against Nafeiy for violating IEEPA and tax evasion
Farhad Nafeiy was charged with one count of violating the International Emergency Economic Powers Act (IEEPA) and one count of tax evasion. These charges reflect his violations of the sanctions on Iran and his evasion of federal income taxes.
Guilty plea to both charges
Farhad Nafeiy pleaded guilty to both charges brought against him. His guilty plea strengthens the prosecution’s case and eliminates the need for a trial.
Sentencing hearing scheduled for January 29, 2024
The sentencing hearing for Farhad Nafeiy has been scheduled for January 29, 2024. This hearing will determine the penalties he will face for his violations of sanctions on Iran and tax evasion.
Potential Penalties
Maximum statutory prison term, fine, and restitution for violating IEEPA
For the violation of the International Emergency Economic Powers Act (IEEPA), Farhad Nafeiy faces a maximum statutory prison term of 20 years, a maximum fine of $1,000,000, and potential restitution if appropriate. These penalties reflect the seriousness of violating sanctions on Iran.
Maximum prison term, fine, and restitution for tax evasion
For the tax evasion charge, Farhad Nafeiy faces a maximum prison term of five years, a maximum fine of $250,000, and restitution of at least $79,124 to the IRS. These penalties are intended to deter individuals from evading their tax obligations.
Consideration of U.S. Sentencing Guidelines and federal statute governing sentencing
The court will consider the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553, when determining the appropriate penalties for Farhad Nafeiy. These guidelines and statutes provide a framework for ensuring fair and consistent sentencing.
Prosecution Team and Investigation
Members of the prosecution team
The prosecution team handling the case against Farhad Nafeiy includes Assistant U.S. Attorney Benjamin Kingsley, Trial Attorney David Ryan of the National Security Division’s Counterintelligence and Export Control Section, and Kathleen Turner of the U.S. Attorney’s Office. These individuals are responsible for presenting the evidence and arguments against Nafeiy in court.
Assistance provided by former Trial Attorney Elizabeth Abraham
Former Trial Attorney Elizabeth Abraham provided valuable assistance in prior phases of the prosecution against Farhad Nafeiy. Her expertise and support have contributed to building a strong case against Nafeiy.
Involvement of Homeland Security Investigations and IRS-Criminal Investigation
Homeland Security Investigations (HSI) and the IRS-Criminal Investigation were both involved in the investigation of Farhad Nafeiy’s violations of sanctions on Iran and tax evasion. These agencies played a crucial role in gathering evidence and conducting the investigation.
In conclusion, Farhad Nafeiy’s guilty plea to violating sanctions on Iran and tax evasion highlights the importance of enforcing economic sanctions and ensuring compliance with tax obligations. The seriousness of these offenses is reflected in the potential penalties Nafeiy faces, including prison terms, fines, and restitution. The prosecution team, along with the assistance of Homeland Security Investigations and the IRS-Criminal Investigation, has diligently pursued justice in this case. The sentencing hearing scheduled for January 29, 2024, will determine the appropriate penalties for Nafeiy’s violations.