FAC No. IQ-214111

MAR 28, 2005

PENALTY NOTICE
Mr. Ryan Clancy
c/o James A. Friedman, Esq.
One East Main St.
P.O. Box 2719
Madison, WI 53701-2719

Dear Mr. Clancy

A Prepenalty Notice ("Notice") dated July 8, 2004, was issued to you by the Office of Foreign Assets Control ("OFAC") for engaging in certain prohibited transactions relating to Iraq, as detailed in the Notice. Inasmuch as no license or approval was issued by OFAC for these transactions, such transactions violated the Iraqi Sanctions Regulations, 31 CFR Part 575 ("Regulations"), promulgated pursuant to the International Emergency Economic Powers Act, 50 U.S.C. 1701 et seq. ("IEEPA") and underlying statutes and Executive Orders. See §§ 575.205 and 575.207 of the Regulations.

Section 586E of the Iraq Sanctions Act of 1990, Pub. L. No.101-513, 104 Stat. 1979, provides, in part, for a civil penalty not to exceed $325,000 for each violation occurring after October 23, 2003.pursuant to § 575.702 of the Regulations, the Notice proposed a penalty against you in the amount of 10,000. You were advised of your right to make a written presentation to OFAC setting forth reasons why the penalty should not be issued or, if issued, why the amount should be less than that proposed. Such written response was required to be made within thirty (30) days of the mailing of the Notice.

Through legal counsel, you requested an extension of time to submit a written response to the Notice, by fax on July 20, 2004, which OFAC granted. Again, through legal counsel, you requested an extension by fax, on August 11, 2004, and OFAC granted another extension of your time to respond the Notice until August 23, 2004. By letter through legal counsel, dated August 23, 2004, you made a written presentation setting forth reasons why you believed a penalty should not be issued. Therein, you admitted departing the U.S. for Iraq on January 28, 2003 and failed to present any new facts or explanations to refute OFAC's allegations that you violated the Regulations.

OFAC notes that your Freedom of Information Act ("FOIA") request does not operate as parallel discovery in a Treasury enforcement action such as this. The FOIA request will be handled in accordance with FOIA regulations.

The Regulations prohibit persons subject to U.S. jurisdiction from exporting services to Iraq or engaging in transactions related to travel in Iraq and activities within Iraq absent prior license or other authorization from OFAC. Accordingly, your unauthorized travel to Iraq and exportation of services violated the Regulations; shielding a Government of Iraq ("GOI") infrastructure from possible U.S. military action constitutes services to the GOI, as alleged in the Notice.

With respect to your due process contentions, OFAC’s civil enforcement actions are conducted in accordance with the Administrative Procedure Act, which you have not cited. Issuance of the Penalty Notice constitutes a final agency action, itself subject to review by a federal district court.

After consideration of the entire record, OFAC finds that you did violate the Regulations as set forth in the Notice. Balancing the mitigating against aggravating factors, it is further determined that some mitigation is warranted to reflect that this is your first offense on record at OFAC and you provided a written response to the Notice. However, it is further determined that an aggravating factor is presented inasmuch as you had knowledge of the law with respect to the Iraq Sanctions and you willfully violated it. Accordingly, 'the proposed CMP in the amount of $10,000 is hereby reduced by 20% to $8,000, which is a penalty amount imposed on you pursuant to the Regulations.

A check payable to the "U.S. Treasury" in the amount of $8,000 should be sent within 30 days of the mailing of this Penalty Notice to U.S. Treasury Department, Office of Foreign Assets Control, 2nd Floor Annex, 1500 Pennsylvania Avenue, N.W., Washington, D.C. 20220. In the alternative, you may arrange for an electronic funds transfer by contacting OFAC's Civil Penalties Division. Please note that interest, administrative charges and late fees will commence to accrue after 30 days. Under Public Law 97-365, 31 U.S.C. § 3717, interest at an annual rate of 5% and an administrative charge of $12.00 will be added monthly if the amount is not paid by the due date. Should the amount not be paid within ninety (90) days, an additional late charge of 6% will be added.

Please note that § 575.705 of the Regulations provides that this matter shall be referred to the United States Department of Justice for collection if the penalty is not paid within 30 days of the mailing of the Penalty Notice.

Please further note that 31 U.S.C. § 7701 requires that a person assessed a penalty by a Federal agency furnish a taxpayer identification number/Social Security Number and also requires the agency to disclose that the agency intends to use such number for the purposes of collecting and reporting on any delinquent penalty amount in the event of a failure to pay the penalty imposed.

Sincerely,
Robert W. Werner
Director
Office of Foreign Assets Control

[1] Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. No. 101-410, 104 Stat. 890, 28 U.S.C. § 2461 note), as amended by the Debt Collection Improvement Act of 1996 (Pub. L. No. 104-134, sec. 3100 1 (s)(1), Apr. 26, 1996, 110 Stat. 1321-373 -- jointly, the "FCPIA"), requires each Federal agency with statutory authority to assess civil monetary penalties ("CMPs") to adjust CMPs for inflation according to a formula described in § 5 of the FCPIA. Accordingly, on October 28, 2003, OFAC published the required amendment, effective October 23, 2003, to the Regulations adjusting its CMP to $325,000, for offenses committed after October 23, 2003. See 68 Fed. Reg. 61359 at 6 1361.