ORDER: (1) DENYING MOTION TO DISMISS INDICTMENT [ECF No. 86] and (2) DENYING MOTION TO COMPEL ADDITIONAL DISCOVERY [ECF No. 86.]
M. JAMES LORENZ, District Judge.
Defendant Mohammad Reza Nazemzadeh ("Defendant" or "Nazemzadeh") was charged on December 15, 2011, via Indictment with one charge of Obstruction of Justice, pursuant to 18 U.S.C. §1512(b)(3). Later, on October 18, 2012, a grand jury returned a Superseding Indictment which included charges of Conspiracy to Export to Embargoed County, in violation of 50 U.S.C. §§ 1702 & 1705 (Count One); Conspiracy to Smuggle Goods from the United States, in violation of 18 U.S.C. § 371 & 554 (Count Two); Money Laundering, in violation of 18 U.S.C. § violation of 18 U.S.C. § 1512(b)(3) (Count Four).
On February 19, 2013, Defendant filed a Motion to Dismiss the Indictment or Order a Bill of Particulars, renewed his Motion to Order Return of Cell Phone, and included a Motion to Compel Additional Discovery. [ECF No. 86.] On March 4, 2013, the Government filed its Opposition to the Motion. [ECF No. 89.] Defendant filed a Reply brief on April 1, 2013. [ECF No. 95.] The Court held a hearing on the Motion on May 2, 2013, and ordered further briefing. [ECF Nos. 100-101.] The Government filed supplemental briefing on June 13, 2013, and Defendant filed briefing on July 5, 2013. [ECF Nos. 109-110.] A further hearing on the Motion was held on August 21, 2013. [ECF No. 117.]
I. FACTUAL BACKGROUND
Mohamad Nazemzadeh was born in Iran but now lives in the United States on an H1B employment visa. He is currently employed as a post doctoral research fellow in the Department of Radiology Oncology at the University of Michigan in Ann Arbor, Michigan. According to Defendant, his work has received nationwide recognition in the field of radiation therapy in cancer treatment in several peer-reviewed journals and conferences. One of his discoveries has been recognized as a significant development in cancer treatment and, as a result, he was invited to present his work at the annual meeting of the American Association of Physics In Medicine (AAPM) 2012.
Agents began investigating Nazemzadeh when an "industry source" ("source") provided information that an individual was attempting to procure medical equipment for shipment to Iran in violation of U.S. export laws. Nazemzadeh first came to the attention of the source when, in November of 2010, he submitted an electronic pricing request for eight MRI coils to the industry source, who was an employee at Soundimaging, a San Diego-based company. Nazemzadeh said that he represented an Iranian company and that the coils were for export to Iran. According to the Government's brief, the transaction hit a snag when the shipper, TNT, said that it would not ship the coils to Iran. Nazemzadeh then allegedly suggested shipping the coils to a Dutch company, but purportedly complained in an email that "if we have to ship the coil through Netherlands, it would be much more expensive for us and we should pay that company as well." In February 2011, Nazemzadeh abandoned the transaction.
On August 12, 2011, Nazemzadeh again contacted the source at Soundimaging by email, this time to ask about the price and availability of an 8-channel HD MRI brain array coil. This is when the source contacted the Department of Homeland Security Investigations ("HSI") about Nazemzadeh's request and forwarded Nazemzadeh's email correspondence with the company to HSI. On August 15, 2011, an HSI undercover agent ("UCA") posing as a sales representative of Soundimaging contacted Defendant by email, and the next day, by phone. The UCA recorded that phone conversation as well as four later conversations. The UCA also corresponded with Nazemzadeh by email about the proposed purchase of the MRI coil.
Using information obtained in the email correspondence and recorded phone calls, Agent Downey sought and obtained a warrant to search email accounts belonging to Nazemzadeh and three others. [Def. Ex. B.] On January 18, 2012, agents arrested Nazemzadeh at work. After his arrest, Homeland Security Investigations Agents Cole and Downey interrogated Nazemzadeh and he allegedly made inculpatory statements.
II. MOTION TO DISMISS INDICTMENT
In Claim One, Defendant seeks to dismiss the entire Indictment pursuant to Federal Criminal Procedure, Rule 12(b)(3) asserting that the conduct alleged in the Indictment is not illegal because Congress exempted "medical devices" from the general prohibition upon exporting goods to Iran under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 ("CISADA"), 22 U.S.C. § 8512. (Mot. 8.) In the alternative, Defendant argues that the Indictment must be dismissed because Counts 1, 2 and 3 charge offenses under IEEPA which 1) violate the non-delegation doctrine by exceeding the scope of authority conveyed by Congress to the Executive, and 2) violate due process under the Fifth Amendment by failing to provide fair notice of criminal conduct. ( Id. 9.) In Claim Three, Defendant contends that the conspiracy charge, Count 2, must be dismissed because it is overbroad and unduly vague under the Fifth Amendment. ( Id. 26.) In Claim Four, Defendant contends that the Court should dismiss Count 3, the money laundering charge, because the Court lacks jurisdiction, the count imposes additional liability for the exportation offenses charged in counts one and two, and is duplicitous. ( Id. 22-23.) In Claim 5, Defendant asserts that the obstruction of justice charge in Count 4 should be dismissed because it is unduly vague. ( Id. 9.)
A. Statutory History
The controlling legal authority is a patchwork of legislative acts and executive orders which indicate an ongoing effort by Congress and the President to respond to emerging international crises and new technologies concerning Iran. In 1977, Congress issued the International Emergency Economic Powers Act ("IEEPA") delegating limited legislative authority to regulate commerce to the President in cases of an "unusual and extraordinary threat" presented from abroad to our national security, foreign policy, or economy. 50 U.S.C. § 1701 et. seq. After the President declares such an emergency, the President may through "regulations, licenses, or otherwise" prohibit the exportation of any property subject to the jurisdiction of the United States. 50 U.S.C. § 1702(a)(1). IEEPA makes it unlawful to "violate, attempt to violate, conspire to violate, or cause a violation of any license, order, regulation, or prohibition issued" under this section. 50 U.S.C. §1705(a). To convict a defendant of violating IEEPA, the United States must show that a perpetrator's violation was willful. 50 U.S.C. § 1705 (c).
Trade sanctions against Iran were first announced by President Carter in 1979 when he invoked his emergency powers under IEEPA. Dames and Moore v. Regan, 453 U.S. 654, 662-63 (1981). In the ensuing years, the embargo continued uninterrupted, and the current action is premised on executive action taken on May 6, 1995. At that time, "President Clinton signed Executive Orders 12957 and 12959, which fortified the sanctions regime by banning U.S. firms from exporting to Iran...subject to the exemptions provided in IEEPA." U.S. v. Amirnazmi, 645 F.3d 564, 574 (9th Cir. 2011). Executive Order 12957 declared a national emergency with regard to Iran to address the "unusual and extraordinary threat" posed to national security, foreign policy, and the economy of the United States by the "actions and policies of the Government of Iran, " thereby invoking IEEPA's authority. 60 Fed. Reg. 14615 (Mar. 15, 1995). The President then authorized comprehensive trade and financial sanctions of Iran, subject to certain exemptions provided in IEEPA, via Executive Order 12959. 60 Fed. Reg. 24757 (May 9, 1995); see also Amirnazmi, 645 F.3d at 574. In 1997, President Clinton issued Executive Order 13059, which provided clarification for Executive Orders 12957 and 12959, and confirmed that effectively all trade and investment activities with Iran from the United States or by citizens of the United States, are prohibited. Id. at 574. In the years since, sitting Presidents have continued to renew the sanctions against Iran via executive orders, including most recently, President Barack Obama on June 3, 2013. The White House, Briefing Room, Executive Order, Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions with Respect To Iran (June 3, 2013) http://www.whitehouse.gov/briefing-room.
Section 3 of Executive Order 12959 authorized "[t]he Secretary of the Treasury, in consultation with the Secretary of State, to take such actions, including the promulgation of rules and regulations... as may be necessary to carry out the purposes of the Order." 60 Fed. Reg. 24757-24758. At the direction of the Secretary of the Treasury, the Treasury Department issued the Iranian Transactions Regulations ("ITR") to implement the Executive Orders, codified at 31 C.F.R. § 560. See 31 C.F.R 560; see also United States v. Mousavi, 604 Fed.3d. 1084, 1089 (9th Cir. 2010). Section 560.204 of the ITR prohibits the unauthorized exportation, re-exportation, sale, or supply, directly or indirectly, from the United States of any goods, technology, or services to Iran or the Government of Iran; as well as the exportation or supply of goods, technology, or services to persons in third countries knowing or with reason to know the goods, technology or services are intended for supply, transshipment, or re-exportation to Iran. 31 C.F.R. § 560.204. The ITR's are administered by the Office of Foreign Assets Control or "OFAC, " which authorizes and issues licenses for exports subject to the ITR Id. Under 31 CFR 560.530(a), exports of medical devices required an OFAC export license prior to October 2012. 31 C.F.R. §560.530. OFAC has consistently reinforced the licensing requirement over time, including amendment of the ITR in July 2001 to apply the newly enacted Trade Sanctions Reform and Export Enhancement Act of 2000 ("TSRA") which stated that the export of medical devices, among other goods, to "the government of a country that has been determined by the Secretary of State to have repeatedly provided support for acts of international terrorism" shall be made only with a 1-year license issued by the United States Government pursuant to 22 U.S.C. § 7205(a)(1), although Defendant is not charged here under this statute. 22 U.S.C. § 7205(a)(1); see also 66 Fed. Reg. 36683-01 (July 12, 2001) (Interim Rule) and 74 Fed Reg. 61030-01 (Nov. 23, 2009) (Adopting the Interim Rule); Del Monte Fresh Produce Co. v. United States, 570 F.3d 316, 318 (9th Cir. 2009) (recognizing the implementation of the TSRA through the ITR in regard to certain products).
On July 1, 2010, Congress enacted the Comprehensive Iran Sanctions Accountability and Divestment Act ("CISADA"), which is codified at 22 U.S.C. §§ 8512-8516. Under CISADA, Congress indicated that certain goods were exempted from the general prohibition against exports to Iran from the United States or United States citizens, including medical devices. 22 U.S.C. § 8512(b)(2)(B)(ii)(I).
In response to the enactment of CISADA, OFAC published an amended 31 CFR 560 "to implement the import and export prohibitions in section 103 [§ 8512] of [CISADA]" on September 28, 2010. 75 Fed. Reg. 59611-02. According to OFAC's Rules and Regulations,
OFAC will implement these prohibitions through an amendment to the Iranian Transactions Regulations, 31 CFR Part 560 (the "ITR"), which already implement, pursuant to, inter alia, the International Emergency Economic Powers Act (50 U.S.C. §§ 1701-1706) ("IEEPA"), prohibitions similar to those set forth in subsections 103(b)(1) and (b)(2) of CISADA. Consequently, OFAC is amending the ITR by adding CISADA to the ITR's authority citations.
75 Fed Reg. 59611-02 (Sep. 28, 2010).
The Rules and Regulations explained that, "OFAC is relying on the authority of [§ 8512(d)(1)] to maintain in effect the general and specific licenses set forth in or issued pursuant to the ITR." 75 Fed. Reg. 59611-02. The Rules further state, "the general and specific licenses set forth in or issued pursuant to the ITR..; [are treated] as regulatory exceptions to the import and export prohibitions in subsection 103(b) of CISADA." Id.
Defendant is alleged to have attempted to procure the MRI coil for export to Iran during August and September 2011. Although additional legislation has since been passed concerning IEEPA and CISADA, the above sanction and licensing scheme governed the conduct at issue in the current action.
1. IEEPA and CISADA
In Claim One, Defendant contends that IEEPA does not govern, but instead CISADA controls the present action because it is a comprehensive statute intended to supercede all prior legislation and executive actions. (Mot. 7.) In Defendant's view, the plain language of § 8512 of CISADA exempts medical devices, such as the MRI coil from export sanctions, therefore the Indictment fails to state a claim because all of the allegations hinge on the illegality of the exportation of medical devices. ( Id. 8.)
In response, the Government argues that the Indictment properly charged Defendant with a violation of IEEPA, and that "CISADA did not abrogate or otherwise materially alter IEEPA." (Oppo. 2.) The Government contends neither IEEPA nor CISADA permit the unlicensed export of medical devices to Iran from the United States, therefore the Indictment states a claim. ( Id. )
"Statutory interpretation begins with the plain language of the statute. " U.S. v. Rosales, 516 F.3d 749, 759 (9th Cir. 2008). In addition, statutory construction principles dictate that the Court review the entirety of the statute. Aguayo v. U.S. Bank, 653 F.3d 912, 920 (9th Cir. 2011). "When interpreting a statute, a court is guided not by a single sentence or member of a sentence, but [should look] to the provisions of the whole law, and to its object and policy'." John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86, 94-95 (1993). "It is settled that courts should give great weight to any reasonable construction of a regulatory statute adopted by the agency charged with the enforcement of that statute." Clark v. Secs. Indus. Ass'n, 479 U.S. 388, 403-04 (1987). When an agency is delegated authority to promulgate rules effectuating a statute, the "interpretation of [the agency's] regulation reflects its considered views" and the Court should accept the interpretation insofar as the Court is convinced the interpretation is not a rationalization after the fact. Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 171 (2007).
It is undisputed that the plain language of IEEPA vests authority to the President to declare an emergency and implement economic sanctions. As discussed above, the Department of the Treasury and OFAC are tasked with establishing a regulatory scheme to govern the sanctions against Iran. Defendant is correct that the inclusion of the word "comprehensive" in CISADA's title implies an effort by Congress to create an overarching statute, that in theory could supercede IEEPA, however, the enabling statutes under OFAC and statutory construction principles do not support this assertion.
The Congressional session notes discussing CISADA begin by stating that CISADA's purpose was "[t]o amend the Iran Sanctions Act of 1996 to enhance United States diplomatic efforts with respect to Iran by expanding economic sanctions against Iran." 124 Stat. 1312 at 1. Further support for the notion that CISADA enhanced the sanction scheme already in place rather than superceding IEEPA rests in the fact that OFAC's Rules and Regulations amended section 560, governing licenses, in response to CISADA, specifically stating that section 560 applies to both CISADA and IEEPA. 75 Fed. Reg. 59611-02. Because Congress enacted CISADA as a complement to IEEPA, and not as comprehensive legislation, the Court finds that the Indictment properly charges Defendant with a violation of IEEPA.
Although Defendant was properly charged under IEEPA, the language of CISADA indicates that Congress intended to address the exportation of medical devices to Iran, at least to the extent that it authorized their exportation. See 22 U.S.C. 8512(b)(2)(B)(ii)(I). The Government agrees that medical devices are exempt from the prohibition against exporting products to Iran but argues that the Indictment charges Defendant with attempt to export the MRI coil ...