Bought 2 tankers, broke Iran sanctions, gets prison term

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A complex scheme to evade U.S. Iran sanctions has not turned out too well for onetime tanker owner Behrouz Mokhtari, 72, of McLean, Va. This week, he was sentenced to 41 months in prison followed by three years of supervised release for violating U.S. sanctions against Iran by conspiring to engage in prohibited business activities on behalf of persons and entities in Iran. In addition, Mokhtari was ordered to forfeit approximately $2,862,598 in proceeds derived from his criminal activity as well as a residence he purchased in Campbell, Calif., for over $1.5 million using those proceeds.

Mokhtari pleaded guilty earlier this year in the District of Maryland to two counts of conspiracy to violate the International Emergency Economics Power ACT (IEEPA). According to court documents, Mokhtari engaged in a conspiracy lasting from at least March 2018 until at least September 2020 in which he conducted numerous business activities on behalf of Iranian entities without first obtaining the required licenses from the Office of Foreign Assets Control (OFAC). In a separate conspiracy lasting from about February 2013 until at least June 2017, Mokhtari and a number of Iranian nationals agreed to conduct illicit shipments of petrochemical products to and from Iran­, utilizing his front company, East & West Shipping Inc., in Panama to do so.

In reporting on that plea, the Department of Justice said that Mokhtari created the Panama-based front company, East & West Shipping Inc., to purchase two liquid petroleum gas (LPG) tanker vessels to transport Iranian petrochemical products in international commerce on behalf of, and to benefit, Iranian entities associated with the Government of Iran.

After using East & West to purchase the two vessels (LPG Vessels 1 and 2), Mokhtari transferred ownership of the vessels to other entities to conceal the conspirators’ financial and ownership interest. The conspirators then used another entity, Greenline Shipholding Inc., to control the operations of LPG Vessels 1 and 2. For example, through email communications from Greenline email accounts, or email accounts containing some variation of the Greenline name, the conspirators directed Company 5, a ship management company, to oversee the leasing and operation of LPG Vessels 1 and 2 to transport Iranian petrochemical products from Iranian ports to other locations and to participate in ship-to-ship transfers of Iranian products while on the high seas.

The conspirators, including Mokhtari, used the U.S. financial system to engage in transactions related to the vessels and other expenses. In addition, Mokhtari and his co-conspirators frequently communicated by email about the nature and source of the products that the vessels were transporting, as well as the use of false shipping documents and other measures to conceal the fact that the vessels were transporting products to and from Iran in violation of Iranian sanctions.

At some point prior to May 2017, ownership of LPG Vessel 1 was transferred to Russell Shipping Inc., which was owned by Mokhtari. On May 30, 2017, Mokhtari sold LPG Vessel 1 to be scrapped for more than $3.1 million. Mokhtari received a total of $2,862,591.12 from that sale. The purchaser wired funds to accounts at two separate banks – one held in the name of Mori Construction and Development LLC and the other held in the name of Mori Construction. Mokhtari was the sole owner of Mori Construction and controlled both bank accounts. Through a series of inter-account transfers and check payments, by September 2017, the proceeds from the sale of LPG Vessel 1 were located in a third account, over which Mokhtari and his daughter had signature authority. In March 2018, Mokhtari used those proceeds to purchase the Campbell, California, residence,

The Department of Justice says that Mokhtari held management positions and/or maintained ownership control of numerous businesses in Iran and the United Arab Emirates (UAE), collectively referred to as “the FSR Network.” Using the FSR Network, he and his co-conspirators illegally provided services to Iranian entities such as the refinement and transport of petrochemical products. Mokhtari and his co-conspirators used FSR Network bank accounts in the UAE, including Bitubiz FZE, to process these U.S. dollar transactions.

Mokhtari admitted that he knew that, as a U.S. citizen, engaging in business with Iranian entities without first obtaining a license or permission from OFAC is prohibited. He further knew that it was illegal to engage in transactions intended to evade Iranian sanctions, or to engage in transactions related to goods and services of Iranian origin or export.