Nichols Kaiga Charged with Attempting to Illegally Export Aluminum Tubes to Malaysian Front for Individual in Iran

A Belgian businessman was scheduled to be arraigned on federal charges alleging that he violated U.S. laws by attempting to export aluminum tubes that were controlled for nuclear non-proliferation purposes from a company in Schaumburg, through Belgium, to a company in Kuala Lumpur, Malaysia, without obtaining a license from the U.S. Commerce Department, federal law enforcement officials announced. The case follows a lengthy undercover investigation in which the Schaumburg company, which was cooperating with law enforcement, actually shipped different non-controlled aluminum tubes to the defendant’s business in Belgium before they were allegedly illegally transshipped to Malaysia.

Court documents allege that the Malaysian business is a front company operated by an individual who is located at times in Iran.

The case involves 7075 T6 aluminum tubing with an outside diameter of 4.125 inches and an ultimate tensile strength of 572 MPa (megapascals), which is used in the aerospace industry, among other applications. As a controlled material, a license was required from the Commerce Department’s Bureau of Industry and Security to export the 7075 aluminum from the U.S. to Malaysia, but not to Belgium.

The defendant, Nichols Kaiga, 36, of Brussels and London, was charged with one count of violating the International Emergency Economic Powers Act (IEEPA) and two counts of making false statements on U.S. export forms in a three-count indictment returned by a federal grand jury last Thursday. Kaiga has been in federal custody since he was arrested on June 25 in New York City, approximately a week after he arrived there. A criminal complaint filed at the time of his arrest was unsealed when he was indicted last week.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Gary Hartwig, Special Agent in Charge of Homeland Security Investigations in Chicago; Robert J. Shields, Jr., Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Ronald B. Orzel, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Chicago Field Office. The Justice Department’s National Security Division is providing assistance in the case.

According to the complaint affidavit and the indictment, the Schaumburg company, identified as Company A in court documents began cooperating with law enforcement in December 2007. The cooperation began after a person identified as Individual A, who was at times located in Iran, attempted to purchase 7075 aluminum from Company A, to be shipped to a company in the United Arab Emirates, but was denied an export license. In late 2009, an undercover agent began posing as an employee of Company A.

Between November 2009 and February 2012, the indictment alleges that Kaiga, who was managing director of a Belgian company, Industrial Metals and Commodities, attempted to export 7075 aluminum from Company A to Company B in Malaysia without an export license. The complaint affidavit alleges that Company B was a front for Individual A in Iran. The false statements charges allege that Kaiga lied on Commerce Department export declaration forms, which stated that the ultimate destination and recipient of the 7075 aluminum were in Belgium.

In November 2011, material that was purported to be 7075 aluminum, but was actually substituted with a different aluminum by Company A in cooperation with law enforcement, was picked up from Company A by a freight forwarding company designated by Kaiga’s Belgian company. The material arrived in the Belgian port of Antwerp on December 1, 2011, and two months later it was shipped by a freight forwarding company to Individual A’s front company in Malaysia.

Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine, while making false statements to government agencies carries a maximum penalty of five years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. The government is being represented by Assistant U.S. Attorneys Raj Laud and Nancy DePodesta.

An indictment contains merely charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

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