DOJ Declines Prosecution of Company for Export Control Offenses by Former Employee: Analysis and Key Takeaways
Client Alert | May 7, 2025
A recent declination by the U.S. Department of Justice offers one example of enforcement agencies’ expectations for how companies should respond to potential criminal export control violations.
Executive Summary
On April 30, 2025, the Department of Justice (DOJ) announced that it had declined to prosecute Universities Space Research Association (USRA), a nonprofit research firm and NASA contractor, for export control violations committed by a former employee. The case was jointly investigated by the Department of Commerce’s Bureau of Industry and Security (BIS), the Department of Defense’s Defense Criminal Investigative Service, and the FBI. The Counterintelligence and Export Control Section of DOJ’s National Security Division (NSD) and the U.S. Attorney’s Office for the Northern District of California prosecuted the case.
USRA is the second company to receive a declination of prosecution under NSD’s Enforcement Policy for Business Organizations (the “Policy”). As discussed in greater detail below, this case highlights steps companies can take to minimize – or avoid altogether – criminal exposure stemming from the export control violations of employees or agents. Those steps include maintaining robust compliance programs with rigorous due diligence, oversight, and auditing capabilities to detect and address misconduct. If wrongdoing nevertheless occurs, companies can consider taking advantage of the Policy by immediately conducting internal investigations, identifying root causes of the compliance violations, taking appropriate corrective actions, and promptly self-reporting.
Factual Background
According to the press release issued by DOJ, USRA contracted with NASA in 2016 to license and distribute aeronautics-related and military-owed flight control software. Between April 2017 and September 2020, Jonathan Soong, a former USRA program administrator responsible for performing due diligence on prospective purchasers, willfully exported flight control and optimization software to Beijing University of Aeronautics and Astronautics (a.k.a. “Beihang” or “Beihang University”) in the People’s Republic of China. Since May 2001, Beihang has been listed on the Commerce Department’s Entity List due to its involvement in developing military rocket and unmanned aerial vehicle systems. Under the Export Administration Regulations (EAR), a license from the Department of Commerce is required to export the software, developed by the U.S. Army and licensed by NASA, to parties on the Entity List.
Soong’s illegal scheme continued until USRA began to investigate based on an inquiry from NASA about the sales of software licenses to China-based purchasers. Soong initially attempted to conceal his action by lying to USRA and fabricating evidence of due diligence on the purchasers. He was later confronted by USRA’s counsel and eventually admitted to knowing that Beihang was on the Entity List and that a license was required when he exported the software.
According to the Declination Letter (the “Letter”), USRA self-disclosed the violations to NSD within days of Soong’s admission of misconduct and before the completion of the internal investigation. Soong was charged with willfully violating the EAR by exporting U.S. Army-developed aviation software to Beihang. He pleaded guilty in January 2023, admitting to willfully exporting software without a license, using an intermediary to complete the transfer and export to avoid detection, and separately embezzling at least $161,000 in software license sales by directing purchasers to make payment to his personal account. Soong was sentenced to 20 months in prison.
Multiple Theories of Liability Arising From The Same Facts
Companies should be aware that corporate criminal liability results from the illegal actions of employees or agents. In the USRA case, former employee Jonathan Soong exported unlicensed software to an entity subject to EAR restrictions, diverted license payments to his personal accounts, defrauded the government in connection with a federal contract, and presented false statements and falsified documentation during or in connection with a federal proceeding. According to the Letter, DOJ could have prosecuted USRA based on Soong’s misconduct for potential violations of multiple federal criminal statutes:
- violations of the EAR and the Export Control Reform Act of 2018 (ECRA) predicated on export-related violations;
- violations of the International Emergency Economic Powers Act (IEEPA) predicated on export-related violations;[1]
- violations of the False Claims Act predicated on a federal contractor’s knowing submission of fraudulent claims to the U.S. government with the intent to receive payment or approval;
- violations of 18 U.S.C. § 1001 predicated on knowingly making false statements in “any matter within the jurisdiction” of the federal government;
- violations of 18 U.S.C. § 1343 predicated on using the U.S. electronic communication wires to deceive or defraud; and
- violations of 18 U.S.C. § 1512 predicated on obstruction of justice during a federal proceeding.
Mitigating Factors
A declination of prosecution is a discretionary decision by NSD not to prosecute, guided by the evaluative factors set forth in the Policy. Here, by showing that it had initially lacked knowledge of the misconduct but then responded swiftly and transparently through a robust internal investigation, USRA reinforced its status as a good corporate actor and thus earned itself a declination.
Specifically, the Letter cited to a number of mitigating factors as reasons for the declination, including USRA’s “timely and voluntary” self-disclosure of misconduct, “exceptional and proactive” cooperation with the government, and “timely and appropriate” remediation measures, such as terminating the employment of Jonathan Soong, disciplining supervisory personnel, enhancing internal compliance controls, reimbursing NASA of Soong’s salary, and compensating the U.S. Treasury for financial losses resulting from Soong’s criminal embezzlement of $161,000 in sales. The government also considered the nature and seriousness of the offense to be a contributing mitigating factor given that only four unlicensed exports of software were made and the software was based on publicly available information. Furthermore, the government determined that USRA did not obtain any unlawful gains from Soong’s offenses.
Broader Context: NSD’s Voluntary Self-Disclosure Policy and MilliporeSigma
VSD Policy
NSD is responsible for criminal enforcement of U.S. export control and sanctions laws, among other matters related to national security. To qualify for the Policy, companies should make prompt disclosure directly to NSD of all potentially criminal violations of the Arms Export Control Act (22 U.S.C. § 2778), the Export Control Reform Act (50 U.S.C. § 4819), or the International Emergency Economic Powers Act (50 U.S.C. § 1705), as well as potential violations of other criminal statutes that affect national security when they arise out of or relate to enforcement of export control and sanctions laws.
When a company:
- voluntarily self-discloses to NSD potentially criminal violations arising out of or relating to the enforcement of export control or sanctions laws,
- fully cooperates, and
- timely and appropriately remediates the underlying causes of the violation,
absent aggravating factors, NSD generally will not seek a guilty plea, and there is a presumption that the company will receive a non-prosecution agreement and will not pay a fine. NSD also has the discretion to issue a declination when warranted by the principles of federal prosecution. See Justice Manual § 9-27.000.
A deferred prosecution agreement (DPA) or guilty plea may result if the following aggravating factors are present:
- pervasive and egregious conduct, including repeat violations;
- concealment or involvement by upper management;
- significant profit from misconduct;
- involvement with Foreign Terrorist Organizations or Specially Designated Global Terrorists;
- exports of items controlled for nonproliferation or missile technology reasons; or
- exports of WMD components or military items to countries of concern.
Even when a DPA or guilty plea is required, though, companies can still benefit from VSDs, as they are eligible for up to a 50% reduction in criminal fines if they receive full cooperation and remediation credit.
Recent Example: MilliporeSigma Declination
USRA is only the second declination NSD has issued under the Policy. In May 2024, NSD declined to prosecute MilliporeSigma in a factually analogous case where a company employee shipped biochemical products to a Chinese customer using falsified export documents. Notably, the MilliporeSigma case shares many common factors with USRA, including prompt disclosure of misconduct after retaining counsel and before the internal investigation concluded, proactive and full cooperation, effective remediation, and lack of corporate gain or involvement. In addition, NSD considered the limited quantities of biochemical exports as a mitigating factor.
Key Takeaways
Maintain a Robust Compliance Program
The USRA case once again underscores the importance for companies, especially those consistently dealing with sensitive or controlled technologies, to maintain robust compliance programs. An effective compliance framework should implement thorough due diligence procedures, a strong oversight mechanism, and routine audits capable of detecting potentially unauthorized activities. Although companies can work to mitigate enforcement outcomes – as USRA successfully did here – through extensive post-violation cooperation with the enforcement authorities, stronger internal control and supervisory oversight can help detect and address employee misconduct involving illicit exports and embezzlement internally and thus further reduce the serious legal and reputational risks.
Conduct an Internal Investigation
Upon uncovering the misconduct, companies are well advised to acknowledge the seriousness and urgency of the violation and promptly undertake a thorough internal investigation. USRA’s response was crucial in demonstrating to NSD that the company was effectively a defender of corporate compliance integrity, rather than an enabler of the employee’s criminal actions. The comprehensive nature of USRA’s internal investigation, coupled with its full and prompt cooperation, voluntary self-disclosure, disciplinary measures, and updates to internal controls contributed to DOJ’s successful prosecution of the employee and convinced DOJ to decline charges against the company itself.
Carefully Weigh Voluntary Self-Disclosure Considerations
The Letter recognized USRA’s timely VSD to NSD as having a significant impact on DOJ’s decision to not to bring charges against the company. By choosing to self-disclose early – within days of the employee’s admission of wrongdoing and before completing its internal investigation – USRA earned significant VSD credit under the Policy. While each voluntary self-disclosure decision is dependent on individual facts and circumstances, this case, like MilliporeSigma, showcases how voluntary and timely disclosures to DOJ has the potential to substantially reduce corporate criminal exposure by demonstrating to the government corporate responsibility and commitment to compliance.
We have decades of experience conducting investigations and supporting clients with disclosures before the Department of Commerce, State, Treasury, Justice, and other international trade regulatory and enforcement agencies of the United States. We also have the deep experience advising clients on how to construe and implement trade regulation in their business operations, which is critical to mounting the most effective defense to resulting enforcement actions when they arise. Our team includes key architects of U.S. export control enforcement policies at both the Department of Justice and Department of Commerce. David P. Burns, a co-chair of Gibson Dunn’s National Security practice group, previously held senior positions within both the Criminal Division and National Security Division of the U.S. Department of Justice prior to rejoining the firm. David served at NSD during the pivotal 2019 update to its corporate enforcement policy. Mathew S. Axelrod, a co-chair of Gibson Dunn’s newly established Sanctions and Export Enforcement practice group, recently joined the firm following his tenure at the Department of Commerce’s BIS as Assistant Secretary for Export Enforcement. While at BIS, Matt overhauled a number of the agency’s enforcement policies, including those on voluntary self-disclosures. Matt brings valuable firsthand insights to help clients navigate complex export enforcement issues.
[1] The export control system created pursuant to the Export Administration Act of 1979, a statute that expired in 2001, was continued by a presidential declaration of a national emergency and the invocation of IEEPA until the passage of the ECRA in 2018.
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*Soo-Min Chae, a visiting attorney based in Washington, D.C., is not admitted to practice.
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