$70,000 Agreement Settles Export Charges Against Apollo Lasers Inc.
The U.S. Department of Commerce reached a $70,000 settlement last week involving a case in which it charged a Chatsworth company with violating export regulations in exporting a laser and related equipment.
The Commerce Department’s office of export enforcement charged Apollo Lasers Inc. with eleven export violations between Aug. 28, 1984, and Sept. 12, 1987. During most of that period Apollo was owned by Patlex Corp., then based in Chatsworth. But Patlex restructured and spun off Apollo and some other subsidiaries under a new name, Geotek. That company has since sold its laser divisions and moved its headquarters to Philadelphia.
The charges stem from a March 4, 1988, search by federal agents at Chatsworth offices shared by Apollo and Patlex. In the search, government agents took documents relating to the shipping of lasers to countries such as Britain, China and the Soviet Union, a Patlex official said in 1988.
But allegations justifying the search “were not substantiated,” said Special Agent Jim Lowry of the Commerce Department’s export enforcement office in Irvine.
Those allegations are contained in sealed affidavits filed in federal district court in Los Angeles, and Lowry declined to say what the allegations were.
Other files seized in the search, a Patlex official said at the time, included records of Apollo’s export of electronic components to two other then-subsidiaries of Patlex: Oram Electric Industries, a maker of transformers, and Reshef Defense Technologies, a producer of electronic detonators. Both companies are based in Israel.
The federal government impaneled a grand jury in connection with the case, but in July, 1989, told Geotek that the grand jury investigation was dropped, according to Geotek’s recent annual report.
The eleven charges settled last week alleged essentially technical violations of the regulations involving exports to Japan, India, Italy and the Netherlands. But in settling the charges, Geotek, which answered the charges for Apollo, did not admit to any of the violations.
Nevertheless, after a group of outside directors of Patlex conducted their own investigation into “the practices and procedures of Patlex, Geotek and their respective subsidiaries regarding exports and imports,” Geotek fired one employee of its Reshef subsidiary and suspended another without pay, according to the annual report.
The fired employee, whom Geotek declined to name, was fired “not because we found he had done anything illegal but because he operated in a very unorganized way,” Geotek chief executive Yaron Eitan said.
The consent agreement between the Commerce Department and Geotek was approved last week by the assistant secretary for export enforcement in Washington. The agreement settled federal government claims that on six occasions Apollo sent equipment abroad without the appropriate licenses--and five of those times did so by claiming on export forms that the shipments didn’t require licenses.
On one occasion, Apollo sent a laser to Japan, said Brooks Ohlson, special agent in charge at the export enforcement office in Irvine. Exports of that type of laser are restricted because in combination with other equipment they could be used to help produce weapons-grade nuclear fuel, Ohlson said. But the government did not charge that the laser was to be used for such fuel production.
On three other occasions, Apollo sent laser parts to Italy, India, and the Netherlands, Lowry said.
The government charged that the shipments violated regulations because Apollo failed to get appropriate permissions. But Apollo would likely have received a license if it had applied, Lowry said.
Indeed, Apollo had sent the same type of laser to the same Tokyo company with licenses both before and after the shipment in question, claimed Jerry Levy, Geotek’s treasurer.
Geotek and the government said the $70,000 settlement--which is to be paid in five installments--puts an end to any investigation of those eleven allegations. Geotek said in its annual report that Patlex would pay half the fine.
Apollo, Geotek and Patlex have a complicated, intertwined history. Patlex Corp., a public company, was founded in the mid-1970s to help inventor Gordon Gould win several laser patents that are key to many commercially produced lasers. Patlex, which was based in Chatsworth, eventually won the laser rights and now invests its share of royalties for the patents in a variety of businesses.
Apollo was Patlex’s laser-making division. But after Patlex won the laser patent rights, it spun off Apollo and two other divisions to its shareholders, creating a new company called Geotek. Soon after that, Geotek bought several defense-related companies and sold its laser divisions.
