Saying prosecutors failed to present a solid case, a federal judge Tuesday dismissed allegations that an Orange County company plotted to illegally export a mainframe computer to Iran.
U.S. District Judge Edward Rafeedie in Los Angeles dismissed a single charge of wire fraud against Iran Business Machines, a Costa Mesa import-export business that was barred from doing international business earlier this year.
"I'm glad it's over," said Charles Reger, general manager for the company, which is owned by Reza Zandian. "They didn't have a case, and the judge threw it out."
Federal export control officials alleged that Iran Business Machines illegally plotted to ship an International Business Machines Corp. ES9000 mainframe computer, which can handle the processing demands of a medium or large business, to Iran's Ministry of Agriculture.
Federal law prohibits the unlicensed export of powerful computers to countries such as Iran that do not have friendly relations with the United States. Agents feared that Iran could use the machine for military purposes.
The company said it had originally planned to export the computer to Iran under a United Nations program. But the export license for the shipment was denied and the company subsequently planned to send the machine to its Paris office, said Reger, a Huntington Beach resident.
Prosecutors alleged that Iran Business Machines intended to ship the computer from Paris to Iran, but Reger said Tuesday that the company had no such plans.
In January, federal agents alleged that the company had on three occasions violated the Export Administration Act, with each charge carrying a maximum 10-year jail sentence and $250,000 fine. The company was subsequently charged with wire fraud, or perpetrating fraud via phone lines.
In April, the Commerce Department banned the company, Reger and Zandian from doing business overseas. The export-law violation charges were later dropped by federal prosecutors, leaving only a charge that Iran Business Machines had defrauded IBM about its intended use of the computer.
After the U.S. attorney's office finished presenting its evidence Tuesday, Rafeedie granted a motion by the company's attorneys to dismiss the case. In granting the defense motion, Rafeedie called the remaining counts a "desperate attempt" by the government to salvage its case.
"The defense never had to put on its case," said Richard Marmaro, an attorney for the company.
Assistant U.S. Atty. Daniel Goodman, who prosecuted the case, was unavailable for comment. Brooks Ohlson, special agent in charge of the Commerce Department's Export Enforcement Office in Southern California, said he was not aware of the dismissal. But he said that the company could still be permanently barred from export activity under the agency's administrative procedures.
Marmaro said he hopes the Commerce Department will drop any attempt at a permanent export ban.