Archive for September, 2011

Federal Prosecutors Take Aim At Corporate Officers For FDCA Violations With Revived Use Of The Park Doctrine

Thursday, September 22nd, 2011

Although criminal sanctions against corporate officers for violations for the Food, Drug & Cosmetic Act (FDCA) have been on the books since 1938, federal prosecutors have taken aim at corporate executives personally with renewed vigor through the use of the “responsible corporate officer doctrine,” better known as the Park doctrine.

As we previously reported here and here, the Park Doctrine is named after a Supreme Court case called United States v. Park, 421 U.S. 658 (1975). In that case, Acme Markets, Inc. and Park, its president, in his personal capacity, were charged with violating § 301(k), now 21 U.S.C. § 331 (k), of the FDCA because interstate food shipments being held in Acme’s Baltimore warehouse were contaminated by rodents. At Parks trial, the trial court instructed the jury that, although Park need not have personally participated in the activity which cause the violation, he must have had “a responsible relationship to the issue” in order to be convicted. The jury convicted Park on all counts.

In affirming his conviction, the Supreme Court, noted that food and drug laws have historically been applied to persons by virtue of their managerial position if the person ultimately had the power to prevent the alleged unlawful act. Id. at 670-672. As a result, corporate executives have an affirmative duty to ensure the safety of their corporations products under the FDCA. Today, based on that decision, an executive may be criminally prosecuted for violations of the FDCA if he or she had, by reason of his or her position in the corporation, responsibility and authority to either prevent in the first instance, or promptly correct the violation.

The Park Doctrine does not require that the corporate officer be aware of wrongdoing within the company. Instead, these offenses are “strict liability” misdemeanors, and the government is only required to prove that the prohibited act occurred and that the executive had the authority to prevent or correct it. (More information on strict liability offenses can be found in our previous report here.) Additionally, should a corporate officer be convicted under the Park Doctrine, any subsequent violations of the FDCA are treated as felonies under 21 U.S.C. 333, even without proof that the defendant acted with the intent to defraud or mislead.

Initially used by the government in the 1960s and 1970s to regulate insanitary conditions in food warehouses, the Park Doctrine has reemerged as a tool for federal prosecutors in enforcement of misbranding and adulterated drug offenses. Although the FDAs position is that “misdemeanor prosecutions, particularly those against responsible corporate officials, can have a strong deterrent effect on the defendants and other regulated entities,” the practical effects of such prosecutions can be devastating. Indeed, a misdemeanor conviction can serve as a basis for exclusion from participation in numerous federal programs.

The Purdue Fredrick Co. case is an example of the potential collateral consequences of Park Doctrine prosecutions. In Purdue Fredrick, the corporation pled guilty to a felony count of misbranding OxyContin with the intent to defraud or mislead. Prosecutors alleged that the company falsely claimed that OxyContin was less addictive and less subject to abuse than other pain medications. Additionally, federal prosecutors sought Park Doctrine misdemeanor misbranding charges against the CEO, the general counsel, and the medical director of Purdue Fredrick. Ultimately, the three corporate officers pled guilty, were sentenced to probation, and disgorged millions of dollars of income.

However, soon after the officers entered their guilty pleas, the U.S. Department of Health and Human Services excluded the three officers from any participation in federal health care programs for 12 years because their convictions were based on fraud and the unlawful manufacture of a controlled substance. HHSs decision was upheld by the United States District Court for the District of Columbia and is currently on appeal. As a consequence of this exclusion, the corporate officers will be unable to engage any in business which participates in federal health care programs such as Medicare and Medicaid.

The FDA and white collar criminal defense lawyers at Fuerst Ittleman are experienced in handling even the most complex cases where clients are facing allegations of criminal actions. Fuerst Ittleman attorneys have represented clients in a variety of FDA-related criminal investigations and prosecutions including violations of the FDCA under 21 U.S.C. §§ 331 and 333 as well as prosecutions of corporate officials for FDCA violations under the Park Doctrine. For more information regarding Fuerst Ittlemans white collar criminal defense practice, contact an attorney today at

FDA Issues Letter to Industry Regarding Imports of Medical Devices

Tuesday, September 20th, 2011

On September 6, 2011, the U.S. Food and Drug Administration (FDA) issued a Letter to Industry focused on the import entry review process. Importers of medical devices are encouraged to provide sufficient documentation in order to avoid time-consuming FDA review of each line offered for entry. Found here, the Letter sets forth several recommendations to importers of medical devices aimed at expediting the importation process. For instance, the FDA sets forth the various categories of medical devices that are subject to federal performance standards, noting that importers must provide a form certifying that the devices offered for import conform to these standards. The Letter, which is a follow-up to a March 24, 2011 letter published by the FDA, also reiterates the importance of using Affirmations of Compliance (AofC) codes.

Found here, the March 24, 2011 Letter to Industry regarding the import entry review process details the benefits of using AofC codes, including how they will expedite the importation process. AofC codes are specific identifiers of FDA-regulated products that may be used by importers to certify that the line offered for import meets the requirements of the particular code. Generally, when FDA-regulated goods are offered for import into the country, U.S. Customs and Border Protection (CBP) forwards import entry information to the FDA in order to verify that the goods meet all necessary FDA regulations. The FDA warns that without proper documentation, including the use of AofC codes, the review process will often be delayed, as FDA may have to undertake a manual review of the entry. Because of the complexities of the importation process, particularly when FDA-regulated goods are involved, importers should be aware of the various means of expediting the review process in order to avoid unnecessary set-backs upon entry.

For more information about the import process or FDA compliance, please contact us at

Patient Protection and Affordable Care Act Challenges Often Turn On Interpretation of the Court’s Commerce Clause Jurisprudence

Tuesday, September 20th, 2011

On September 13, 2011, the United States District Court for the Middle District of Pennsylvania issued its decision finding that the individual mandate provision of the Patient Protection and Affordable Care Act (PPACA) exceeded Congresss authority under the Commerce Clause and therefore is unconstitutional. As discussed in a recent Forbes article, this decision is merely one in a long line of District and Circuit opinions on the constitutionality of the PPACA. Ultimately, the individual mandate provision the PPACAs constitutionality will turn on the interpretation of two bedrocks of Commerce Clause precedent, Wickard v. Filburn, 317 U.S. 111 (1942) and Gonzales v. Raich, 545 U.S. 1 (2005). A copy of the Forbes article can be read here.

Generally speaking, Congresss power under the Commerce Clause extends to three broad categories. First, Congress may regulate the channels of interstate commerce. Second, Congress may regulate and protect the instrumentalities of interstate commerce. Finally, Congress may regulate activities that have a substantial effect on interstate commerce. See United States v. Lopez, 514 U.S. 549, 558 (1995). It is within this third category that Congresss Commerce Clause authority is pressed to its “outer limits” and is often the subject of judicial challenge. See Id. at 557. Such is the case with the PPACA.

In Wickard, the Supreme Court held that Congress could regulate the production of home grown wheat meant solely for personal use under its Commerce Clause power. In so holding, the Court found that although Filburns activities were entirely local, such activities, when taken in the aggregate, had a substantial effect on the national market for wheat. In the annals of Commerce Clause jurisprudence, Wickard v. Filburn represents the high-water mark for Congressional power.

More than 60 years later,    in Gonzales v. Raich, the Supreme Court upheld Congresss authority under the Commerce Clause to prohibit the possession of home-grown marijuana intended solely for personal use, even when such possession was allowed by state law. Similar to the Courts rationale in Wickard, the Raich Court found that the production of marijuana substantially affects supply and demand in the national market; therefore the regulation was “squarely within Congress commerce power.” The Court went on to hold that “Congress can regulate purely intrastate activity that is not itself Ëœcommercial . . . if it concludes that failure to regulate that class of activity would undercut the regulation of the interstate market in that commodity.” Raich, at 18. Both Raich and Wickard stand for an expansive and broad reading of Congresss power under the Commerce Clause.

In finding that the PPACAs individual mandate was unconstitutional, Judge Conner distinguished the mandate from the economic regulations at issue in Wickard and Raich. The Court found that unlike the laws at issue in Wickard  and Raich, which allowed people to not engage in regulated conduct and thereby stay beyond the reach of the statute, PPACAs mandate requires people to become active participants in the health insurance market regardless of whether heath services will be used. As explained by Judge Conner:

Congress can reach the personal production of wheat “ a clear activity affecting the interstate market “ in an effort to stabilize the wheat market. Congress cannot, however, in order to stabilize that market, force the purchase of wheat by individuals who decide to forego wheat or wheat products, even if Congress legitimately determines that an individuals decision not to purchase wheat or wheat products inhibits the governments ability to regulate or stabilize the wheat market. Similarly, Congress may lawfully regulate the interstate market for health insurance and health services, but Congress cannot require individuals who choose not to purchase health insurance or individuals who are not currently seeking or receiving services in the health care market to purchase health insurance in order to stabilize the health insurance market. Congress cannot mandate or regulate in anticipation of conduct that may or may not occur.

Bachman v. U.S. Department of Health and Human Service, et. al., at 36.

The Court went on to find that an uninsured individuals conduct has no effect on conduct Congress sought to regulate under the Commerce Clause until such time that: 1) the individual obtains health care services; and 2) the individual does not pay for the services received. The Court stated that “the mere status of being without health insurance, in and of itself, has absolutely no impact on interstate commerce . . . at least not any more so than the status of being without any particular good or service.” Id. at 38. As a result, “current Commerce Clause precedent does not permit Congress to reach a pre-transaction stage in anticipation of participation in a market. . . .”Id. at 40.

Ultimately, it is likely that the final decision as to the constitutionality of the individual mandate of the PPACA will be made by the Supreme Court. Such a decision has the potential to reshape Congresss power to regulate individuals and businesses under the Commerce Clause regardless of its outcome. Fuerst Ittleman will continue to monitor the litigation challenging the PPACA and its effects on Commerce Clause jurisprudence. For more information, please contact us at

IRS and DOL Release Final Regulatory Review Plans to Help Distressed Sponsors and Retirement Plans

Friday, September 16th, 2011

In January 2011, President Obama issued Executive Order 13563, Improving Regulation and Regulatory Review, requiring agencies to review current regulations and determine if they are necessary and effective. On August 22, 2011, the Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) released their final plans for regulatory review. The IRS and DOL final plans for regulatory review aim to assist distressed sponsors and help retirement plans.

According to a White House fact sheet, the IRS is in the process of reviewing regulations pertaining to retirement plans to determine whether “any modifications could better achieve the objective of promoting retirement security by facilitating the offering of benefit distribution options in the form of retirement income.” This initiative plans to reduce administrative burdens for retirement plan sponsors looking to expand employees retirement income options.

Additionally, the IRS is considering providing relief to employers facing financial difficulty from requirements under the existing regulations pertaining to safe harbor contributions to 401(k) plans. The IRS proposal would provide flexibility to plan sponsors by allowing them to suspend required contributions based on financial health. According to the White House, the proposed regulations are in response to concerns raised by employers experiencing economic hardship and incapable of meeting certain safe harbor contributions under their plans.

The DOL Employee Benefits Security Administration (EBSA) will propose revisions to 401(k) plans that have been abandoned by their sponsors to reflect changes in the U.S. Bankruptcy Code. The proposed regulation would provide a streamlined program to terminate plans, including those for businesses involved in bankruptcy liquidations, with little EBSA involvement. Expanding the program to cover plans in liquidation would allow bankruptcy trustees to use the streamlined termination process to better discharge its obligations. The proposal is expected to be published in December 2011.

The attorneys at Fuerst Ittleman are current and knowledgeable on todays pressing tax issues. If you have any tax concerns, email an attorney at


Google Agrees to Forfeit $500 Million As Part of Non-Prosecution Agreement

Wednesday, September 14th, 2011

On August 19, 2011, Google entered into a non-prosecution agreement with the United States Department of Justice to settle allegations that the search engine knowingly and improperly assisted Canadian online pharmacies in advertising prescription drugs and controlled substances that targeted the United States in violation of  21 U.S.C. § 952 and 21 U.S.C. § 331 though its AdWords advertising program. As part of the non-prosecution agreement, Google agreed to forfeit $500 million to the United States government. A copy of the non-prosecution agreement can be read here.

Generally speaking, the Food, Drug, and Cosmetic Act (“FDCA”) prohibits pharmacies located outside the United States from selling and shipping prescription drugs to consumers in the U.S. See 21 U.S.C. § 331(a) and (d). One of the more popular ways for international pharmacies to engage in business with U.S. consumers is via the internet. Federal prosecutors alleged that since 2003 Google has been aware of the illegality of prescription drug sales by online Canadian pharmacies advertising on its AdWords program. (AdWords is an online advertisement program run by Google which allows advertisers to post ads, for a fee, that specifically target selected regions or countries for business.) The non-prosecution agreement also alleges that Google knew that many of these online pharmacies distributed prescription drugs and controlled substances through their websites without valid prescriptions from a doctor. Additionally, federal prosecutors allege that between 2003 and 2009, Google provided customer support to these online pharmacy advertisers to optimize their ads and improve the effectiveness of their websites.

As a result of these allegations, Google agreed to forfeit $500 million to the federal government. The $500 million total includes both the revenues earned by Google from the advertisements as well as the estimated revenues the online Canadian pharmacies received through the sale of drugs to American customers. Google has also agreed to enhance its compliance program for online ads. Upon learning of the governments investigation, Google made several changes to its advertising policies regarding online pharmacies. Google has since required all online pharmacies to be certified by either the National Association Boards of Pharmacy in the US or the Canadian International Pharmacy Association. Additionally, Google now prohibits foreign online pharmacies from advertising in the United States on AdWords. Google has also brought suit against several pharmaceutical advertisers for violating its advertising rules.

The governments non-prosecution agreement with Google may signal a new approach at combating illegal drug trafficking. In this case, though Google was not involved in the actual sale, distribution, or transfer of drugs from foreign pharmacies to the United States, the Department of Justice has treated Google as an aider and abettor of these pharmacies, and thus liable for the unlawful conduct of the pharmacies. However, it should also be noted that because this is a non-prosecution agreement and not a plea bargain, no judicial approval is needed for its terms. Therefore, it is conceivable that had Google not agreed to enter into this agreement, federal prosecutors may not have been able to obtain an indictment and conviction.

Lawyers at Fuerst Ittleman are experienced in representing individuals and corporations facing scrutiny from the government regarding regulatory and white collar criminal allegations. For more information regarding Fuerst Ittlemans white collar criminal defense practice, contact an attorney today at

FDA Announces Implementation of Traceability Projects under FSMA

Tuesday, September 13th, 2011

On September 7, 2011, the U.S. Food and Drug Administration (FDA) announced two new pilot projects to aid tracking of food products, in an effort to prevent the spread of foodborne illness outbreaks. Through collaborative efforts with the Institute of Food Technologists (IFT), the FDA is implementing these projects, one concerning produce and the other involving processed foods, as directed by the Food Safety Modernization Act (FSMA). Under the pilot projects, available technologies and methods for tracing foods will be evaluated, including tracking at different points in the supply chain and monitoring how rapidly data reaches the FDA.

The recently-enacted FSMA directs the FDA to establish a number of measures aimed at ensuring the nation’s food supply remains safe for public consumption. While we previously reported on other FDA actions pursuant to the FSMA, these pilot projects remain among the first measures taken by the Agency in implementing this legislation. Ultimately, the FDA intends to use data collected from the projects to undertake rulemaking concerning the new recordkeeping requirements. As directed by the FSMA, FDA must adopt regulations pertaining to recordkeeping requirements for high-risk foods. Through the data collection efforts undertaken in these projects, FDA intends to have the information necessary to define “high-risk” foods and establish the required recordkeeping activities of the facilities that handle them. An overview of some of the other requirements under the FSMA may be accessed here.

Fuerst Ittleman will continue to monitor the FDA’s measures under the FSMA. For more information regarding the FSMA or FDA regulations, please contact us at or (305) 350-5690.

4th DCA Rules: Real Time Cell Phone Location Tracking Does Not Violate 4th Amendment

Tuesday, September 13th, 2011

On September 7, 2011, the Florida Fourth District Court of Appeal upheld a lower court ruling that law enforcement did not violate the Fourth Amendment by using “real time” cell site location information (“CSLI”) to track the movements and location of a suspect on public roads. A copy of the Courts Opinion can be read here.

In this case, the defendant, Shawn Alvin Tracey, was the subject of a narcotics investigation when law enforcement filed an application for an order authorizing the installation and use of a pen register and a trap and trace device to enable law enforcement to see who Tracey was calling and who was calling him. (A “pen register” is a device or process that records or decodes dialing, routing, addressing, or signaling information transmitted by an instrument or facility from which a wire or electronic communication is transmitted, but such information does not include the contents of any communication. A “trap and trace device” is a device or process that captures the incoming electronic or other impulses that identify the originating number or other dialing, routing, addressing, or signaling information reasonably likely to identify the source of a wire or electronic communication, but such information does not include the contents of any communication.) See § 934.02, Fla. Stat. However, neither the application nor the Order granting the use of the pen register and trap and trace device mentioned the collection of and use of CSLI.

CSLI works as follows: “Cell phones whenever on, now automatically communicate with cell towers, constantly relaying their location information to the
towers that serve their network and scanning for the one that provides the strongest signal/best reception. This process, called Ëœregistration, occurs approximately every seven seconds.” See Tracey v. Florida, No. 4D09-3565, at 3 (Fla. 4th DCA September 7, 2011). As a customer location changes, their cell phone will search for and communicate with multiple towers. Cell phone companies track which cell phone towers are serving a phone. CSLI can accurately place the location of a cell phone within 200 feet in urban areas. Accuracy improves to within 50 feet when via the built in GPS feature of most phones. As a result, the real time location of any cell phone can be traced.

In this case, law enforcement used the CSLI of Traceys phone to track his movements from the west coast of Florida to several known and suspected drug stash houses. Upon observing Traceys movements the officers stopped and arrested Tracey for driving with a suspended license. The subsequent search uncovered a kilogram brick of cocaine in his car. Prior to trial Tracey moved to suppress any evidence obtained as a result of law enforcement using CSLI arguing that: 1) law enforcement exceeded the scope of the Courts surveillance order; 2) electronic surveillance statutes do not authorize the surveillance of CSLI; and 3) probable cause is required in order for law enforcement to use CSLI.

In finding that the lower court properly allowed the evidence into trial, the Court noted that it was bound to follow U.S. Supreme Court precedent in interpreting the Fourth Amendment. In United States v. Knotts, 460 U.S.276 (1983), the U.S. Supreme Court held: “A person traveling in an automobile on public thoroughfares has no reasonable expectation of privacy in his movements from one place to another.” As such, the Court found that because the case “concerns the governments tracking of an individuals location on public roads, this case does not involve a Fourth Amendment violation.”

The Court noted that “a compelling argument can be made that CSLI falls within a legitimate expectation of privacy. . . . Location information can be extraordinarily personal and potentially sensitive, revealing Ëœprecisely the kind of information that an individual wants and reasonably expects to be private.” However, while people “may maintain an expectation of privacy with respect to their location in private areas,” because the location tracked was that of a person on a public road, no such expectation of privacy existed.

Additionally, the Court found that although law enforcement failed to meet the burden necessary to allow for electronic monitoring, “under Florida law the exclusionary rule is not a remedy” for such violations. Rather, the criminal and civil penalties found in Chapter 934 of the Florida Statutes provide the exclusive remedy for such violations. See §§ 934.21, Fla. Stat., 934.27, Fla. Stat.

While the decision was based on historical US Supreme Court precedent, the case provides an illustrative example of how the Court must balance expectations of privacy against enhanced search capabilities of law enforcement because of technological advances. This principle is applicable in a variety of proceedings, including the white collar criminal cases in which Fuerst Ittleman attorneys regularly appear. For more information regarding Fuerst Ittlemans white collar criminal defense practice, contact an attorney today at

IRS Removes Two-Year Limit for Filing Innocent Spouse Claims

Tuesday, September 13th, 2011

The Internal Revenue Service has announced that it has eliminated the two-year limit for filing innocent spouse claims under IRC §6015(f), giving spouses of those accused of tax evasion more time to file their claims. 

The innocent spouse rule allows spouses who signed joint returns with their partners to avoid sharing the responsibility of paying taxes and penalties as a result of their partners wrongful actions.  Under Treas. Reg. §1.6015-5(b)(1), the IRS required innocent spouse claims to be filed within two years after the first attempt to collect.  About 50,000 innocent spouse requests are filed per year and about 2,000 are automatically rejected by the IRS because of the two-year rule.  Nina Olson, an Ombudsman at the IRS, said that the two-year rule did not work because, in many cases, taxpayers were unaware that the collection process had started.  Also, many taxpayers may have had legitimate reasons for missing the two-year deadline “ including domestic abuse, divorce, fraud, and death.  (See blog entry Relaxed Restrictions for Tough “Innocent Spouse Relief” Rules, July 1, 2011).  However, despite legitimate reasons for taxpayers missing the deadline, the IRS has been unyielding in a number of especially sensitive situations.  Commissioner Douglas Shulman stated that the rule was too restrictive and not “flexible and compassionate” in its treatment of innocent spouses. 

The strictly-enforced deadline triggered an outcry of criticism from lawmakers and legal aid attorneys.  Whether Treas. Reg. §1.6015-5(b)(1) was a valid exercise of the IRSs rulemaking authority has been challenged and several courts of appeal have upheld the validity of the two-year deadline (see, e.g., Lantz v. Commr., 607 F.3d 479 (7th Cir. 2010); Mannella v. Commr., 631 F.3d 115 (3d Cir. 2011); Jones v. Commr., 642 F.3d 459 (4th Cir. 2011)).  While the IRS has been defending the validity of the two-year rule in court, members of Congress have been urging the IRS to reconsider it.  Representatives Jim McDermott and Pete Stark, senior members of the House Ways and Means Committee, wrote a letter to Commissioner Shulman stating that Congress had not specifically included a statute of limitations for filing innocent spouse claims under IRC § 6015.  Regarding the new rule, McDermott says that the new rule makes the IRS rules consistent with congressional intent.  Representative Michele Bachman, a former IRS attorney, introduced a bill in April preventing the IRS from imposing a time limit on filing innocent spouse claims.

The new rule is effective immediately and will apply to certain cases pending before the IRS or in Tax Court.  Notice 2011-70 provides guidance regarding the new rule and several transitional rules pending formal modification of the regulations removing the two-year time limit. 

Future Requests.  Individuals may request equitable relief under IRC §6015(f) without regard to when the first collection activity occurred. The request must be filed within 10 years of the IRSs assessment under IRC §6502.

Requests Pending with the IRS.  Innocent spouse requests that have already been submitted under IRC §6015(f) and are currently under consideration by the IRS will be honored, even if they were submitted more than two years after the first collection activity occurred.  They will be honored as long as the applicable period of limitation under IRC §6502 or IRC §6511 was open when the request was filed.

Requests that were Denied Solely for Untimeliness and not Ligitated.  Individuals whose IRC §6015(f) requests were denied solely because they were untimely and were not litigated may reapply for IRC §6015(f) relief by filing a new Form 8857, Request for Innocent Spouse Relief

Requests in Litigation.  For cases currently in litigation, the IRS will take appropriate action with regard to the timeliness issue and no reapplication for relief is required.

Requests that were in Litigation and the Case is now Final.  The IRS will take no further collection activity with respect to an individual who sought equitable relief under IRC §6015(f) in a judicial proceeding in which the validity of the two-year deadline was at issue and the decision in the case is final.  The collection relief provided under Notice 2011-70 applies only to those liabilities for which equitable relief would have been granted under IRC §6015(f).

Notice 2011-70 may be relied upon until final regulations modifying the two-year rule are published in the Federal Register or other published guidance is issued.  

The attorneys at Fuerst Ittleman are experienced in making and defending innocent spouse claims.  If you have any questions regarding the innocent spouse rule or any other provision of the Internal Revenue Code, please contact us at

Bureau of Industry & Security Publishes Best Practices in Effort to Curb Illegal Export Transshipments

Monday, September 12th, 2011

On August 31, 2011, the U.S. Department of Commerces Bureau of Industry and Security (BIS) announced its publication of a new set of best practices, aimed at curbing the practice of transshipment of dual-use items. Transshipment is a shipping practice whereby items are sent to an intermediate destination before being shipped again for arrival at the goods ultimate destination. While transshipment undoubtedly has legitimate and beneficial uses in our globalized economy, some argue that the practice is being used in a way that creates heightened security risk to the United States, particularly when dual-use items are involved.

BIS-regulated “dual-use” items are those goods that have both commercial and military applications. When dual-use items are exported, transshipment may be used to disguise the ultimate destination of the goods from the U.S. government and the U.S. exporter. Or on the other hand, transshipment can serve as a means for a U.S. exporter who has knowledge that it is violating an embargo to have a way to deny knowledge of the exports ultimate destination. So, for example, transshipment can be used to hide the fact that a dual-use item is being exported to an embargoed country like Iran by first having the item shipped to a non-embargoed country like Singapore. The shipping documents would show that the U.S. exporter sent the dual-use item to a friendly, non-embargoed country, but then the intermediate consignee in Singapore, perhaps a front for the Iranian government, would then turn around and ship the item to the Iranian military, thus violating the U.S. embargo against Iran. Thus, BIS issued its Best Practices in order to gain cooperation from the U.S. export industry in an effort to thwart these dangers.

Found here, the BIS-issued 2011 Best Practices details seven practices that U.S. exporters are urged to follow. In particular, the practices direct companies to notify BIS when a buyers order for export is denied, in addition to using due-diligence when gathering information about potential customers. While many of these practices emphasize cooperation between industry and government, there may be consequences for willful disregard of these practices in the future. Because companies may no longer be able to turn a blind eye to the potential transshipment of their dual-use items, these Best Practices could be the first step to imposing liability on companies whose goods wind up in the wrong hands.

Fuerst Ittleman lawyers are experienced in representing companies and individuals under investigation for engaging in illegal exporting activity, including transshipment of dual-use items to embargoed countries. Fuerst Ittleman can also assist exporters with their compliance efforts to avoid export violations. For more information concerning BIS regulations or other trade-related issues, please contact us at

Researchers Find that Stem Cells May Prove Useful for Blood Transfusions

Monday, September 12th, 2011

On September 1, 2011, researchers announced that they may have discovered what may become a new option for blood transfusions. Appearing in this months issue of the journal Blood, found here, the study findings detail how researchers were able to take cultured red blood cells (cRBC) derived from a patients stem cells and re-infuse the cultured cells back into the patient.

According to the findings, the red blood cells survived approximately as long as native RBCs. Although researchers have previously had success culturing red blood cells from hematopoetic stem cells (HSCs), this study is the first showing that these blood cells can survive in the human body. While researchers caution that the findings are still preliminary, this process may change the way blood transfusions are administered in the future. Potentially serving as an alternative to traditional sources of transfusable blood in the coming years, research regarding the capabilities of HSCs has been ongoing.

As we previously reported, researchers have been studying the potential of HSCs in a variety of areas, such as tissue repair and in the treatment of blood disorders. However, because questions surround the regulation of stem cells and other tissues, progress has not been as fruitful as researchers once hoped. The U.S. Food and Drug Administration (FDA), the agency tasked with regulating these emerging areas, has been slow moving as compared to the rapid pace of innovation. While the FDA has regulations pertaining to human cells and tissues, the intricacies of these regulations have yet to be refined. For instance, the FDA currently regulates stem cells as human tissues, biologics, new drugs, etc., depending on a number of factors, including where the cells are derived from, how they are cultured, and the purpose they will be used for. Thus, compliance with applicable federal regulations can be tricky, and medical advancement may outreach the potential of the current regulatory scheme.    

While scientific advances in this area are continually being made, Fuerst Ittleman will continue to monitor the progress and development of HSC research and other stem cell-related issues.

For more information, contact us at