Full opinion text
OPINION LECHNER, District Judge. On 4 March 1996, a United States Grand Jury for the District of New Jersey (the “Grand Jury”) returned a thirteen count, thirty-eight page indictment (the “Indictment”) against Electrodyne Systems Corporation (“Electrodyne”), Dennis Nathan (“Nathan”) and Victor Aron Lander (“Lander”) (collectively, the “Defendants”). The Indictment charges the Individual Defendants and Electrodyne with conspiracy to commit offenses against the United States, 18 U.S.C. § 371 (“Section 371”), violations of the Arms Export Control Act (the “AECA”), 22 U.S.C. § 2778(b)(2) (“Section 2778(b)(2)”) and (c) (“Section 2778(c)”), the International Traffic in Arms Regulations (“ITAR”), 22 C.F.R. §§ 127.1 and 127.3, unlawful importation of goods into the United States, 18 U.S.C. §§ 545 (“Section 545”) and 2 (“Section 2”), and making false statements, 18 U.S.C. § 1001 (“Section 1001”) and Section 2. This opinion addresses the sentencing of the Individual Defendants and the resentenc-ing of Electrodyne. Electrodyne was a New Jersey corporation formed in 1986 to specialize in providing military components, as a prime contractor, to the United States. See Letter, dated 30 September 1997, and included memorandum from Office of the General Counsel, Department of the Navy (the “30 September 1997 Letter”) attached as Exhibit C to Sentencing Memorandum submitted by the Government, dated 5 August 1998, (the “Government Sentencing Memorandum”). Eleetrodyne manufactured, sold, imported and exported microwave components and electronic power conversion equipment for military application in advanced communications and radar systems in aircraft, warships, satellites, tanks and ground forces defense systems. See id. at 3-4. Electrodyne held numerous contracts to provide these electronic components, including some manufactured using classified information, to a number of Government agencies. See id. at 4. Its customers included the National Aeronautics and Space Administration (“NASA”), the United States Air Force (“Air Force”) and the United States Navy (“Navy”), which included the Naval Research Laboratory (“NRL”). See id. At all times relevant to this action, Nathan was President and Vice-President of Eleetro-dyne. See 30 September 1997 Letter attached as Exh. C to Government Sentencing Memorandum at 4. At certain times relevant to this action, Nathan was also the designated security officer for Electrodyne. See id. At all times relevant to this action, Lander was Director of Marketing of Electrodyne. See 30 September 1997 Letter attached as Exh. C to Government Sentencing Memorandum at 4. Before Lander emigrated to the United States in 1976, he assisted the military of the former Soviet Union in developing electronic warfare systems. See id. As will be discussed infra in more detail, the Indictment describes the AECA and ITAR, which authorize the United States State Department’s Office of Defense Trade Controls (“ODTC”) to establish and maintain the United States Munitions List (the “Munitions List”). See 30 September 1997 Letter attached as Exh. C to Government Sentencing Memorandum at 4; 22 C.F.R. § 121.1. The Munitions List is a catalog of designated “defense articles” subject to export restrictions. See 30 September 1997 Letter attached as Exh. C to Government Sentencing Memorandum at 4; 22 C.F.R. § 121.1. Anyone wishing to export from the United States a defense article on the Munitions List must first obtain a license from the ODTC. See 30 September 1997 Letter attached as Exh. C to Government Sentencing Memorandum at 4; 22 C.F.R. § 121.1. Included on the Munitions List are certain electronic components designed and manufactured for use by the military for advances communications and radar systems in aircraft, warships, satellites, tanks and ground forces defense systems. See 30 September 1997 Letter attached as Exh. C to Government Sentencing Memorandum at 4; 22 C.F.R. § 121.1. The ODTC also regulates the export of “defense services.” See 30 September 1997 Letter attached as Exh. C to Government Sentencing Memorandum at 4. As part of the limitations on providing defense services pursuant to ITAR, an individual in the United States may not contract with a foreign person to build an item on the Munitions List outside of the United States without first obtaining a license under the AECA. See id. The Indictment charges that from on or about 6 November 1989 to on or about 10 March 1994, Electrodyne entered into six contracts to provide agencies of the United States Government with electronic components for use in research, communications, radar and weapon systems. See 30 September 1997 attached as Exh. C to Government Sentencing Memorandum at 4. In order to facilitate the building of the military components contracted for, and contrary to the express terms of the contracts, and in some cases Department of Defense directives, Electrodyne, Nathan and Lander disclosed to foreign manufacturers the drawings, technology and specifications for United States military components. See id. Electrodyne, Nathan and Lander also provided the engineering and scientific assistance necessary to build these components. See id. The Indictment charges these acts were, inter alia, in violation of the AECA, ITAR and the Buy American Act. On 26 August 1996, Electrodyne entered into a written plea agreement (the “Electro-dyne Plea Agreement”) with the Government. See Electrodyne Plea Agreement. Electrodyne agreed to plead guilty to Count Two of the Indictment which charged Elec-trodyne with impermissibly exporting defense related items in violation of Sections 2778(b)(2) and (c) and Section 2. See id. Electrodyne also agreed to plead guilty to Count Ten of the Indictment which charged Electrodyne with making a false statement in violation of Section 1001 and Section 2. See id. On or about 16 October 1996, Electrodyne pleaded guilty (the “Electrodyne Plea Hearing”), pursuant to the Electrodyne Plea Agreement, to Counts Two and Ten of the Indictment. See Transcript from Electro-dyne Plea Hearing at 25. On 27 May 1997, Electrodyne was sentenced; a fine of $500,-000 on each of Counts Two and Ten was imposed. See Transcript from Electrodyne Sentencing at 10-11. This fine was then due and payable. See id. at 11. Restitution of $369,105.70 was also ordered. See id. at 4-7. The Electrodyne sentence was enhanced pursuant to U.S.S.G. § 8C2.5(b)(4) (“Section 802.5(b)(4)”) because Electrodyne employed fifty or more employees. See Transcript from Electrodyne Sentencing at 2-3. The base offense level was also increased by nine points pursuant to Section 2F1.1 based upon a calculation of loss equal to the amount of restitution. On 22 August 1996, Lander entered into a plea agreement (the “Lander Plea Agreement”) with the Government. See Lander Plea Agreement. Lander agreed to plead guilty to a one count Information (the “Information”) which charged him with the unlawful introduction of merchandise into the commerce of the United States in violation of 18 U.S.C. § 542 (“Section 542”) and Section 2. On 25 September 1996, Nathan entered into a plea agreement (the “Nathan Plea Agreement”) with the Government. See Nathan Plea Agreement. Nathan agreed to plead guilty to Count Twelve of the Indictment, which charged him with knowingly importing merchandise into the United States contrary to law and with the intent to defraud the United States, in violation of Sections 545 and 2. See id. On 16 October 1996, a plea hearing (the “Nathan Plea Hearing”) was held regarding the Nathan Plea Agreement pursuant to Rule 11 (“Rule 11”) of the Federal Rules of Criminal Procedure. Nathan affirmatively responded when asked if he was aware that his guilty plea would expose him to a maximum sentence of imprisonment of up to five years. See Transcript from Nathan Plea Hearing at 11. Nathan also acknowledged his guilty plea would subject him to a statutory maximum fine of the greatest of $250,-000, or twice the gross amount of any pecuniary gain derived from the offense or twice the gross amount of any pecuniary loss suffered by a victim of the offense. See id. At the conclusion of the Nathan Plea Hearing, the plea of guilty offered by Nathan was accepted and he was found guilty of violating Sections 545 and 2. See id. at 21-22. On 31 October 1996, a plea hearing (the “Lander Plea Hearing”) was held regarding the Lander Plea Agreement pursuant to Rule 11. Lander affirmatively responded when asked if he was aware that his guilty plea would expose him to a maximum sentence of imprisonment of up to two years. See Transcript from Lander Plea Hearing at 12. Lander also acknowledged his guilty plea would subject him to a statutory maximum fine of the greatest of $250,000, or twice the gross amount of any pecuniary gain derived from the offense or twice the gross amount of any pecuniary loss suffered by a victim of the offense. See id. At the conclusion of the Lander Plea Hearing, the plea of guilty offered by Lander was accepted and he was found guilty of violating Sections 542 and 2. See id. at 22-23. After the pleas of the Individual Defendants were accepted, the Probation Department (“Probation”) conducted presentence investigations for their sentencings. See Fed.R.Crim.P. 32(b). The presentence investigation report for Nathan (the “Nathan Presentence Investigation Report”) and the presentence investigation report for Lander (the “Lander Presentence Investigation Report”) (collectively the “Presentence Investigation Reports”) set forth calculations by Probation for the sentencing of the Individual Defendants under the United States Sentencing Guidelines (the “Guidelines”). In the Presentence Investigation Reports, Probation states the appropriate Guideline for the Individual Defendants is Section 2F1.1 rather than U.S.S.G. § 2T3.1 (“Section 2T3.1”), as stipulated by the Government and the Individual Defendants. Probation cites to U.S.S.G. § lB1.2(c) (“Section 1B1.2”) which states: “A plea agreement (written or made orally on the record) containing a stipulation that specifically establishes the commission of additional offense(s) shall be treated as if the defendant has been convicted of additional count(s) charging those offenses.” Nathan Presentence Investigation Report, ¶ 141; Lander Presentence Investigation Report, ¶ 148. Probation further refers to Application Note One to Section 1B1.2 (“Application Note One to Section 1B1.2”) which states: “Where a stipulation that is set forth in a written plea agreement or made between the parties on the record during a plea proceeding specifically establishes facts that prove a more serious offense or offenses of conviction, the court is to apply the [Guideline most applicable to the more serious offense or offenses established.” Nathan Presentence Investigation Report, ¶ 141 (quoting Application Note One to Section 1B1.2); Lander Presentence Investigation Report, ¶ 148 (quoting Application Note One to Section IB 1.2). Probation commented that during their respective plea proceedings, Nathan and Lander were asked, under oath, a series of questions to establish a factual basis for their pleas. See Nathan Presentence Investigation Report, ¶ 141; Lander Presentence Investigation Report, ¶ 148. Probation states: “Those questions [and answers] clearly establish a more serious offense — fraud.” Nathan Presentence Investigation Report, ¶ 141; Lander Presentence Investigation Report, ¶ 148. In the Lander Presentence Investigation Report, Probation observes the verbal admissions by Lander were not “stipulations,” but states his verbal admissions “are more persuasive or, at least, as binding as a stipulation to a more serious offense.” Lander Presentence Investigation Report, ¶ 148. Probation states: [T]he nature of the offense [committed by the Individual Defendants] was/is fraud and that the [Guideline for Evading Import Duties or Restrictions (Smuggling); Receiving or Trafficking in Smuggled Property, [Section] 2T3.1, is not the most appropriate [Guideline. Accordingly, [Section] 2F1.1, Fraud, is deemed the most analogous [Guideline and calls for a base offense level of [six]. Nathan Presentence Investigation Report, ¶ 142; Lander Presentence Investigation Report, ¶ 149. I. BACKGROUND A. Guideline Calculations 1. Offense Guideline Calculations for Nathan Probation states the following offense calculations should be used if Section 2F1.1 is used as the base offense level: Base Offense Level: 6 Section 2F1.1 Specific Offense Characteristics: 9 The loss exceeded $350,000, but was not more than $500,000. Pursuant to Section 2Fl.l(b)(l)(M), nine levels are added. Specific Offense Characteristics: 2 If the offense involved more than minimal planning (as well as a scheme to defraud more than one victim). Pursuant to Section 2F1.1(b)(2)(A), two levels are added. Victim Related Adjustments: None 0 Adjustments for Role in the Offense: 4 Pursuant to U.S.S.G. § 3Bl.l(a) (“Section 3B1.1”), the offense is increased by four levels. Adjustment for Obstruction of Justice: None 0 Adjusted Offense Level (Subtotal): 21 Adjustment for Acceptance of Responsibility: -2 Pursuant to U.S.S.G. § 3El.l(a), the offense is reduced two levels. Additional Adjustment for Acceptance of Responsibility: — 1 Total Offense Level: 18 Chapter Four Enhancements: None 0 Total Offense Level: 18 See Nathan Presentence Investigation Report, ¶¶ 142-153. 2. Offense Guideline Calculations for Lander: Probation states the following offense calculations should be used if Section 2F1.1 is used as the base offense level for Lander: Base Offense Level: 6 Section 2F1.1 Specific Offense Characteristics: 9 The loss exceeded $350,000, but was not more than $500,000. Pursuant to Section 2Fl.l(b)(l)(M), nine levels are added. Specific Offense Characteristics: 2 If the offense involved more than minimal planning (as well as a scheme to defraud more than one victim). Pursuant to Section 2F1.1(b)(2)(A), two levels are added. Victim Related Adjustments: None 0 Adjustments for Role in the Offense: None 0 Adjustment for Obstruction of Justice: None 0 Adjusted Offense Level (Subtotal): _17 Adjustment for Acceptance of Responsibility: - 2 Pursuant to U.S.S.G. § 3El.l(a), the offense is reduced two levels. Additional Adjustment for Acceptance of Responsibility: — 1 Total Offense Level: 14 Chapter Four Enhancements: None 50 Total Offense Level: 14 See Lander Presentence Investigation Report, ¶¶ 149-160. B. The Indictment 1. Conspiracy Count One of the Indictment charges that from on or about 12 March 1990 through on or about 10 March 1994, the Individual Defendants and Eleetrodyne knowingly and willfully conspired and agreed with each other, and with others, to commit offenses against the United States in violation of Section 371. Count One specifically charges Section 371 was violated by the Defendants: (a) by falsely representing to the ... [Government that they would deliver military components manufactured in the United States when, in fact, they intended to manufacture such components in Russia and Ukraine, in violation of [18 U.S.C. § 1001]; (b) by exporting to Russia and Ukraine, without the required export license, defense services relating to defense articles listed on the Munitions List (ie., the specifications and expertise necessary to manufacture United States Military components) in violation of [the AECA]; (c) by importing into the United States from Russia and Ukraine completed military components without the required markings indicating the country of origin, contrary to [19 U.S.C. § 1304], in violation of [Section 545]; (d) by delivering completed military components made in Russia and Ukraine to the United States [Government and falsely representing that the components conformed to [G]overnment contracts requiring that the goods be manufactured in the United stats, in violation of [Section 1001]; and (e) by receiving payment from the United States [Government for Russian and Ukrainian-made components by falsely representing that the components conformed to [Government contracts requiring that the goods be manufactured in the United States, in violation of [18 U.S.C. § 287]. Indictment, ¶ 10. The Indictment charges that on or about 6 November 1989 through on or about 10 March 1994, Eleetrodyne entered into six contracts (the “Contracts”) to provide Government agencies and the United States military with “electronic components for use in research, communications, radar, and weapon systems.” Indictment, Count One, ¶ 13. “Each of the Contracts required Eleetrodyne to comply with the provisions of the Buy American Act.” Id., ¶ 14. The Individual Defendants caused Electrodyne, nevertheless, to enter into agreements with several foreign companies to manufacture the components outside of the United States. See id., ¶ 16. Significantly, in order to facilitate the manufacture of the components, the Individual Defendants disclosed to foreign manufacturers (the “Foreign Manufacturers”) “the drawings, technology, and specifications of United States military components and provided engineering and scientific assistance necessary to build [the] components —” Id., ¶ 18. The Individual Defendants further took “affirmative steps” and made certain omissions to conceal the agreements with the Foreign Manufacturers. See id., ¶¶ 19-20. Count One alleges a number of overt acts taken by the Individual Defendants and Electrodyne in furtherance of the Conspiracy: a) On or about [29 June 1992] ... Lander instructed the Foreign Manufacturers not to mark the components with any symbol indicating where the item was produced. b) In or about June of 1993, ... Nathan instructed Electrodyne’s employees not to disclose to anyone outside of the company the fact that Electro-dyne manufactured components overseas. c) On or about [26 June 1993], ____ Lander traveled to Moscow, Russia. d) On or about [26 June 1993], ... Nathan traveled to Moscow, Russia. e) On or about [13 August 1993], ... Nathan signed Contract Number N00014-93-C-2196 with the ... Navy. f) On or about [12 October 1993], ... Lander sent the specifications of an item on the ... Munitions List to the Research Institute of Long Range Communication in Russia by facsimile transmission. Indictment, ¶ 21. 2.The Diplexer Contract Count Two charges that from on or about 1 October 1993 through on or about 24 February 1994 the Individual Defendants and Electrodyne exported “from the United States a defense service relating to a defense article on the ... Munitions List, i.e., an OE-82/WSC-l(V) Diplexer, without a valid license for such export issued in accordance with the [AECA] and the regulations promulgated thereunder [i]n violation of [Sections 2778(b)(2) and (c), Section 2] and 22 [C.F.R. §§ ] 127.1 and 127.3.” Indictment, Count Two, ¶ 11. 3. The Tone Modulator Contract Counts Three and Four charge the Individual Defendants and Electrodyne exported “from the United States a defense service relating to a defense article on the ... Munitions List, i.e., an isolator (the ‘Isolator’) for the APG-63 Fire Control Radar without a valid license for such export issued in accordance with the [AECA] and the regulations promulgated thereunder [i]n violation of [Sections 2778(b)(2) and (c), Section 2] and 22 [C.F.R. §§ ] 127.1 and 127.3.” Indictment, Count Three, ¶ 10; Count Four, ¶ 6. 4. The Switchable Amplifier Contract Count Five charges the Individual Defendants and Electrodyne exported “from the United States a defense service relating to a defense article on the ... Munitions List i.e., a switchable amplifier for the MK-92 Fire Control System, without a valid license for such export issued in accordance with the [AECA] and the regulations promulgated thereunder [i]n violation of [Sections 2778(b)(2) and (c), Section 2] and 22 [C.F.R. §§ ] 127.1 and 127.3.” Indictment, Count Five, ¶ 6. 5. The Phase Shifter Contract Counts Six charges the Individual Defendants andr,Electrodyne exported “from the United States a defense service relating to a defense article on the ... Munitions List, i.e., a phase shifter for the AMRAAM[] Radio Frequency Simulator, without a valid license for such export issued in accordance with the [AECA] and the regulations promulgated thereunder [i]n violation of [Sections 2778(b)(2) and (c), Section 2] and 22 [C.F.R. §§ ] 127.1 and 127.3.” Indictment, Count Six, ¶8. Count Seven charges the Individual Defendants and Electrodyne imported “five phase shifters” into the United States “from Russia, without markings indicating the country of origin, contrary to the marking requirements of [19 U.S.C. § 1304] ... [and i]n violation of [Sections 545 and 2].” Indictment, Count Seven, ¶ 2. 6. The Pin Diode Switch Contract Counts Eight and Nine charge the Individual Defendants and Electrodyne exported “from the United States a defense service relating to a defense article on the ... Munitions List, i.e., a pin diode switch [ (‘Pin Diode Switch’) ] for the AMRAAM Radio Frequency Simulator, without a valid license for such export issued in accordance with the [AECA] and the regulations promulgated thereunder [i]n violation of [Sections 2778(b)(2) and (c), Section 2] and 22 [C.F.R. §§ ] 127.1 and 127.3.” Indictment, Count Eight, ¶ 9; Count Nine, ¶ 6. Count Ten charges the Individual Defendants and Electrodyne “willfully and knowingly, made and used and caused to be made and used a false writing and document knowing the same to contain a false, fictitious, and fraudulent material statement in that the defendants Electrodyne and Nathan, signed the Pin Diode Switch Contract with the Air Force which stated that the Pin Diode Switches would be manufactured in the United States, whereas in truth and fact, as the [Individual Defendants and Electrodyne] ... knew, the Pin Diode Switches were to be manufactured in ... Russia and Ukraine ... [i]n violation of [Sections 1001 and 2].” Indictment, Count 10, ¶ 2. 7. The Broad Band Amplifier Contract Count Eleven charges the Individual Defendants and Electrodyne “made and used and caused to be made and used a false writing and document knowing the same to contain a false, fictitious, and fraudulent material statement in that the defendants Elec-trodyne and Nathan, signed the Broad Band Amplifier Contract with the [NRL] which stated that the amplifiers would be manufactured in the United States, whereas in truth and fact, [the Individual Defendants and Electrodyne], then and there well knew, the amplifiers were to be manufactured in Ukraine, in violation of [Sections 1001 and 2].” Indictment, Count Eleven, ¶ 10. Counts Twelve and Thirteen charge the Individual Defendants and Electrodyne brought “into the United States merchandise, contrary to law, in that [Defendants [on two occasions] imported and brought into the United States ... amplifiers from Ukraine, without markings indicating the country of origin, contrary to the marking requirements of [19 U.S.C. § 1304], in violation of [Sections 545 and 2].” Indictment, Count Twelve, ¶2, Count Thirteen, ¶ 2. C. The Pleas 1. Lander a. The Lander Plea As mentioned, on 22 August 1996, Lander signed the Lander Plea Agreement. Lander agreed to plead guilty to a “one count Information, which charged the unlawful introduction of merchandise into the commerce of the United States, in violation of ... [Sections] 542 and 2.” Lander Plea Agreement at 1. The Lander Plea Agreement provides: The violation of ... [Sections] 542 and 2 to which [Lander] agrees to plead guilty carries a statutory maximum prison sentence of [two] years.... The Sentencing Reform Act and the [Guidelines] also may impose a minimum term of imprisonment and/or fine, and the [Guideline] may authorize departure from the minimum and maximum penalties under certain circumstances. The sentence to be imposed upon [Lander] is within the sole discretion of the sentencing judge. This Office cannot and does not make any representation or promise as to what [Guideline range will be found applicable to [Lander], or as to what sentence [Lander] ultimately will receive. Lander Plea Agreement at 3. As part of the Lander Plea Agreement, the Government and Lander stipulated to the following: 1. As [Lander] has been convicted of a violation of ... [Section] 542, the applicable [Guideline is [Section] 2T3.1. See U.S.S.G., Appendix A [(“Appendix A”)]. This [G]uideline carries a base offense level of [four]. The United States did not suffer a tax loss as a result of [Lander’s] ■ conduct. 2. [Lander] used sophisticated means to impede discovery of the nature and existence of the offense. Accordingly, the specific offense characteristics of [Section] 2T3.1(b)(l) applies and [Lander’s] adjusted offense level is [six]. 3. In committing the offense described in the Information, [Lander] did not endanger national security. Accordingly, the [G]ovemment will not seek an upward departure pursuant to [U.S.S.G.] § 5K2.14, or any other basis. 4. As of the date of his agreement, [Lander] has clearly demonstrated a recognition and affirmative acceptance of personal responsibility for the offense charged under ... [Sections] 542 and 2. Therefore, a downward adjustmént of two points to [a total base offense] level [of four] for acceptance of responsibility is appropriate if the defendant’s acceptance of responsibility continues through the date of sentencing. (See U.S.S.G. § 3El.l(a).) There are no other applicable Chapter [Three] adjustments. Lander Plea Agreement, Schedule A. b. The Lander Plea Hearing On 31 October 1996, a thorough hearing pursuant to Rule 11 took place with the advice and assistance of counsel. At the Lander Plea Hearing, Lander entered his plea of guilty to the superseding Information. See Transcript from Lander Plea Hearing at 22. Lander was asked a series of questions to lay the factual foundation for the plea, including the following: GOVERNMENT: Mr. Lander, during 1993, was Electrodyne Systems Corporation in the business of providing electronic components to the United States Government? LANDER: Yes GOVERNMENT: During that time, were you the director of marketing of Electro-dyne? LANDER: Yes, sir. GOVERNMENT: On or about [13 August 1993], did Electrodyne enter into a contract to supply the United States Government with [twenty-five] broad-band amplifiers, which were to be manufactured in the United States? LANDER: Yes, sir. GOVERNMENT: On or about [13 August 1993], did Electrodyne import five of the NRL amplifiers into the United States from Enterprise Saturn in Ukra[i]ne? LANDER: Yes. GOVERNMENT: Were these amplifiers marked with the Enterprise Saturn logo? LANDER: Correct. GOVERNMENT: On or about [23 November 1993], did you send Enterprise Saturn a facsimile transmission with instructions not to manufacture components in a way that indicated foreign manufacture? LANDER: Yes, sir. GOVERNMENT: On or about [30 December 1993], did you cause [twenty-two] broadband amplifiers to be imported into the United States from Ukra[i]ne without markings indicating the country of origin in violation of the laws of the United States and constructed to allow Electrodyne employees to cover the foreign markings and label them as if they had been manufactured in the United States? LANDER: Yes, sir. GOVERNMENT: Thereafter, did Electro-dyne employees paint the amplifiers, attach a label indicating they had been manufactured by Electrodyne in the United States and deliver them to the United States Government? LANDER: Yes. GOVERNMENT: Did you cause the amplifiers to be imported into the United States without country of origin markings in order to assist Electrodyne in deceiving the United States Government into believing that the amplifiers had been manufactured in the United States when they had, in fact, been manufactured in the Ukra[i]ne? LANDER: Yes, sir. GOVERNMENT: Did you know at the time that you committed these acts that such conduct was wrong? LANDER: Yes. Transcript from Lander Plea Hearing at 18-21. It was determined Lander had discussed the possible consequences of entering the instant plea with his attorney. See Transcript from Lander Plea Hearing at 21, 22. It was also determined Lander voluntarily entered the plea and was aware the stipulations entered between the Government and Lander were not binding upon the court. See id. at 3. Lander was also informed that under some circumstances the court could depart from the Guidelines and impose a sentence more or less severe than that called for by the Guidelines. See id. at 15. Lander stated he understood that if he received a sentence more severe than he expected, he would still be bound by his plea and he could not withdraw his plea. See id. at 16. In addition to the admissions Lander made in response to the questioning by the Government, Lander admitted he had “knowingly, willfully and intentionally committed the conduct set forth in th[e] [I]nformation.” See Transcript from Lander Plea Hearing at 20. The Lander guilty plea was accepted. See id. at 22-23. After a number of adjournments at the request of counsel for Lander, sentencing was scheduled for 12 August 1998. By letter, dated 20 February 1998 (the “20 February 1998 Letter”), the Individual Defendants were provided with a supplemental notice, pursuant to Rule 32 (“Rule 32”) of the Federal Rules of Criminal Procedure, that an upward departure was being considered. See 20 February 1998 Letter (citing Rule 32; Burns v. United States, 501 U.S. 129, 138-39, 111 S.Ct. 2182, 115 L.Ed.2d 123 (1991); United States v. Barr, 963 F.2d 641, 655-56 (3d Cir.1992)). The 20 February 1998 Letter stated: Although it appears the Presentence Investigation Reports notified the [Individual] Defendants of the possibility of upward departures, see Nathan Presentence Investigation Report, Addendum; Lander Pre-sentence Investigation Report, ¶¶ 204-206, this letter is intended to supplement such notice. The basis for a possible upward departure is two-fold. First, an upward departure may be appropriate for each of the [Individual] Defendants based upon the conduct underlying the counts which were dismissed as to the [Individual] Defendants pursuant to their plea agreements. See United States v. Baird, 109 F.3d 856, 863 (3d Cir.), cert. denied, — U.S. -, 118 S.Ct. 243, 139 L.Ed.2d 173 (1997). Second, an upward departure may be appropriate for each of the [Individual] Defendants for reasons set forth in the [Lander] Presentence Investigation Re-port____See [Lander] Presentence Investigation Report ..., ¶ 206. The violations of the Buy American Act by each of the Individual Defendants in fulfilling certain Government contracts may not be adequately measured by the ... Guidelines if ... Section 2T3.1 is applicable. See Application Note Two to Section 2T3.1. It appears Section 2T3.1 may not adequately reflect the harm posed by the conduct of each of the [Individual] Defendants. Id. The 20 February 1998 Letter indicated if the Individual Defendants desired to respond, such submissions were to be received by 9 March 1998. See 20 February 1998 Letter. Michael Critchley, counsel for Nathan, telephoned chambers on 2 March 1998 and requested an extension until 20 March 1998 to respond to the 20 February 1998 Letter; this request was granted by letter, dated 2 March 1998 (the “2 March 1998 Letter”). See 2 March 1998 Letter. A joint response from the Individual Defendants was thereafter received by letter, dated 20 March 1998 (the “20 March 1998 Letter”). 2. Nathan a. The Nathan Plea As mentioned, on 25 September 1996, Nathan signed the Nathan Plea Agreement. Nathan agreed to plead guilty to Count Twelve of the Indictment which charged him with knowingly importing merchandise into the United States contrary to law and with the intent to defraud the United States, in violation of Sections 545 and 2. See Nathan Plea Agreement. The Nathan Plea Agreement provides: The violation of ... [Sections] 545 and 2 to which [Nathan] agrees to plead guilty carries a statutory maximum prison sentence of [five] years.... The Sentencing Reform Act and the [Guidelines] also may impose a minimum term of imprisonment and/or fine, and the [Guidelines] may authorize departure from the minimum and maximum penalties under certain circumstances. The sentence to be imposed upon [Nathan] is within the sole discretion of the sentencing judge. This Office cannot and does not make any representation or promise as to what [Gjuideline range will be found applicable to [Nathan], or as to what sentence [Nathan] ultimately will receive. Nathan Plea Agreement at 3. The Government and Nathan stipulated to the following: 1) The applicable [Guideline is [Section] 2T3.1. This [Guideline carries a base offense level of [four]. The United States did not suffer any tax loss as a result of defendant’s conduct. 2) The defendant used sophisticated means to impede discovery of the nature and existence of the offense. Accordingly[,] the specific offense characteristic of [Section] 2T3.1(b)(l) applies and the defendant’s adjusted level is [six]. 3) In committing the offense described in Count [Twelve] of the [I]ndictment, the defendant did not endanger national security. Accordingly, the [Government will not seek an upward departure pursuant to [U.S.S.G.] § 5K2.14, or any other basis. 4) As of the date of this agreement, [Nathan] has clearly demonstrated a recognition and affirmative acceptance of personal responsibility for the offense charged under ... [Sections] 545 and 2. Therefore, a downward adjustment of two points to [a total offense] level [of four] for acceptance of responsibility is appropriate if [Nathan’s] acceptance of responsibility continues through the date of sentencing. (See U.S.S.G. § 3El.l(a).) There are no other applicable Chapter [Three] adjustments. Nathan Plea Agreement, Schedule A. b. The Nathan Plea Hearing On 16 October 1996, a thorough hearing pursuant to Rule 11 took place with the advice and assistance of counsel. At the Nathan Plea Hearing, Nathan entered his plea of guilty as to Count Twelve of the Indictment with the court. See Transcript from Nathan Plea Hearing at 4, 21. Nathan was asked a series of questions to lay the factual foundation for the plea: GOVERNMENT: Mr. Nathan, from on or about [31 October 1989] through [10 March 1994], was Electrodyne Systems Corporation in the business of providing electronic components to the United States Government? NATHAN: Yes, they were [sic]. GOVERNMENT: During that time, were you the majority shareholder, president and vice-president of Electrodyne? NATHAN: Yes, I was. GOVERNMENT: During that time, was [Lander] Electrodyne’s director of marketing? NATHAN: He was. GOVERNMENT: During that time, did [Lander] report to you in your capacity as president of the company? NATHAN: He did. GOVERNMENT: During that time, were you aware [Lander] had arranged for various companies in Ukra[i]ne and Russia to build electronic components for Electro-dyne? NATHAN: Yes, I was. GOVERNMENT: On or about [13 August 1993], did you sign a contract on behalf of [Electrodyne] with the United States Government to provide ... the NRL with [twenty-five] broad-band amplifiers? NATHAN: Yes, I did. GOVERNMENT: At the time you signed the contract, did you know that [Lander] had ordered the amplifiers from Saturn in Ukra[i]ne? NATHAN: Yes. GOVERNMENT: Had [Lander] done so acting at your direction and with your knowledge and approval? NATHAN: Yes. GOVERNMENT: Did- the NRL contract contain a Buy American Act clause obligating Electrodyne to buy the end product manufactured in the United States? NATHAN: Yes, it did. GOVERNMENT: On or before [23 November 1993], did employees of Electro-dyne import five of the NRL amplifiers into the United States from Enterprise Saturn without markings indicating they had been manufactured in Ukra[i]ne? NATHAN: Yes, they did. GOVERNMENT: Were these employees acting at your direction and with your knowledge and approval? NATHAN: Yes. GOVERNMENT: ,..[0]n or before [23 November 1993], did employees of Electro-dyne paint the amplifiers imported from the Ukra[i]ne to obscure markings indicating foreign manufacturing and affix stickers with the words “Electrodyne Systems Corporation”? NATHAN: Yes, they did. GOVERNMENT: Were those employees acting at your direction and with your knowledge and approval? NATHAN: Yes, they were. GOVERNMENT: Did you cause the amplifiers to be painted and an Electrodyne sticker added with the intention of deceiving the NRL into believing that the amplifiers had been manufactured by Electro-dyne in the United States. NATHAN: Yes, I did. GOVERNMENT: Did you know at the time that you committed these acts that such conduct was wrong? NATHAN: Yes. Id. at 17-20. It was determined Nathan had discussed the possible consequences of entering the instant plea with his attorney. See Transcript from Nathan Plea Hearing at 21, 22. It was also determined Nathan voluntarily entered the plea and was aware the stipulations entered between the Government and Nathan were not binding upon the court. See id. at 13, 22. Nathan was also informed that under some circumstances the court could depart from the Guidelines and impose a sentence more or less severe than that called for by the Guidelines. See id. at 15. Nathan stated he understood that if he received a sentence more severe than expected, he would still be bound by his plea and he could not withdraw his plea. See id. at 15-16. In addition to the admissions Nathan made in response to the questioning by the Government, Nathan admitted he had “knowingly, willfully and intentionally committed the conduct set forth in count [Twelve] in the [I]ndictment.” Transcript from Nathan Plea Hearing at 20. The Nathan guilty plea was accepted. See id. at 22. After a number of adjournments at the request of counsel for Nathan, Nathan’s sentencing was scheduled for 12 August 1998. D. Probation Investigation After the Defendants entered pleas of guilty as described above, Probation conducted a presentence investigation to assist in the sentencing of the Defendants. Probation conducted interviews with representatives of the Office of the United States Attorney, the United States Naval Criminal Investigative Service, the Air Force Office of Special Investigations, NASA and the United States Customs Service (“Customs”). See Presen-tence Investigation Reports, ¶ 18. The findings of Probation are set forth below. On 1 January 1990, Nathan purchased a controlling block of Electrodyne stock to become a majority owner of the corporation. See Presentence Investigation Reports, ¶ 35. Shortly thereafter, Nathan hired Lander as the Director of Marketing. See id. As mentioned, between 6 November 1989 and 10 March 1994, Electrodyne entered the Contracts to provide United States Government agencies and branches of the military with electronic components for use in research, communications, radar and weapons systems. See Presentenee Investigation Reports, ¶ 36. Each of the Contracts required Electrodyne to comply with the provisions of the Buy American Act. See id., ¶ 36. In each Contract, Nathan and Electrodyne represented they (a) intended to manufacture the components in the United States, (b) would not use foreign components, and (c) would not use offshore manufacturing sites. See Presentence Investigation Reports, ¶ 38. Despite the representations made in the Contracts, the Individual Defendants caused Electrodyne to enter into agreements with several Foreign Manufacturers to build the military components outside the United States. See id. These Foreign Manufacturers included: (a) “ISTOK” Research and Production Corp., located in Moscow, Russia (“Istok Research”), (b) Enterprise Saturn, a/k/a Research Institute “Saturn”, located in Kiev, Ukraine (“Enterprise Saturn”), (c) Research Institute of Long Range Communications, a/k/a NIIDAR, located in Moscow, Russia ... [ (the “Russian Institute”) ], (d) S & R Institute “ORION”, also located in Kiev (“Enterprise Orion”), and (e) NKPT “PHASA” a/k/a Rostov State University, located in Rostov, Russia (“Enterprise Phasa”) [collectively, the “Foreign Manufacturers”]. Presentence Investigation Reports, ¶ 40. In order to facilitate the building of the military components and contrary to the express terms of the Contracts and, in some cases, DOD security directives, the Individual Defendants and Electrodyne disclosed to the Foreign Manufacturers the drawings, technology and specifications of the components and provided engineering and scientific assistance necessary to build the components. See Presentence Investigation Reports, ¶ 41. In an attempt to hide certain conduct from the Government, as well as Electro-dyne employees, the Defendants: (1) told Electrodyne employees the foreign-made components were for “low cost commercial” applications and not United States military and Government contracts, (2) instructed employees not to disclose the use of foreign components to anyone outside the corporation, (3) instructed the Foreign Manufacturers not to mark the components in any way which would indicate the country of origin, (4) marked the components to make it appear they were made in the United States, and (5) instructed employees to cover up any markings which would indicate that the components were foreign-made. See Presen-tence Investigation Reports, ¶ 42. In an effort to hide certain conduct and, despite their obligation to do so, the Defendants failed to disclose to the United States Government the following: (1) the agreements with the Foreign Manufacturers, (2) travel to Ukraine and Russia, and (3) the use of off-site manufacturing locations to build Electrodyne components. See Presentence Investigation Reports, ¶ 43. The Defendants also failed to register with the State Department as a manufacturer and exporter of defense articles, defense services, and munitions. See id. Further, the Defendants failed to obtain export licenses from the State Department for the technology and defense services exported to Russia and Ukraine as required by ITAR. See id. 1. The Diplexer Contract On 31 October 1989, Eleetrodyne entered into “contract # N00104-89-M355” (the “Diplexer Contract”) with the Navy to supply 220 electronic components known as OE 82/ WSC-1(V) Diplexers (the “Diplexers”) at an average unit cost of $3,697.58, for a total contract price of $753,468. See Presentence Investigation Reports, ¶ 44. The initial solicitation, which was incorporated into the Diplexer Contract, was signed by Nathan, as vice-president of Eleetrodyne. See id. The Diplexer is a defense article within'the meaning of ITAR, 22 C.F.R. §§ 120.3 and 121.8(b). See Presentence Investigation Reports, ¶45. Accordingly, Eleetrodyne could not arrange for the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification or operation of the Diplexer outside the United States without prior approval of the ODTC. See id. The Diplexer is a component part of a satellite communications antenna system (the “System”) mounted on the decks of all fighting ships in the Navy. See Presentence Investigation Reports, ¶ 46. The System allows ships to communicate quickly and efficiently with other armed services during a military engagement. See id. In January of 1989, the Navy delivered the specifications for the Diplexer to Electro-dyne. See Presentence Investigation Reports, ¶ 47. After being awarded the Diplexer Contract, Nathan and Lander, acting on behalf of Eleetrodyne, contracted with the Russian Institute to build the Diplexer. See id., ¶48. From October 1989 through December 1993, an Eleetrodyne engineer, working in the United States, developed engineering specifications, plans, diagrams and drawings (the “Diplexer Plans”) for the Diplexer. See Presentence Investigation Reports, ¶ 49. On 9 December 1993, Lander exported the Diplexer Plans to the Russian Institute. See id. ¶ 50. Both before and after sending the Diplexer Plans, Lander had discussions with persons at the Russian Institute regarding the design, development, engineering, manufacture, production and assembly of the Diplexer. See Presentence Investigation Reports, ¶ 51. These discussions constituted the providing of a “defense service” within the meaning of ITAR regulations, more specifically 22 C.F.R. § 120.9. See id. At no time did the Individual Defendants and Eleetrodyne seek the required export license from the Government to send the Diplexer Plans to Russia or to discuss the design, development, engineering, manufacture, production and assembly of the Diplexer with the Russian Institute. See Presen-tence Investigation Reports, ¶ 52. 2. The Tone Modulator Contract On 20 August 1991, Eleetrodyne entered into a classified contract with the Air Force (the “Tone Modulator Contract”) to supply 124 tone modulators (the “Tone Modulators”) at a cost of $1,095 each. See Presentence Investigation Reports, ¶ 53. The Tone Modulator Contract also obligated Electrodyne to build two prototypes at a cost of $23,100 each. See id. The total contract price was $198,980. See id. The initial solicitation, which was incorporated into the Tone Modulator Contract, was signed by Nathan, as Vice-President of Electrodyne. See id. Tone Modulators are a component part of the APG-63 fire control radar installed in the F-15 fighter aircraft. See Presentence Investigation Reports, ¶ 54. The APG-63 fire control radar is used to control the firing of the aircraft’s AIM-7 air-to-air missiles. See id. The APG-63 radar utilizes advanced signal processing technologies to provide unambiguous target presentations on the radar indicators used on the F-15 aircraft. See id. The Tone Modulator is a component of the transmitter assembly and provides the means by which real and false targets are distinguished and discriminated by the radar processor on board an F-15. See id. Construction of the Tone Modulator requires careful component specification and vendor selection. See id. A critical part of the Tone Modulator is an electronic component called the “Isolator.” See Presentence Investigation Reports, ¶ 55. Within each Tone Modulator, there are two Isolators, a high power unit and a low power unit. See id. The function of the Isolator is to control the flow of radio frequencies (“RF”) within the Tone Modulator. Isolators are critical to the performance of the Tone Modulator. See id. Proper specification of the parameters of an Isolator is paramount to optimum performance and to avoid premature failure of the Isolator or the Tone Modulator. See id. The RF Isolators are the single most expensive electronic component utilized in the Tone Modulator assemblies. See id. The Isolator is a “defense article” within the meaning of ITAR, 22 C.F.R. §§ 120.3 and 121.8(b). See id., H 56. On 8 June 1993, Electrodyne entered into an agreement with Enterprise Phasa, a manufacturer of electronic components in Rostov, Russia, to build 140 of the Isolators at a cost of $30 each. See Presentence Investigation Reports, ¶ 57. On that date, Lander, acting on behalf of Electrodyne sent Enterprise Phasa an electronic facsimile transmission of the specifications for the engineering, manufacture, production and assembly of the Isolators. See id., ¶ 58. Lander instructed employees of Enterprise Phasa on the engineering, manufacture, production, and design of the Isolator. See Pre-sentence Investigation Reports, ¶ 59. These discussions constituted the providing of a “defense service” within the meaning of ITAR, 22 C.F.R. § 120.9. At no time did the Individual Defendants and Electrodyne seek the required export license from the Government to send the plans and specifications or to discuss the design, development, engineering, manufacture, production and assembly of the Isolator with Enterprise Phasa. See Presentence Investigation Reports, If 60. On 28 July 1993, in addition to the agreement with Enterprise Phasa, Electrodyne entered into an agreement with Istok Research, a manufacturer of electronic components in Moscow, Russia, to build the Isolators. See Presentence Investigation Reports, ¶ 61. On 29 July 29, Lander sent Istok Research an electronic facsimile transmission of certain specifications for the engineering, manufacture, production and assembly of the Isolator. See id., ¶ 62. From 28 July 1993 through 29 July 1993, Lander instructed Istok Research employees on the engineering, manufacture, production and design of the Isolator. See Presentence Investigation Reports, ¶ 63. These discussions constituted the providing of a “defense service” within the meaning of ITAR regulations, 22 C.F.R. § 120.9. See id. At no time did the Individual Defendants and Electrodyne seek the required export license from the Government to send the plans and specifications for the Isolator to Russia or to discuss the design, development, engineering, manufacture, production and assembly of the Isolator with Istok Research. See Presentence Investigation Reports, ¶ 64. 3. The Smtchable Amplifier Contract On 26 December 1992, Electrodyne entered into a contract (the “Switchable Amplifier Contract”) with the Navy to supply thirty-seven switchable amplifiers (the “Switchable Amplifiers”) at a unit cost of $2,374, for a total contract price of $87,838. See Presentenee Investigation Reports, ¶ 65. The initial solicitation, which was incorporated into the Switchable Amplifier Contract, was signed by Nathan. See id. The Switchable Amplifier is a component part of the MK-92 fire control system used on Navy warships. See Presentence Investigation Reports, ¶ 66. MK-92 fire control system is used to control the firing of missiles, both anti-ship and surface-to-air, as well as the ship’s guns. See id. The Switchable Amplifier is a “defense article” within the meaning of ITAR, 22 C.F.R. §§ 120.3 and 121.8(b). See id., ¶ 67. On 14 July 1993, Electrodyne entered into an agreement with Istok Research, to build forty Switchable Amplifiers at a unit cost of $350. See Presentence Investigation Reports, ¶ 68. On 14 July 1993, Lander sent Istok Research an electronic facsimile transmission of the specifications for the engineering, manufacture, production and assembly of the Switchable Amplifiers. See id., ¶ 69. From 23 August 1993 through 27 October 1993, Lander instructed employees of Istok Research on the engineering, manufacture, production and design of the Switchable Amplifiers. See Presentence Investigation Reports, ¶70. These discussions constituted the providing of a defense service within the meaning of ITAR, 22 C.F.R. § 120.9. See id. The Individual Defendants and Electro-dyne did not seek the required export license from the Government to send the plans and specifications for the Switchable Amplifier to Russia or to discuss the design, development, engineering, manufacture, production and assembly of the Switchable Amplifiers with Is-tok Research. See Presentenee Investigation Reports, ¶ 71. 4. The Phase Shifter Contract On 22 March 1993, Electrodyne entered into a contract (the “Phase Shifter Contract”) with the Air Force to supply twenty-eight digital phase shifters (the “Phase Shifters”) at an average cost of $3,880 each for a total contract price of $108,640. See Presentence Investigation Reports, ¶ 72. The initial solicitation, which was incorporated into the Phase Shifter Contract, was signed by Nathan as Vice-President of Electrodyne. See id. Phase Shifters are a component part of the Radio Frequency Simulator (the “RFS”), a device used to evaluate radar guided weapons systems. See Presentence Investigation Reports, ¶ 73. The RFS is to used to provide simulation support to the AMRAAM. See id. Phase Shifters are “defense articles” within the meaning of ITAR, 22 C.F.R. §§ 120.3 and 121.8(b). See id., ¶ 74. On 18 May 1993, Electrodyne entered into an agreement with Enterprise Phasa to build the Phase Shifters. See Presentenee Investigation Reports, ¶75. On that same day, Lander sent Enterprise Phasa a facsimile transmission of the specifications for the engineering, manufacture, production and assembly of the Phase Shifters. See id., ¶ 76. Lander also instructed Enterprise Phasa employees on the engineering, manufacture, production and design of the Phase Shifters. See id., ¶ 77. These instructions constituted the providing of a “defense service” within the meaning of ITAR, 22 C.F.R. § 120.9. See id. The Individual Defendants and Electro-dyne did not seek the required export license from the Government to send the plans and specifications for the Phase Shifter to Russia or to discuss the design, development, engineering, manufacture, production and assembly of the Phase Shifter with Enterprise Phasa. See Presentence Investigation Reports, ¶ 78. On 15 February 1994, the Individual Defendants and Electrodyne imported five Phase Shifters from Russia. See Presen-tence Investigation Reports, ¶ 79. The Phase Shifters did not have the markings indicating the country of origin. See id. 5. The Pin Diode Svñtch Contract On 12 November 1993, Electrodyne entered into a contract (the “Pin Diode Switch Contract”) with the Air Force to supply 2,377 Pin Diode Switches at an average cost of $368.23 each for a total contract price of $875,280.00. See Presentence Investigation Reports, ¶ 80. The Pin Diode Switch Contract was signed by Nathan. See id. A Pin Diode Switch is also a component part of the RFS and is a “defense article” within the meaning of ITAR, 22 C.F.R. §§ 120.3 and 121.8(b). See id., ¶ 81. On 29 October 1993, Eleetrodyne entered into an agreement with Istok Research to build 1,245 of the switches at an average cost of $77.91 each. See Presentence Investigation Reports, ¶ 82. On that same day, Lander sent Istok Research a facsimile transmission of the specifications for the engineering, manufacture, production and assembly of the Pin Diode Switches. See id. From 29 October 1993 through 19 November 1993, Lander instructed employees of Istok Research on the engineering, manufacture, production and design of the Pin Diode Switches. See Presentence Investigation Reports, ¶84. These instructions constituted the providing of a “defense service” within the, meaning of ITAR, 22 C.F.R. § 120.9. See id. The Individual Defendants and Eleetro-dyne did not seek the required export license from the Government to send the plans and specifications for the Pin Diode Switches to Russia or to discuss the design, development, engineering, manufacture, production and assembly of the Pin Diode Switches with Istok Research. See Presentence Investigation Reports, ¶ 8. On 25 October 1993, in addition to the agreement with Istok Research, Electrodyne entered into an agreement with Enterprise Orion, a manufacturer of electronic components in Kiev, Ukraine, to build 1,245 Pin Diode Switches at an average cost of $53.42 each. See Presentence Investigation Report, ¶ 86. On that same date, Lander sent Enterprise Orion a facsimile transmission of the specifications for the engineering, manufacture, production and assembly of the switches. See id., ¶ 87. From 25 October 1993 through 5 March 1994, Lander instructed Enterprise Orion employees on the engineering, manufacture, production, and design of the Pin Diode Switches. See Presentence Investigation Reports, ¶ 88. These discussions constituted the providing of a “defense service” within the meaning of ITAR, 22 C.F.R. § 120.9. See id. The Individual Defendants and Electro-dyne did not seek the required export license from the Government to send the plans and specifications for the Pin Diode Switches to Ukraine or to discuss the design, development, engineering, manufacture, production and assembly of the Pin Diode Switches with Enterprise Orion. See Presentence Investigation Report, ¶ 89. On 12 November 1993, Electrodyne and Nathan signed the Pin Diode Switch Contract with the Air Force. See Presentence Investigation Reports, ¶ 90. The Pin Diode Switch Contract stated that the Pin Diode Switches would be manufactured in the United States, although the Individual Defendants and Electrodyne knew the Pin Diode Switches would be manufactured in Russia and Ukraine. See id. 6. The Broad Band Amplifier Contract On 13 August 1993, Electrodyne entered into a contract with the NRL (the “Broad Band Amplifier Contract”) to supply twenty-five broad band amplifiers (the “Broad Band Amplifiers”) at a cost of $1,595 each for a total contract price of $39,875. See Presen-tence Investigation Reports, ¶ 91. The Broad Band Amplifier Contract was signed by Nathan and contained a “Buy American” provision. See id. The NRL intended to use the Broad Band Amplifiers in conjunction with a high priority Government program which was designing a component for attachment to NASA aircraft for airborne surveillance. See id., ¶ 92. As early as 13 August 1993, Electrodyne entered into an agreement with Enterprise Saturn, a manufacturer of electronic components in Kiev, Ukraine, to build the Broad Band Amplifiers at a cost of $210.00 each. See Presentence Investigation Reports, ¶ 93. On 23 November 1993, Electrodyne imported five Broad Band Amplifiers from Enterprise Saturn into the United States without markings indicating the country of origin. See id., ¶ 94. On 30 December 1993, Electrodyne imported twenty-two Broad Band Amplifiers from Enterprise Saturn into the United States without markings indicating the country of origin. See id., ¶ 95. After the Broad Band Amplifiers had been imported into the United States, Electrodyne employees painted the Broad Band Amplifiers to obscure and disguise foreign markings on the Broad Band Amplifiers and attached a label which stated “Electrodyne Sys. Corp.” See Presentence Investigation Reports, ¶ 96. On 23 November 1993, Electrodyne supplied five of the Broad Band Amplifiers to the NRL. See id., ¶ 97. The Broad Band Amplifiers are not classified; however, the data obtained from the unit that the Broad Band Amplifiers would have been attached to is classified. See id. On 7 December 1993, at the request of Customs, an independent third-party (the “Examiner”) examined one of the Broad Band Amplifiers. See Presentence Investigation Reports, ¶ 98. The Examiner concluded that, although the mechanical design and construction of the Broad Band Amplifiers were “good,” the internal parts were of low quality and the poor seal of the Broad Band Amplifier was non-hermetic and precluded use in an environment with high humidity and changing pressures. See id. Thereafter, on or about 2 January 1994, Eleetrodyne supplied twenty of the Broad Band Amplifiers to NRL. See id., ¶ 99. In February of 1994, Nathan was informed NRL was questioning the design and components of the Broad Band Amplifiers, and was asked by a NRL contracting official where the Broad Band Amplifiers were made. See Presentence Investigation Reports, ¶ 100. Nathan eventually admitted the Broad Band Amplifiers were made in Ukraine. See id. 7. The Scheme to Sell Ukrainian Converters to NASA Eleetrodyne was awarded separate contracts from NASA (the “NASA Contracts”) to build five “up” and five “down” converters for the Advanced Communication Technology Satellite (the “ACTS”). See Presentence Investigation Reports, ¶ 101. On November 29, 1993, Customs inspected a shipment from Ukraine to Eleetrodyne containing five “down” converters. See id. The country of origin was listed as “Ukraine” and the unit value was $1,500. See id. Inside the package was a commercial invoice and a document, believed to be in Ukrainian, containing specifications. See id. No country of origin markings were on any of the five converters. See id. During the first week of December 1993, two “down” converters were shipped by Eleetrodyne to NASA. See Presentence Investigation Reports, ¶ 102. On 17 December 1993, the contracting officer and the project manager for ACTS were interviewed by Customs officials. See id., ¶ 103. Both of these individuals stated that neither Nathan nor David Heller, the Director of En