I don't believe this lawsuit is about the sell of the equipment. That sell is being used by Shawn Robotka as an example of Sotis' poor judgment and as a basis for liquidating assets and granting an injunction that prevents Sotis from operating the business.
You state "in general there is no prohibition..." and that is where we enter a gray area. When the term "in general" is used, it indicates that there are situations where there is a prohibition. Understanding why there could be a prohibition requires some knowledge of US regulations.
There are regulations in place that could prohibit the sell of recreational rebreather equipment. While recreational rebreathers may not fall under International Traffic in Arms Regulations (ITAR) they can fall under Export Administration Regulations (EAR). ITAR covers military items or defense articles. EAR regulates items designed for commercial purposes which could have military applications.
I don't know which rebreathers were sold, but rebreathers from KISS and Poseidon and the Hollis Prism have Export Control Classification Numbers which could require an export license. Selling an item to a customer and having full knowledge that it is the intent of that customer to ship the product overseas could be problematic.
Even if the rebreather does not have an ECCN assigned it would fall under EAR99 classification. EAR99 items usually do not require an export license, however, exports of EAR99 items to an embargoed country, an end-user of concern, or in support of a prohibited end-use may require an export license. There is not a black and white answer for EAR99 items and this requires the seller of EAR99 classified items to do some checking.
Seller must make sure the end users are not included on any restricted parties lists.
Seller must make sure they are not shipping to embargoed countries.
Seller should ensure the goods aren’t going to be diverted to another country that may be embargoed.
Seller should perform due diligence to find out how the product is going to be used and how potential customers may use them.
Seller should watch for red flags for the export. While there is no exhaustive list of red flags to consider, some of the ones listed are:
A customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing.
A freight forwarding firm is listed as the product's final destination.
Go back and read the story. Do you see some Red Flags?
But typically, clients do not pay all at once, as did Bensadik.
“Most people do it piecemeal. These guys were well funded and ready to buy everything under the sun,” Sotis said.
The fact that the Department of Commerce’s Office of Export Enforcement and the FBI are looking into this leads me think that Shawn Robotka had a pretty good head on his shoulders and determined that this was a sell that should be avoided.
Sotis also makes the comment:
“If someone wants to pick something up from us and ship it overseas, it’s none of our business."
But he knew that the intention was to ship the items overseas and his decision resulted in the problems the company now has with the Department of Commerce. Without out knowing everything involved, I think there is some merit to Shawn Robotka's lawsuit based on this transaction.
