Q1-2017
ERAI, INC QUARTERLY NEWSLETTER
Dear ERAI Members and Colleagues,

This quarter we have seen a flurry of legislative activity by President Trump and the US Congress. This issue of INSIGHT will outline specific amendments to the 2017 National Defense Authorization Act that specifically relate to the detection and avoidance of counterfeit electronic parts; the NASA Transition Authorization Act of 2017 which recognizes the risks posed by counterfeits and the importance of detection and avoidance; H.R. 917's effort to stem the flow of electronic waste from becoming a source of counterfeit parts; as well as the Defense Science Board's Cyber Supply Chain report providing recommendations to the Department of Defense for strengthening their weapons systems supply chain. These new pieces of legislation demonstrate the US Government's continuing efforts in counterfeit mitigation and how lawmakers are refining legislation and contract clauses in response to the evolving threats it faces from counterfeiters and cyber criminals.

With that in mind, we are starting a new featured column, "How to Spot a Counterfeit Part", which will feature parts selected from ERAI's High Risk and Suspect Counterfeit Parts Database to highlight different counterfeit techniques and detection test methods to identify anomalies.

As always, feel free to reach out to us with any questions you have – we are here to help with issues from detection and avoidance of counterfeit parts, research on legislation and how it can affect your organization, assistance with verification of supplier certificates, and more…the list is endless. The next quarter will bring exciting new features to ERAI, so stay tuned as we continue to provide you, our members and industry peers, with information and tools to help make the global electronic supply chain a safer business environment.

Anne-Liese Heinichen
Editor-in-Chief
anne@erai.com

How To Spot A Counterfeit Part

By: Kristal Snider

Distinguishing authentic parts from those that have been altered and are thus classified as "suspect counterfeit" or "counterfeit" requires a trained eye. Going forward in each edition of INSIGHT we will select a part reported to ERAI's High Risk and Suspect Counterfeit Part Database to highlight the counterfeiting techniques used by the counterfeiters and the counterfeit detection test method applied by quality inspectors to thwart their attempts to fool us.





Case Example

Part Number: EWIXP465BAET
Manufacturer: Intel
Part Status: Obsolete
Last Time Buy: April 1, 2010
Last Time Delivery: April 1, 2011
Counterfeit Detection Test Method: Detailed External Visual Inspection
Inspection Equipment: Microscope

This particular case example demonstrates the significance of carefully examining a part's markings and the validity of the part number appearing on the device.

During this microscopic evaluation, the inspector observed distinctly different laser marking styles. All of the letters and numerals in the part number appear to have been inscribed by the same laser except for the letter "T". Under higher magnification supplemented by fluorescent lighting it becomes clear, due to the unique diagonal pattern, the letter "T" was added using a different laser.

The datasheet reveals why the letter "T" was added to the end of part number EWIXP465BAE.

Laser Markings Magnified under Fluorescent Lighting
The laser pattern for the letter "T" is different from the other letters



The part in question is manufactured in multiple speeds and in extended and commercial temperature ranges. The addition of the letter "T" to the base part number is meant to indicate extended temperature grade.



Extended grade devices are typically manufactured in smaller quantities and are sold for a higher price. By definition, extended temperature is -40 °C to 85 °C. If a device that is manufactured to be suitable for a commercial temperature range (0 °C to 70 °C) is used in that application, the part could fail at the extreme upper and lower temperature ranges. The failure could come immediately or over time and could be minor or catastrophic (e.g. total failure). Neither would be acceptable risks in most applications.

Because part remarking is sometimes done by the OCM, efforts were made to verify if the "T" had been added by Intel or an authorized partner. These efforts were unsuccessful; therefore, the parts in question were determined to be counterfeit.

Q: WHO CAN REPORT PARTS TO ERAI?
A: ANYONE. Membership to ERAI is not required.


We have made the process as simple as possible by offering two ways to report parts:

1. Report a part online at: http://www.erai.com/SubmitHighRiskPart
2. Or even simpler, email your report to reportparts@erai.com


We require: 1) the part information, manufacturer, part number, date code, lot code; 2) a text description of the non-conformance or findings and; 3) digital images that support the findings.

Ideally, you can send all archived data you have and make reporting future cases routine by including a report to ERAI in your existing inspection process.

Please note that you can report parts anonymously. We will not include your company name on an alert. You do not have to report the supplier that shipped you counterfeit devices unless you choose to. The major benefit to the industry at large is knowing there is a suspect counterfeit part out there.



Legislation Tackling Counterfeit Parts in the Defense Supply Chain Continues to Evolve

On December 23, 2016, S.2943 National Defense Authorization Act for Fiscal Year 2017 was signed into law (Public Law No: 114-328). Section 815 revises requirements for the detection and avoidance of counterfeit electronic parts by eliminating the controversial phrase "trusted suppliers" and by replacing it with "suppliers that meet anticounterfeiting requirements".

SEC. 815. AMENDMENTS RELATED TO DETECTION AND AVOIDANCE OF COUNTERFEIT ELECTRONIC PARTS


Section 818 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112–81; 10 U.S.C. 2302 note) is amended—

(1) in paragraph (3) of subsection (c)—

(A) by striking the heading and inserting "SUPPLIERS MEETING ANTICOUNTERFEITING REQUIREMENTS.—";

(B) in subparagraph (A)(i), by striking "trusted suppliers in accordance with regulations issued pursuant to subparagraph (C) or (D) who" and inserting "suppliers that meet anticounterfeiting requirements in accordance with regulations issued pursuant to subparagraph (C) or (D) and that";

(C) in subparagraphs (A)(ii) and (A)(iii), by striking "trusted suppliers" each place it appears and inserting "suppliers that meet anticounterfeiting requirements";

(D) in subparagraph (C), by striking "as trusted suppliers those" and inserting "suppliers";

(E) in subparagraph (D) in the matter preceding clause (i), by striking "trusted suppliers" and inserting "suppliers that meet anticounterfeiting requirements"; and

(F) in subparagraphs (D)(i) and (D)(iii), by striking "trusted" each place it appears; and

(2) in subsection (e)(2)(A)(v), by striking "use of trusted suppliers" and inserting "the use of suppliers that meet applicable anticounterfeiting requirements".


H.R. 1540- National Defense Authorization Act for Fiscal Year 2012: Then vs. Now

If we apply all of the revisions made since H.R. 1540 Sec. 818 "DETECTION AND AVOIDANCE OF COUNTERFEIT ELECTRONIC PARTS" was first signed into law, we can see the evolution supplier selection has taken. The highlighted sections appearing in the "Now" column reflect the current language with all applicable revisions applied. The text appearing in the "Then" column is the original text as it appeared at the time H.R. 1540 was signed and became Public Law No: 112-81 on December 31, 2011.

NOW THEN
(3) SUPPLIERS MEETING ANTICOUNTERFEITING REQUIRE-
MENTS.-
The revised regulations issued pursuant to paragraph (1) shall—

(A) require that the Department and Department contractors and subcontractors at all tiers–

(i) obtain electronic parts that are in production or currently available in stock from the original manufacturers of the parts or their authorized dealers, or from suppliers identified as suppliers that meet anticounterfeiting requirements in accordance with regulations issued pursuant to subparagraph (C) or (D) and that'; obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers;

(ii) obtain electronic parts that are not in production or currently available in stock from suppliers identified as suppliers that meet anticounterfeiting requirements in accordance with the regulations issued pursuant to subparagraphs (C) and (D); and

(iii) obtain electronic parts from alternate suppliers when such parts are not available from original manufacturers, their authorized dealers, or in accordance with the regulations issued pursuant to subparagraphs (C) and (D;

(B) establish requirements for notification of the Department, and for inspection, testing, and authentication of electronic parts that the Department or a Department contractor or subcontractor obtains from any source other than a source described in clause (i) or (ii) of subparagraph (A), if obtaining the electronic parts in accordance with such clauses is not possible;

(C) establish qualification requirements, consistent with the requirements of section 2319 of title 10, United States Code, pursuant to which the Department may identify suppliers that have appropriate policies and procedures in place to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts; and

(D) authorize Department contractors and subcontractors to identify and use additional suppliers that meet anticounterfeit-
ing requirements and provided that–

(i) the standards and processes for identifying such suppliers comply with established industry standards;

(ii) the contractor or subcontractor assumes responsibility for the authenticity of parts provided by such suppliers as provided in paragraph (2); and

(iii) the selection of such suppliers is subject to review, audit, and approval by appropriate Department officials.
(3) Trusted suppliers.--The revised regulations issued pursuant to paragraph (1) shall--

(A) require that, whenever possible, the Department and Department contractors and subcontractors at all tiers--

(i) obtain electronic parts that are in production or currently available in stock from the original manufacturers of the parts or their authorized dealers, or from trusted suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers; and

(ii) obtain electronic parts that are not in production or currently available in stock from trusted suppliers;

(B) establish requirements for notification of the Department, and inspection, testing, and authentication of electronic parts that the Department or a Department contractor or subcontractor obtains from any source other than a source described in subparagraph (A);

(C) establish qualification requirements, consistent with the requirements of section 2319 of title 10, United States Code, pursuant to which the Department may identify trusted suppliers that have appropriate policies and procedures in place to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts; and

(D) authorize Department contractors and subcontractors to identify and use additional trusted suppliers, provided that--

(i) the standards and processes for identifying such trusted suppliers comply with established industry standards;

(ii) the contractor or subcontractor assumes responsibility for the authenticity of parts provided by such suppliers as provided in paragraph (2); and

(iii) the selection of such trusted suppliers is subject to review and audit by appropriate Department officials.



NASA Transition Authorization Act of 2017 Addresses Counterfeit Risk

On March 21, 2017, surrounded by an astronaut and legislators, President Trump signed the National Aeronautics and Space Administration Transition Authorization Act of 2017 making it public law number 115-10. The bill, also known as S.422 in the 115th Congress, recognizes the risk counterfeit electronic parts pose to astronauts, crew, other personnel, and NASA overall and includes provisions specifically targeting, detecting, and avoiding the use of counterfeit parts.

The passage of S.422 is made more significant by the fact this is the first bill to pass both chambers of Congress and be signed into law since S.3729 - National Aeronautics and Space Administration Transition Authorization Act of 2010.

What the Law Requires of Contractors

  • SEC. 823. DETECTION AND AVOIDANCE OF COUNTERFEIT PARTS.

  • (a) FINDINGS.—Congress makes the following find:

  • (b)
    • (1) A 2012 investigation by the Committee on Armed Services of the Senate of counterfeit electronic parts in the Department of Defense supply chain from 2009 through 2010 uncovered 1,800 cases and over 1,000,000 counterfeit parts and exposed the threat such counterfeit parts pose to service members and national security.

    • (2) Since 2010, the Comptroller General of the United States has identified in 3 separate reports the risks and challenges associated with counterfeit parts and counterfeit prevention at both the Department of Defense and NASA, including inconsistent definitions of counterfeit parts, poorly targeted quality control practices, and potential barriers to improvements to these practices.

  • (b) SENSE OF CONGRESS.—It is the sense of Congress that the presence of counterfeit electronic parts in the NASA supply chain poses a danger to United States government astronauts, crew, and other personnel and a risk to the agency overall.

  • (c) REGULATIONS.—

    • (1) IN GENERAL.—Not later than 270 days after the date of enactment of this Act, the Administrator shall revise the NASA Supplement to the Federal Acquisition Regulation to improve the detection and avoidance of counterfeit electronic parts in the supply chain.

    • (2) CONTRACTOR RESPONSIBILITIES.—In revising the regulations under paragraph (1), the Administrator shall—

      • (A) require each covered contractor—

        • (i) to detect and avoid the use or inclusion of any counterfeit parts in electronic parts or products that contain electronic parts;

        • (ii) to take such corrective actions as the Administrator considers necessary to remedy the use or inclusion described in clause (i); and

        • (iii) including a subcontractor, to notify the applicable NASA contracting officer not later than 30 calendar days after the date the covered contractor becomes aware, or has reason to suspect, that any end item, component, part or material contained in supplies purchased by NASA, or purchased by a covered contractor or subcontractor for delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part; and

      • (B) prohibit the cost of counterfeit electronic parts, suspect counterfeit electronic parts, and any corrective action described under subparagraph (A)(ii) from being included as allowable costs under agency contracts, unless—

        • (i)(I) the covered contractor has an operational system to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts that has been reviewed and approved by NASA or the Department of Defense; and

        • (II) the covered contractor has provided the notice under subparagraph (A)(iii); or

        • (ii) the counterfeit electronic parts or suspect counterfeit electronic parts were provided to the covered contractor as Government property in accordance with part 45 of the Federal Acquisition Regulation.

  • (3) SUPPLIERS OF ELECTRONIC PARTS.—

  • In revising the regulations under paragraph (1), the Administrator shall—

    • (A) require NASA and covered contractors, including subcontractors, at all tiers—

      • (i) to obtain electronic parts that are in production or currently available in stock from—

        • (I) the original manufacturers of the parts or their authorized dealers; or

        • (II) suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers; and

      • (ii) to obtain electronic parts that are not in production or currently available in stock from suppliers that meet qualification requirements established under sub-paragraph (C);

    • (B) establish documented requirements consistent with published industry standards or Government contract requirements for—

      • (i) notification of the agency; and

      • (ii) inspection, testing, and authentication of electronic parts that NASA or a covered contractor, including a subcontractor, obtains from any source other than a source described in subparagraph (A);

    • (C) establish qualification requirements, consistent with the requirements of section 2319 of title 10, United States Code, pursuant to which NASA may identify suppliers that have appropriate policies and procedures in place to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts; and

    • (D) authorize a covered contractor, including a subcontractor, to identify and use additional suppliers beyond those identified under subparagraph (C) if—

      • (i) the standards and processes for identifying such suppliers comply with established industry standards;

      • (ii) the covered contractor assumes responsibility for the authenticity of parts provided by such suppliers under paragraph (2); and

      • (iii) the selection of such suppliers is subject to review and audit by NASA.

    • (d) DEFINITIONS.—In this section:

      • (1) COVERED CONTRACTOR.—The term ‘‘covered contractor'' means a contractor that supplies an electronic part, or a product that contains an electronic part, to NASA.

      • (2) ELECTRONIC PART.—The term ‘‘electronic part'' means a discrete electronic component, including a microcircuit, transistor, capacitor, resistor, or diode, that is intended for use in a safety or mission critical application.



On March 23, 2017 Loftware hosted a webinar featuring Robert Metzger, a partner at Rogers Joseph O’Donnell, titled, "Reducing the Risk of Electronics Counterfeiting". If you were not aware of this educational opportunity or were unable to attend the event, you may access an archived copy of the webinar by visiting: http://resources.loftware.com/Reducing-Risk-Electronics-Counterfeiting-with-Labeling.html.

About the Webinar:

Electronics counterfeiting continues to be a hot-button issue as manufacturers lose $160B+ annually in revenue. New government regulations and industry standards aim to reduce risk—but still put much of the burden on companies to safeguard supply chain integrity. What can you do to protect yourself from counterfeit and gray market components? How can you leverage new strategies and technologies to ensure trust in the security of your supply chain?

Topics Addressed:
  • Update on latest federal anti-counterfeiting regulations—and why they fall short
  • Current and expected industry standards on traceability
  • Recommendations for a strategic, holistic approach to improve supply chain visibility
  • Insight into technologies like enterprise labeling that ensure authenticity of parts and suppliers
  • Best practices for leveraging "source of truth" data to avoid risk, drive efficiencies
  • What lies ahead: IoT sensors, cloud aggregation and data-driven supply chain assurance



The Fight Continues to Stop the Flow of Counterfeit "Feedstock"

Early into 2017 lawmakers and industry leaders picked up the fight to pass legislation preventing the export of e-waste containing electronic components after H.R. 5579 failed to become law by the close of 2016.

The Secure E-Waste Export and Recycling Act (SEERA) was reintroduced as H.R. 917 by Representatives Republican Paul Cook and Democrat Gene Green. If passed and signed into law by President Trump, the bill will ensure electronic waste does not become a source of counterfeit electronic parts which then re-enter the supply chain.

"Electronic waste is the fastest growing segment of our domestic waste stream. This problem will continue to grow unless Congress acts to ensure that e-waste is recycled responsibly in the United States and out of the hands of overseas counterfeiters. SEERA will help ensure our servicemen and women have reliable systems to protect us while creating thousands of jobs. I have worked on e-waste for a decade and look forward to Congress holding hearings on this bipartisan legislation and seeing it come before the House for a vote," Green said in a statement.

"By keeping these materials in the US, we will keep them out of the hands of counterfeiters and data thieves". Cook added, "China regularly counterfeits electronics and puts these dangerous products, including critical military equipment, back into the market. These electronic components threaten the reliability and safety of a wide range of technology. SEERA will ensure we're not exporting electronic scrap materials that come back to us as counterfeit parts and undermine the reliability of technology essential to our national security".


In addition to the widely publicized national security concerns this community is aware of, we urge you to research and consider the broader risks we all face. According to the Institute of Electrical and Electronic Engineers, counterfeits, "threaten not only military systems but also commercial transportation systems, medical devices and systems, and the computers and networks that run today's financial markets and communications systems."  

Show your support and let's do what we can do ensure this bill finally becomes a law in 2017.

For more information visit ERAI's
E-Waste Knowledge Center


U.S. Attorney Deirdre Daly to Resign

Connecticut U.S. Attorney Deirdre Daly, along with 45 other prosecutors appointed by former President Obama, were asked to resign on March 10, 2017 by U.S. Attorney General Jeff Sessions. While causing a media stir, the action is not unprecedented for a new incoming administration.

During her 4 years' of service, Daly spearheaded the convictions of: Peter Picone of Epic International Electronics and Tytronix Inc.; Jeffrey Krantz of Harry Krantz LLC: Jeffrey Warga of Bay Components LLC: and Daofu Zhang, Xianfeng Zuo, and Jiang (Ben) Yan of HK Potential Electronics.

In the press release announcing Picone's sentencing Daly stated, "Supplying counterfeit electronic components to the U.S. Military is a serious crime. Individuals who choose profit over the health and safety of the men and women of our armed services will be prosecuted."i

Daly has been permitted to stay at her position until October to complete a 20-year service record with the Department of Justice and will assist President Trump's new appointee during the transition period. It remains to be seen if her successor will also make prosecuting suppliers of counterfeit materiel a top priority.


i "Massachusetts Man Sentenced to 37 Months in Prison for Trafficking Counterfeit Military Goods." The United States Department of Justice. Office of Public Affairs, 6 Oct. 2015. Web. https://www.justice.gov/opa/pr/massachusetts-man-sentenced-37-months-prison-trafficking-counterfeit-military-goods-0


NJMET Ordered to Pay $3.76 Million Dollars in Damages for Breach of Contract and Fraud

What started as a Federal Aviation Administration (FAA) suspect unapproved part investigation into substandard transistors used in Boeing 737 antiskid/autobrake control unitsi and other aviation applications, ended with the test lab tasked with ensuring the parts were in good working condition ordered to pay $3,766,416.00 in damages for breach of contract and fraud for failing to perform the work they were hired to do and falsifying laboratory reports.

Beginning in June 2008 Electrospec, Inc. purchased more than 20,000 pieces of International Rectifier (IR) part number JANTX2N6901 for re-sale to Hydro-Aire Inc., a division of Crane Aerospace. Hydro-Aire brake control products have been selected and specified for the majority of applications in all aerospace market segments (commercial, regional/commuter, business, and military) including the military Unmanned Aircraft Vehicle (UAV) sector.ii

Before shipping any of the transistors to Hydro-Aire, Electrospec sent the parts to New Jersey Micro-Electronic Testing Inc. (NJMET) where they were visually inspected as part of NJMET's incoming inspection procedure (QP4010.A10) and tested to ensure the parts were in good working condition. Only parts that passed testing and marked with a green test dot were sent on to Hydro-Aire: 13,265 parts to be exact.

Hydro-Aire performed testing of its own where it was discovered some of the parts were not new and electrical evaluation revealed excessive drain-source current leakage and/or decrease breakdown voltage.iii

NJMET applied green test dots to parts that had passed testing Heavy scratches and flat sides to the leads indicate that the leads have been mechanically abraded to "refinish" the leads for sale.
Corrosion from the ingress of moisture Corrosion from the ingress of moisture


These findings triggered a formal FAA investigation, the release of Unapproved Parts Notification Number 2012-20111108011 which warned the transistors were not properly tested, could be counterfeit and were most likely reclaimed, refurbished and distributed as new and called into question the validity and reliability of NJMET's inspection and test procedures.

On March 7, 2014 Electrospec filed a lawsuit against NJMET in Passaic County, New Jersey (docket number PAS-L-914-14) for breach of contract, negligence, consumer fraud, deceit and punitive damages.

Electrospec alleged that, on June 4, 2008, NJMET issued a quotation for testing services which called for NJMET to perform "Group A testing, Subgroups 2 and 3" on part number JANTX2N6901 in accordance with MIL-PRF-19500/570C but that NJMET improperly tested or never performed certain ordered tests ("thermal impedance", "forward voltage" and "forward transconductance"), and that it falsified test reports.

On March 28, 2017 a verdict was finally reached. According to Richard Vrhovc, Electospec's attorney, "the jury awarded Electrospec $3,766,416.99 in damages against NJMET, Inc. for breach of contract AND fraud."


i FAA Unapproved Parts Notification No: 2012-2011110801
ii http://www.craneae.com/AboutUs/Hydro-Aire.aspx
iii Hydo-Aire Component Analysis Report (CAR #11-0095)


Caby Family Members Charged with Violating IEEPA for Allegedly Sending Dual Use Items to Syria

By: Anne-Liese Heinichen

Ali Caby aka "Alex Caby", Arash Caby aka "Axel Caby", and Marjan Caby were arrested and charged on February 24, 2017 for violating the International Emergency Economic Powers Act (IEEPA) for allegedly exporting switches, indicators, transmitters and other articles that have both civilian and military use from the United States destined for Syria. Along with the Cabys, five employees out of the Sofia, Bulgaria-based office of AW-TRONICS are facing charges: Zhelyaz Andreev, Lyubka Hristova, Mihaela Nenova, Iskren Georgiev, and Ivan Sergiev; as well as Syrian Arab Airlines aka Syrian Air and three employees: Adib Zeno, Rizk Ali and Ammar al Mounajed.

A license is required for export of items listed on the Commerce Control List under 15 C.F.R. § 742.4, which states, "it is the policy of the United States to restrict the export and reexport of items that would make a significant contribution to the military potential of any other country or combination of countries that would prove detrimental to the national security of the United States" 1. Additionally, 15 C.F.R. § 746.9 prohibits the export of all items (with the exception of food and medicine) on the Commerce Control List specifically to Syria2.

The indictment alleges that from 2013 through 2015 the defendants evaded obtaining required licenses and mis-declared or provided incomplete export information for controlled goods purchased in the United States that were then shipped to AW-Tronics' Bulgaria office or to the United Arab Emirates, that were then subsequently re-exported to Syria. Destination/End Use Statements signed by AW-Tronics employees, at the apparent urging of AW-Tronics' management, listed the destination as "USA". The indictment additionally revealed that Marjan Caby, who was employed as an auditor who dealt with export compliance, informed employees that, "NOTHING WILL BE SHIPPED TO CLIENTS IN THE MIDDLE FROM THE USA OFFICE. WE HAVE TO SEND TO BG THEN TO CLIENT. COUNTRIES: ISRAEL, IRAQ, EMIRATES, SYRIA, SAUDI ARABIA, LIBYA, YEMMEN, KUWAIT ETC…We will have are [sic] packages stopped by the US Customs and Border Control."3

Payments were allegedly processed through third parties to conceal payments between the co-conspirators, specifically through a travel agency based in the UAE.

In another instance, AW-Tronics' employees are charged with exporting a tactical air navigation accessory unit to China via their Bulgaria office from late 2014 through mid-2015 by again allegedly concealing the true destination of the ITAR-controlled product.

Ali Caby faces 13 counts punishable by a total maximum penalty of 50 years' imprisonment and $2.5 million in fines and as of the date of this article is being held at a Miami Federal Detention Center.

Arash Caby faces 13 counts punishable by a total maximum penalty of 60 years' imprisonment and $2.75 million in fines.

Marjan Caby faces 11 counts punishable by a total maximum penalty of 50 years' imprisonment and $2.25 million in fines.

Ali, Arash, and Marjan Caby's trials are scheduled for October 2, 2017 and are estimated to last 2-3 weeks.

The Cabys, including Catherine Caby aka Catherine Kafi-Keramati who is not named in the indictment, have owned and operated numerous companies in addition to AW-Tronics including but not limited to: Arrowtronic LLC, Aero Troniks LLC, aka Aerotroniks LLC, Dixie Air Parts Inc. and Factory Direkt LLC.


1Code of Federal Regulations, Title 15 Commerce and Foreign Trade, Subtitle B, Chapter VII, Subchapter C, Part 742, § 742.4, Bureau of Industry and Security, Department of Commerce.
http://www.ecfr.gov/cgi-bin/text-idx?SID=a2650ec55e1cd0d858d5162e911226c1&mc=true&node=se15.2.742_14&rgn=div8

2Code of Federal Regulations, Title 15 Commerce and Foreign Trade, Subtitle B, Chapter VII, Subchapter C, Part 746, § 746.9, Bureau of Industry and Security, Department of Commerce.
http://www.ecfr.gov/cgi-bin/text-idx?SID=a2650ec55e1cd0d858d5162e911226c1&mc=true&node=se15.2.746_19&rgn=div8

3United States of America vs. Ali Caby, Arash Caby, Marjan Caby, et. al., 16-20803 (2016)

On April 4, 2017 Military & Aerospace Electronics hosted a webinar sponsored by IEC Electronics Corporation titled, "Should Your Organization Be Concerned About DFARS 252.246.7008 and the Supply Chain Impact Regarding Obsolete and Counterfeit Components?". If you were not aware of this educational opportunity or were unable to attend, the event is now available online and may be accessed by visiting: www.militaryaerospace.com. Simply click on the "Webcasts" tab to access the Military & Aerospace Electronics webcast archive.

Topics Addressed:
  • DFARS 7008 Introduction – Sourcing Electronics Flow Down
  • Interpreting the term "Contractor Approved Supplier" (CAS)
  • Qualification requirements for "Contractor Approved Suppliers"
  • The three-tier supply chain model for sourcing electronic components
  • Compliance to the DFAR regarding Inspection, Test, and Authentication (IT&A)
  • Alternative Pathways for Independent Distributors through AS6081 Certification
  • Corporate flow down, liability, and business risk
  • Benefits of the new DFARS 7008
The archived webinar will be available for the next twelve months.




Sentencings for Arc Electronics' Employees Continue


On March 30, 2017, Alexander Posobilov, the former Procurement Director of Arc Electronics, was sentenced to 135 months' imprisonment followed by 3 years' of supervised release after a jury trial. Posobilov was found guilty of exporting controlled microelectronics to Russia in violation of the International Emergency Economic Powers Act (IEEPA) and the Arms Export Control Act (AECA) and for money laundering conspiracy. Posobilov's attorney has indicated that he will be filing an appeal with the court.

Posobilov allegedly assisted Alexander Fishenko, the President and Owner of Arc, in the conspiracy. In contrast, in July of 2016, Fishenko pleaded guilty to acting as an unregistered agent of the Russian government, IEEPA and AECA violations, money laundering conspiracy and obstruction of justice and subsequently received 120 months' imprisonment, 3 years' supervised released, forfeiture of money and real estate assets and mandatory drug/alcohol abuse treatment.

A total of eleven individuals and two corporations, Arc Electronics and Apex System LLC were indicted in October 2012. Five employees have pleaded guilty; three were found guilty of charges after trial and three remain at large.


Q1 2017 Articles You Can't Afford to Miss


Lawmakers fear infiltration of defense supply chain
http://thehill.com/policy/cybersecurity/324575-lawmakers-fear-infiltration-of-defense-supply-chain

Rockwell Collins First Company to Achieve CAAP Accreditation for Supply Chain Management Involving Counterfeit Risks
http://www.aviationpros.com/press_release/12311206/rockwell-collins-first-company-to-achieve-caap-accreditation-for-supply-chain-management-involving-counterfeit-risks

Suppliers & Distributors: Uneasy Partners, Part 1
https://epsnews.com/2016/12/21/distribution-at-a-crossroads-part-1/

Suppliers & Distributors, Uneasy Partners, Part 2
https://epsnews.com/2017/01/12/s-distributors-uneasy-partners-part-2/

Suppliers & Distributors: Uneasy Partners, Part 3
https://epsnews.com/2017/02/14/suppliers-distributors-uneasy-partners-part-3/

Managing E-Waste: Everyone's Problem
http://www.ebnonline.com/author.asp?doc_id=282469§ion_id=3219&hootPostID=ecef16327c0e13ca8a713e35ad714251

CBP, ICE Seize Record Number of Shipments with Intellectual Property Rights Violations in FY2016
https://www.cbp.gov/newsroom/national-media-release/cbp-ice-seize-record-number-shipments-intellectual-property-rights

DoD Policy Takes Aim at Counterfeit Electronics
http://www.ebnonline.com/author.asp?section_id=3219&doc_id=282356

JEDEC's New JESD243: Is It an Industry Standard for Counterfeit Electronic Parts – or Something Less?
http://circuitsassembly.com/ca/magazine/26838-jedec-s-new-jesd243-is-it-an-industry-standard-for-counterfeit-electronic-parts-or-something-less.html


White Paper Reviews


Report of the Defense Science Board, Task Force on Cyber Supply Chain

Why you should read it: The report produced by the Defense Science Board, an advisory committee established to provide advice to the Secretary of Defense, provides a critical analysis and 25 recommendations to address cyber vulnerabilities in the DoD's weapon systems supply chain and sustainment programs.

ERAI Insight: The task force provides well-researched insight into the DoD cyber landscape and highlights vulnerabilities, both on software and hardware, present throughout its now global supply chain. While addressing the DoD's reduced market share as a consumer, long lifecycle, obsolescence, and COTS issues, the report provides recommendations for increased monitoring and detection techniques, lifecycle program protection plans, increased research and development, enhanced responses when a vulnerability is exposed and data-sharing and reporting.

A few of the recommendations of note are:
  • Technical approaches to obtaining trustworthy microelectronics from untrusted suppliers.
  • Examination of various methods of tagging, monitoring, and authentication of integrated circuits.
  • USD(AT&L) [Under Secretary of Defense for Acquisition, Technology and Logistics] work to promulgate new regulations to eliminate the disincentives for industry self-reporting of counterfeits.
  • Enhance GIDEP's functionality, funding, and staffing to include enhanced capability to rapidly communicate on vulnerability, events, and mitigation to users of parts that are under attack of at risk.
  • Expand GIDEP's charter to encompass reports of software and firmware attack as well as hardware.
  • USD(AT&L) [Under Secretary of Defense for Acquisition, Technology and Logistics] direct programs to acquire a gold standard to test reference parts; and acquire hardware and software data rights for use in diagnosing malicious tampering:
    • Contract clauses should be made available to program offices so that, selectively, for systems at high risk or of high impact, they may establish a contractual right, if exercised, to require the cooperation of the parts supplier in the evaluation of suspect parts against original and authentic materiel.
    • The DoD Office of General Counsel (OGC) should be consulted on methods to assure contractors that DoD will protect the security and proprietary character of reference parts and source data.
  • ASD(L&MR) [Assistant Secretary of Defense for Logistics and Materiel Readiness] commission a feasibility study to demonstrate visibility to the bottom of the supply chain for critical parts; also to capture this information and include it in a DoD parts application database.
    • The study should assess the present practices of DoD contractors to collect and retain the "as-built" configuration of key systems.
    • The study should examine what can be accomplished by DoD Components and support contractors to extend the parts application database past into operational and sustainment phases.
    • The study should report on costs and benefit to both contractors and to DoD Components.
  • Develop a vulnerability database fed by multiple sources (DoD programs, commercial databases, DIA, contractor reports, Hardware CERT analyses).
  • The Secretary of Defense pursue a relationship with a commercial state-of-the-art foundry, without investing in a DoD-owned state-of-the-art foundry.
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Regional E-Waste Monitor

Why you should read it: This report was written by the United Nations University's Sustainable Cycles (SCYCLE) program funded by the Japanese Ministry of Environment to address e-waste in East and Southeast Asia, both the largest manufacturer and consumer of electrical and electronic equipment.

ERAI Insight: The report concludes an average e-waste growth 62.7% over a five-year period for the region. Estimated at 16 million tons in 2014, the total volume exceeds North and South America (11.7 million tons) and Europe (11.6 million tons) respectively. The largest per-capital of e-waste was found in Hong Kong with 21.7 kg/capita, followed by Singapore (19.95 kg), and Taiwan (19.3 kg), all three in excess of the North/South American average of 12.2 kg, European average of 15.6 kg and the Asian average of 3.7 kg per capita. The report cites four main trends responsible for increasing volumes: more gadgets (i.e. introduction of new products); more consumers (i.e. growing population and expanding middle classes), decreased usage time (e.g. shorter lifecycles due to minimum operating requirements, fashion trends); and imports (i.e. greater availability of products).

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Upcoming Educational & Networking Opportunities


Meet ERAI at the following events



Oxebridge has partnered with ERAI and Aerospace Exports Inc. to present a remarkable 2-day "Braindump Course" on implementing the new AS9100 Revision D standard without driving yourself insane or ruining your company's QMS in the process.

DAY ONE:
  • The Secret Origin of ISO 9001 and AS9100 Rev. D – how it came about, and why ISO and the IAQG hope you won't take this course.
  • AS9100 Beatdown – a clause-by-clause analysis of the ISO 9001:2015 / AS9100 Rev. D standards, with practical implementation advice for each, and emphasis on the latest changes.
  • Implementing COTO & RBT in the Aerospace Environment – implementing the new "Context of the Organization" and "Risk-Based Thinking" requirements in the right sequence, without driving yourself mad or spending a fortune. Includes why FMEA is a joke, and how to use it anyway.
DAY TWO:
  • The Process Approach Made Freakin' Easy – how to implement the process approach so you get real and lasting value.
  • Counterfeit Part Control – ERAI reveals the latest methods to ensure your plant remains counterfeit-free. Includes information on counterfeit electronic components as well as materiel.
  • Export Expert – Aerospace Exports Inc. discusses what's coming related to aerospace FAR clauses, DFARs, ITAR and other regulations.
  • Six Sense Auditing – conducting internal AS9100 audits using all six — yes, six! — senses.
  • Dominate Your Registrar! – don't let your third-party registrar inject needless costs and inefficiency while threatening your AS9100 certificate; learn to take control during the audit.  This proved to be the most popular segment of our previous Braindumps!




SMTA and CALCE @ University of Maryland are pleased to announce the east coast venue for the Symposium on Counterfeit Parts and Materials. The program will be held June 27-28 at the College Park Marriott Hotel & Conference Center. The Workshops will be held June 29 at the University of Maryland. Don't miss this opportunity to learn from and share your insights with government, industry and academia who are addressing the counterfeit problem.

Changes in electronic supply chain had been fast and furious in the last decades and its impact on the practices of companies is still evolving. It is well understood that, the scourge of counterfeit electronic parts is related to the changes in supply chain but it is only one of the many impacts. This symposium will provide a forum to cover all aspects of changes in the electronic parts supply chain on how an organization performs part selection and management through whole life cycle of the parts.

Going beyond anecdotes and examples of counterfeit parts, this symposium focuses on the solutions that are available and are under development by all sectors of the industry.