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Wednesday, July 24, 2024 | Back issues
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Law Firm Fights Arms-Broker Requirements

WASHINGTON (CN) - State Department backpedalling on the need to register as an arms broker tramples the Fifth Amendment, a D.C. law firm says in Federal Court.

Specializing in international trade law, Matthew A. Goldstein PLLC says its clients include exporters of military, homeland security, and commercial items and technologies. Many of the firm's clients' exports are subject to the International Traffic in Arms Regulations, administered under the Arms Export Control Act of 1976 - the two pieces of legislation at the heart of the lawsuit Goldstein filed against the State Department on Tuesday.

Until August 2013, the ITAR did not apply to legal services, Goldstein says. Amendments to the regulations in August 2013 raised questions as to whether firms like Goldstein may be affected, but subsequent correspondence between Goldstein and a Department of State compliance chief reassured the law firm that it would not face additional requirements.

That allegedly changed last week when Goldstein received a Feb. 24, 2015, letter in which the Department of State backpedals from its prior assurances and says Goldstein may need to submit a second Advisory Opinion Request to the State Department if it had further questions.

If the Department of State imposes ITAR restrictions on legal services, Goldstein and other law firms will be forced to disclose confidential client information and provide law-enforcement agents with open access to their records without any legal process, according to the complaint.

Goldstein says the ITAR impositions blatantly contradict D.C.'s Rules of Professional Conduct, highlighting an opinion by the D.C. Bar Ethics Committee that allegedly supports this view.

Lawyers are ethically bound to protect their clients' confidentiality, and the ITAR undermines the independence of the bar from the government, Goldstein says.

The State Department's ambiguity in its outlined regulations regarding legal services puts law firms at risk of continuing with their practices and later being found in violation of the ITAR, according to the complaint.

Civil violations of the ITAR are subject to fines of $500,000 each, and criminal violations are subject to fines of up to $1 million and 20 years in prison per violation. If Goldstein were to stop all its services that possibly relate to the ITAR, however, it would no longer have a practice, according to the complaint.

Goldstein seeks declaratory and injunctive relief with regard to application of the ITAR amendments to its practice. Specifically because Goldstein received official correspondence in response to its initial Advisory Opinion Request that cleared Goldstein of ITAR restrictions, the firm says it would be a violation of its Fifth Amendment due-process rights if the government were now to punish Goldstein under the ITAR.

Goldstein's lawsuit names the Department of State, Secretary of State John Kerry, Directorate of Defense Trade Controls, and Kenneth Handleman and Daniel Cook, two officials within the Defense Trade Controls division of the State Department, as defendants.

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