Old Iranian Company Poses New Problems For Houston Owner

Bahram Mechanic founded Faratel, an Iranian electronics company, in 1972 when the U.S. and Iran were allies and long before the imposition of U.S. government trade sanctions. He immigrated to the U.S. in 1985, starting a sister company to Faratel — Smart Power Systems — in Houston.

Earlier this year, the U.S. government indicted five people, including Mechanic, 69, his nephew, 46-year-old Tooraj Faridi, of Houston, and Khosrow Afghahi, 71, of Los Angeles, charging that they were members of an Iranian procurement network that provided goods to Iran’s nuclear and defense agencies. Federal agents searched Mechanic’s home and froze his assets here and abroad.

Faratel and its sister company, Smart Power, make power supplies, battery backups and surge protectors, primarily for computers. The indictment charges Mechanic and others with the import of more than $24 million in electronics parts to Faratel in Iran during the past five years.

In September, Mechanic asked a Texas federal court to dismiss charges that he violated the International Emergency Economic Powers Act (IEEPA), arguing that the IEEPA does not prevent him from operating Faratel because the company was founded before the law was passed. Because he is an American citizen, Mechanic said that he belongs to a small group of business owners with Iranian assets not covered by the sanctions.

Mechanic’s motion notes, “Congress delegated authority to the executive under the IEEPA with the intent to address extraordinary threats sourcing from abroad, not to punish or interfere with the liberties of Americans at home.”

The government’s 24-count indictment includes charges of conspiracy, sanctions violations, money laundering and tax evasion. Mechanic’s motion asked for dismissal of 23 of those counts but excluded the tax count.

In addition, Mechanic has filed suit against the U.S. government, saying that because of his arrest, the government “has taken and deprived him of his property without paying him just compensation in violation of the Takings Clause of the Fifth Amendment.”

The Cogdell Law Firm is a full service criminal litigation and appellate law firm. We provide client-focused representation at all stages of the process, whether our clients are seeking to avoid charges, have been charged, or are seeking reversal of a conviction on appeal. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.