## Facts

- Arch Trading Company, Inc. (Arch), a Virginia corporation, sold and installed laboratory equipment.
- In November 1988, Arch entered a roughly $1.9 million contract with Agricultural Supplies Company, described as a quasi-governmental entity owned by the Iraqi government, to ship and install laboratory equipment in Iraq, including a “virology fermenter.”
- Payment was supported by letters of credit issued by Iraqi and Kuwaiti banks to secure payment and performance.
- By August 1990, most equipment had been delivered to Iraq but awaited installation.
- On August 2, 1990, Iraq invaded Kuwait. That same day, President George H.W. Bush issued executive orders under the International Emergency Economic Powers Act (IEEPA) prohibiting U.S. persons from traveling to Iraq and from dealing with the Iraqi government and its agents; willful violations carried criminal penalties.
- After the executive orders took effect, Arch continued efforts to complete the contract. Two Arch executives attempted to enter Iraq to install the equipment but were unsuccessful.
- Arch then hired a Jordanian company to perform the installation, and an Arch executive accompanied the Jordanian installers into Iraq to complete the work.
- Arch later communicated with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) in connection with its efforts to recover funds tied to the transaction; the government alleged Arch provided false or misleading information about its Iraq-related conduct.
- Arch was indicted and convicted by a jury of conspiracy to commit an offense against the United States (18 U.S.C. § 371), violations of IEEPA-based executive orders, and making false statements to OFAC (18 U.S.C. § 1001). The district court imposed a $50,000 fine.
- Arch appealed to the United States Court of Appeals for the Fourth Circuit, challenging the indictment and the validity of the IEEPA-related prohibitions, as well as the false-statement and search-warrant rulings.

## Issues

1. Whether a conspiracy to violate executive orders issued under IEEPA may be charged under the “offense against the United States” clause of 18 U.S.C. § 371 (rather than only the “defraud” clause).
2. Whether IEEPA unconstitutionally delegates legislative power to the President by authorizing executive orders whose willful violation is criminally punishable.
3. Whether the Iraq-related executive orders (and related enforcement measures) were unconstitutionally vague as applied to Arch’s conduct.
4. Whether the prosecution violated the Ex Post Facto Clause because some implementing regulations postdated certain conduct.
5. Whether Arch’s statements to OFAC were “material” under 18 U.S.C. § 1001.
6. Whether the challenged search warrant was supported by probable cause under the Fourth Amendment.

## Decision

- The Fourth Circuit affirmed Arch’s convictions and sentence.
- The court held that when Congress has provided criminal penalties for willful violations of IEEPA-based executive orders, an agreement to violate those orders can qualify as a conspiracy “to commit any offense against the United States” under § 371.
- The court rejected Arch’s claim that IEEPA improperly delegates power to the President, concluding the statute supplies adequate limits and guidance and that Congress, not the President, set the criminal consequences for willful violations.
- The court rejected the vagueness challenge, concluding the executive orders gave sufficient notice that U.S. persons could not travel to Iraq or transact with the Iraqi government and its instrumentalities.
- The court rejected the ex post facto argument, reasoning that Arch’s charged conduct was prohibited by the executive orders themselves when committed, and later regulatory details did not retroactively create the offense.
- The court held the evidence supported materiality for the § 1001 count because the misstatements were capable of influencing OFAC’s administration of sanctions and related decisions.
- The court upheld the search warrant, finding probable cause supported the warrant and suppression was not warranted.

## Legal Principles

- A § 371 “offense” conspiracy may rest on planned violations of executive orders when Congress has made willful violations of those orders criminal through an authorizing statute such as IEEPA.
- IEEPA is a constitutional delegation of authority where it restricts the President’s action to declared national emergencies involving foreign threats and provides statutory direction and oversight, while Congress supplies the criminal penalties for willful violations.
- Executive orders restricting travel and transactions with a sanctioned foreign government are not void for vagueness when their prohibitions are stated in terms a reasonable person can understand.
- No ex post facto violation occurs when the defendant’s conduct was already prohibited by effective executive orders carrying criminal penalties, even if later regulations further specify administration or enforcement.
- Under 18 U.S.C. § 1001, a statement is material if it has a natural tendency to influence, or is capable of influencing, an agency’s decisionmaking.
- A search warrant satisfies the Fourth Amendment when, considering the affidavit as a whole, there is a fair probability that evidence of a crime will be found in the place to be searched.

## Conclusion

In *United States v. Arch Trading Co.*, the Fourth Circuit affirmed convictions arising from Arch’s post–August 2, 1990 efforts to complete an Iraqi-government-related installation despite IEEPA-based executive orders barring travel to Iraq and dealings with the Iraqi government, holding that such planned violations can support a § 371 “offense” conspiracy, that IEEPA’s delegation is constitutional, that the orders were sufficiently clear and not applied ex post facto, that misstatements to OFAC were material, and that the search warrant was supported by probable cause.


United States v. Arch Trading Co., 987 F.2d 1087 (1993)