3D Systems, the world’s leading 3D printing company, has agreed to pay the US $27 million for export violations in connection with NASA and DOD contracts between 2012 and 2019. The fine is divided among several agencies in the United States including the U.S. Department of State, and U.S. Department of Commerce, with which the company has agreed to settle following a court order.
According to the Commerce Department, 3D Systems, based in Rock Hill, South Carolina, which provides 3D printing and other services to customers in the United States and abroad, emailed design documents, blueprints, and technical specifications to Quickparts.com, Inc., its then-office subsidiary’s in China for price quotes.
3D Systems to pay Fine
On February 27, 2023, a civil settlement was reached with the Department of Justice, with the company agreeing to pay the fine in restitution to the federal government within the next 30 days.
The fine includes:
- The United States Attorney for the Northern District of Texas, Leigha Simonton, announced a US $4.54 million settlement to resolve allegations that it violated the False Claims Act by improperly transmitting export-controlled technical data to China in violation of US export control laws in connection with certain NASA and DOD contracts.
- US $20 million for administrative settlements with the US Department of State in accordance with alleged export violations.
- In addition, a US $2.77 million administrative settlement with the United States Department of Commerce.
Brief about the Export Violations
The Commerce Department imposed a US $2,777,750 administrative penalty for 19 separate Export Administration Regulations (EAR) violations. 3D Systems is also accused of violating the EAR’s recordkeeping requirements.
3D Systems is said to have frequently emailed design documents, blueprints, and technical specifications to its then-subsidiary Quickparts.com, which had an office in Guangzhou City, China, between 2012 and 2019. These exports were allegedly sent on several occasions to generate price quotes and included design drawings for military electronics. Other files pertaining to the repair, operation, production, and development of US spacecraft are said to have been sent as well. Controlled design documents were also allegedly sent to Germany, where 3D Systems kept a mirrored server to store employee emails.
“Sending export-controlled blueprints for aerospace and military electronics to China is detrimental to U.S. national security.”
– Matthew Axelrod, Assistant Secretary for Export Enforcement
In addition to the Commerce Department, the company reached agreements with the Departments of Justice and State.
During a recent earnings call with investors, 3D Systems CEO Jeffrey Graves stated that “the company is pleased to have reached a settlement” and that the company is “committed to continuing to enhance its export controls programme.” Graves later stated on the call that “we’ve made tremendous progress in our compliance infrastructure” since 2019 and that they will strive to “make it even better” in the future.
The settlement requires 3D Systems to pay US $2.27 million within 30 days of the agreement’s execution. If the company does not meet the deadline and pay at least that amount to the other agencies, an additional US $2.27 million must be paid.
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