Key Takeaways

• Iranian national Bahram Ostovari, a U.S. permanent resident since 2020, is charged with orchestrating a scheme to export U.S. electronics and electrical components to Iran in violation of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR).
• Ostovari used two front companies, MH-SYS (founded in 2003) and Match Systech (founded in 2019), both founded in the United Arab Emirates (UAE), to conceal the identity of Iranian end-users and acquire export-controlled electronics and other items from U.S. suppliers.
• The scheme supported the development of Iran’s railway signaling and metro system, including contracts with the Islamic Republic of Iran Railways, the Tehran Urban and Suburban Railway Company, and the Esfahan Urban Railway.
• From at least 2018 to 2024, Ostovari oversaw the procurement and transshipment of at least nine categories of electronics and electrical components, including high-performance microcontrollers, RF amplifiers, train driver panels, CPU modules, and fanless touch-screen panel PCs.
• Ostovari personally instructed his employees to mislead the U.S. Bureau of Industry and Security (BIS) during a 2020 inquiry, directing them to provide false justifications and conceal the fact that the goods had been shipped to Iran.

Overview

Bahram Ostovari, an Iranian national, became a U.S. permanent resident in May of 2020, a status that he allegedly leveraged to violate U.S. sanctions by shipping sophisticated electronics and electrical components to Iran.[1]  Ostovari, a resident of Santa Monica, California, was arrested upon arriving at the Los Angeles International Airport on July 10, 2025. 

Ostovari is the CEO of an unnamed railway signaling and communications engineering firm based in Tehran, Iran (referred to as “Company A”).  Founded by Ostovari in 1986, Company A had one of the “largest mass transit project management portfolios in Iran” and specifically was “responsible for developing metro and light rail systems [between] Tehran, Esfahan, and other Iranian cities.”[2]  

Ostovari held significant roles in two front companies in the UAE, created to “procure U.S.-origin electronics and electrical components and other U.S.-origin items, on behalf of Company A in Iran.”[3]  Ostovari founded the first of these companies, MH-SYS FZCO (hereinafter referred to as MH-SYS), in 2003 and became both the managing director and controlling shareholder at the time.  MH-SYS was founded in Jebel Ali, a UAE free economic zone located on the outskirts of Dubai.  Ostovari founded the second company, Match Systech, based in Dubai, around April 2019. 

Ultimately, Ostovari directed MH-SYS and Match Systech employees to export goods and technology from the United States to Iran without a license from the Office of Foreign Assets Control or BIS.  In doing so, Ostovari and his conspirators intentionally concealed the identity of the relevant end users by providing false and misleading information to the U.S. government. 

Legal Background of Charges 

Ostovari is charged with violating the International Emergency Economic Powers Act (IEEPA), which grants the U.S. President the “authority to deal with unusual and extraordinary threats to national security, foreign policy, or economy of the United States,”[4] and Iranian Transactions and Sanctions Regulations (ITSR), which prohibits the “exportation, reexportation, sale, or supply…of any goods, technology, or services to Iran or the Government of Iran.”[5]

More specifically, Ostovari is being charged with four counts: acquiring export-controlled electronics and electrical components on behalf of Iranian end users; exporting said goods from the United States to Iran, including through the United Arab Emirates; attempting to evade the prohibitions and licensing requirements outlined in the IEEPA and ITSR; and profiting from these illegal activities. 

The Scheme

Company A, under Ostovari’s leadership, secured contracts with the Iranian government to supply signalling and communications systems for railway projects, including the Islamic Republic of Iran Railways, the Tehran Urban and Suburban Railway Company, and the Esfahan Urban Railway. 

Ostovari directed his three co-conspirators, all employees of either MH-SYS or Match Systech, to acquire U.S.-based electronics and electrical components, which they transhipped to Iran through the United Arab Emirates.  To do so successfully, Ostovari and his co-conspirators intentionally provided “false and misleading information about the ultimate end users” to the U.S.-based companies from which they were purchasing the equipment. 

Between approximately May 25, 2018, and March 3, 2024, Ostovari directed his co-conspirators to illicitly procure and transship nine different technologies on behalf of Company A, thereby violating U.S. sanctions on the Iranian government and its affiliates.  The technologies transshipped to Iran in violation of sanctions include development kits of high-performance microcontrollers from Texas Instruments and radio frequency amplifiers from AMETEK PDS, as well as train driver panels, CPU modules, locomotive driver panels, and railway fanless touch screen panel PCs from Axiomtek. 

Additionally, Ostovari also coordinated the transshipment of three items that are U.S. export-controlled technologies that, while not requiring a license for most destinations, would have required a BIS license for export to Iran: 57 Intel Atom E3845 processors, 25 Intel Atom x7-E3950 processors, and 75 DC/DC regulated RSD-60H-24 power supply modules.  The Intel Atom processors were found in railway fanless touchscreen panel PCs and computer modules developed by an unnamed Taiwanese industrial computer manufacturer, which shipped the electronics from Taiwan to the UAE.  

Ostovari’s co-conspirator at Match Systech ordered the power supply modules from a U.S., Massachusetts-based electronics manufacturer in March of 2024.  Shortly after, the manufacturer shipped the power supply modules from Lewisville, Texas, to Match Systech in the UAE.  Though the invoice from the Massachusetts-based manufacturer noted that the “items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified,”[6] Ostovari coordinated the transshipment of the power supply modules, falsely labeled as “electrical spare parts,”[7] from Match Systech in Jebel Ali, UAE, to Company A in Bandar Abbas, Iran in late November of 2024.  Figure 1 illustrates this procurement network.

Figure 1.  Visualization of Company A’s procurement network. 

The most prominent illustration of Ostovari’s attempts to evade U.S. sanctions and export controls targeting Iran occurred in May 2020, when a BIS officer inquired with a co-conspirator, an MH-SYS employee, about the end-user of the purchased microcontroller development kits and RF amplifier modules.  The employee emailed Ostovari on May 4, 2020, asking for guidance on how to respond to the BIS officer’s inquiry.  On May 5, 2020, Ostovari replied, advising the employee not to provide any substantive information, stating, “You should not give him any information if he asks anything and just emphasize that you will reply [to] the inquiry by email,” and that “[MH-SYS was] not active since 2019 because of [the] economic crisis.”[8]  

Later on May 7, 2020, Ostovari once again emailed the employee, instructing them to refer to the microcontroller development kits  and RF amplifiers as “samples for evaluation” and “not sold,” despite the fact that the goods had been exported to Iran in January of 2019.[9]  Furthermore, should BIS wish to inspect the items, Ostovari instructed the employee to inform BIS that MH-SYS does not retain samples beyond six months due to limited storage space.  The co-conspirator emailed this information to the BIS officer, blind carbon-copying Ostovari on the email. 

If convicted, Ostovari will face a maximum penalty of 20 years in prison for each count.

Lessons & Recommendations

Many of the involved U.S. companies required end-user statements, and the shipments included written warnings stating that the exports were authorized only for the specified end-user.  To this end, Ostovari listed MH-SYS and Match Systech as the intended end-users.  However, preventing Ostovari from transshipping the electronics beyond the listed end-user proved difficult.  

This may have been avoided had both the electronics suppliers and the transshipment country, the UAE, conducted more proactive due diligence on the stated end-users and performed detailed inspections of shipments destined for Iran.  Such due diligence and inspections should be conducted with particular care when evaluating shipments that list Western-origin electronics in their customs declarations. 

This case also raises questions of how Ostovari obtained U.S. permanent resident status.  His background as a long-time CEO of a major Iranian company in need of Western electronics and his relation to companies in the UAE should have been disqualifying. A reasonable assumption is that Ostovari wanted a permanent residence status to better facilitate violations of U.S. export controls in order to enable the functioning of his Iranian company. Applications by Iranian nationals need to be better scrutinized as to links to Iranian companies and supply chains.

Overall, this case study serves as a sobering reminder of the challenges that prevent Western electronics, many of which are controlled only by destination, from reaching Iran.  Under this scheme, the complaint indicates that the primary end-user of these electronics and electrical components was the Iranian railway entity.  With that said, given the success of this operation, Iranian military entities could have easily taken advantage of this or a similar scheme, outfitting programs like the Shahed drone program, which extensively rely on Western electronics.