Red Flags Rising

Mike and Brent welcome to the podcast the U.S. Attorney for the Eastern District of Pennsylvania, David Metcalf.
They discuss the U.S. Attorney’s background working as a government lawyer, a lawyer in private practice, and an in-house lawyer at a large company, and what perspectives that varied background has given him (01:42); the potential pitfalls of over-reliance on legal privilege, especially for company employees (09:00); the relevance of the Japanese classic film Rashomon (1950) to investigations and compliance, especially in terms of mooting various perspectives when making decisions where “knowledge” or “willfulness” is relevant (11:06); the important mission and objectives of the U.S. Department of Justice’s (DOJ’s) new National Fraud Enforcement Division (NFED) (13:07); how the U.S. Attorney sees trade and export or import enforcement unfolding nationally and in the Eastern District of Pennsylvania (19:46); the importance of frameworks and tools, such as Brent’s Fraud Four-Circle Framework to identifying and effectively responding to potential issues (23:53); the importance to the DOJ of voluntary disclosures and the incentives being offered to corporations today (26:56); and the broader work of the Eastern District of Pennsylvania, including how they develop and how people can report cases (33:07). They then conclude with the latest edition of Brent’s “Managing Up” segment (34:31).
More about U.S. Attorney David Metcalf: https://www.justice.gov/usao-edpa/us-attorney
The Eastern District of Pennsylvania’s White Collar Justice Program: https://www.justice.gov/usao-edpa/white-collar-justice-program
The DOJ’s National Fraud Enforcement Division: https://www.justice.gov/fraud
More about the 1950 classic Japanese film “Rashomon”: https://en.wikipedia.org/wiki/Rashomon#:~:text=%5B4%5D%20Starring%20Toshiro%20Mifune%2C%20Machiko,murdered%20in%20a%20forest.%20The
Contact Brent: brent@redflagsrising.com
More about Brent: www.redflagsrising.com/founder
Connect with Brent on LinkedIn: https://www.linkedin.com/in/brent-carlson-41ba692/
Contact Mike: michael.huneke@morganlewis.com
More about Mike: https://www.morganlewis.com/bios/michaelhuneke
Connect with Mike on LinkedIn: https://www.linkedin.com/in/mhuneke/

Mike and Brent revisit and synthesize in one episode everything trade compliance teams need to know about the “knowledge” standard under the US Export Administration Regulations (EAR).
After starting the episode with Brent’s own journey in website design and announcing free resource materials (now) available at www.redflagsrising.com (01:05), Mike and Brent specifically discuss the full definition of “knowledge” under the EAR including its three-tiered definition of actual knowledge, reason to know, and an awareness of a high probability (08:36); the “collective knowledge doctrine” under US law (14:14); parallels to US Foreign Corrupt Practices Act (FCPA) enforcement (15:06); misperceptions regarding the Bureau of Industry & Security’s KYC Guidance (16:25); other common misunderstandings (18:11); where KYC screening programs go wrong (24:23); the limited application of the “legally distinct” rule under the Entity List catch-all (25:33); why we accepted self-certifications when national security was served by global integration (26:36); the suspended BIS Affiliates Rule and its core problems (30:43); entity-shifting (34:10); risks associated with distributors and resellers (35:10); and the potential restrictions on remote access (40:49). They then conclude with this episode’s installment of Brent Carlson’s “Managing Up” segment (46:22).
Brent’s improved website and free resources: www.redflagsrising.com
“Knowledge”: https://www.ecfr.gov/current/title-15/part-772/section-772.1#p-772.1(Knowledge)
General Prohibition 10: https://www.ecfr.gov/current/title-15/part-736#p-736.2(b)(10)
Brent Carlson, When Loopholes Create Liability Pitfalls (Aug. 25, 2023): https://wp.nyu.edu/compliance_enforcement/2023/08/25/29814/
Contact Brent: brent@redflagsrising.com
More about Brent: www.redflagsrising.com/founder
Connect with Brent on LinkedIn: https://www.linkedin.com/in/brent-carlson-41ba692/
Contact Mike: michael.huneke@morganlewis.com
More about Mike: https://www.morganlewis.com/bios/michaelhuneke
Connect with Mike on LinkedIn: https://www.linkedin.com/in/mhuneke/

Mike and Brent dust-off a discussion recorded in May 2026, before the prior US-China trade summit, which is yet again timely with the next round of meetings coming up on September 24, 2026. They also discuss highlights from their May 2026 national security enforcement and compliance event in Washington, DC, at which Assistant Secretary for Enforcement David Peters spoke. Then they discuss how companies can best manage US export controls risks in the context of M&A pre- and post-acquisition due diligence.
Specifically, Mike and Brent set the stage for the M&A discussion (01:49); preview what Sun Tzu’s Art of War means for the upcoming negotiations (03:50); provide a recap of their May 5, 2026, national security compliance and enforcement event in Washington, DC and the key takeaways from the event in terms of M&A and export controls (05:36); discuss Brent’s recent NYU Program on Corporate Compliance & Enforcement (PCCE) article and how Brent’s Fraud Four-Circle Framework (SM) can help with pre-acquisition due diligence based on some anecdotal evidence from his own experience (10:32); some anecdotes from Mike’s experience (14:43); how export controls now pose “central compliance risks” in terms of boards of directors’ duty of oversight under Delaware law (20:35); and how these ideas can help sellers, not just buyers (23:36);
Mike and Brent then conclude with the latest installment of Brent’s “Managing Up” segment (24:41).
Contact Brent: brent@redflagsrising.com
More about Brent: www.redflagsrising.com/founder
Connect with Brent on LinkedIn: https://www.linkedin.com/in/brent-carlson-41ba692/
Brent’s article referenced in the episode: Brent Carlson, “A Light Shines Through the Darkness in Disputes, Investigations, and Trade Compliance: A Fresh Look at the Classic Fraud Triangle with the Fraud Four-Circle Framework℠,” NYU PCCE (Jan. 8, 2026), https://wp.nyu.edu/compliance_enforcement/2026/01/08/a-light-shines-through-the-darkness-in-disputes-investigations-and-trade-compliance-a-fresh-look-at-the-classic-fraud-triangle-with-the-fraud-diamond-framework-sm/
Contact Mike: michael.huneke@morganlewis.com
More about Mike: https://www.morganlewis.com/bios/michaelhuneke
Connect with Mike on LinkedIn: https://www.linkedin.com/in/mhuneke/

Mike and Brent invite Loyaan Egal on the podcast to discuss recent developments regarding the US Federal Communications Commission’s (FCC’s) “covered list” and its implications for trade compliance professionals.
Specifically, Mike, Brent, and Loyaan discuss Loyaan’s prior government service in both DOJ and the FCC (01:05); the FCC’s authorities and role (05:29); the US national security concerns driving the US administration’s increasing recourse to the covered list (11:13); what potentially impacted importers should be doing to get ahead of rumored additions to the covered list (15:28); how the conditional approval process works for exception requests (19:22); what importers should expect next in terms of rulemaking (23:55); recent reports that optical transceivers might be soon added to the covered list, and the potential implications for data centers and for companies in the optical transceiver supply chain (26:03); how in the president’s second term the FCC is filling a role previously envisioned for the Commerce Department’s Bureau of Industry & Security’s Office of Information and Communications Technology and Services (OICTS), and speculation as to why that is happening (28:13); and what companies should be thinking about in terms of getting ahead of potential FCC enforcement actions (29:54).
They then conclude with the latest installment of Brent’s “Managing Up” segment (36:31).
More about Loyaan: https://www.morganlewis.com/bios/loyaanegal
Connect with Loyaan on LinkedIn: https://www.linkedin.com/in/loyaan-egal/
Contact Loyaan: loyaan.egal@morganlewis.com
Reuters Article: Alexandra Alper, “Trump administration drafting ban on Chinese data center devices, sources say” (Aug. 4, 2026): https://www.reuters.com/world/trump-administration-drafting-ban-chinese-data-center-devices-sources-say-2026-08-04/
More about Brent: https://www.redflagsrising.com/founder
Connect with Brent on LinkedIn: https://www.linkedin.com/in/brent-carlson-41ba692/
Contact Brent: brent@redflagsrising.com
More about Mike: https://www.morganlewis.com/bios/michaelhuneke
Connect with Mike on LinkedIn: https://www.linkedin.com/in/mhuneke/
Contact Mike: michael.huneke@hugheshubbard.com

Mike and Brent provide their day-of reactions to July 14, 2026, testimony by U.S. Department of Commerce Under Secretary for Industry & Security, Jeffrey Kessler, before the Foreign Affairs Committee of the U.S. House of Representatives. Although much of the coverage of the hearing and the Under Secretary’s remarks has focused on the Members of Congress questioning why more rules and Entity List additions haven’t been forthcoming, Mike and Brent highlight the Under Secretary’s own emphasis on more enforcement—not more rulemaking or entity-listing—as being the key metric for U.S. national security.
Mike and Brent discuss their main takeaways from the Under Secretary’s testimony (02:00); the increase in monetary penalties imposed by the Bureau of Industry & Security (“BIS”) from 2024 to 2025 and during the first half of 2026 (07:28); what BIS is requesting for FY2027 and what they will do with it, including adding 370 new Office of Export Enforcement Agents (09:43); how the Under Secretary responded to criticism, including his remark that “I do not think that more regulation equates to more national security” (12:12); why misperceived loopholes will continue to lead to liability pitfalls (13:19); the return of U.S. congressional focus on battlefield recoveries (13:56); the Under Secretary’s invitation for Congress to judge his and BIS’s success based on enforcement (16:52); how and why the “high probability” standard is an opportunity for compliance teams in these circumstances to do more with less or on tight budgets (19:40); how taking a fresh look at the meaning of “red flags,” “possibility,” and “probability” can all help take advantage of such opportunities (28:03); and the confirmed death of the AI Diffusion Rule (32:42).
Mike and Brent then conclude with this episode’s “Managing Up” segment (36:24).
Under Secretary Kessler’s prepared remarks, hearing video link, and other materials: https://foreignaffairs.house.gov/committee-activity/hearings/fy27-bis-budget-the-ai-arms-race-and-the-icts-office
Eleanor Olcott, “Nvidia’s Banned AI Chips Double in Price on China’s Black Market,” Financial Times (Jun. 23, 2026) (subscription required): https://www.ft.com/content/57fcd3ce-464f-4dc2-8ea2-5712d4972c69?syn-25a6b1a6=1
Red Flags Rising Episode 22, “All-In on America's AI Action Plan”: https://rss.com/podcasts/red-flags-rising/2140126
Red Flags Rising Episode 39, “Pull, Push, Tap, Aim, Fire - What Recent Settlements and Indictments Teach about Clearing Compliance Jams”: https://rss.com/podcasts/red-flags-rising/2778961
UAE LinkedIn post: https://www.linkedin.com/posts/mhuneke_enhanced-uae-treatment-under-us-export-controls-activity-7481377138542006274-TOBu?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAE_zFwB6ELW6Yitzba7Kt-wYyoqEFq6I6s