U.S. Relations With the People's Republic of China (2008)

Department of Justice

FOR IMMEDIATE RELEASE
Tuesday, October 28, 2008
WWW.USDOJ.GOV

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(202) 514-2007
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Fact Sheet: Major U.S. Export Enforcement Prosecutions During the Past Two Years

Below is a snapshot of some of the major export and embargo-related criminal prosecutions handled by the Justice Department over the past two years, beginning in October 2006. These cases resulted from investigations by the Department of Homeland Security's U.S. Immigration and Customs Enforcement (ICE), the Federal Bureau of Investigation (FBI), the Department of Commerce's Bureau of Industry and Security (BIS), the Pentagon's Defense Criminal Investigative Service (DCIS), and other law enforcement agencies. This list of cases is not exhaustive and only represents select cases.

- Carbon-Fiber Material with Rocket & Spacecraft Applications to China – On Oct. 28, 2008, a grand jury in the District of Minnesota returned an indictment charging Jian Wei Deng, Kok Tong Lim, and Ping Cheng with conspiring to illegally export to the People's Republic of China (PRC) controlled carbon-fiber material with applications in aircraft, rockets, spacecraft, and uranium enrichment process. According to the indictment, the intended destination for some of the materials was the China Academy of Space Technology, which oversees research institutes working on spacecraft systems for the PRC government. Jian Wei Ding and Kok Tong Lim are residents of Singapore and affiliated with a Singaporean import/export company known as FirmSpace, Pte Ltd. Ping Cheng is a resident of New York and the sole shareholder of Prime Technology Corporation. This investigation was conducted by BIS and ICE.

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- Military Accelerometers to China – On Sept. 26, 2008, Qing Li was sentenced in the Southern District of California to 12 months and one day in custody, followed by three years of supervised released, and ordered to pay $7,500 for conspiracy to smuggle military-grade accelerometers from the United States to the People's Republic of China (PRC). Li pleaded guilty on June 9, 2008 to violating Title 18, USC Section 554. She was indicted for the offense on Oct. 18, 2007. According to court papers, Li conspired with an individual in China to locate and procure as many as 30 Endevco 7270A-200K accelerometers for what her co-conspirator described as a "special" scientific agency in China. This accelerometer has military applications in "smart" bombs and missile development and in calibrating the g-forces of nuclear and chemical explosions. The investigation was conducted by ICE and the DCIS.

- Space Launch Technical Data and Services to China – On Sept. 24, 2008, Shu Quan-Sheng, a native of China, naturalized U.S. citizen and PhD physicist, was arrested in the Eastern District of Virginia on charges of illegally exporting space launch technical data and services to the People's Republic of China (PRC) and offering bribes to Chinese government officials. Shu was the President, Secretary and Treasurer of AMAC International, a high-tech company located in Newport News, Va., and with an office in Beijing, China. According to the complaint, beginning in or around January 2003, Shu provided technical assistance and foreign technology acquisition expertise to several PRC government entities involved in the design, development, engineering and manufacture of a space launch facility in the southern island province of Hainan, PRC. This facility will house liquid-propelled heavy payload launch vehicles designed to send space stations and satellites into orbit, as well as provide support for manned space flight and future lunar missions. Among those PRC government entities involved in the Hainan space launch facility the People's Liberation Army's General Armaments Department and the 101st Research Institute (101 Institute). Shu is accused of illegally exporting technical data related to the design and manufacture of a "Standard 100 M3 Liquid Hydrogen (LH) 2 Tank," and illegally providing assistance to foreign persons in the design, development, assembly, testing or modification of the "Standard 100 M3 LH2 Tank" and related components of fueling systems for a foreign launch facility. The complaint also alleges that Shu offered bribes to government officials with the PRC's 101 Institute to induce the award of a hydrogen liquefier project to a French company he represented. This investigation was conducted by the FBI, ICE, BIS and DCIS.

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- Military Technical Data on Unmanned Aerial Vehicles to China – On Sept. 3, 2008, J. Reece Roth, a former Professor Emeritus at the University of Tennessee, was convicted in the Eastern District of Tennessee of 15 counts of violating the Arms Export Control Act, one count of conspiracy, and one count of wire fraud. Roth had illegally exported military technical information relating to plasma technology designed to be deployed on the wings of Unmanned Aerial Vehicles (UAVs) or "drones" operating as a weapons or surveillance systems. The illegal exports involved technical data and information related to a U.S. Air Force research and development contract that Roth provided to foreign nationals from China and Iran. In addition, Roth carried multiple documents containing controlled military data with him on a trip to China and caused other controlled military data to be e-mailed to an individual in China. On Aug. 20, 2008, Atmospheric Glow Technologies, Inc (AGT), a privately-held plasma technology company in Tennessee, also pleaded guilty to charges of illegally exporting U.S. military data about drones to a citizen of China in violation of the Arms Export Control Act. Roth and AGT were first charged on May 20, 2008 in an 18-count indictment. In a related case, on April 15, 2008, Daniel Max Sherman, a physicist who formerly worked at AGT, pleaded guilty to an information charging him with conspiracy to violate the Arms Export Control Act in connection with this investigation. The investigation was conducted by the FBI, ICE, U.S. Air Force Office of Special Investigations, DCIS and BIS.

- Military Aircraft Components to China and Iran -- On Aug. 28, 2008, Desmond Dinesh Frank, a citizen and resident of Malaysia, was sentenced to 23 months in prison after pleading guilty on May 16, 2008, to several felonies in the District of Massachusetts in connection with a plot to illegally export military items to China and Iran. A six-count indictment returned on Nov. 15, 2007 charged Frank, the operator of Asian Sky Support, Sdn., Bhd., in Malaysia, with conspiring to illegally export items to Iran, conspiring to illegally export C-130 military aircraft training equipment to China, illegally exporting defense articles, smuggling, and two counts of money laundering. Frank was arrested in Hawaii on Oct. 8, 2007 by ICE agents. Frank conspired with others to illegally export and cause the re-export of goods, technology and services to Iran without first obtaining the required authorization from the Treasury Department. He also conspired with others to illegally export ten indicators, servo driven tachometers -- which are military training components used in C-130 military flight simulators -- from the United States to Malaysia and ultimately, to Hong Kong, China, without the required license from the State Department. This investigation was conducted by ICE, BIS, and DCIS.

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- Thermal Imaging Cameras to China -- On Aug. 25, 2008, in the Central District of California, Evan Zhang (a/k/a You Wen Zhang), pleaded guilty to one count of exporting national security controlled items without obtaining the necessary license in violation of the International Emergency Economic Powers Act and the Export Administration Regulations. Zhang served as the President and Chief Executive Officer of Zybron Optical Electronics, Inc., an Ohio company involved in the development of high tech commodities, including infrared thermal imaging devices. In February 2007, Zhang illegally exported infrared thermal imaging cameras to Zhi Yong Guo, the managing director of Beijing Shenzhoukaiye System Engineering Technology Research Center in Beijing, China. Zhang is the second person to plead guilty in this case, which involves two additional defendants. On July 16, 2008, Tah Wei Chao, of Beijing, China, pleaded guilty to one count of conspiracy and two counts of illegally exporting or attempting to restricted items. Zhi Yong Guo, a Chinese national, is scheduled to stand trial in October 2008, on one count of conspiracy and one count of illegally exporting or attempting to restricted items. Both Chao and Guo were arrested at the Los Angeles International Airport in April 2008 after authorities recovered 10 cameras hidden in their suitcases. They were charged on April 7, 2008. The investigation was conducted by BIS, ICE, FBI, and other federal agencies.

- Military Laser Aiming Devices & Fighter Pilot Cueing Systems to Taiwan – On Aug. 18, 2008, Yen Ching Peng was arraigned in Southern District of New York on Arms Export Control Act violations, as well as money laundering and smuggling violations after being extradited from Hong Kong. Among other things, Peng allegedly attempted to illegally export to Taiwan infrared laser aiming devices, thermal weapons sights, and a Joint Helmet Mounted Cueing System. On occasion, Peng requested that military items be delivered to his associate, Peter Liu, in New York for delivery in Taiwan. On Dec. 11, 2007, Peng was arrested in Hong Kong, while Liu was arrested in New York. Liu later pleaded guilty and was sentenced to 30 months in prison on Aug. 7, 2008. The investigation was conducted by ICE and DCIS.

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- U.S. Military Source Code and Trade Secrets to China – On June 18, 2008, Xiaodong Sheldon Meng was sentenced in the Northern District of California to 24 months in prison, three-years of supervised release, and a $10,000 fine for committing economic espionage and violating the Arms Export Control Act. Meng pleaded guilty in August 2007 to violating the Economic Espionage Act by misappropriating a trade secret used to simulate motion for military training and other purposes, with the intent to benefit China's Navy Research Center in Beijing. He also pleaded guilty to violating the Arms Export Control Act for illegally exporting military source code involving a program used for training military fighter pilots. Meng was the first defendant in the country to be convicted of exporting military source code pursuant to the Arms Export Control Act. He was also the first defendant to be sentenced under the Economic Espionage Act. Meng was charged in a superseding indictment on Dec. 13, 2006. The investigation was conducted by FBI and ICE.

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- Controlled Amplifiers to China – On June 6, 2008, WaveLab, Inc. of Reston, Virginia, was sentenced in the Eastern District of Virginia to one year of supervised probation and a $15,000 fine, together with $85,000 in forfeiture previously ordered, for the unlawful export of hundreds of controlled power amplifiers to China. The exported items, which have potential military applications, are controlled and listed on the Commerce Control List for national security reasons. Wave Lab purchased these items from a U.S. company and assured the company that the products would not be exported from the United States, but would be sold domestically. WaveLab pleaded guilty on March 7, 2008 to a criminal information filed the same day. The investigation was conducted by BIS and ICE.

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- Amplifiers / Missile Target Acquisition Technology to China – On June 5, 2008, a grand jury in the Southern District of Florida returned an indictment charging Joseph Piquet, AlphaTronX, Inc, Thompson Tam, and Ontime Electronics Technology Limited with violations of the Arms Export Control Act and the International Emergency Economic Powers Act in connection with a conspiracy to illegally export to China military amplifiers used in early warning radar and missile target acquisition systems. The defendants were also charged will illegally exporting controlled dual-use amplifiers that have military applications. Piquet is the owner and President of AlphaTronX, a company in Port St. Lucie, Florida, that produces electronic components. Tam is a director of Ontime Electronics, an electronics company in China. This investigation was conducted by BIS and ICE.

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- Trade Secrets to China – On April 1, 2008, Hanjuan Jin, a naturalized U.S. citizen born in China, was indicted in the Northern District of Illinois for allegedly stealing business trade secrets from her employer, a telecommunications company in Chicago, and attempting to take these technical documents with her to China for a new employer there. Jin allegedly possessed more than 1,000 electronic and paper proprietary documents when she attempted to travel one-way to China in Feb. 2007. The U.S. company had spent hundreds of millions of dollars on research and development for the proprietary data that Jin allegedly possessed without authorization. Jin was charged with three counts of theft of trade secrets. The investigation was conducted by the FBI, with assistance from U.S Customs and Border Protection.

- U.S. Naval Warship Data to China – On March 24, 2008, Chi Mak, a former engineer with a U.S. Navy contractor, was sentenced in the Central District of California to 293 months (more than 24 years) in prison for orchestrating a conspiracy to obtain U.S. naval warship technology and to illegally export this material to China. Mak was found guilty at trial in May 2007 of conspiracy, two counts of attempting to violate export control laws, acting as an unregistered agent of the Chinese government, and making false statements. The investigation found that Mak had been given lists from co-conspirators in China that requested U.S. Naval research related to nuclear submarines and other information. Mak gathered technical data about the Navy's current and future warship technology and conspired to illegally export this data to China. Mak's four co-defendants (and family members) also pleaded guilty in connection with the case. On April 21, 2008, Chi Mak's brother, Tai Mak, was sentenced to 10 years imprisonment pursuant to a June 4, 2007, plea agreement in which he pleaded guilty to one count of conspiracy to export defense articles. On Oct. 2, 2008, Chi Mak's wife, Rebecca Chiu, was sentenced to 3 years in prison for her role in the plot. The investigation was conducted by FBI, NCIS, and ICE.

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- Theft of Trade Secrets on U.S. Space Shuttle for China – On Feb. 11, 2008, Dongfan "Greg" Chung, a former Boeing engineer, was arrested in Southern California after being indicted on charges of economic espionage and acting as an unregistered foreign agent of the People's Republic of China (PRC), for whom he allegedly stole Boeing trade secrets related to several aerospace and military programs, including the Space Shuttle, the Delta IV rocket program and the Air Force's C-17 aircraft. Chung, who was employed by Rockwell International from 1973 until its defense and space unit was acquired by Boeing in 1996, was named in an indictment in the Central District of California accusing him of eight counts of economic espionage, one count of conspiracy to commit economic espionage, one count of acting as an unregistered foreign agent, one count of obstruction of justice, and three counts of making false statements to the FBI. According to the indictment, individuals in the Chinese aviation industry began sending Chung "tasking" letters as early as 1979. Over the years, the letters directed Chung to collect specific technological information, including data related to the Space Shuttle. Chung responded in one letter indicating a desire to contribute to the "motherland." In various letters to his handlers in the PRC, Chung referenced engineering manuals he had collected and sent to the PRC, including 24 manuals relating to the B-1 Bomber that Rockwell had prohibited from disclosure outside of the company. Between 1985 and 2003, Chung made multiple trips to the PRC to deliver lectures on technology involving the Space Shuttle and other programs, and during those trips he met with agents of the PRC. The investigation was conducted by the FBI and NASA.

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- Military & Commercial Aircraft Components to Iran – On Feb. 1, 2008, Laura Wang-Woodford, the director of a Singapore-based aviation company, was arraigned in the Eastern District of New York in connection with charges that she illegally exported controlled U.S. commercial and military aircraft components to Iran. She pleaded not guilty and was ordered detained. Wang-Woodford is a U.S. citizen who served as the director of Monarch Aviation Pte, Ltd., a company in Singapore that has imported and exported aircraft components for more than 16 years. She and her husband, Brian D. Woodford, were charged in a 20-count indictment with Arms Export Control Act and International Emergency Economic Powers Act violations in the Eastern District of New York. According to the indictment, Wang-Woodford exported controlled U.S. aircraft parts from the United States to her company in Singapore and then re-exported these commodities to a company in Tehran, Iran without obtaining the required U.S. Government licenses. A superseding indictment against the couple was returned on May 27, 2008. At the time of her Dec. 23, 2007 arrest in San Francisco, Wang-Woodford was carrying catalogues from the China National Precision Machinery Import and Export Company (CPMIEC), which contained advertisements for surface-to-air missiles and rocket launchers. CPMIEC has been sanctioned by the Treasury Department as a specially designated Weapons of Mass Destruction proliferator. The investigation was conducted by BIS and ICE.

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- Military Amplifiers to China – On Dec. 19, 2007, Ding Zhengxing, Su Yang and Peter Zhu were indicted in the Western District of Texas for Arms Export Control Act violations in connection with an alleged plot to purchase and illegally export to China amplifiers that are controlled for military purposes. The amplifiers are used in digital radios and wireless area networks. Zhengxing and Yang were arrested in January 2008 after they traveled to Saipan to take possession of the amplifiers. Peter Zhu, of Shanghai Meuro Electronics Company Ltd., in China, remains at large. The case was investigated by ICE.

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- Military Night Vision Technology to China – On Dec. 3, 2007, Philip Cheng was sentenced in the Northern District of California to two years in prison and ordered to pay a $50,000 fine for his role in brokering the illegal export of a night vision camera and its accompanying technology to China in violation of federal laws and regulations. Mr. Cheng pleaded guilty on Oct. 31, 2006, to brokering the illegal export of Panther-series infrared camera, a device which makes use of "night vision" technology. He was indicted on June. 3, 2004. The technology used in the device was controlled for national security reasons by the United States Department of State. The case was the result of a joint investigation by ICE, the FBI, the Department of Commerce, and the IRS.

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- F-14 Fighter Jet Components and Other Military Items to Iran – On Nov. 20, 2007, a grand jury in the Southern District of New York returned an indictment charging Yousef Boushvash with violating the Arms Export Control Act, smuggling, conspiracy to commit money laundering and other violations in connection with his alleged acquisition of F-14 military fighter jet components and other military parts from the United States for export to Iran. The grand jury later returned two superseding indictments against Boushvash adding new offenses. According to the charges, Boushvash operated a company in Dubai, United Arab Emirates, called Glasgow International LLC which served as a hub for his illegal arms deals. Boushvash and his co-conspirators allegedly contacted numerous suppliers in the U.S. via e-mail and had them illegally export military components to the UAE, Thailand, and other locations, for ultimate transshipment to Iran. Boushvash had been arrested by Hong Kong authorities on Oct. 29, 2007 in Hong Kong pursuant to a provisional warrant issued by the Southern District of New York. The Justice Department commenced extradition proceedings to bring Boushvash to New York. On April 11, 2008, days before the extradition hearing was scheduled to begin in Hong Kong, authorities in Hong Kong terminated the proceeding and released Boushvash from custody. Boushvash currently is a fugitive from justice and has been placed on Interpol's list of wanted suspects. Three of Boushvash's U.S. suppliers have been convicted in related cases. Lawrence Davis and Gwendolyn Douglas and George Frank Myles Jr. have all pleaded guilty in the Southern District of New York. This investigation was conducted by ICE and DCIS.

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- Military Night Vision Technology to China – On Oct. 31, 2007, Bing Xu, of Nanjing, China, was charged by criminal complaint in the District of New Jersey with attempting to illegally export military-grade night vision technology from the U.S. to China. According to court documents, Xu arrived in New York on October 26 from China a day after his Chinese employer wire transferred $14,080 to federal agents as payment for the purchase of the restricted equipment. The investigation was conducted by ICE and the DCIS.

- U.S. Stealth Missile Data & Military Secrets to China – On Oct. 26, 2007, Noshir Gowadia was charged in a second superseding indictment in the District of Hawaii with an additional count of transmitting classified national defense information to China and two additional counts of filing false tax returns. Gowadia was charged in a superseding indictment in November 2006 with performing substantial defense related services for China by agreeing to design, and later designing, a cruise missile exhaust system nozzle that renders the missile less susceptible to detection and interception. Among other violations, Gowadia was charged in the first superseding indictment with willfully communicating classified national defense information to China with the intent that it be used to the advantage of China or to the injury of the U.S, as well as unlawfully possessing classified information, and laundering funds paid to him by the Chinese government for his illegal defense work. The original indictment against Gowadia was returned on Nov. 8, 2005. The investigation was conducted by the FBI, Air Force Office of Special Investigations, IRS, CBP, and ICE.

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- Nickel Powder to Taiwan – On Oct. 11, 2007, Theresa Chang was sentenced to three years probation and to pay a $5,000 criminal fine. One June 21, 2007, Chang pleaded guilty to one count of making false statements related to the export of nickel powder controlled for nuclear proliferation reasons to Taiwan without an export license. The investigation was conducted by BIS.

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- Economic Espionage and Theft of Trade Secrets – On Sept. 26, 2007, Lan Lee and Yuefei Ge were charged in a superseding indictment the Northern District of California on charges of economic espionage and theft of trade secrets. The indictment alleges that the pair conspired to steal trade secrets from two companies and created a new firm to create and sell products derived from the stolen trade secrets. The charges also allege that Lee and Ge attempted to obtain funds for their new company from the government of China, in particular China's General Armaments Division and China's 863 Program, otherwise known as the National High Technology Research and Development Program of China. The case was investigated by the FBI.

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- Restricted Technology to China – On Aug. 1, 2007, Fung Yang, the president of Excellence Engineering Electronics, Inc., pleaded guilty in the Northern District of California to a charge of illegally exporting controlled microwave integrated circuits to China without the required authorization from the Department of Commerce. Yang was charged by information on July 31, 2007. The investigation was conducted by BIS and the FBI.

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- Telecommunications Equipment from China to Iraq – On April 10, 2007, Andrew Huang, the owner of McAndrew's, Inc, an international export company, pleaded guilty in the District of Connecticut to one count of making false statements to the FBI. Huang was charged in 2006 with operating as a representative for the Chinese Electronic System Engineering Corporation, the technology procurement arm of the government of China. According to court documents, Huang allegedly helped broker the illegal sale and transfer of millions of dollars worth of telecommunications equipment from China to Iraq between 1999 and 2001. The investigation was conducted by the FBI, ICE, NCIS, IRS and BIS.

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- $100 Million Penalty for Illegal Exports of Military Night Vision Technology to China, Singapore, U.K . -- On March 27, 2007, ITT Corporation, the leading manufacturer of military night vision equipment for the U.S. Armed Forces, agreed to pay a $100 million penalty and admitted to illegally exporting restricted night vision data to China, Singapore, and the United Kingdom in the Western District of Virginia. The company also pleaded guilty to charges that it omitted statements of material fact in required arms exports reports. The $100 million penalty is believed to be one the largest ever in a criminal export control case. As part of the plea agreement, ITT Corporation must invest $50 million of the penalty toward the development of the most advanced night vision systems in the world for the U.S. Armed Forces. The investigation was conducted by DCIS and ICE.

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- Stolen Trade Secrets to Chinese nationals – On Dec. 14, 2006, Fei Ye and Ming Zhong pleaded guilty in the Northern District of California to charges of economic espionage for possessing trade secrets stolen from two Silicon Valley technology companies. The pair admitted that their company was to have provided a share of any profits made on sales of the stolen chips to Chinese entities. The case marked the first convictions in the nation for economic espionage. They were first indicted on Dec. 4, 2002. The investigation was conducted by ICE, FBI and CBP.

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- Military Weapons Scopes to China – On Oct. 25, 2006, Wai Lim William Lam was charged in the District of Connecticut with attempting to smuggle weapons scopes, including submersible night-vision monocular devices, to Hong Kong. He pleaded guilty on Dec. 11, 2006. The investigation was conducted by DCIS, BIS, and ICE.

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- Industrial Furnace to Missile Institute in China – On Oct. 4, 2006, William Kovacs, the owner and president of Elatec Technology Corporation in Massachusetts, was sentenced in the District of Columbia to 12 months in prison for illegally exporting a hot press industrial furnace to a research institute in China affiliated with that nation's aerospace and missile programs. Kovacs and Elatec pleaded guilty to conspiring to violate export laws on May 28, 2004. They were first charged on Nov. 13, 2003. An associate, Stephen Midgley, separately pleaded guilty on Jan. 10, 2005, to making false statements in export documents. The investigation was conducted by BIS and ICE.

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