Three Chinese Nationals and Two Corporations Charged with Illegally Exporting Defense Articles...

Three Chinese Nationals and Two Corporations Charged with Illegally Exporting Defense Articles and Commerce Controlled Electronics Components to China and Conspiring to Violate U.S. Export Laws

BOSTON, MA—Three nationals of the People’s Republic of China and two corporations were charged on October 1, 2009 in federal court with conspiring over a period of 10 years to illegally export defense articles, designated on the United States Munitions List, and Commerce controlled electronics components to end-users in China, including several Chinese military entities.

Acting United States Attorney Michael K. Loucks; John J. McKenna, Special Agent in Charge of the U.S. Department of Commerce, Office of Export Enforcement, Boston Field Office; Bruce M. Foucart, Special Agent in Charge of Immigration and Customs Enforcement - Boston Field Division; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Division; and Edward Bradley, Special Agent in Charge of the Defense Criminal Investigative Service, Northeast Field Office announced that ZHEN ZHOU WU a/k/a ALEX WU, YUFENG WEI a/k/a ANNIE WEI, BO LI a/k/a ERIC LEE, CHITRON ELECTRONICS, INC. (“CHITRON-US”), and SHENZHEN CHITRON ELECTRONICS COMPANY LIMITED (“CHITRON-SHENZHEN”) were charged in a thirty-eight count indictment with conspiring to violate U.S. export laws (including the Arms Export Control Act and Export Administration Regulations), illegally exporting defense articles and Commerce controlled electronics to China, money laundering, and causing false Shipper’s Export Declarations to be filed with the U.S. Department of Commerce.

ZHEN ZHOU WU a/k/a ALEX WU, YUFENG WEI a/k/a ANNIE WEI, CHITRON-US and CHITRON-SHENZHEN are also charged with illegally exporting electronics components to the Shanghai Academy of Spaceflight Technology, an organization which is designated on the U.S. Department of Commerce’s Entity List (according to the Indictment, organizations listed on the Entity List are subject to specific license requirements due to U.S. national security interests). According to the Indictment, Shanghai Academy of Spaceflight Technology “conducts research for the development of, and manufactures, tactical missiles, carrier rockets, space launch vehicles, and satellites.” Lastly, the Indictment charges YUFENG WEI a/k/a ANNIE WEI with immigration fraud.

The Second Superseding Indictment alleges that ZHEN ZHOU WU a/k/a ALEX WU founded CHITRON-SHENZHEN in or about April 1996. In March 1998, ZHEN ZHOU WU a/k/a ALEX WU incorporated CHITRON-US, which served as CHITRON-SHENZHEN’s purchasing office in the United States. The Indictment further alleges that using CHITRON-US, ZHEN ZHOU WU a/k/a ALEX WU, YUFENG WEI a/k/a ANNIE WEI, and CHITRONSHENZHEN ordered U.S. military products and Commerce controlled electronic components from U.S. companies for end-users in mainland China. Allegedly, at the instruction of ZHEN ZHOU WU a/k/a ALEX WU and YUFENG WEI a/k/a ANNIE WEI, the U.S. companies were instructed to ship all ordered products to the CHITRON-US office located in Waltham, Massachusetts. According to the Indictment, upon receipt by CHITRON-US of the ordered products, the U.S. commodities were inspected by CHITRON-US employees and consolidated into packages, which were exported on a weekly basis to mainland China using freight forwarders in Hong Kong without obtaining the required export licenses from the Department of State and Department of Commerce. According to the Indictment, ZHEN ZHOU WU a/k/a ALEX WU promoted CHITRON on its website (shared by both CHITRON-US and CHITRONSHENZHEN) as a company that could procure military products. Thus, by “2007, according to WU, Chinese military-related institutions (including research institutes) in electronics and aerospace comprised 25% of CHITRON-SHENZHEN’s customers.”

If ZHEN ZHOU WU a/k/a ALEX WU is convicted of the charges he faces in the Indictment, he faces up to 20 years' imprisonment, to be followed by three years' supervised release, and a $1,000,000 fine. If YUFENG WEI a/k/a ANNIE WEI is convicted of the charges she faces in the Indictment, she faces up to 20 years' imprisonment, to be followed by three years' supervised release, and a $1,000,000 fine. If BO LI a/k/a ERIC LEE is convicted of the charges he faces in the Indictment, he faces up to 20 years' imprisonment, to be followed by three years' supervised release, and a $1,000,000 fine. Both CHITRON-SHENZHEN and CHITRON-US face up to a $1,000,000 fine for each count in the Indictment charging them with illegal export of defense articles. They each also face up to a $500,000 fine for the remaining counts in the Indictment.

The case is being investigated agents of the Department of Commerce, Office of Export Enforcement, U.S. Department of Homeland Security, Immigration and Customs Enforcement, Federal Bureau of Investigation, and Defense Criminal Investigative Service. It is being prosecuted by Assistant U.S. Attorneys B. Stephanie Siegmann and John Capin of Loucks’ Anti- Terrorism and National Security Unit.

The details contained in the Indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

UPDATE:

NOTE The Following text is a quote:

http://boston.fbi.gov/dojpressrel/pressrel10/bs051710.htm

May 17, 2010 United States Attorney’s Office

Two Chinese Nationals Convicted of Illegally Exporting Electronics Components Used in Military Radar and Electronic Warfare

BOSTON, MA—Following a five-week trial, a federal jury in Massachusetts found two Chinese nationals, one of whom resided in the United States, guilty of illegally conspiring to violate U.S. export laws and illegally exporting electronic equipment from the United States to China. Several Chinese military entities were among those receiving the exported equipment.

The jury also convicted a Waltham, Massachusetts corporation, owned by one of the defendants, which procured the equipment from U.S. suppliers and then exported the goods to China, through Hong Kong. The exported equipment is used in electronic warfare, military radar, fire control, military guidance and control equipment, and satellite communications, including global positioning systems.

U.S. Attorney Carmen M. Ortiz; Assistant Attorney General David Kris of the Justice Department’s National Security Division; John J. McKenna, Special Agent in Charge of the U.S. Department of Commerce, Office of Export Enforcement, Boston Field Office; Matthew J. Etre, Acting Special Agent in Charge of Immigration and Customs Enforcement, Boston Field Division; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office; and Leigh-Alistair Barzey, Resident Agent in Charge of Defense Criminal Investigative Service in Boston, announced that ZHEN ZHOU WU a/k/a Alex Wu, YUFENG WEI a/k/a Annie Wei, and CHITRON ELECTRONICS, INC. (“CHITRON-US”), were convicted of unlawfully exporting defense articles and Commerce controlled goods to China on numerous occasions between 2004 and 2007 and conspiring to violate U.S. export laws over a period of ten years. WU and WEI were also both convicted of filing false shipping documents with the U.S. Department of Commerce. In addition, WEI was convicted of immigration fraud for presenting a U.S. Permanent Resident Card, which she knew had been procured by making false and fraudulent statements to immigration officials, to enter the country.

“For more than 10 years, this corporation and these defendants conspired to procure U.S. military products and other controlled electronic components for use in mainland China – for military radar, military satellite communications, and military guidance systems,” said U.S. Attorney Ortiz. “In doing so, these defendants violated U.S. export laws and compromised our national security. The result in this case was achieved through the exemplary investigative efforts of dedicated agents and prosecutors working with various law enforcement and other government agencies.”

“Today’s convictions demonstrate the importance of safeguarding America’s sensitive technology against illicit foreign procurement efforts. They also serve as a warning to those who seek to covertly obtain technological materials from the U.S. in order to advance military systems of their own. I applaud the many agents, analysts and prosecutors who helped bring about this successful outcome,” said David Kris, Assistant Attorney General for National Security.

Evidence presented at trial proved that the defendants illegally exported military electronic components, which are designated on the U.S. Munitions List, to mainland China, through Hong Kong, between April 2004 and June 2006. The defense articles the defendants illegally exported are primarily used in military phased array radar, electronic warfare, military guidance systems, and military satellite communications. Since 1990 the U.S. government has maintained an arms embargo against China that prohibits the export, re-export, or re-transfer of any defense article to China.

The defendants also illegally exported Commerce controlled electronics components to China that could be used in military applications in electronic warfare, military radar, satellite communications systems and space applications. These items could make a direct and significant contribution to weapons systems and war-fighting capabilities of U.S. adversaries, and cannot be exported to China without an export license from the U.S. Department of Commerce.

WU founded and controlled CHITRON, including its headquarters in Shenzhen, China and its U.S. office located in Waltham, Massachusetts. While WU resided in China, WEI served as the manager of the U.S. office. Using CHITRON, WU targeted Chinese military factories and military research institutes as customers of CHITRON, including numerous institutes of the China Electronics Technology Group Corporation (“CETC”), which is responsible for the procurement, development, and manufacture of electronics for the Chinese military. Indeed, WU referred to Chinese military entities as CHITRON’s major customer since as early as 2002. WU hired an engineer at CHITRON’s Shenzhen office to work with Chinese military customers. By 2007, 25% of CHITRON’s sales were to Chinese military entities.

Correspondence between WU, WEI and other CHITRON employees showed knowledge that U.S. export restricted parts were being shipped overseas to Chinese customers without having first obtained an export license. WU instructed WEI and employees of CHITRON-US on numerous occasions to never tell U.S. companies that parts were going overseas. At WU and WEI’s direction, U.S. companies were told to ship all ordered products to the CHITRON-US office located in Waltham, Massachusetts.

Upon receipt by CHITRON-US of the ordered products, the U.S. commodities were inspected by CHITRON-US employees and consolidated into packages, which were then exported to CHITRON’s Shenzhen office (located in Mainland China) using freight forwarders in Hong Kong, without the required export licenses from the Department of State and Department of Commerce.

“Today’s convictions represent an outstanding collaborative investigation and prosecution to bring to justice those who flout our export control laws and endanger our national security,” said John McKenna, Special Agent in Charge of the Commerce Department’s Boston Office of Export Enforcement. “Preventing dangerous U.S.-origin items from falling into the wrong hands is one of our top priorities at the Commerce Department,” he said.

“Today’s verdicts underscore the importance of ICE’s global investigative efforts aimed at disrupting and dismantling criminal organizations that profit from the illegal exportation of sensitive U.S. technology that threatens our national security,” said Matthew J. Etre, Acting Special Agent in Charge of ICE’s Office of Investigations in Boston.

Warren Bamford, Special Agent in Charge of FBI’s Boston Field Office said, “This was a significant verdict in a joint investigation with ICE, Commerce, DCIS, and the U.S. Attorney’s Office. The illegal export of U.S. defense technology to foreign countries is harmful to the national security of the United States. These types of violations will continue to be aggressively investigated because this conduct cannot and will not be tolerated.”

“The convictions in this case are the end result of a joint investigation conducted by the Defense Criminal Investigative Service and its partner Federal law enforcement agencies,” said Resident Agent In Charge Leigh-Alistair Barzey. “This investigation demonstrates the commitment DCIS has to ensuring that sensitive military equipment and technology are not illegally exported to restricted countries, which could put America’s war fighters and the Nation at considerable risk.”

WU and WEI both face up to 20 years imprisonment to be followed by three years supervised release and a $1 million fine. After serving their sentence, both will face deportation to China.

CHITRON-US face up to a $1 million fine for each count in the Indictment charging the company with illegal export of U.S. Munitions List items and $500,000 for each count in the Indictment charging them with illegal export of Commerce controlled electronics. Sentencing is scheduled for August 17, 2010.

The Government also indicted SHENZHEN CHITRON ELECTRONICS COMPANY LIMITED (”CHITRON-SHENZHEN”), the Chinese company owned by WU which received the U.S. electronics and delivered the parts to Chinese end-users, for these same crimes. The Court has entered a contempt order against CHITRON-SHENZHEN for refusing to appear for trial and fined the corporation $1.9 million dollars.

Co-defendant BO LI, a/k/a Eric Lee, previously pled guilty to making false statements on shipping documents, and faces five years imprisonment to be followed by three years supervised release and a $1 million fine. Sentencing is scheduled for July 22, 2010 in Boston.

The case was investigated by the Department of Commerce’s Office of Export Enforcement, Immigration and Customs Enforcement, Federal Bureau of Investigation, and Defense Criminal Investigative Service. It is being prosecuted by Assistant U.S. Attorneys B. Stephanie Siegmann and John A. Capin of Ortiz’s Anti-Terrorism and National Security Unit.

NOTE The following text is a quote:

www.fbi.gov/boston/press-releases/2013/chinese-national-sentenced-for-illegally-exporting-military-electronics-components

Chinese National Sentenced for Illegally Exporting Military Electronics Components

U.S. Attorney’s Office
September 10, 2013

District of Massachusetts

BOSTON—Zhen Zhou Wu, a Chinese national, was re-sentenced yesterday to 84 months in prison for conspiring over a 10-year period to illegally export military and sophisticated electronics to the People’s Republic of China (PRC).

Wu was also convicted of illegally exporting sensitive electronic components to the PRC on 12 occasions between 2004 and 2007. Several Chinese military entities were among those to whom the defendant exported the equipment, which is used in military phased array radar, electronic warfare, and missile systems. He was also ordered to pay a $15,000 fine. After serving his sentence, Wu will be subject to deportation to the PRC.

On March 19, 2013, the U.S. Court of Appeals for the First Circuit affirmed Wu’s conviction on 15 of the 17 counts of export violations for which a jury convicted him after a six-week trial in 2010. The First Circuit vacated two counts of conviction that charged Wu with illegally exporting parts designated on the United States Munitions List because it held that the jury instructions given were constitutionally inadequate. However, the First Circuit observed that “from 1996 until 2008, Wu and his co-defendant, Yufeng Wei, shipped tens of millions of dollars worth of sophisticated electronic components from the United States to China, with little regard for whether the parts that they sold were export-controlled.” Further, the First Circuit found that Wu’s company “specifically pursued military customers; and Wu promoted himself as both an exporter of military supplies and an export compliance expert.” Lastly, the First Circuit determined that “Wu and Wei repeatedly attempted to disguise the fact that they were exporting to China and that they lacked the necessary licenses to do so.”

Because two counts of the conviction were vacated, the case was remanded for a re-sentencing hearing. Wei’s re-sentencing hearing has not yet been scheduled.

On May 17, 2010, Wu; his ex-wife, We;, and his company, Chitron Electronics Inc., were convicted of conspiring to unlawfully export to the PRC military electronics from 1997 to 2007 and export restricted electronics components and illegally exporting such parts to the PRC on numerous occasions between 2004 and 2007. The defendants’ illegal enterprise involved the use of Chitron Electronics Inc., a company Wu established in Waltham, Massachusetts, as a front company for its parent company, Chitron Electronics Limited, headquartered in Shenzhen, PRC. Wu used Chitron-US to procure export restricted equipment from U.S. suppliers and then export the goods to from Waltham to China through Hong Kong without the suppliers’ knowledge. The exported equipment is used in electronic warfare, military radar, fire control, military guidance and control equipment, missile systems, and satellite communications. Many of Chitron’s customers were Chinese military research institutes and military entities respon

The Department of Defense’s Defense Technology Security Administration concluded in a report filed with the court that the defendants’ activities in this case seriously threatened “U.S. national and regional security interests.” According to the Department of Defense, the parts the defendants were convicted of illegally exporting are “vital for Chinese military electronic warfare, military radar, fire control, military guidance and control equipment, and satellite communications.” The report further concluded that the illegally exported parts are “precisely the [types of] items...that the People’s Liberation Army actively seeks to acquire.”

United States Attorney Carmen M. Ortiz; Acting Assistant Attorney General John P. Carlin of the Justice Department’s National Security Division; John J. McKenna, Special Agent in Charge of the U.S. Department of Commerce, Office of Export Enforcement, Boston Field Office; Bruce Foucart, Special Agent in Charge of Homeland Security Investigations in Boston; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office; and Leigh-Alistair Barzey, Resident Agent in Charge of Defense Criminal Investigative Service in Boston made the announcement. The case is being prosecuted by Assistant U.S. Attorneys B. Stephanie Siegmann and John A. Capin of Ortiz’s Anti-Terrorism and National Security Unit.

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