Part I: Export Enforcement Actions
US Suspends Export Privileges of People Indicted in Russian Sanctions Evasion Scheme
The Bureau of Industry and Security issued a 180-day temporary denial order Dec. 13 against three people and two companies for illegally sending controlled exports to Russia as part of a Moscow-led sanctions evasion scheme. Along with the denial order, DOJ indicted the three individuals, along with others, on charges related to the illegal exports, including money laundering, wire fraud, bank fraud and conspiring to defraud the U.S.
BIS issued the denial order for Boris Livshits, Svetlana Skvortsova and Aleksey Ippolitov -- along with New York-based companies Advanced Web Services and Strandway -- who were charged Dec. 13 with conspiring to violate U.S. export controls by sending electronic signal generator and measurement equipment, along with other items, to Russian entities on the Entity List. DOJ also charged Yevgeniy Grinin, Vadim Konoshchenok, Alexey Brayman and Vadim Yermolenko in connection with the violations.
BIS said Livshits, Skvortsova and Ippolitov used Advanced Web Services and Strandway to illegally export equipment controlled under the Export Administration Regulations to multiple Russian entities, including OOO Serniya Engineering, a Moscow-based wholesale machinery and equipment company added to the Entity List in March (see 2203040020). BIS said Serniya leads a procurement network that works for Russia’s intelligence services to “evade U.S. sanctions to acquire sensitive military grade and dual-use technologies,” including advanced semiconductors, for Russia’s military defense sector and research institutions.
Livshits, Skvortsova and Ippolitov were aware of export control laws and took “active steps” to hide their illegal export activities, BIS said. Ippolitov acted as a liaison for Serniya and Moscow-based Sertal LCC by soliciting orders from Russian end users for U.S.-origin parts and items, and relayed those orders to Grinin and Skvortsova. Ippolitov also oversaw the purchase and shipping of the items from the U.S. companies through Serniya’s network of front companies and bank accounts. Skortsova and Grinin procured the items from U.S. companies, BIS said, including by preparing false shipping documents. Brayman and Yermolenko worked to "fabricate" shipping documents and repackage and reship items to "intermediate destinations around the world" before eventually being routed to Russia, DOJ said.
BIS said Livshits was “frequently tasked to interface directly” with U.S. companies and often misrepresented information about how the item would be used, the parties involved in the transactions and the ultimate end-user. Livshits used the alias David Wetzky and an email address associated with Advanced Web Services in “an effort to frustrate due diligence efforts by U.S. companies,” the TDO said. He also created shell companies -- which included Advanced Web Services and Strandway -- and bank accounts to “fund unlawful export activities” "in coordination with Konoshchenok, Brayman and Yermolenko.
In one instance, Livshits “initiated” a payment for an account held in his name for an oscilloscope, which was controlled under Export Control Classification Number 3A992.a for anti-terrorism reasons, BIS said. In other cases, Konoshchenok, who DOJ suspects of being a Russian Federal Security Service officer, would ship or "physically smuggle" U.S.-origin items from Estonia to Russia, including "dual-use electronics, military-grade tactical ammunition and other export-controlled items," the agency said. Konoshchenok was stopped at the Estonian border in October with "35 different types of semiconductors and other electronic components ordered by Livshits" and thousands of U.S.-made 6.5mm bullets, DOJ said.
The people also worked to “evade detection by law enforcement,” the TDO said. BIS pointed to one purchase in 2019 in which they tried to buy a "chip set" of 45 advanced semiconductors controlled under ECCN 3A0013a.2.c, for the Physics Institute of the Russian Academy of Sciences. Livshits “cautioned” that the “part required an export license and that ‘you need to buy such positions carefully, at 5-10 pieces at a time.’” In another instance, Konoshchenok discussed “fabricating” business records with Livshits to hide the ammunition shipments and instead describe them as “auto parts,” DOJ said.
The TDO describes several other instances of Livshits, Skvortsova and Ippolitov trying to illegally export EAR-controlled items, both before and after Russia invaded Ukraine earlier this year. Between February and April, BIS said they illegally bought a $14,000 spectrum analyzer classified under ECCN 3A992.a from a Florida-based electronics company and tried to arrange for a Hong Kong freight forwarder to ship the item to Russia. BIS said the forwarder refused the request because of sanctions against Russia, but Livshits eventually “directed another individual” to ship the item from New Hampshire to a Serniya “transshipment point” in Hamburg, Germany. The item was eventually sent to Russia.
In another instance, Livshits used his alias and his front companies to buy a $25,000 "MSO54-BW100 Mixed Signal Generator" in April from an Illinois-based electronics distributor. BIS said a package was shipped the next month via DHL from Strandway’s New Hampshire location to Hamburg, and it was declared as a “Oscilloscope -- Used, No Warr.” Shipping documents said the item was worth $2,482, just below the $2,500 threshold that would have triggered a required filing of Electronic Export Information with CBP, BIS said.
BIS said Livshits “continues to engage in attempts at illicit procurement,” including through Advanced Web Services. The agency said he bought semiconductors and electronic components in May from a Texas distributor and tried to buy a $56,000 signal generator from an Illinois company in August.
Matthew Axelrod, BIS’ top export enforcement official, said the coordinated action with DOJ demonstrates “our vigilance in uncovering Russian tactics to illicitly acquire the items they need to keep their brutal war going.” Office of Export Enforcement Director John Sonderman said OEE will “continue to leverage our unique authorities and global reach to target those who violate U.S. export control laws.”
Brayman surrendered to the FBI Dec. 13 and Yermolenko was arrested in New Jersey, DOJ said. Brayman and Yermolenko will be arraigned in New Hampshire and New York, respectively. Konoshchenok was arrested by Estonian authorities Dec. 6 at the request of the U.S. and is awaiting extradition. The others remain at large. The people face a maximum of 30 years in prison if convicted of bank fraud or bank fraud conspiracy.
BIS Renews Denial Order After Finding More Compliance ‘Failures,’ Potential Violations
BIS renewed the temporary denial order (TDO) Dec. 5 for three U.S. companies for their involvement in illegally exported technical drawings and blueprints to China (see 2206080068). The order, issued in June, was renewed for another 180 days, BIS said, partly because the agency found possible evidence of additional export violations.
BIS originally suspended the export privileges for Quicksilver Manufacturing, Rapid Cut and U.S. Prototype, which share ownership, after they illegally exported their customers’ technical drawings to print satellite, rocket and defense-related prototypes in 3D. The companies sent these materials to Chinese manufacturers without their customers’ consent or knowledge and without required BIS licenses.
BIS’ Office of Export Enforcement said it renewed the order because it has evidence the companies’ “export compliance failures are broader in scope than the initial investigation revealed.” The agency also said it has “new concerns” about the companies “raised by actions taken after” BIS issued its order in June.
The agency said it has found additional companies that worked with Quicksilver, Rapid Cut and U.S. Prototype to illegally export “technical specifications” to China for gun components controlled under Export Control Classification Number 0E501.a and “space-rated items" controlled under ECCN 9E515.a. BIS also said it found “numerous additional suspected export control-related violations between 2017 and 2022.”
Additionally, BIS said the companies’ “attempts at compliance” since the June order “at best continue to fall short.” The businesses are continuing to provide “inaccurate information to customers about the scope of items subject to the” Export Administration Regulations, BIS said.
BIS also said the businesses may have violated the TDO. It said a China-based person who operates an @rapidcut.com email address may have provided customers with information on how to complete and fulfill pending orders despite the TDO. “Such information includes instructions to cancel existing Rapid Cut orders and reissue purchase orders to China Company No. 1, in an apparent attempt to avoid the restrictions of the TDO,” BIS said.
The “evidence presented by BIS convincingly demonstrates that Respondents have acted in violation of the Regulations; that such violations have been significant, deliberate and covert; and that given the foregoing and the nature of the matters under investigation, there is a likelihood of imminent violations,” the order said.
Spokespeople for the companies didn't respond to requests for comment. In an automated email response from their sales team's email, the companies are telling customers that BIS has "frozen our ability to service any and all jobs due to" its investigation. The company said it's "cooperating fully," is appealing the temporary denial order and is "optimistic to get it lifted. However, until we get clearance of this issue, please understand and respect our position. We are sorry" for "any inconvenience this action has caused you."
Chinese Intelligence Agent Sentenced for Attempting to Steal Trade Secrets From US Aviation Firms
Yanjun Xu, a Chinese national and the first Chinese government intelligence official to be extradited to the U.S. to stand trial, was sentenced Nov. 16 to 20 years in prison, DOJ announced. Xu stole trade secrets from American aviation companies by recruiting employees to travel to China and then stealing their proprietary information on behalf of the Chinese government, the U.S. said. A federal jury in November 2021 convicted Xu on all counts: conspiracy to commit economic espionage, conspiracy to commit trade secret theft, attempted economic espionage and attempted trade secret theft (see 2111080021).
Xu started as an intelligence officer in 2003, later becoming deputy division director at the Chinese Ministry of State Security. Starting in 2013, Xu targeted U.S. aviation firms, using aliases, false companies and universities to trick the companies' employees and steal information, DOJ said. Believing they were giving a presentation at a university, the aviation employees went to China where Xu paid for travel costs and stipends for the employees. The defendant then worked with other MSS agents to "hack or copy computers in hotel rooms" while the aviation individuals were taken to dinner by the MSS.
DOJ in its release detailed Xu's and the MSS' efforts to steal trade secrets from GE Aviation and a French aerospace manufacturer. The defendant tried to steal technology related to GE Aviation's exclusive composite aircraft engine fan module for the Chinese government. A GE Aviation employee, working with the FBI, then got Xu to travel to Belgium under the guise of paying for this information. He was arrested in Belgium and extradited to the U.S.
“As proven at trial, the defendant, a Chinese government intelligence officer, used a range of techniques to attempt to steal technology and proprietary information from companies based in both the U.S. and abroad,” Attorney General Merrick Garland said. “Today’s sentence demonstrates the seriousness of those crimes and the Justice Department’s determination to investigate and prosecute efforts by the Chinese government, or any foreign power, to threaten our economic and national security.”
DOJ Charges 3 People, 1 Company in Scheme to Ship Export-Controlled Data to China
Three U.S. citizens and Quadrant Magnetics were charged with wire fraud, violating the Arms Export Control Act and smuggling goods relating to their participation in an illegal scheme to ship export-controlled defense-related technical data to China, DOJ announced. They also allegedly supplied DOD with Chinese-origin rare earth magnets for aviation systems and military items, DOJ said.
An indictment was unsealed Nov. 9 in the U.S. District Court for the Western District of Kentucky alleging that Phil Pascoe and Monica Pascoe, both of Floyds Knobs, Indiana, and Scott Tubbs of Georgetown, Kentucky, conspired from 2012 to 2018 to ship around 70 drawings with export-controlled data to a Chinese company without a license, in violation of the AECA and International Traffic in Arms Regulations. The drawings belonged to two U.S. companies and concerned end-use items for "aviation, submarine, radar, tank, mortars, missiles, infrared and thermal imaging targeting systems, and fire control systems for DOD," DOJ said.
Quadrant Magnetics also allegedly imported rare earth magnets smelted and magnetized by a Chinese company, then sold the magnets to two U.S. firms that included them in parts sold to DOD for use in the F-16, F-18 and other defense assets, DOJ said. The three individuals face a maximum 20-year prison sentence for each wire fraud count, 20 years in prison for each count of exporting without a license, and 10 years in prison for smuggling goods.
BIS Charges UAE Company With Illegal Telecom Exports to Syria, Iran
A United Arab Emirates company violated U.S. export controls by shipping or trying to ship more than $50,000 worth of U.S.-origin telecommunications items to Syria and Iran, BIS said in a charging letter released Nov. 4. The company, WEBS Electronics Trading, and its owner, Mohammad Alhamra, also lied to a BIS agent when it said it didn’t export to Syria.
BIS said it can impose a maximum civil penalty against WEBS and Alhamra of $330,947 per violation or twice the value of the illegal transactions -- whichever is greater. BIS may also suspend the company’s export privileges. WEBS and Alhamra have 30 days after being served notice of the charging letter to respond to the allegations. The company couldn’t be reached for comment.
“Export controls on Syria and Iran are among the most restrictive that we enforce because their governments support terrorism, commit human rights abuses, and destabilize regional security,” said Matthew Axelrod, BIS top export enforcement official. “Today’s actions demonstrate the unique authorities of BIS to identify, investigate, and seek administrative sanctions on illegal exports to Syria and Iran.”
BIS said the charging letter stemmed from an incident in 2018, when WEBS, a company that buys and reexports U.S. telecommunications equipment, tried to reexport a U.S. origin Brocade 6510 switch and transceiver from the UAE to Syria. The shipment was detained and returned to WEBS because it was controlled under Export Control Classification Number 5A002.a for Anti-Terrorism and National Security reasons and needed an export license before it could be sent to Syria.
BIS said one of its export control officers conducted a post-shipment verification with WEBS about two months later, and Alhamra “denied” selling products to Syria. BIS said it designated WEBS as an “unreliable recipient of U.S. commodities” because the company couldn’t “provide sufficient documentation” during the visit with BIS.
One month later, BIS discovered that WEBS was again trying to reexport U.S.-origin items to Syria, this time a Blade System SP transceiver. The agency said it detained the shipment, which was controlled under ECCN 5A991.b for Anti-Terrorism reasons. After it was detained, Alhamra asked the export control officer to approve the shipment and “provided an invoice confirming that the shipment was destined” for a company in Syria. When asked by the BIS officer why Alhamra had said a few months earlier that his company didn’t ship products to Syria, Alhamra “admitted” that “up to 80% of his previous business had been to Syria but stated that it had declined to approximately 5% in recent years.”
The following year, the BIS officer met with Alhamra at WEBS to conduct a post shipment verification for two exports of computer equipment classified as EAR99. BIS said Alhamra had documentation that showed some of the equipment was sold to a trading company in the UAE but couldn’t provide documentation for the remaining equipment that was sold. BIS again deemed the company “an unreliable recipient of U.S. commodities.”
BIS said an agency investigation later showed that WEBS had been illegally exporting U.S.-origin equipment “for years” to Syria. Those reexports included a $2,250 Brocade 6510 Switch in April 2018; $600 worth of HPE Blade System Transceivers in July 2018; and $38,114 worth of items, including an enterprise shock rack, riser cards, a dat tape drive, a host bus adapter and other products, between November 2017 and September 2019. WEBS also reexported $16,065 worth of wireless access points and one WS-C6509 Switch to Iran in April 2018, BIS said. The charging letter includes a table of each of the alleged illegal shipments along with the date they occurred, the items they contained, their ECCNs, their value and country of destination.
US Tech Company Says BIS Accused It of Violating Export Controls
BIS sent a proposed charging letter to Seagate Technology alleging that it violated U.S. export controls by providing controlled items to a company on the Entity List. Seagate said the Aug. 29 letter accused it of violating the Export Administration Regulations by providing hard disk drives to the blacklisted company and its affiliates between August 2020 and September 2021.
Seagate told BIS that it didn’t violate U.S. export controls because the hard disks aren’t subject to the EAR, the company said in an Oct. 26 SEC filing. “Seagate believes it has complied with all relevant export control laws and regulations,” the company said. BIS’s proposed charging letter accuses Seagate of selling the hard disk drives to Huawei, Reuters reported.
A Commerce Department spokesperson declined to say whether the agency sent the letter. BIS recently revised its administrative enforcement policies to publish all charging letters (see 2206300069), and the spokesperson said the agency plans to continue to make charges public “with the filing of a charging letter or the issuance of an order resolving the matter.”
“BIS is committed to fully investigating any allegation of violations of the Foreign Direct Product Rule, including any attempts to sell or divert export-controlled items to entities on the Entity List,” the spokesperson said Oct. 26. “BIS aggressively pursues criminal and civil actions related to unauthorized exports to China.”
Republican staff on the Senate Commerce Committee told BIS in 2021Seagate had likely violated U.S. export controls against Huawei for more than a year by shipping hard disk drives to Huawei in violation of BIS’ foreign direct product rule (see 2110260040, 2005150058 and 2008170029). Seagate told the committee’s minority staff that the products didn’t need a license, but the staff disagreed, saying the company incorporated controlled semiconductor items into the hard disk drives with knowledge that the products were destined to Huawei.
Sen. Roger Wicker, R-Miss., whose staff published a report on Seagate’s potential export control violations, said he is "pleased" BIS "finally seems to be acting a full year after" the report was released in 2021. "China is our greatest strategic competitor," Wicker said in an Oct. 26 emailed statement. "It is more important than ever that we enforce strict export controls over sensitive products to prevent our adversaries from using them."
BIS at the time also declined to say whether it was investigating Seagate and faced criticism for not moving quickly enough to penalize the company. Republicans urged BIS to move faster (see 2111160015), while a Chinese technology expert said in June that the agency’s “inaction” has emboldened other companies to export similar shipments (see 2206070011 and 2206080011).
In its SEC filing, Seagate said it has “committed to compliance,” employs a “global team of international trade compliance and legal professionals" and uses “robust trade controls” and procedures. But the company also said the matters raised by BIS in its proposed charging letters “remain unresolved,” adding it’s “possible” the “outcome could have a material impact on our business” and revenue. “Seagate has been cooperating with BIS and intends to continue to engage with BIS to seek a resolution of this matter,” the company said.
DOJ Charges Chinese Nationals for Schemes to Aid Huawei, Steal US Tech
The U.S. Oct. 24 charged several Chinese nationals, including Chinese government intelligence officers, for their efforts to obstruct a federal prosecution of Huawei and illegally acquire U.S. technology. In one indictment, DOJ charged two Chinese intelligence officers with trying to steal federal prosecution documents relating to the Huawei case. A second indictment charges four Chinese nationals, including three Ministry of State Security (MSS) intelligence officers, for their involvement in a “long-running intelligence campaign” to acquire sensitive U.S. technology, information and assistance.
The indictments “take place against a backdrop of malign activity from the People's Republic of China,” said U.S. Deputy Attorney General Lisa Monaco, including “unceasing efforts to steal sensitive U.S. technology.” The cases show a “coordinated effort across the Chinese government to lie, cheat and steal their way into unfairly dominating entire technology sectors, putting competing U.S. companies out of business,” FBI Director Christopher Wray said.
DOJ said Dong He and Zheng Wang tried to steal files and other information related to the U.S. prosecution of a “global telecommunications company” from the U.S. Attorney’s Office for the Eastern District of New York. The company’s name isn’t included in the complaint, but Reuters reported the firm is Huawei, which was charged in 2020 with racketeering and conspiracy to steal trade secrets as part of a decades-long scheme to illegally acquire U.S. technology (see 2002130045).
The two Chinese officers allegedly paid a $41,000 Bitcoin bribe to a U.S. government official who they believed had been recruited to work for China but who was actually a double agent, DOJ said. The two officers were specifically seeking “confidential information about the criminal prosecution of” Huawei “in order to interfere with that prosecution,” DOJ said. Dong He faces up to 40 years in prison on charges related to obstructing a criminal prosecution, money laundering and bribery. Zheng Wang faces up to 20 years in prison for attempting to obstruct a criminal prosecution. Both remain at large.
“This case exposes the interconnection between PRC intelligence officers and Chinese companies,” Monaco said, “and it demonstrates once again why such companies, especially in the telecommunications industry, shouldn't be trusted to securely handle our sensitive personal data and communications.”
The second indictment charges Wang Lin, Bi Hongwei, Dong Ting and Wang Qiang with operating a conspiracy to illegally acquire information, materials, equipment and “assistance” for the Chinese government to help bolster its “intelligence objectives,” DOJ said. The agency said they tried to target professors at universities, including a former federal law enforcement and state homeland security official, to act as “agents” of the Chinese government.
MSS intelligence officers Wang Lin and Dong Ting, along with others, used the Ocean University of China -- also known as the Institute for International Studies -- as a “cover” to try to access “sensitive” information and equipment from U.S. college professors. The officers offered one professor “all-expenses-paid trips” to China, where they asked the person to provide China with “sensitive fingerprint technology.” The person “refused these requests and reported them to law enforcement,” DOJ said.
All four Chinese intelligence officers were charged with conspiracy to act in the U.S. as agents of a foreign government without prior notification to the attorney general, and to direct such unlawful action by others in the U.S. The conspiracy charge carries a maximum five-year prison sentence and maximum fine of $250,000. Monaco said the four officers operated the recruitment scheme for a decade, a prime example of China’s “relentless campaign to gain access to our technology.”
A third case mentioned in the DOJ release charges seven Chinese nationals in a scheme to “cause the forced repatriation” of a Chinese national living in the U.S.
Michigan Manufacturer Violated Export Controls, BIS Says
Michigan-based Thermotron Industries violated U.S. export controls when it shipped a controlled environmental test chamber to South Korea without a license, the BIS said in an enforcement order released Sept. 30. BIS said Thermotron, an environmental test equipment manufacturer, exported the test chamber in 2012 despite it being subject to missile technology controls and subject to a license requirement under Export Control Classification Number 9B106.
As part of a settlement agreement, Thermotron admitted to “committing the alleged conduct described” in the charging letter, part of a new effort by BIS to do away with no-admit, no-deny clauses in settlements (see 2206300069). The company will be subject to a two-year probationary period in which it may have its export privileges revoked if it commits another violation of the Export Control Reform Act or Export Administration Regulations.
Thermotron also agreed to conduct export compliance training for its staff and management within two years, and it will have to certify to the BIS Office of Export Enforcement that it completed the training. The company also agreed to waive “and will not assert any Statute of Limitations defense” in connection with the violation. Thermotron didn’t respond to a request for comment.
BIS to Seize PJSC Lukoil Plane Over Violation of Export Controls
BIS charged PJSC Lukoil, a Russian multinational energy company, with violations of the Export Control Reform Act for the export of a U.S.-manufactured aircraft from Dubai to Russia, according to an Aug. 31 notice. BIS says that Lukoil "effectively owned, controlled, chartered or leased, through a series of shell companies, at least one U.S.-origin aircraft" subject to the Export Administration Regulations and that its export in March violated license requirements imposed in February.
On Feb. 24, BIS imposed a license requirement for the export of aircraft to Russia and removed the availability of the Aircraft, Vessels and Spacecraft license exception for all aircraft registered in, owned, or controlled by, or under charter or lease by Russia or a national of Russia, on March 2, meaning that subject aircraft must have BIS authorization for legal operation. The charging letter said that flight records show that after the license requirement was put in place, the Lukoil-owned aircraft was exported to Russia on one occasion without the requisite BIS authorization.
The charging letter issued to Lukoil alleges that on or about March 12, Lukoil engaged in conduct prohibited by and contrary to regulations, by reexporting controlled items, specifically a U.S.-origin Boeing 737-7EM aircraft to Russia without the required BIS license. BIS obtained a warrant from the U.S. District Court for the Southern District of Texas for the seizure of the plane, valued at $45 million. The seizure is being coordinated through DOJ's Task Force KleptoCapture -- the interagency group tasked with enforcing the U.S.'s and its allies' sanctions regimes on Russia following its invasion of Ukraine.
“Today’s actions to enforce the powerful export restrictions placed on Russia are our latest coordinated measures that let Vladimir Putin and his allies know they are isolated and we are watching,” Matthew Axelrod, BIS assistant secretary for export enforcement, said. “The Department of Commerce has been consistent and aggressive in our enforcement of the export controls placed on Russia after its unprovoked invasion of the Ukraine. Today’s enforcement action is the latest example showing the consequences companies and individuals will face if they violate U.S. export controls,” said John Sonderman, director of the Office of Export Enforcement.
State Dept. Debars Former Intelligence Community Members for Alleged ITAR Violations
The State Department imposed an administrative debarment on three former U.S. intelligence community and military members for their roles in export control violation charges, the agency said in a notice released Aug. 29. The debarments prohibit Ryan Adams, Marc Baier and Daniel Gericke from exporting or participating in transactions that export defense articles or services that require a license under the International Traffic in Arms Regulations. The debarments for Adams and Baier took effect July 7 and expire July 7, 2025; the debarment for Gericke took effect Aug. 5 and expires Aug. 5, 2025.
The debarment action comes about one year after the trio paid more than $1.68 million as part of a deferred prosecution agreement with DOJ (see 2109150031). The fine stemmed from their work as senior managers at United Arab Emirates-based DarkMatter Group, a company that carried out computer hacking operations to benefit the UAE government. Their work constituted a “defense service” under the ITAR and required a license, but the trio never obtained the authorization, State said.
BIS Temporarily Blocks Exports to Belgian Company After Multiple Fraud Attempts
BIS on Aug. 26 issued a temporary denial order barring a Belgian company and its owner for fraudulently attempting to acquire accelerometers from the U.S. on behalf of prohibited end-users in China. BIS said it suspended export privileges for Knokke-Heist Support Corporation Management (also known as Hasa-Invest) and Hans De Geetere after their “false statements made to U.S. companies to obtain the items” raised “significant concerns of future violations.”
According to BIS, Knokke-Heist made several attempts to obtain the accelerometers from a U.S. company whose identity is redacted in the order. For example, in April 2021, BIS detained a shipment of accelerometers being exported from a German company, and obtained sales documentation from the U.S. company, including an end-user statement where Knokke-Heist said the items were being purchased on behalf of a Belgian government entity and a letter from Knokke-Heist in support of the end-user statement that was purportedly signed by the Belgian government, BIS said.
BIS was unable to confirm the Belgian government end user and “planned to advise” the U.S. company not to proceed with the transaction. It then received an email “purportedly written by Knokke-Heist’s Belgian Government customer, copying De Geetere.” BIS “was able to confirm this was a fraudulent email and that it did not come from the Belgian Government,” it said.
BIS later determined that, prior to the detained shipment, De Geetere and his company had ordered about $360,000 worth of accelerometers from the anonymous U.S. company’s German distributor starting around July 2020, which was shortly after the U.S. company’s Chinese distributor, Nova Instruments, had been placed on the entity list. Other evidence showed at least some orders from the German distributor had been placed on behalf of a Chinese entity that is related to another Chinese company on the entity list.
BIS subsequently uncovered other attempts to fraudulently obtain accelerometers by Knokke-Heist and De Geetere, including another detained shipment exported from the U.S. company to a company in the United Arab Emirates using a fictitious name and that did not have equipment that could use the accelerometers, where the U.S. company was again led to believe the shipment was destined for the Belgian government. De Geetere also made a separate attempt to obtain accelerometers directly from another U.S. company based in Florida. Most recently, Belgian authorities identified a shipment of accelerometers in mid-August 2022 from the U.S. to De Geetere and Knokke-Heist, BIS said.
“Given the sheer number and nature of attempts by Respondents to acquire U.S.-origin items under false pretenses on behalf of prohibited end-users or for prohibited end-uses, conduct which OEE’s investigation reveals has continued, renders a TDO necessary to prevent future violations,” the agency said.
BIS Announces First Nonmonetary Settlement Agreement for Export Violations
BIS entered into a settlement agreement with a Nogales, Arizona, business owner after he tried to illegally export about $4,000 worth of items to Mexico, including ballistic helmets and rifle scopes. Under a settlement agreement, Luis Fernando Gracia must conduct an internal audit of his company’s export compliance procedures and complete compliance training or else face the suspension of his export privileges.
The agreement, announced Aug. 1, was the first resolution without a monetary fine under BIS’s new enforcement policies previewed in June (see 2206300069). The settlement also didn’t include a no-admit, no-deny clause -- BIS said Garcia “admitted committing the alleged conduct” described in the enforcement order.
BIS said Garcia -- who owns GE Equipos de Seguridad, a company in Nogales and in Sonora, Mexico -- tried to export the helmets and rifle scopes in 2018 without a license, even though they were listed on the Commerce Control List and subject to crime-control licensing restrictions. Garcia ordered the items from a Los Angeles-based supplier and gave them to a person in Arizona, who then tried to drive the products into Mexico, BIS said.
CBP stopped the car and seized the shipment at Nogales’ port of entry to Mexico before Garcia could resell them to Mexican customers, BIS said. Garcia told BIS he intended to sell the helmets to a Mexican company that would then sell them to Mexican government customers. He planned to sell the rifle scopes to Mexican “retailers and distributors with which he regularly conducts business,” BIS said.
As part of the settlement agreement, Garcia agreed to complete an internal audit of GE Equipos de Seguridad’s export compliance program and share the results with BIS. The audit will cover a 12-month period beginning Aug. 1 and must be reported to the BIS L.A. field office within 15 months. If the audit reveals any potential violations of the Export Administration Regulations, Garcia must give the field office “pertinent air waybills and other export control documents” associated with those shipments.
Garcia also will have to undergo export compliance training within the next 12 months and notify BIS about the course he chose. He will also have to submit a course attendance certificate to BIS. If Garcia violates the settlement agreement or commits another violation during a two-year probationary period, BIS may revoke his export privileges.
BIS said the case was an example of a violation that is “relatively less serious from a national security perspective” and therefore didn’t rise to the level of a fine. “To be eligible for such treatment, respondents must accept responsibility, including by admitting to the underlying conduct, and also agree to other remediation-oriented measures such as participation in training programs and compliance audits,” BIS said.
BIS Charges Chinese Company With Export Violations, Aiding ZTE
BIS July 29 charged a Chinese company with violating U.S. export controls when it helped Zhongxing Telecommunications Equipment Corporation sell controlled items to Iran. The company, Far East Cable, served as a “cutout” between ZTE and several Iranian telecommunications companies, BIS said, helping ZTE “conceal and obfuscate” its business dealings in Iran from U.S. investigators. In total, BIS said Far East Cable committed 18 violations of the Export Administration Regulations.
BIS said the violations occurred between 2014 and 2016, when Far East Cable, China’s largest wire and cable manufacturer, exported U.S.-origin routers, microprocessors, servers, databases and other items on the Commerce Control List to Iran without the required licenses. The items were either controlled for national security reasons, encryption reasons, regional stability reasons or anti-terrorism reasons, BIS said, and were also subject to restrictions under the Treasury Department’s Iranian Transactions and Sanctions Regulations.
The violations stemmed from a $164 million agreement between Far East Cable and ZTE in 2013 in which Far East Cable agreed to buy telecommunications equipment from ZTE. After signing the agreement with ZTE, Far East Cable signed a contract with the Telecommunication Company of Iran (TCI) -- an entity majority owned by the sanctioned Iran Revolutionary Guard Corps -- and Iran-based Khadamate Ertebati Rightel to supply them both with telecom equipment, BIS said.
Although the contracts between Far East Cable and the Iranian entities didn’t reference ZTE, the two entities were “longtime customers” of ZTE, BIS said, and used Far East Cable as an intermediary to continue to do business after BIS served ZTE with an administrative subpoena in 2012. Far East Cable began shipping the controlled items to Iran in 2014 and continued until at least January 2016, BIS said, adding that the shipments included items classified under nine separate Export Control Classification Numbers in EAR categories 3, 4 and 5.
BIS may pursue a range of enforcement penalties against Far East Cable, including a fine, a denial of export privileges or “any other liability, sanction or penalty available under the law.” The Chinese company could face a maximum civil penalty of either $330,947 per violation or twice the value of the transaction that led to the violations. The charging letter includes a table describing each of the 18 violations, which total more than $9.7 million.
John Sonderman, director of BIS’ Office of Export Enforcement, said the charging letter “should send a strong message to any company contemplating facilitating violations on behalf of another.” Far East Cable, which couldn’t be reached for comment, has 30 days to respond after being served with the charging letter.
BIS Charges Business Owner With Export Violations
BIS charged a Montana resident and his two companies with violating U.S. export controls after BIS said he tried to ship controlled items knowing they would be used in Iran. Kenneth Scott and his companies, Scott Communication and Mission Communications, also made false or misleading statements to agents, failed to file Electronic Export Information and didn’t maintain the required export records, BIS said.
The violations began in 2017, when an undercover FBI agent asked Scott for a price quote for two Motorola XTS 2500, 800 or 900 Mhz radios, BIS said in a June 7 charging letter. The agent said the items were destined for Iran and would be transshipped through Jordan, BIS said, and at one point asked Scott if he could export the items directly to Iran.
Although Scott agreed to export the items to Jordan “with knowledge that they would then be transshipped to Iran,” BIS said he declined to ship them directly to Iran. “I have never shipped to IRAN, and the way the politics here are concerned, I would guess not,” Scott said in an email to the undercover agent, according to BIS. “Where else could we ship them to, [p]rior to them going to IRAN. Do you have a broker here in the US?”
Scott eventually agreed to ship the items, sending about $2,000 worth of the radios through the U.S. Postal Service. U.S. authorities detained the shipment in Montana with the help of USPS.
When special agents with the FBI and BIS reached out to Scott more than a year later for an interview, Scott said he was “familiar” with BIS regulations and regularly checked the BIS website for updates. He also said he had recently completed a sale involving a portable radio destined for a customer in Iran, but the export was “made through an individual in Florida,” BIS said. During the interview, a BIS agent explained the agency’s voluntary self-disclosure process, but Scott never filed a disclosure for the radio export, the charging letter said.
Later that day, however, Scott forwarded BIS emails related to the radio sale but “failed to include any of the emails with the [undercover agent] referencing Iran or discussing possible transshipment,” BIS said. Scott also edited the emails to “support his claim that he did not export anything to Iran,” BIS said, and specifically inserted two sentences in one email that weren’t initially there: “I won’t sell to IRAN OR I WILL NOT SUPPLY ANY ENCRYPTION. I have explained this to you on the phone, why are you badgering me.”
BIS said Scott also made several false statements while speaking with the agent, including that the customer involved in the radio sale told him the radios’ “end-use was for oil exploration.” He also didn’t comply with EEI reporting requirements for the radios and told agents that he has never “kept a record or a file on this stuff, as I had no idea I had to.” He also said some of his shipping records were on an “old” computer, which had been damaged three years ago by a “lightning strike.”
BIS said the two Motorola Astro XTS 2500 Digital Portable Radios exported by Scott were controlled under Export Control Classification Number 5A991.g and controlled for anti-terrorism reasons. The agency can impose a maximum civil penalty against Scott of $330,947 per violation of the Export Administration Regulations or twice the value of the transactions at the center of the violations. It can also revoke Scott’s export privileges. BIS said Scott has 30 days to respond to the charges. Scott didn’t respond to a request for comment.
BIS Suspends 3 Companies’ Export Privileges for Illegal Exports to China
BIS June 8 issued a temporary denial order for three U.S. companies for their involvement in illegally exported technical drawings and blueprints to China. BIS said it suspended the export privileges for Quicksilver Manufacturing, Rapid Cut and U.S. Prototype for 180 days after they illegally exported materials used to 3D print satellite, rocket and defense-related prototypes, which are subject to strict export controls because of their “sensitivity and importance to U.S. national security,” BIS said.
“Outsourcing 3-D printing of space and defense prototypes to China harms U.S. national security,” BIS Assistant Secretary for Export Enforcement Matthew Axelrod said. “By sending their customers’ technical drawings and blueprints to China, these companies may have saved a few bucks -- but they did so at the collective expense of protecting U.S. military technology.”
BIS said it was alerted to the violations in 2020 by a U.S. aerospace and global defense technology company. The agency found that all three companies used the same “rental mailbox” in North Carolina to receive export-controlled drawings from domestic customers to 3D-print certain “requested items,” BIS said. The companies then provided the drawings to manufacturers in China to 3D print the items “without their customers’ advance consent or knowledge” and without BIS licenses, the agency said. The three companies then imported the items into the U.S. for their customers.
The companies sent a range of “sensitive” drawings to the Chinese manufacturers, BIS said, including for “prototype space and defense technologies.” For one order in 2017, the agency said Quicksilver, a manufacturing services company, received about a dozen technical drawings for items subject to the Export Administration Regulations, which were intended to be used in a prototype space satellite. Quicksilver fulfilled the order and eventually received the finished items from China despite the technical drawings -- classified under Export Control Classification Number 9E515 -- being subject to a presumption of denial policy for China
In May 2021, a U.S. company hired Rapid Cut, which shares ownership with Quicksilver, to manufacture “specially designed parts intended for a rocket platform’s ground support and test equipment,” BIS said. Rapid Cut sent the technology -- which was classified under ECCN 9E604.a and also subject to a presumption of denial licensing policy for China -- to China May 7, 2021, without a license. Rapid Cut, like Quicksilver, exported the drawings despite being told by the customer that the drawings were subject to export controls and required a license.
The companies’ “clear disregard for export controls” also led to violations of the State Department’s International Traffic in Arms Regulations, BIS said. In April 2020, Quicksilver sent a U.S. customer an invoice for its 3D manufactured items, BIS said, and the invoice identified the shipper of the goods as Quicksilver MFG, located in Zhongshan, China. BIS said Quicksilver sent the customer’s technical drawings -- which were controlled under U.S. Munitions List Category XX -- to China despite Quicksilver signing a purchase order agreeing to comply with U.S. export regulations. The signed order said Quicksilver read the customer's terms and conditions, including the section on complying with “all applicable U.S. export control laws and regulations, specifically including but not limited to the Arms Export Control Act, ITAR, and the EAR.”
BIS said US Prototype’s president is a Quicksilver employee and listed as the designated representative for Rapid Cut’s corporate bank account. Prototype shared the North Carolina rental mailbox with Quicksilver and Rapid Cut.
The agency said it’s still investigating the illegal exports and encouraged customers of all three companies to “review their records to determine whether intellectual-property or export-controlled technology was provided and/or potentially compromised.” The denial order will remain in effect for 180 days from June 7 and may be renewed. The companies didn’t immediately respond to requests for comment.
BIS Charges Russian Oligarch With Export Violations
BIS June 6 charged Russian oligarch Roman Abramovich with violating U.S. export controls by exporting U.S.-origin aircraft to Russia without the required licenses (see 2202240069). BIS said Abramovich’s planes flew to and from Russia in March, days after the agency announced new export controls on Russia-related aircraft.
The charging letter -- the first such letter released under new administrative enforcement policies that allow BIS to publish charges before a case is resolved (see 2206030012) -- said Abramovich’s U.S.-origin Gulfstream G650ER aircraft flew from Turkey to Russia March 12 and March 15. His second plane, a U.S.-origin Boeing 787-8, flew from the United Arab Emirates to Russia March 4, BIS said.
Abramovich, whose planes were previously listed on BIS’ list of restricted Russian aircraft (see 2205200008 and 2203180044), didn’t apply for a license from BIS despite both planes being controlled under Export Control Classification Number 9A991, the agency said. BIS also said Abramovich was a “primary passenger on part, if not all,” of the flights to Russia.
Working with BIS, the Justice Department issued a seizure warrant for both of Abramovich’s planes. Both aircraft “flouted export controls that prohibited those planes to pass into Russian territory,” a DOJ official said during a June 6 call with reporters. The planes haven’t yet been taken into U.S. custody but are now “publicly known as wanted property,” the official said.
The official also said it purposefully publicized the seizure notice because it hopes industry and other governments can help it eventually confiscate the planes. “While we pursue these assets -- as we will -- today's filings provide banks, insurance companies, aviation service providers and others with the details sufficient to understand” that “any company that may assist in further moving these playing while they're under active pursuit runs the risk of being viewed as obstructionist,” the official said.
A second administration official said the Commerce Department hopes BIS’ public charging letter “helps with deterrence” and lets industry know “when there is a violation of our rules, we take action.” BIS can issue a maximum penalty of about $328,000 per violation, or twice the value of each airplane, the official said. The Boeing plane is worth about $350 million, and the Gulfstream about $50 million.
“The maximum penalty would be pretty high,” the official said. “What the actual result of an administrative proceeding would be, I wouldn't want to predict,” the official added. “I think we'll see as this plays out."
Maryland Man Sentenced to Prison for Trying to Ship Goods to Hong Kong Without Export License
Jorge Orencel, of Silver Spring, Maryland, was sentenced to six months in federal prison and one year of supervised release for attempting to smuggle goods out of the U.S. without the necessary export license, the U.S. Attorney's Office for the District of Maryland said Feb. 22. Orencel, who pleaded guilty, was also ordered to pay a $5,000 fine for attempting to ship a fission chamber and five ionization chambers to a company in Hong Kong.
Orencel owned and operated shipping company Sumtech, which told prospective customers it could ship goods to South America, Asia and the Middle East. In 2016, Orencel was approached by an employee of a Hong Kong company that wanted to buy five ionization chambers and one fission chamber from an unnamed, New York-based manufacturer. The Hong Kong contact said this manufacturer needed an end-user statement and export license if the goods were to be shipped out of the U.S., DOJ said. Orencel took the order to the manufacturer, saying the intended destination was Argentina.
In 2017, agents from the BIS Office of Export Enforcement provided Orencel copies of the relevant export regulations, DOJ said. He told the agents he "always obtained export licenses when required," DOJ said. A week later, Orencel shipped the ionization chamber to Hong Kong, having not yet received the fission chamber. Just before receiving the fission chamber, Orencel undervalued the chamber and falsified its final destination in a Shipper's Letter of Instruction. Law enforcement seized the package in New York before further shipping took place. Orencel admitted he had lied about the chamber's final destination and undervaluing the product.
DDTC Fines US Company for Illegal Defense Exports, ITAR Violations
The State Department fined a U.S. electro-optics equipment manufacturer $840,000 after it illegally exported or tried to export defense items to several countries, including China and Lebanon. Torrey Pines Logic didn’t secure required export licenses before shipping its products, illegally participated in defense export activities while it was ineligible and didn’t maintain adequate export transaction records, the Directorate of Defense Trade Controls said in a charging letter released Jan. 31. TPL ultimately agreed to a series of remedial measures to improve its export compliance program, including hiring a DDTC-approved compliance officer.
In one instance, Leonid Volfson, TPL’s founder, tried to illegally take International Traffic in Arms Regulations-controlled thermal imaging systems on a 2018 commercial flight from Seattle to Singapore via Tokyo. DDTC said CBP agents stopped Volfson when he couldn’t provide them with approved export licenses for the cameras, which customs eventually seized. TPL and Volfson later “challenged” the State Department’s jurisdiction over the cameras and said they were only trying to “relocate to Singapore the manufacturing of the Chinese-made component parts.” TPL and Volfson also said Volfson “had a good faith belief that the two thermal imaging systems were not ITAR-controlled.”
In 2015, TPL exported various “small form-factor thermal imagers” to Germany, Switzerland, the Netherlands, France, Malaysia, Canada, Hong Kong and Austria without licenses. The company also exported 13 shipments of the imagers to Bulgaria, Canada, Estonia, Germany, Lebanon, Russia, Spain, Switzerland and China while their commodity jurisdiction request with DDTC was still pending, the agency said.
DDTC also said TPL repeatedly tried to conduct ITAR activities while ineligible and not registered with DDTC. Despite being suspended from government contracting in 2013, making the company “generally ineligible to engage in activities regulated under the ITAR,” TPL disclosed to DDTC that it continued to export ITAR goods during its suspension period. This included “manufacturing and supporting the export” of an S30 Sentinel, a “hand-held device designed to detect optical systems pointed at the viewer,” to Japan and Thailand.
During the suspension period, TPL also performed “manufacturing work” on at least one S30 Sentinel for the Los Angeles-based branch of Japanese company Sojitz, which was intended to be ultimately delivered to Sojitz Aerospace Corp. in Japan. TPL also disclosed to DDTC that it continued to do manufacturing work despite not being registered with DDTC.
TPL also planned an export transaction while it was barred from exporting ITAR-controlled goods, DDTC said. In 2014, it worked with its sister company, Foms, on a project involving the export of defense goods to Thailand. Although Foms and TPL agreed to wait to move forward with the actual export until TPL regained its ITAR eligibility, which was thought to be after March 2015, Foms submitted a license application to DDTC in January 2015 to export the defense item, which was intended for Thailand’s navy.
Even though TPL said it “completed the modification work on the items, prepared the items for export to Thailand, and accepted payment from FOMS for the items to be exported” only after its suspension was lifted, the company still “participated in certain aspects of the transaction during their period of general ineligibility,” DDTC said.
In another instance, TPL exported an S30 Sentinel to Sojitz in Japan despite being told by DDTC months earlier that the product required a license. TPL told DDTC that it only sent the S30 Sentinels to Sojitz’s L.A. branch, and that Sojitz had planned to export the products to Japan. But DDTC found invoices and shipping documents that showed “direct shipments from TPL in San Diego, California, to Sojitz in Tokyo, Japan.”
DDTC also said TPL didn’t maintain and couldn’t produce its export transactions records, which “hindered” the agency’s review of TPL’s export compliance and limited its ability to “assess any potential harm to U.S. national security and foreign policy arising” from the violations. In addition, in a 2016 external auditor report, an auditor wrote that the company wasn’t following certain guidelines in its export compliance manual and didn’t maintain an export license log, DDTC said. The auditor also wrote that the company didn’t keep “any records of technical data exports,” and said it “uses serial numbers yet is not able to tie its own serial numbers to product details.”
DDTC pointed to several aggravating factors that led to the penalty, including that some of TPL’s violations involved China and Lebanon, two proscribed country destinations in the ITAR. Some violations also involved Russia, which is subject to strict licensing requirements, and some exports qualified as “significant military equipment.” DDTC also pointed to the company's having committed “repeated violations” of the ITAR and not voluntarily disclosing certain violations.
The agency also referenced several mitigating factors, including TPL’s one voluntary disclosure, which included a third-party audit report, and its cooperation with DDTC’s investigation. TPL also entered into several tolling agreements, and Volfson waived his statute of limitations defense.
As part of the consent agreement, DDTC will waive $420,000 of its fine if TPL applies that money to improve its export compliance program and procedures, which includes hiring an outside compliance officer and conducting an audit. The officer, who must be approved by DDTC, will report to the agency during the three-year agreement and will monitor TPL’s ITAR compliance. DDTC will also conduct multiple on-site reviews.
TPL also agreed to strengthen its corporate compliance procedures within the next 10 months so that its employees are familiar with government export regulations and understand their obligations. Within 32 months, the company also must “review and verify” the export control jurisdiction of all items it manufactures, including any associated defense services, technical data or software. After the review, the company must verify to DDTC that the items have accurate jurisdiction determinations.
TPL will also be barred from exporting, temporarily importing, reexporting, retransferring or brokering defense articles or defense services during the three-year consent agreement. The company will also not be allowed to manufacture defense products for its affiliated entities to export. But DDTC said it decided not to impose a debarment on TPL because the company “acknowledged the seriousness of the violations,” agreed to pay a cash penalty and implement “significant additional remedial compliance actions.” A TPL spokesperson didn’t comment.
DOJ Announces Guilty Plea and Indictment in Illegal Dual-Use Export Scheme to Iran
The U.K's Saber Fakih pleaded guilty in the U.S. District Court for the District of Columbia to illegally exporting and attempting to export an industrial microwave system (IMS) and counter-drone system to Iran, DOJ said. Fakih also admitted conspiring with Bader Fakih of Canada; Altaf Faquih from the United Arab Emirates; and Alireza Taghavi of Iran. Fakih's actions violated the International Emergency Economic Powers Act and Iranian Transactions and Sanctions Regulation, DOJ said Jan. 27.
The IMS and counter-drone system are dual-use items with military applications as a high-power microwave-based directed-energy weapon system and a mechanism to take control of target unmanned aerial vehicles, respectively, DOJ said. Fakih faces up to 20 years in prison and/or a $1 million fine for violating the IEEPA.
DOJ also announced that Iranian national Jalal Rohollahnejad was indicted on charges of smuggling, wire fraud and unlawful export information activities, among others, from the same export scheme. Rohollahnejad was added to the BIS Entity List in March 2020 for procuring goods on behalf of a Specially Designated National (see 2003130029). Rohollahnejad and Taghavi allegedly served as representatives of the Rayan Roshd Asfzar company, which has been linked to the Iranian Revolutionary Guards Corps, the indictment said.
2 Florida Residents Sentenced for Trying to Illegally Export Rebreathing Equipment to Libya
Florida residents Peter Sotis and Emilie Voissem were sentenced Jan. 12 for conspiring to and illegally attempting to ship export-controlled rebreather diving equipment to Libya, DOJ said. Sotis will spend 57 months in prison, while Voissem will serve a five-month sentence in prison and a five-month term in home confinement. The scheme to illegally export the rebreather equipment -- an item that is export controlled due to its enhanced underwater breathing capabilities and dual use as a military and civilian item -- was hatched in August 2016.
Due to their place on the Commerce Control List, the items required a license to be exported. Sotis owned 80% of diving equipment and training company Add Helium and Voissem was the office manager. Despite being warned that the equipment couldn't be exported without a license, Sotis and Voissem lied to shipping company Ramas about being told this information, DOJ said. Sotis also threatened a government witness not to cooperate with the federal investigation, testimony revealed.
Chinese National Pleads Guilty in Monsanto Trade Secrets Case
Xiang Haitao, a Chinese national, pleaded guilty Jan. 6 to conspiracy to steal a trade secret from international agricultural biotechnology company Monsanto to benefit the Chinese government, DOJ said. Xiang worked at the company, now part of Bayer, and its subsidiary, The Climate Corporation, during 2008-2017 as an imaging scientist. Monsanto and The Climate Corporation developed a digital, online farming software platform used to collect and store field data and bolster productivity for farmers, DOJ said. The Nutrient Optimizer was a key piece of this technology and ended up being the target of Xiang's trade theft efforts.
The day after Xiang ended his tenure with Monsanto and its subsidiary, he booked a one-way ticket to China. Federal officers searched his bags while he was waiting to board the flight and found what was later determined to be the company's trade secrets, DOJ said. Although he was allowed to continue to China, Xiang was arrested upon his return to the U.S., DOJ said. He pleaded guilty to one count of conspiracy to commit economic espionage and faces a maximum penalty of 15 years in prison coupled with a potential fine of $5 million. Sentencing will be April 7, DOJ said.
“Despite Xiang’s agreements to protect Monsanto’s intellectual property and repeated training on his obligations to do so, Xiang has now admitted that he stole a trade secret from Monsanto, transferred it to a memory card and attempted to take it to the People’s Republic of China for the benefit of Chinese government,” said Assistant Attorney General Matthew Olsen of DOJ's National Security Division. “With his guilty plea, Xiang is now being held accountable for this unlawful conduct.”