Department of Justice seal U.S. Department of Justice

Debra Wong Yang
United States Attorney
Central District of California

United States Courthouse
312 North Spring Street
Los Angeles, California 90012
Release No. 06-044

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April 19, 2006
For Information, Contact Public Affairs
Thom Mrozek (213) 894-6947


Los Angeles, CA - Admitting his role in a series of conspiracies, a Southern California man today pleaded guilty to a host of federal charges related to schemes to smuggle many items into the United States, including a plot to smuggle into the country surface-to-air missiles designed to shoot down aircraft.

Chao Tung Wu, 51, of La Puente, appeared in United States District Court and admitted that he conspired to smuggle, among other things, Chinese-made QW-2 shoulder-fired missiles into the United States. The guilty plea in relation to the missile is the first conviction in the nation under an anti-terrorism statute that outlaws the importation of missile systems designed to destroy aircraft. Enacted in December 2004 as part of an intelligence reform package, the statute carries a mandatory minimum penalty of 25 years and the possibility of life without parole in federal prison.

A second man charged in the missile smuggling scheme Yi Qing Chen, 41, of Rosemead, California is scheduled to go on trial in that case on June 27.

The case against Wu and Chen is the result of Operation Smoking Dragon, an FBI-led undercover investigation into smuggling operations in Southern California. Smoking Dragon and a related investigation in New Jersey this summer led to the indictment of 87 individuals on charges related to international conspiracies to smuggle counterfeit United States currency, drugs and other contraband into the United States.

According to a statement of facts read in court today when Wu pleaded guilty, Wu and Chen met with an undercover FBI agent and agreed to arrange the importation of hundreds of QW-2 shoulder-fired missiles, as well as launch and operation hardware for the missiles, from the People's Republic of China. Wu and Chen told the undercover agent that a third country would pretend to order and receive shipment of the missiles from the manufacturer, but the missiles would, instead, ultimately be shipped to the United States in sea-land containers. Wu, Chen and unindicted co-conspirators allegedly were to pay bribes to customs officials in other countries to ensure the shipment. One payment was to be a $2 million bribe to an official in a foreign country. The missiles were never delivered because Wu and Chen were arrested last August before the deal was concluded. According to the indictment still pending against Chen, after the arrests, a confederate in the PRC continued to contact an undercover FBI agent to discuss consummating the proposed sale.

Wu also pleaded guilty to conspiring to smuggle "Supernotes" extremely high quality counterfeit $100 bills into the United States. Wu, who told the undercover agent that the counterfeit bills were manufactured in North Korea, agreed to provide $2 million worth of Supernotes. As part of the investigation, nearly $2 million in counterfeit $100 bills were seized at the Port of Los Angeles last year.

Wu also pleaded guilty today to conspiring to distribute methamphetamine and Ecstasy, as well as to charges of importing millions of counterfeit cigarettes.

Wu, who is being held without bond, is scheduled to be sentenced by United States District Judge Dale S. Fischer on July 31.

Operation Smoking Dragon, which was announced on August 18, resulted in four indictments in Los Angeles that name 30 defendants. The indictments allege that several individuals in California were importing counterfeit products, including $40 million worth of cigarettes that were manufactured in a foreign country, through the Los Angeles and Long Beach ports. An FBI undercover operation arranged the shipment of these counterfeit goods into California for the purpose of identifying the entire criminal enterprise. FBI undercover agents posed as underworld criminals who could move these counterfeit products into the United States and Canada. The defendants, believing they were dealing with other criminals, paid for some of the illegal shipments with counterfeit cigarettes and narcotics.

Operation Smoking Dragon was an investigation run by the Federal Bureau of Investigation, which received substantial assistance from U.S. Immigration and Customs Enforcement and the United States Secret Service.


Release No. 06-044

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