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HONG KONG CITIZEN SENTENCED TO 42 MONTHS FOR ATTEMPT TO ILLEGALLY EXPORT MILITARY PARTS TO IRAN

September 29, 2011

BOSTON - A Hong Kong national was sentenced to 42 months for conspiring to illegally export, and attempting to illegally export, 10 indicators, used in C-130 military flight simulators in violation of the Arms Export Control Act and Smuggling Statute. These indicators are designated on the U.S. Munitions List. HOK SHEK CHAN a/k/a JOHN CHAN, 57, of Hong Kong, had been engaged in the procurement and export of U.S. aircraft parts for military-related entities in Iran for the last 20 years.

On Sept. 26, CHAN was sentenced to 42 months in prison for conspiring with two Malyasian nationals, WONG FOOK LOY a/k/a AARON WONG and NGO TEK CHAI a/k/a T.C. NGO and others to knowingly and willfully export and cause the export of military components used in C-130 military flight simulators from the United States without the required license or written authorization from the Department of State having first been obtained, and attempting to illegally export the military flight indicators from the United States in violation of the Arms Export Control Act.

At the sentencing hearing, the government argued that CHAN’s conduct threatened the national security of the United States. In 1993, CHAN’s company, Jetpower Industrial, was convicted in Hong Kong of export violations related to his export of U.S. military parts to Iran. CHAN then changed his business practices to avoid detection. Rather than shipping U.S. origin goods directly from Hong Kong to Iran, CHAN set up a sophisticated procurement network involving front companies and an experienced freight forwarder in Malaysia. Using his network, the defendant was engaged in the illegal procurement and export of aircraft parts from the U.S. for customers located in Iran, including several military related entities in Iran such as the Iranian Air Force, in direct violation of the U.S. Embargo against Iran since 1997.

Judge Douglas P. Woodlock agreed with the government that CHAN committed a “very serious crime,” he “was aware of the illegality of his conduct,” and was “engaged in [this type of criminal conduct] for a very long time.” Judge Woodlock also determined that the United States’ sanctions against Iran are well-known and that the parts Chan conspired to export would have been “useful to Iran.” Judge Woodlock further concluded that a sentence of 42 months was necessary under the circumstances to deter others from violating U.S. export laws.

United States Attorney Carmen M. Ortiz said, “Safeguarding America’s sensitive technology against illicit foreign procurement efforts is of critical importance. This sentence acknowledges the seriousness of those crimes and should send a strong message to anyone considering to violate our export laws.”

“This case is yet another example of the diligent work conducted by HSI and its domestic and international law enforcement partners in safeguarding sensitive military technology,” said Bruce M. Foucart, Special Agent in Charge of HSI in Boston. “Export violations involving military components are a serious threat to our national security and a top ICE priority.”

"This lengthy sentence is a tremendous victory in the fight against the transshipment of U.S.-origin items to Iran," said John McKenna, Special Agent-in-Charge of the Commerce Department's Boston Office of Export Enforcement. "Federal law enforcement agencies will continue to conduct highly coordinated investigations in conjunction with the U.S. Attorney's office to pursue those who willfully violate our laws," he added.

"Our national security is predicated on America's military possessing the most sophisticated technology and weapon systems in the world,” said Leigh-Alistair Barzey, Resident Agent in Charge, U.S. Department of Defense, Defense Criminal Investigative Service, Boston Resident Agency. “This sentencing should serve as a deterrent to those who would try to circumvent U.S. export laws and demonstrates the commitment of DCIS, and its federal law enforcement partners, to detect and defeat illegal efforts to provide sensitive military technology to countries, such as Iran, that are specifically restricted from receiving that information."

Charges against WONG FOOK LOY a/k/a AARON WONG and NGO TEK CHAI a/k/a T.C. NGO are pending. If extradited and convicted of the pending charges against them, they each face up to 10 years in prison, to be followed by three years of supervised release, and a $1 million fine.

U.S. Attorney Carmen M. Ortiz, Special Agent in Charge Foucart, Special Agent McKenna, and Edward Bradley, Special Agent in Charge of the Defense Criminal Investigative Service, Northeast Field Office, announced the sentence today.

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

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