News and Press Releases

Chinese Nationals Sentenced 24 Months for Illegally Attempting to Export Radiation-Hardened Microchips to the PRC

FOR IMMEDIATE RELEASE
September 30, 2011

ALEXANDRIA, Va. – Two Chinese nationals were sentenced to 24 months in prison today for participating in a conspiracy to violate the Arms Export Control Act and smuggle radiation-hardened microchips from the United States for an agency controlled by the People’s Republic of China (PRC) and responsible for the development of missiles and launch vehicles.
       Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Lisa Monaco, Assistant Attorney General for National Security; John P. Torres, Special Agent in Charge for ICE, Office of Homeland Security Investigations (HSI) in Washington, D.C.; and Robert E. Craig, Special Agent in Charge of the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office, made the announcement after sentencing by United States District Judge Gerald Bruce Lee.
        “The line between traditional espionage, export violations and economic espionage has become increasingly blurred as the sensitive information sought by the PRC commonly has ramifications both economically and in terms of national security,” said U.S. Attorney MacBride. “Today’s sentences should serve as a deterrent to anyone who might seek to illegally obtain sensitive information for the PRC. The person they are dealing with may turn out to be a federal undercover agent.”
“The protection of America’s most sensitive technologies, particularly those with defense applications, is among HSI’s most critical of missions,” said ICE HSI SAC Torres. “ICE HSI will continue to work with our foreign and federal law enforcement partners to ensure that those who illegally export sensitive materials are identified, investigated, and brought to the U.S to face prosecution.”
        On June 1, 2011, Hong Wei Xian, a/k/a “Harry Zan,” 32, and Li Li, a/k/a “Lea Li,” 33, both from the PRC, pled guilty to conspiring to violate the Arms Export Control Act and to smuggle goods unlawfully from the United States.
        Xian and Li were officers of Beijing Starcreates Space Science and Technology Development Company Limited (Beijing Starcreates), which, among other things, engages in the business of importing and selling programmable read-only memory microchips to China Aerospace Science and Technology Corporation (China Aerospace).  China Aerospace is controlled by the PRC government and plays a substantial role in the research, design, development and production of strategic and tactical missile systems and launch vehicles for the PRC.
           Since 1990, the U.S. government has maintained an arms embargo against the PRC that prohibits the export, re-export, or re-transfer of any defense article to the PRC. Prohibited defense articles are placed on the United States Munitions List, which includes spacecraft systems and associated equipment. A programmable read-only memory microchip (PROM) serves to store the initial start-up program for a computer system and is built to withstand the conditions present in outer space.
           According to their guilty pleas, Xian and Li admitted that they neither applied for nor received a license from the United States to export defense articles of any description; however, from April 2009 to Sept. 1, 2010, the two contacted a company in the Eastern District of Virginia, seeking to export thousands of radiation-hardened PROMs from that company.  Xian and Li knew a license was required, but did not seek to obtain one because it would have required them to identify the end user — their PRC-controlled customer, China Aerospace — and describe the end use that would occur on behalf of the PRC.  To avoid drawing attention to the true purpose of their orders, the defendants conspired to break up orders into multiple shipments and designate countries outside the PRC for delivery. 
On Sept. 1, 2010, the defendants were arrested in Hungary pursuant to a United States provisional arrest warrant and transferred into the custody of U.S. Marshals on April 1, 2011, after they waived extradition. In sentencing the defendants, Judge Lee expressly stated that he had already taken into account the time the defendants had spent in jail in Hungary, and that those seven months would not reduce the sentence imposed today. Effectively, then, the defendants’ sentence was 31 months in prison.
        This case was investigated by ICE HSI and DCIS, with assistance from ICE HSI Office of International Affairs, Department of Justice’s Office of International Affairs, and the Department of Defense, Defense Security Service.  Assistant United States Attorney James P. Gillis of the Office’s National Security and International Crime Unit and Trial Attorney Brandon L. Van Grack of the Justice Department’s National Security Division are prosecuting the case on behalf of the United States.
        A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov

 

 

 

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