Bank Fraud Charges Added to Indictment Against Swiss Businessman in Connection to Russian Oligarch’s Superyacht
WASHINGTON – An indictment, filed in the District of Columbia, charges Chinese nationals Baoxia Liu a/k/a Emily Liu, 42, Yiu Wa Yung a/k/a Stephen Yung, 63, Yongxin Li a/k/a Emma Lee, 36, and Yanlai Zhong a/k/a Sydney Chung, 40, with various federal crimes related to a years-long conspiracy to unlawfully export and smuggle U.S.-origin electronic components from the United States to Iran. According to court documents, Baoxia Liu aka Emily Liu; Yiu Wa Yung aka Stephen Yung; Yongxin Li aka Emma Lee; and Yanlai Zhong aka Sydney Chung unlawfully exported and smuggled U.S. export controlled items through China and Hong Kong ultimately for the benefit of entities affiliated with the Islamic Revolutionary Guard Corps (IRGC) and Ministry of Defense and Armed Forces Logistics (MODAFL), which supervises Iran’s development and production of missiles, weapons, and military aerial equipment to include Unmanned Aerial Vehicles (UAVs).
The indictment was announced by U.S. Attorney Matthew M. Graves, Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, FBI Special Agent in Charge Cheyvoryea Gibson of the Detroit Field Office, and Special Agent in Charge Aaron Tambrini of the Department of Commerce’s Chicago Field Office, Office of Export Enforcement.
According to the indictment, beginning as early as May 2007 and continuing until at least July 2020, the defendants utilized an array of front companies in the People’s Republic of China (PRC) to funnel dual-use U.S.-origin items, including electronics and components that could be utilized in the production of UAVs, ballistic missile systems, and other military end uses, to sanctioned Iranian entities with ties to the Islamic Revolutionary Guard Corps (IRGC) and Ministry of Defense and Armed Forces Logistics (MODAFL) such as Shiraz Electronics Industries (SEI), Rayan Roshd Afzar, and their affiliates.
Throughout the course of the conspiracy, the defendants concealed the fact that the goods were destined for Iran and Iranian entities and made material misrepresentations to U.S. companies regarding the end destination and end users. These deceptive practices caused the U.S. companies to export goods to the defendants’ PRC-based front companies under false pretenses and under the guise that the ultimate destination of these products was China as opposed to Iran. As a result, a vast amount of dual-use U.S.-origin commodities with military capabilities were exported from the United States to Iran in violation of U.S. sanctions and export control laws and regulations.
“Our indictment alleges a years-long, complex conspiracy to violate U.S. laws by procuring U.S. technology with military uses for entities in Iran who would do us harm – a serious offense that endangers our national security,” said U.S. Attorney Matthew M. Graves. “Our office, along with our federal law enforcement partners, will continue to turn over every stone to find those who break our laws and put us at risk. We are committed to making sure that U.S. technology is kept out of the hands of those taking aim at the U.S. and its citizens through robust enforcement of U.S. sanctions.”
“For more than a decade, the defendants allegedly orchestrated a scheme to smuggle U.S. manufactured parts to the IRGC and the Iranian agency charged with developing ballistic missiles and UAVs,” said Assistant Attorney General Matthew G. Olsen of the Justice Department's National Security Division. “Such efforts to unlawfully obtain U.S. technology directly threaten our national security, and we will use every tool at our disposal to sever the illicit supply chains that fuel the Iranian regime's malign activity.”
“Aggressively combatting illicit procurement networks that support Iranian miliary systems like radars and UAVs is essential to U.S. national security,” said Matthew S. Axelrod, Assistant Secretary of Commerce for Export Enforcement. “Today’s indictment, tied to the work of the Disruptive Technology Strike Force, reaffirms that proliferators cannot hide behind front companies in third countries to funnel technology to our adversaries.”
“The theft of technology from the U.S. to Iran and Iranian military affiliates is a threat to our economic and national security,” said Special Agent in Charge Cheyvoryea Gibson, of the FBI’s Detroit Field Office. “The FBI remains committed to combating the illegal transfer of technology and export fraud. We will continue to work with our national security partners to investigate anyone who seeks to weaponize U.S. technology or commodities.”
“This multi-year investigation is the product of vigorous, cooperative law enforcement focused on denying the diversion and export of sensitive U.S.-origin items to Iran that endanger our national security,” said Special Agent in Charge Aaron Tambrini, of the Office of Export Enforcement’s Chicago Field Office. “The Office of Export Enforcement, working with our interagency law enforcement partners, is committed to investigating violations of BIS export control rules and prosecuting the individuals involved, as appropriate, whether in the U.S. or abroad.”
The defendants are charged with conspiring to violate the International Emergency Economic Powers Act (IEEPA), violating IEEPA, smuggling goods from the United States, and one count of submitting false or misleading export information. If convicted, the defendants face a maximum penalty of 20 years in prison for violating the IEEPA; up to 10 years in prison for smuggling goods from the United States; and up to five years in prison for each count of conspiracy and submitting false or misleading export information. Arrest warrants have been issued for Liu, Yung, Li and Zhong who all remain fugitives.
This case is being investigated by the FBI’s Detroit Field Office and the Chicago Field Office of the Department of Commerce’s Office of Export Enforcement. The case is being prosecuted by Assistant U.S. Attorney Jack F. Korba for the United States Attorney’s Office in the District of Columbia and Trial Attorneys Heather Schmidt and Yifei Zheng of the National Security Division’s Counterintelligence and Export Control Section.
In June 2023, the Department of Justice joined with the Departments of Commerce, State, and Treasury to issue an advisory to share information about the threat posed by Iran’s procurement, development, and proliferation of UAVs. Four months later, in October 2023, the Department joined with the same interagency partners to issue an advisory describing the threat posed by Iran’s ballistic missile procurement activities. The advisories gave an overview of the key components sought by Iran, the regime’s use of deceptive practices to acquire certain types of technologies, and recommendations for implementing effective compliance controls to minimize sanctions and export control risk.
Charges in an indictment are merely allegations, and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.