California-Based Company, Company President and Employee Indicted in Alleged Scheme to Violate the Export Control Reform Act
Chemicals manufactured or distributed in Rhode Island were earmarked to be exported to a company with ties to the Chinese military
PROVIDENCE – The president of a California-based electronics distribution company, his company and an employee have been indicted by a federal grand jury in Providence, Rhode Island, on charges they participated in a conspiracy to conceal information from the U.S. Department of Commerce and U.S. Customs and Border Protection as part of a scheme to illegally export chemicals manufactured and/or distributed by a Rhode Island-based company to a technology company in China. The company is on a U.S. government list of businesses not permitted to receive products manufactured in the United States.
According to an indictment unsealed today in U.S. District Court in Providence, there is reasonable cause to believe that the Chinese entity is involved in the illicit procurement of commodities and technologies for unauthorized military end-use. Export Administration Regulations restrict the export of items that could make a significant contribution to the military potential of other nations or that could be detrimental to the foreign policy or national security of the United States.
It is alleged in the indictment that Broad Tech System Inc., located in Ontario, California, the company’s CEO, CFO, and President Tao Jiang, aka “Jason Jiang” and Bohr Winn-Shih, an equipment engineer for Broad Tech Systems, conspired to order the chemicals HiPR 6517 Photoresist (Photoresist) and HPRD 441 Developer (Developer) from a Rhode Island-based manufacturer, then knowingly submitted false and misleading documentation to the U.S. Government and shipping companies in an effort to have the product illegally shipped to a company in China, in violation of the Export Control Reform Act. Photoresist and HPRD are essential in the chip manufacturing process.
It is alleged the defendants knowingly provided false information in an attempt to ship the chemicals to China Electronics Technology Group Corporation 55th Research Institute, a/k/a Nanjing Electronic Devices Institute, CETC Research Institute 55, NEDI, and NEDTEK, located in Nanjing, China. The company is a state-owned Chinese entity that mainly engages in the manufacturing of electronic components and the research, development and production of core chips and key components in China’s military strategic early warning systems, air defense systems, airborne fire control systems, manned space systems, and other national large-scale projects.
On October 25, 2018, The Customs and Border Protection National Targeting Center alerted an agent from the Department of Commerce (DOC) of an intended export of 58 gallons of Photoresist to NEDI. The shipment was halted and agents from DOC communicated with the RI-based manufacturer to inform them that NEDI was included on a U.S government list of Chinese companies that U.S companies are prohibited from exporting commodities to. The product was returned to the manufacturer.
It is alleged that several days after the shipment to NEDI was halted, the Rhode Island manufacturer received a call from Jason Jiang, acting on behalf of Broad Tech System, requesting to purchase 94 gallons of Photoresist. During continuing communications, Jiang and Bohr Winn-Shih represented to the manufacturer that the intended recipient of the Photoresist, and a quantity of Developer added to the order, was a company called NTESY, located in Nanjing, China. The manufacturer communicated to DOC agents that they found this to be suspicious because they had never done business with Broad Tech; ninety-four gallons was a significant quantity of Photoresist; and that the request came just several days after the shipment to NEDI had been recalled.
Records obtained by DOC agents established that Jiang, Shih and Broad Tech allegedly used NTESY to conceal that NEDI was the intended recipient.
According to the indictment, in January 2019, Jiang, Shih, and Broad Tech provided false information to a California-based freight forwarder about the intended recipient of 58 gallons of Photoresist. In May 2019, Jiang, Shih, and Broad Tech provided false information to the freight forwarder about the intended recipient of an additional 36 gallons of Photoresist and 131 units of Developer. Relying on these false representations, the freight forwarder filed export documents with the DOC that allegedly falsely identified the recipient of the Photoresist and Developer as NTESY.
According to the indictment, on January 29, 2019, Broad Tech received a wire transfer of $65,984 to its account at a bank within the United States purporting to be from NTESY Technology Co., China, representing payment for the 58 gallons of Photoresist. The wire transfer originated in Nanjing, China. Records show that the account where the funds originated from was an account controlled by NEDI.
The indictment charges Broad Tech Systems, Inc., Tao Jiang, 50, of Riverside, CA, and Bohr Winn-Shih, 63, of Ontario, CA, with conspiracy, violation of the Export Control Reform Act, and money laundering conspiracy, announced Aaron L. Weisman, United States Attorney for the District of Rhode Island and Department of Commerce Office of Export Enforcement Boston Field Office Special Agent in Charge William Higgins.
An indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
The case is being prosecuted in the District of Rhode Island by Assistant U.S. Attorney Paul F. Daly, Jr.