Company President And Employee Arrested In Alleged Scheme To Violate The Export Control Reform Act
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, and Jonathan Carson, Special Agent in Charge of the New York Field Office of the U.S. Department of Commerce, Office of Export Enforcement (“OEE”), announced the arrests today of CHONG SIK YU, a/k/a “Chris Yu,” and YUNSEO LEE. YU and LEE are charged with conspiring to unlawfully export dual-use electronics components, in violation of the Export Control Reform Act, and to commit wire fraud, bank fraud, and money laundering. YU and LEE were arrested this morning and are expected to be presented later today before U.S. Magistrate Judge Kevin Nathaniel Fox in Manhattan federal court.
Acting U.S. Attorney Audrey Strauss said: “Chong Sik Yu and Yunseo Lee are accused of violating U.S. export laws by sending electronics components with military applications to Hong Kong and China. Together with the Commerce Department and all of our law enforcement partners, we will continue to protect our national security by preventing dual-use technologies from being sent abroad without the required licenses.”
Assistant Attorney General for National Security John C. Demers said: “The Department’s fight against illegal technology transfer to China is no more critical than in areas like those involved in this case – controlled items used in missile and nuclear technology. We will do everything in our power to disrupt illegal exports like these that jeopardize our national security.”
OEE Special Agent in Charge Jonathan Carson said: “A top priority of the Office of Export Enforcement is identifying and disrupting the illicit export of items to Hong Kong and China that undermine the national security of the United States. We will continue to work with our law enforcement partners using criminal prosecutions to keep the most dangerous goods out of the most dangerous hands.”
As alleged in the criminal Complaint, unsealed today in Manhattan federal court:
Since at least 2019, a U.S. company named America Techma Inc. (“ATI”) has illegally exported electronic components from the United States to Hong Kong for apparent re-export to other countries, including China, in violation of the Export Control Reform Act of 2018 (“ECRA”). Pursuant to the ECRA controls, the Department of Commerce administers export-licensing and other requirements for the export of goods, software, and technologies from the United States to foreign countries. These requirements 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. The Commerce Department identifies the most sensitive items subject to Export Administration Regulations (“EAR”) on the Commerce Control List (“CCL”), which is categorized by Export Control Classification Number (“ECCN”).
YU is ATI’s president, and LEE is an ATI sales representative. YU and LEE worked together and with others to ship what they knew to be export-controlled items to Hong Kong and China. For instance, in June 2019, ATI obtained electronics components – which are export-controlled under the CCL for missile technology, nuclear nonproliferation, and anti-terrorism reasons – from a U.S. supplier (“U.S. Supplier-1”), and then sent those components to a trading company in Hong Kong (“Hong Kong Trading Company-1”). In January 2020, ATI attempted to send to Hong Kong Trading Company-1 several electronic components, which are export-controlled under the CCL for national security, regional stability, missile technology, nuclear nonproliferation, and anti-terrorism reasons. After the January 2020 package was detained by law enforcement, YU and LEE discussed methods for evading future law enforcement scrutiny by, for instance, transshipping packages through South Korea, and by using a separate company based in New Jersey (the “New Jersey Reshipper”) to send shipments to Hong Kong in an attempt to avoid customs scrutiny of ATI’s shipments.
For instance, on February 12, 2020, LEE sent an email to another ATI customer located in Hong Kong (“Hong Kong Company-2”) stating that: “[W]e had delivery issue currently with customs, so we’ve decided to release all items to South Korea first and release to HK from Korea temporarily.” The next day, LEE received a response, which stated, in part, “Most of the items we buy from ATI are under ECCN restriction, so I guess ATI will stock in and release to [ATI’s branch in South Korea], and then ship to HK . . . am I correct?” LEE replied, “Yes you are right.”
On March 5, 2020, LEE responded to Hong Kong Company-2’s inquiry regarding whether ATI could sell certain components to China. LEE’s response, which copied YU, stated: “We’ve sold” the requested parts “to China customer many times. . . But currently we have customs issue so we don’t know how to handle it. [W]e are thinking we release all controlled parts to South Korea first then release to HK from Korea[.]”
Hong Kong Trading Company-1 also advised ATI on steps to take in order to evade U.S. export controls. For instance, Hong Kong Trading Company-1 advised YU and LEE to use a marker to obscure ATI’s name on labels, to cover each component with an electro-static discharge (“ESD”) bag, to remove all original documentation from the package, and to use the New Jersey Reshipper to send the shipment. On March 14, 2020, LEE sent an email to Hong Kong Trading Company‑1, copying YU, stating: “We will follow your direction like adjusting invoice or removed label. But we do not have responsible if it will have problem during the transit to you. But for sure, we will do everything what you want for preparing shipments. We just hope that there is no more detained package.”
In April 2020, ATI sent a package of components to Hong Kong Trading Company-1 using the New Jersey Reshipper. The package was inspected and detained by U.S. customs authorities. Consistent with Hong Kong Trading Company-1’s instructions, the components had been placed in ESD bags labelled with part numbers different from the actual part numbers. One of the components in the April 2020 shipment was export-controlled under the CCL for national security and anti-terrorism.
Financial and shipping records establish that ATI has had a long-standing relationship with Hong Kong Trading Company-1. Between August 2016 and July 2020, ATI shipped more than 200 packages to Hong Kong Trading Company-1. In the one-year period between May 2019 and June 2020, Hong Kong Trading Company-1 transferred over $800,000 into ATI’s bank account in the United States.
No one involved in any of these transactions obtained the licenses required under the ECRA to export these dual-use components.
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YU, 58, of Oradell, New Jersey, and LEE, 33, of Fort Lee, New Jersey, are each charged with one count of conspiring to unlawfully export dual-use electronics components, which carries a maximum sentence of 20 years in prison, one count of conspiring to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison, and one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Ms. Strauss praised the extraordinary investigative work of the New York Field Office of the Department of Commerce, Office of Export Enforcement. Ms. Strauss also thanked the Newark Field Offices of Homeland Security Investigations and U.S. Customs and Border Protection for their assistance in the investigation, as well as the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.
This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Michael K. Krouse and Michael D. Lockard are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Counterintelligence and Export Control Section.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein are only allegations, and every fact described should be treated as an allegation.