Russian International Money Launderer Arrested For Illicitly Procuring Large Quantities Of U.S.-Manufactured Dual-Use, Military Grade Microelectronics For Russian Entities
Damian Williams, the United States Attorney for the Southern District of New York, Merrick B. Garland, the Attorney General of the United States, Lisa O. Monaco, the Deputy Attorney General, Matthew G. Olsen, the Assistant Attorney General for National Security, Christopher A. Wray, the Director of the Federal Bureau of Investigation (“FBI”), Paul Abbate, the Deputy Director of the FBI, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the FBI, Donald Alway, the Assistant Director in Charge of the Los Angeles Field Office of the FBI, and J. Russell George, the Treasury Inspector General for Tax Administration (“TIGTA”), announced today the unsealing of a Complaint charging JOHN CHEN, a/k/a “Chen Jun,” a U.S. citizen and former citizen of the People’s Republic of China (“PRC”), and LIN FENG, a PRC citizen, with acting and conspiring to act in the United States as unregistered agents of the PRC Government, conspiring to bribe and bribing a public official, and conspiracy to commit money laundering. The charges in the Complaint arise from CHEN and FENG’s alleged participation in a PRC Government-directed scheme targeting U.S.-based practitioners of Falun Gong — a spiritual practice banned in the PRC. CHEN and FENG were arrested today in the Central District of California and will make an initial appearance later today before Chief U.S. Magistrate Judge Pedro V. Castillo.
U.S. Attorney Damian Williams said: “John Chen and Lin Feng allegedly waged a campaign at the behest of the Government of the People’s Republic of China to influence a U.S. Government official in order to further the PRC Government’s repression of practitioners of Falun Gong. Efforts to manipulate and use the arms of the U.S. Government to carry out the PRC Government’s autocratic aims are as shocking as they are insidious. My Office will work vigorously to protect against malign foreign influences.”
Attorney General Merrick B. Garland said: “The Chinese government has yet again attempted, and failed, to target critics of the PRC here in the United States. We allege the defendants in this case attempted to bribe someone they thought was an IRS agent in order to further the Chinese government’s campaign of transnational repression in the United States. But the individual they attempted to bribe was in fact an undercover law enforcement agent, and both defendants were arrested this morning. The Justice Department will continue to investigate, disrupt, and prosecute efforts by the PRC government to silence its critics and extend the reaches of its regime onto U.S. soil. We will never stop working to defend the rights to which every person in the United States is entitled.”
Deputy Attorney General Lisa O. Monaco said: “The Department of Justice continues to expose the Chines government’s brazen attempts to perpetrate transnational repression, this time through attempted bribery. As highlighted by today’s arrests and charges of conspiracy, bribery, and money laundering, we will not tolerate efforts by the PRC or any foreign government to intimidate, harass, or undermine the rights and freedoms enjoyed by all who live in the United States.”
Assistant Attorney General Matthew G. Olsen said: “The Department of Justice continues to expose the Chinese government’s brazen attempts to perpetuate transnational repression, this time through attempted bribery. As highlighted by today’s arrests and charges of conspiracy, bribery, and money laundering, we will not tolerate efforts by the PRC or any foreign government to intimidate, harass, or undermine the rights and freedoms enjoyed by all who live in the United States.”
FBI Director Christopher A. Wray said: “China’s government has once again shown its disregard for the rule of law and international norms. The FBI will not tolerate CCP repression – its efforts to threaten, harass, and intimidate people – here in the United States. We will continue to confront the Chinese government’s efforts to violate our laws and repress the rights and freedoms of people in our country.”
FBI Deputy Director Paul Abbate said: "No other nation poses as severe a threat to the democratic values of the United States as the government of the People's Republic of China. The FBI will not stand by as the PRC attempts to weaponize our institutions and programs and attack the rights of those on U.S. soil. Any attempt to repress or harass individuals runs directly counter to the ideals our nation was founded upon, and it simply will not be tolerated. The FBI and our partners remain committed to confronting the illegal conduct of the PRC government that threatens our national security and freedom."
FBI New York Assistant Director in Charge Michael J. Driscoll said: “We allege Chen and Feng, acting on behalf of the Chinese government, attempted to execute a scheme to manipulate a United States government official to repress individuals opposed to the People’s Republic of China. This appears to be another example of the Chinese government’s willingness to disregard the laws and freedoms of the United States as they attempt to harm anyone with views they oppose. The FBI will continue to be resolute in protecting people from repressive actions.”
FBI Los Angeles Assistant Director in Charge Donald Alway said: “The alleged activity is antithetical to fundamental American values, and those who practice transnational oppression on behalf of the Chinese government must be held accountable. The FBI will continue to invest resources to protect the rights of Americans and those who come to live, work, and study in the United States.”
TIGTA Inspector General J. Russell George said: “The attempt to undermine the integrity of our tax administration system is disturbing. The individuals who thought they could do so have learned a hard lesson. The Treasury Inspector General for Tax Administration is committed to protecting the Nation’s tax system. I want to thank our law enforcement partners and the U.S. Attorney’s Office for their efforts.”
According to the allegations contained in the Complaint unsealed today in White Plains federal court:
From at least approximately January 2023 to May 2023, CHEN and FENG worked inside the United States at the direction of the PRC Government, including an identified PRC Government official (“PRC Official-1”), to further the PRC Government’s campaign to repress and harass Falun Gong practitioners. The PRC Government has designated the Falun Gong as one of the “Five Poisons,” or one of the top five threats to its rule. In China, Falun Gong adherents face a range of repressive and punitive measures from the PRC Government, including imprisonment.
As part of the PRC Government’s campaign against the Falun Gong, CHEN and FENG allegedly engaged in a PRC Government-directed scheme to manipulate the Internal Revenue Service’s (“IRS”) Whistleblower Program in an effort to strip the tax-exempt status of an entity run and maintained by Falun Gong practitioners (“Entity-1”). After CHEN filed a defective whistleblower complaint with the IRS (the “Chen Whistleblower Complaint”), CHEN and FENG paid $5,000 in cash bribes, and promised to pay substantially more, to a purported IRS agent who was in fact an undercover officer (“Agent-1”) in exchange for Agent-1’s assistance in advancing the complaint. Neither CHEN nor FENG notified the Attorney General that they were acting as agents of the PRC Government in the United States.
In the course of the scheme, CHEN, on a recorded call, explicitly noted that the purpose of paying these bribes, which were directed and funded by the PRC Government, was to carry out the PRC Government’s aim of “toppl[ing] . . . the Falun Gong.” During a call intercepted pursuant to a judicially authorized wiretap, CHEN and FENG discussed receiving “direction” on the bribery scheme from PRC Official-1, deleting instructions received from PRC Official-1 in order to evade detection, and “alert[ing]” and “sound[ing] the alarm” to PRC Official-1 if CHEN and FENG’s meetings to bribe Agent-1 did not go as planned. CHEN and FENG also discussed that PRC Official-1 was the PRC Government official “in charge” of the bribery scheme targeting the Falun Gong.
As part of this scheme, CHEN and FENG allegedly met with Agent-1 in Newburgh, New York, on May 14, 2023. During the meeting, CHEN gave Agent-1 a $1,000 cash bribe as an initial, partial bribe payment. CHEN further offered to pay Agent-1 a total of $50,000 for opening an audit of Entity-1, as well as 60% of any whistleblower award from the IRS if the Chen Whistleblower Complaint were successful. On May 18, 2023, FENG paid Agent-1 a $4,000 cash bribe at John F. Kennedy International Airport as an additional partial bribe payment in furtherance of the scheme.
* * *
CHEN, 70, of the PRC and Los Angeles, California, and FENG, 43, a PRC citizen and resident of Los Angeles, California, are each charged with one count of conspiring to act as an agent of a foreign government without notifying the Attorney General and to bribe a public official, which carries a maximum sentence of five years in prison; one count of acting as an agent of a foreign government without notifying the Attorney General, which carries a maximum sentence of 10 years in prison; one count of bribing a public official, which carries a maximum sentence of 15 years in prison; and one count of conspiring to commit international money laundering, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI’s New York and Los Angeles Field Offices and Counterintelligence Division and TIGTA. Mr. Williams thanked the Department of Justice’s National Security Division, Counterintelligence and Export Control Section and the U.S. Attorney’s Office for the Central District of California for their assistance.
The case is being handled by the Office’s White Plains Division and National Security and International Narcotics Unit. Assistant U.S. Attorneys Shiva H. Logarajah, Qais Ghafary, Michael D. Lockard, and Kathryn Wheelock are in charge of the case, with assistance from Trial Attorney Christina Clark of the Counterintelligence and Export Control Section.
The charges in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.