Preet Bharara, the United States Attorney for the Southern District of New York, John P. Carlin, Assistant Attorney General for National Security, Angel M. Melendez, Special Agent in Charge of the New York Field Office of the Department of Homeland Security, Homeland Security Investigations (“HSI”), Jonathan Carson, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office (“DOC”), and Craig Rupert, Special Agent in Charge of the Department of Defense, Defense Criminal Investigative Service, Northeast Field Office (“DCIS”), announced the arrest of FUYI SUN, a/k/a “Frank,” a citizen of the People’s Republic of China (“China”), in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber that is used primarily in aerospace and military applications.
SUN was arrested yesterday after traveling to New York to meet with undercover agents (“UCs”) in an effort to obtain the specialized fiber, which – due to its military and aerospace applications – requires an export license for export to China.
SUN was presented last night in Manhattan federal court before U.S. Magistrate Judge James L. Cott.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Fuyi Sun attempted for years to acquire high-grade carbon fiber for illegal export to China. Earlier this week, after traveling to New York from China to finalize the deal, Sun allegedly told undercover agents that the carbon fiber he sought was headed for the Chinese military, and then paid tens of thousands of dollars in cash to purchase two cases of it. And to avoid law enforcement detection, Sun allegedly directed the undercover agents to ship the carbon fiber in unmarked boxes and to falsify the shipping documents regarding the contents of the boxes.”
Assistant Attorney General John P. Carlin said: “Sun allegedly attempted to procure high grade carbon fiber for a source he repeatedly identified as the Chinese military. The carbon fiber – which has many aerospace and defense applications – is strictly controlled, and Sun expressed a willingness to pay a premium to skirt U.S. export laws. The National Security Division will continue to work to identify and hold accountable those who seek to violate IEEPA and other laws designed to protect our strategic commodities from those who may wish us harm.”
HSI Special Agent in Charge Angel M. Melendez said: “Keeping items such as this high grade carbon fiber, which can be used for military applications, from falling into the wrong hands possibly endangering national security, is a job HSI takes very seriously. Through this investigation, we have disrupted an alleged attempt to knowingly circumvent export controls and ensured this material will not be used for nefarious purposes.”
DOC 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 for unauthorized military end-uses and users in China. Carbon fiber has military, missile and nuclear applications. In this case, working with our law enforcement partners we thwarted an alleged attempt to illegally export carbon fiber to China.”
DCIS Northeast Field Office Special Agent in Charge Craig Rupert said “The recent arrest reinforces the commitment of the Defense Criminal Investigative Service (DCIS) to halting the spread of Defense technology to restricted nations. The ongoing partnership with other law enforcement agencies is essential to shielding America's investment in defense.”
According to the allegations in the Complaint that was filed yesterday in Manhattan federal court:
Since approximately 2011, SUN has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”). M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as “drones”) and other government defense applications. Accordingly, M60 Carbon Fiber is strictly controlled – including that it requires a license for export to China – for nuclear non-proliferation and anti-terrorism reasons.
In furtherance of his attempts to illegally export M60 Carbon Fiber from the United States to China without a license, SUN contacted what he believed was a distributor of carbon fiber – but which was, in fact, an undercover entity created by HSI and “staffed” by HSI undercover special agents (the “UC Company”). SUN inquired about purchasing the M60 Carbon Fiber without the required license. In the course of his years-long communications with the undercover agents and UC Company, SUN repeatedly suggested various security measures that he believed would protect them from “U.S. intelligence.” Among other such measures, at one point, SUN instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications. Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000. In order to avoid detection, SUN also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.
On or about April 11, 2016, SUN traveled from China to New York for the purpose of purchasing M60 Carbon Fiber from the UC Company. During meetings with the undercover agents, on or about April 11 and 12, 2016, among other things, SUN repeatedly suggested that the Chinese military was the ultimate end-user for the M60 Carbon Fiber he sought to acquire from the UC Company. SUN claimed to have personally worked in the Chinese missile program. And SUN asserted that he maintained a close relationship with the Chinese military, had a sophisticated understanding of the Chinese military’s need for carbon fiber, and suggested that he would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it.
On or about April 12, 2016, SUN agreed to purchase two cases of M60 Carbon Fiber from the UC Company. SUN paid the undercover agents $23,000 in cash for the carbon fiber. He also paid an additional $2,000 to the undercover agents as compensation for the risk he believed they were taking to illegally export the carbon fiber to China without a license.
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The Complaint charges SUN, age 52, in three counts: Count One charges attempt to violate the International Emergency Economic Powers Act (“IEEPA”); Count Two charges conspiracy to violate IEEPA; and Count Three charges attempt to smuggle goods from the United States. Counts One and Two each carry a maximum sentence of 20 years in prison. Count Three carries a maximum sentence of 10 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 defendant will be determined by the judge.
Mr. Bharara praised the extraordinary investigative work of the New York Field Office of HSI, the DOC’s Bureau of Industry and Security’s Office of Export Enforcement, the DCIS New York Office, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section.
This prosecution is being handled by the Office’s Terrorism and International Narcotics and Complex Frauds and Cybercrime Units. Assistant United States Attorneys Matthew Podolsky, Patrick Egan, Sean Buckley, and Nick Lewin are in charge of the prosecution. David Recker, Trial Attorney in the National Security Division, Counterintelligence and Export Control Section, is also assisting in the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is 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, constitute only allegations, and every fact described should be treated as an allegation.