Chinese Green Card Holder Charged With Sending Defense-Related Data to China: DOJ

The Department of Justice building in Washington on March 28, 2023. Madalina Vasiliu/The Epoch Times

U.S. prosecutors have indicted the CEO of a Louisville magnetic company for his alleged role in sending defense-related technical data to China and selling unauthorized items to the Defense Department (DOD), the Department of Justice (DOJ) said on Friday.

Hang Sun, a Chinese national also known as Cody Sun, was charged with four counts of conspiracy, wire fraud, smuggling, and violating the Arms Export Control Act relating to the scheme, according to the DOJ.

Sun became a legal permanent U.S. resident in 2015, a year after acquiring the Louisville-based Quadrant Magnetics LLC. He also owned Quadrant’s parent company in China, according to the indictment.

Prosecutors allege that Sun conspired to illegally send around 70 drawings containing defense-related technical data to a company in China between January 2012 and December 2018.

The DOJ said the drawings were the property of two U.S. companies and contained data related to “end-use items for aviation, submarine, radar, tank, mortars, missiles, infrared and thermal imaging targeting systems, and fire control systems for DOD.”

Sun was accused of “fraudulently” selling rare earth magnets imported from China to two U.S. defense contractors, which then included them in components sold to DOD for use in defense assets such as the F-16 and F-18 aircraft, according to the indictment.

Federal regulations require such components to be smelted and magnetized in the United States or an approved country, of which China is not one.

If convicted, Sun could face up to 20 years in prison for each count of wire fraud and exporting technical data without a license. Additionally, he could face up to five years in prison for conspiracy and 10 years for smuggling items from the United States.

His three co-conspirators—Phil Pascoe, Monica Pascoe, and Scott Tubbs—and Quadrant Magnetics were charged separately on Dec. 5, 2023. Phil Pascoe and Tubbs allegedly instructed Quadrant employees to conceal the country of origin of the items, according to the indictment.

In July, District Judge David Hale in the Western District of Kentucky denied the defendants’ motion to dismiss the exporting technical data charges.

The defendants had argued that the International Traffic in Arms Regulations was “unconstitutionally vague” because it was too difficult to determine whether the magnets had commercial equivalents.

The judge rejected the argument, saying the regulations provided “fair notice” to the company that it needed to obtain a license before exporting technical data related to defense articles.

The Epoch Times has reached out to Quadrant Magnetics for comment but did not hear back as of publication time.