The Department of Justice has charged two Chinese nationals who allegedly plotted to export U.S. technology to advance the People’s Republic of China’s military operations.
Han Li, 44, and Lin Chen, 64, have been charged with several counts of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), in addition to the Export Administration Regulations (EAR), for attempting to export a machine used to process silicon microchips. Chen was arrested in Chicago on April 24, and Li is believed to be in China, the Justice Department said.
“The export restrictions at issue in this case were put in place to prevent the illicit procurement of commodities and technologies for unauthorized military end use in the People’s Republic of China,” U.S. Attorney for the Northern District of California Ismail Ramsey said in a press release on the arrests.
“This office will continue to vigorously enforce the nation’s export laws, including those pertaining to advanced technologies, to protect our national security.”
Assistant Attorney General Matthew Olson explained that the defendants “sought to evade export controls to obtain U.S. semiconductors” that they were then going to ship to a Chinese company.
In 2014, the Department of Commerce placed restrictions on the Chengdu GaStone Technology Company (CGTC) based in China, which made it “ineligible to receive exports of certain U.S. technologies and services.”
“As alleged in the indictment, between at least May 2015 and August 2018, Li and Chen conspired to evade the export restrictions imposed by the Department of Commerce on CGTC by using intermediary companies,” the DOJ said.
“Specifically, the defendants sought to illegally obtain for CGTC a DTX-150 Automatic Diamond Scriber Breaker machine from Dynatex International, a Santa Rosa, California company.”
The DOJ said the defendants purposefully avoided getting the Department of Commerce’s authorization to export the CGTC, the DOJ said.
“The defendants sought to obtain the machine through an intermediary company called Jiangsu Hantang International (JHI), which they fraudulently represented as the purchaser and end user, a proxy they fraudulently represented as the purchaser and end user,” the DOJ said.
“To avoid detection, Li and Chen instructed Dynatex International to ensure that the export information associated with the sale did not list CGTC as the ultimate consignee of the shipment.”
Li, the DOJ said, is suspected to be in China.
Both Li and Chen are charged with counts of conspiracy to violate IEEPA, which carries a sentence of up to 20 years in prison and a $1 million fine, and a count of false electronic export information activities, which carries a sentence of up to five years in prison and a $250,000 fine. They are also charged on a count of smuggling, which carries a sentence of up to 10 years in prison and a $250,000 fine, and IEEPA violations, which carry a sentence of up to 20 years in prison and a $1 million fine.
The U.S. Attorney’s Office for the Northern District of California and the DOJ’s National Security Division’s Counterintelligence and Export Control department will prosecute the case.
“This arrest highlights the importance of interagency collaboration in preventing illegal exports that could compromise sensitive technologies and our national security as well as undermine our American economy,” said Homeland Security Investigations Special Agent in Charge Tatum King.
Brent Burmester, a special agent in charge with the Department of Commerce, said stopping “the flow of U.S. semiconductor technology” that goes to advance the People’s Republic of China’s “military modernization efforts” is key to protecting the country’s national security.
FBI Special Agent in Charge Robert Tripp suggested that businesses in the U.S. should establish a relationship with their local FBI field office “to help protect against the pervasive threat of criminals looking to steal American technology.”
“We will aggressively pursue anyone who violates export control laws designed to protect our national and economic security,” Mr. Tripp said.
In a 2023 report on FBI Director Christopher Wray’s roundtable discussion on CBS News, Mr. Wray called the Chinese Communist Party “the defining threat of this generation.”
He said in the discussion that the FBI has 2,000 active investigations “just related to the Chinese government’s effort to steal information.”
“There is no country that presents a broader, more comprehensive threat to our ideas, our innovation, our economic security, and ultimately our national security,” he said.
Aaron Pan contributed to this report.
