San Diego Jury Convicts Resident of China for Conspiracy to Illegally Obtain U.S. Military Encryption Technology

May 12, 2010, 16:06 ET from U.S. Department of Justice

SAN DIEGO, May 12 /PRNewswire-USNewswire/ -- U.S. Attorney Karen P. Hewitt announced that yesterday a federal jury convicted Chi Tong Kuok, a resident of Macau, China, of offenses arising from his efforts to obtain defense articles on the U.S. Munitions List and have them exported to Macau and Hong Kong.  Specifically, the jury convicted Kuok of four counts of conspiracy to export defense articles without a license and smuggle goods from the United States, smuggling goods from the United States, attempting to export defense articles without a license, and money laundering. The articles consisted generally of communications, encryption, and global positioning system (GPS) equipment used by the United States and NATO militaries.  Federal law prohibits the exportation of such items without a license from the United States Department of State.

According to evidence presented at trial and court documents, in late 2006, Kuok contacted a company in the United Kingdom (U.K.).  Kuok sought to obtain various components related to the VDC-300 data controller, a device manufactured and sold by Viasat, Inc., a defense contractor based in Carlsbad, Calif.  The controller is used by the U.S. and NATO militaries to route communications data to and from tactical radios.  The U.K. company referred Kuok to an undercover agent with U.S. Immigration and Customs Enforcement (ICE).  The undercover agent subsequently negotiated with Kuok for over two years, mainly through e-mails, as Kuok sought to obtain the VDC-300 peripherals, an AN/CYZ-10, and a PSN-13, among other items.  The CYZ-10 is a portable fill or data transfer device used by the U.S. and NATO militaries to load encryption software into communication devices, such as tactical radios.  The encryption software, in turn, allows the radios to communicate securely.  The PSN-13 is a GPS device, also used by the U.S. and NATO militaries.

During the over two years that Kuok negotiated with the undercover agent, he also sought to obtain the same and other items from individuals in Los Angeles; Hanover, Mass.; and Phoenix.  A second undercover ICE agent thereafter assumed the role of the individual in Arizona.  On April 29, 2009, Kuok wired $1700 to Imperial County, Calif., to pay for a KG-175 Taclane Encryptor.  The Taclane, manufactured by General Dynamics C4 under a contract with the National Security Agency for use by the U.S. military, encrypts Internet Protocol communications.  Kuok also negotiated with the undercover agent to purchase additional items, including the PSN-13, CYZ-10, and PRC-148 radios.  The PRC-148 is a multi-band handheld radio system manufactured by Thales Communications that was originally designed for, and used by, the U.S. Special Operations Command.  In June 2009, the undercover agent arranged to meet Kuok in Panama to complete the transaction.  On June 27, 2009, federal agents arrested Kuok at Hartsfield-Jackson Atlanta International Airport after he arrived from Paris to catch a connecting flight to Panama.

"This conviction underscores the threat posed by illicit efforts to obtain sensitive U.S. technology and the need for continued vigilance against such schemes. The military encryption technology at the heart of this conspiracy is controlled for good reason and I applaud the agents, analysts and prosecutors who kept these goods from falling into the wrong hands," said David Kris, Assistant Attorney General for National Security

"The United States is engaged in a daily cat and mouse game to keep sensitive technology from falling into the hands of those who might seek to harm America or its allies," said Department of Homeland Security Assistant Secretary John Morton, who oversees U.S. Immigration and Customs Enforcement (ICE). "The enforcement of arms export controls keeps America safe, and Kuok's arrest and conviction have done just that when sensitive encryption technology is not taken overseas by someone whose interests are not in line with those of the United States."

"Safeguarding our military equipment and technology is vital to our nation's defense and the protection of our war fighters," said DoDIG Deputy Inspector General for Investigations James Burch. "We know foreign governments are actively seeking our equipment for their own military development. Thwarting these efforts is a top priority of the Defense Criminal Investigative Service. I applaud the agents and prosecutors who worked tirelessly to bring about this result."

United States District Judge Roger T. Benitez scheduled sentencing for August 23, 2010, at 9:00 a.m.

The investigation was conducted by Immigration and Customs Enforcement and Defense Criminal Investigative Service.  The case was prosecuted in San Diego federal court by Assistant U.S. Attorneys Peter Ko and Alana W. Robinson.

SOURCE U.S. Department of Justice