The Justice Department released the below information:
A four-count indictment was unsealed today charging Hang Sun,
also known as Cody Sun, with conspiracy, wire fraud, smuggling, and a violation
of the Arms Export Control Act for his role in an illegal scheme to send
export-controlled defense-related technical data to China and to unlawfully
supply the Department of Defense (DOD) with Chinese-origin rare earth magnets
for aviation systems and military items.
The indictment alleges that between January 2012 and December
2018, the defendant conspired to send approximately 70 drawings containing
export-controlled technical data to a company located in China without a
license from the U.S. government, in violation of the Arms Export Control Act
and the International Traffic in Arms Regulations. The technical data drawings
were the property of two U.S. companies and related to end-use items for
aviation, submarine, radar, tank, mortars, missiles, infrared and thermal
imaging targeting systems, and fire control systems for DOD.
The indictment further alleges that Quadrant Magnetics imported
rare earth magnets that were smelted and magnetized by a company in China.
Quadrant then sold these magnets to two U.S. companies which included them in
components sold to DOD for use in the F-16, the F-18, and other defense assets
in violation of the Defense Acquisition Regulations System (DFARS). Under the
DFARS specialty metal clause, rare earth magnets sold to DOD must be produced
in the United States or an approved country. China is not an approved
country. Quadrant Magnetics and three of its employees were separately
charged in a superseding indictment filed in the Western District of Kentucky
on Dec. 5, 2023.
If convicted, Sun faces statutory maximum penalties of up to
five years in prison for conspiracy; 20 years in prison for wire fraud; 20
years in prison for exporting technical data without a license; and 10 years in
prison for smuggling goods from the United States. A federal district court
judge will determine any sentence after considering the U.S. Sentencing
Guidelines and other statutory factors.
Assistant Attorney General Matthew G. Olsen of the Justice
Department’s National Security Division, Director Kelly P. Mayo of the Defense
Criminal Investigative Service (DCIS), U.S. Attorney Michael A. Bennett for the
Western District of Kentucky, Executive Assistant Director Robert Wells of the
FBI’s National Security Branch, and Special Agent in Charge Karen Wingerd of
the IRS Criminal Investigation (IRS-CI) Cincinnati Field Office made the
announcement.
The DCIS, FBI, Department of Homeland Security, IRS-CI, Naval
Criminal Investigative Service, and Department of Energy’s Office of Inspector
General are investigating the case.
Assistant U.S. Attorneys Joshua Judd and Christopher Tieke for
the Western District of Kentucky and Trial Attorneys Alexander Wharton and
Leslie Esbrook with the National Security Division’s Counterintelligence and
Export Control Section are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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