Exporing Military encryption to China

Malcolm Idaho malcolm at nukewoody.com
Thu Aug 30 20:58:27 PDT 2001


Customs halts export to China, charges 2 
By Jerry Seper
THE WASHINGTON TIMES



     Two men, one a naturalized U.S. citizen and the other a permanent
resident alien, were arrested yesterday by the U.S. Customs Service on
charges of attempting to export military encryption technology to China. Top
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     Eugene You Tsai Hsu of Blue Springs, Mo., and David Tzu Wvi Yang of
Temple City, Calif., were taken into custody by undercover Customs Service
agents following a four-month investigation by the agency's Baltimore field
office.
     Mr. Hsu, who became a U.S. citizen in 1999, and Mr. Yang, a Taiwan
native who is a resident alien, were accused in an affidavit of attempting
to export to China encryption devices used to safeguard classified
communications, in violation of the Arms Export Act.
     A third man, identified as Charlson Ho, also was named in the
conspiracy and is believed to be in Singapore. Mr. Hsu was arrested at his
Missouri home. Mr. Yang was taken into custody at his office in Compton,
Calif.
     "The technology that these individuals were attempting to export to
China is among the most sensitive items on the U.S. munitions list," said
Agent Allan Doby, who heads the Baltimore office. "The sale of these units
is so tightly controlled that the National Security Agency must approve it."
     According to an affidavit by Customs Service Agent Mary Hamman, the
agency was notified May 2 by the Defense Security Service that Mr. Hsu was
attempting to purchase KIV-7HS encryption devices and user manuals for
export to China. The devices, authorized for government use only, are
designed to secure classified communications.
     Ms. Hamman, in the affidavit, said Mr. Hsu sought to buy the equipment
from Mykotronx Inc., a private company located in Columbia, Md. Officials at
Mykotronx called the Customs Service office in Baltimore, which told the
firm to direct Mr. Hsu to an "intermediary representative."
     That representative, an undercover Customs agent, later engaged in what
the affidavit said was a series of telephone conversations between May 2 and
Aug. 18 with Mr. Hsu, Mr. Yang and Mr. Ho, which were tape-recorded. The
telephone conversations showed that the men were working for a Singapore
firm, Wei Soon Loong Private Ltd., that wanted to buy the encryption
devices.
     During the conversations, according to the affidavit, Mr. Hsu confirmed
that the end user of the encryption devices was located in China. The
affidavit does not elaborate.
     Ms. Hamman wrote that Mr. Hsu, after being told that the purchase of
the equipment would be illegal and that permits to send the devices to China
could not be obtained, said he wanted to proceed anyway, suggesting to the
undercover agent that "everyone will just keep their mouths shut."
     The affidavit said Mr. Hsu then suggested that the agent talk directly
with his buyer in Singapore, who would receive the equipment and forward it
to China. The agent them spoke with Mr. Ho, who also confirmed that the
equipment was bound for China.
     In one conversation, the affidavit said, Mr. Ho told the undercover
agent the Chinese buyers "don't want too many people to know" about the
deal. The document said Mr. Hsu later suggested that instead of a check or
wire transfer as payment for the encryption equipment, cash would be better
"so there's no trail."
     In a conversation with Mr. Yang, the affidavit said, the undercover
agent was told by Mr. Yang that he had agreed to "move the merchandise" for
Mr. Hsu and Mr. Ho, and that he "fully understands the whole situation."
     "I've been doing this business for more than 20 years, I know how to
handle these problems," Mr. Yang is quoted as saying.
     The affidavit said Mr. Yang told the agent the encryption equipment
would be shipped from Los Angeles through Taiwan to Singapore, where it
would then be forwarded "to the end user in China."
     Mr. Hsu and Mr. Yang were not available yesterday. Wei Soon Loong, the
Singapore company, did not return calls for comment.
     The maximum sentence for smuggling sensitive technology is 10 years in
prison and a $1 million fine for each violation.
     Customs spokesman Dean Boyd said people or companies engaged in the
export of items included on the U.S. Munitions List to all foreign
countries, except Canada, must be registered with the State Department. In
addition, he said, persons or companies must obtain a license from the
department for each item on the list before it can be exported.





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