web analytics

U.S. Justice Department Unveils Charges and Arrest Amid Alleged Illicit Technology Transfer Schemes, Targeting Governments of China and Iran

In a pair of distinct legal proceedings, individuals confront allegations linked to unauthorized technology transfer, with potential implications for adversarial foreign powers. The initial case centers on Iranian nationals allegedly orchestrating the exportation of aerospace equipment to Iran. Meanwhile, a separate individual stands accused of pilfering trade secrets concerning the detection of nuclear missile launches and the tracking of ballistic and hypersonic missiles, purportedly for the advantage of China.

Cases Mark One-Year Since Launch of Disruptive Technology Strike Force

In two separate cases out of U.S. Attorneys’ Offices on opposite coasts, several individuals are charged – one of whom was arrested yesterday – in connection with sophisticated schemes to transfer sensitive technology, goods, and information for the benefit of hostile foreign adversaries, in violation of U.S. law.

In the Eastern District of New York, two Iranian nationals are charged with conspiring to export equipment used in the aerospace industry to the Government of Iran, in violation of the International Emergency Economic Powers Act (IEEPA), in connection with an alleged conspiracy to illegally export U.S. goods and technology without the required licenses.

In the Central District of California, a man was arrested for allegedly stealing trade secrets developed for use by the U.S. government to detect nuclear missile launches and track ballistic and hypersonic missiles.

“One year ago, I launched the Disruptive Technology Strike Force to strike back against adversaries trying to steal our nation’s most powerful technology and use it against us,” said Deputy Attorney General Lisa O. Monaco. “Since then, working with our partners at the Commerce Department, we have arrested more than a dozen corporate executives, engineers, distributors, and other high-profile targets on charges that include sanctions and export control violations, and other offenses involving the unlawful transfer of sensitive information and technology. Today’s charges against three additional defendants for seeking to illegally transfer U.S. software and semiconductor technology with military applications to benefit Iran and China highlight the critical importance of our fight against this national security threat.”

“The FBI continues to take aggressive investigative action to hold accountable those who seek to violate sanctions and illegally provide sensitive technology to foreign adversaries,” said FBI Deputy Director Paul Abbate. “Stealing U.S. trade secrets and technology, especially when it can be used for military purposes, will not be tolerated. We will continue to work closely with our partners in the Disruptive Technology Strike Force to stop such activity and protect the national security of the United States.”

“In its first year, the Disruptive Technology Strike Force has strengthened enforcement and disrupted numerous criminal schemes to smuggle highly-sensitive technology that foreign adversaries wield to advance their military and other malign agendas,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The cases announced today underscore the commitment of the Justice Department and our partners to disrupt illegal efforts to siphon off U.S. ingenuity and to safeguard American security and innovation. “

“In the just one year since the launch of the Disruptive Technology Strike Force, we’ve stood up over a dozen local investigative cells, opened scores of investigations, and brought criminal charges against more than a dozen individuals and companies associated with nation-state adversaries,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod. “Today’s announcement provides the latest example of our unwavering mission — keeping our country’s most sensitive technologies out of the world’s most dangerous hands.”

United States v. Bazzazi (EDNY)

​​​​​​​Note: View a copy of the indictment here.

According to court documents, between January 2008 and August 2019, Abolfazi Bazzazi, 79, of Iran, and his son Mohammad Resa Bazzazi, 43, of Iran, and their co-conspirators sought to evade U.S. sanctions and export laws by working to procure goods and technology, including aeronautical ground support equipment, ultraviolet flame detectors, and firefighting equipment, from U.S. companies for end users in Iran, including the Government of Iran, without obtaining the required licenses or other authorization from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

“As alleged, the Bazzazis devised an intricate scheme to evade U.S. export laws in obtaining U.S. equipment and technology to be exported to Iran and for the Government of Iran which has been designated by the United States government as a state sponsor of terrorism,” said U.S. Attorney Breon Peace for the Eastern District of New York. “The defendants allegedly attempted to obtain commercial and military aircraft items from multiple U.S. companies that supply the military, aerospace, and firefighting industries. These charges demonstrate the resolve of this office and the Department of Justice to prosecute those who seek to aid the Government of Iran, in violation of U.S. sanctions.”

According to the indictment, the defendants sought to obtain components that could be used by Iran’s aerospace industry. Additionally, they disguised the final destination of U.S. goods by attempting to forward them through intermediaries in Europe and elsewhere. As alleged, the Bazzazis acted on behalf of the Government of Iran.

The Bazzazis are charged with conspiracy to violate the IEEPA, which carries a maximum penalty of 20 years in prison; and smuggling goods from the United States, which carries a maximum penalty of 10 years in prison. The defendants remain at large.

The Commerce Department’s Bureau of Industry and Security (BIS) and FBI are investigating the case.

Assistant U.S. Attorneys Francisco J. Navarro, Jonathan P. Lax, Nomi D. Berenson, and Adam Amir for the Eastern District of New York are prosecuting the case, with assistance provided by Trial Attorney Adam Small of the National Security Division’s Counterintelligence and Export Control Section.

United States v. Gong (CDCA)

Note: View a copy of the complaint here.

As alleged, Chenguang Gong, 57, of San Jose, California, was arrested yesterday in San Jose and is expected to make his initial appearance today in the Northern District of California. Gong is a native of China and became a United States citizen in 2011.

Gong is charged in a criminal complaint with theft of trade secrets. According to court documents, Gong transferred more than 3,600 files from the research and development company where he worked — identified in court documents as the victim company — to personal storage devices during his brief tenure with the company last year. The files Gong allegedly transferred include blueprints for sophisticated infrared sensors designed for use in space-based systems to detect nuclear missile launches and track ballistic and hypersonic missiles, and blueprints for sensors designed to enable U.S. military aircraft to detect incoming heat-seeking missiles and take countermeasures, including by jamming the missiles’ infrared tracking ability. Some of these files were later found on storage devices seized from Gong’s temporary residence in Thousand Oaks, according to the affidavit in support of the complaint.

Together with the U.S. government and others, the affidavit states, the victim company “has invested tens of millions each year for more than seven years to develop the technology,” and it “would be extremely damaging economically” to the victim company if the technology were obtained by its competitors and “dangerous to U.S. national security if obtained by international actors.”

“We will do everything to protect our nation’s security, including from foreign threats,” said U.S. Attorney Martin Estrada for the Central District of California. “Mr. Gong, who had previously sought to provide the People’s Republic of China with information to aid its military, stole sensitive and confidential information related to detecting nuclear missile launches and tracking ballistic and hypersonic missiles. We know that foreign actors, including the PRC, are actively seeking to steal our technology, but we will remain vigilant against this threat remain vigilant against this threat by safeguarding the innovations of American businesses and researchers.”

“The FBI is committed to protecting our nation’s critical technologies and to pursuing those who look to steal trade secret information for their benefit or for the benefit of foreign adversaries,” said Assistant Director in Charge Donald Alway of the FBI Los Angeles Field Office. “The theft of trade secrets, especially of sensitive military technology, undermines our national security, erodes U.S. competitiveness in the global market, and harms the businesses and individuals who have invested time, resources, and creativity into developing innovative technologies. Our actions today send a strong message that anyone willing to steal proprietary information from U.S. businesses will face consequences in the criminal justice system.”

As alleged in the affidavit, the victim company hired Gong in January 2023 to work at one its laboratories as an application-specific integrated circuit design manager responsible for the design, development and verification of its infrared sensors. Beginning on approximately March 30, 2023, and continuing until his termination on April 26, 2023, Gong transferred thousands of files from his work laptop to three personal storage devices, including hundreds of files after he had accepted a job on April 5, 2023, at one of the victim company’s main competitors.

Many of the files Gong allegedly transferred contained proprietary and trade secret information related to the development and design of a readout integrated circuit that allows space-based systems to detect missile launches and track ballistic and hypersonic missiles while providing resilience and a readout integrated circuit that allows aircraft to track incoming threats in low visibility environments. Gong also allegedly transferred trade secret files relating to the development of “next generation” sensors capable of detecting low observable targets while demonstrating increased survivability in space, as well as the blueprints for the mechanical assemblies used to house and cryogenically cool the victim company’s sensors. This information was among the victim company’s most important trade secrets worth hundreds of millions of dollars, according to the complaint, and many of the files were marked “[VICTIM COMPANY] PROPRIETARY,” “FOR OFFICIAL USE ONLY,” “PROPRIETARY INFORMATION,” and “EXPORT CONTROLLED.”

During the investigation, the affidavit states, the FBI discovered that, between approximately 2014 and 2022 while employed at several major technology companies in the United States, “Gong submitted numerous applications to ‘Talent Programs’ administered by the People’s Republic of China government.” The affidavit explains that “the PRC has established talent programs through which it identifies individuals located outside the PRC who have expert skills, abilities, and knowledge that would aid in transforming the PRC’s economy, including its military capabilities.” To entice applicants, “the PRC government rewards Talent Recruits with significant financial and social incentives,” noting that the “salaries often meet or exceed salaries the Talent Recruits draw through their non-PRC employment.”

In 2014, while employed at a U.S. information technology company headquartered in Dallas, Texas, the affidavit states that Gong sent a business proposal to a contact at the 38th Research Institute of the China Electronics Technology Group Corporation, a high-tech research institute in China focused on both military and civilian products. In his proposal, translated from Chinese, Gong described a plan to produce high-performance analog-to-digital converters similar to those produced by his employer, noting that the global market for those products “is basically monopolized by several companies in the United States” and that the export of those items from the United States requires a “government export license.” On May 8, 2023, the FBI executed a search warrant at Gong’s temporary residence in Thousand Oaks, California, and recovered several digital devices containing hundreds of documents marked as confidential or proprietary belonging to the U.S. information technology company, the affidavit alleges.

In another Talent Program application in September 2020, the affidavit states, Gong proposed to develop “low light/night vision” image sensors for use in military night vision goggles and civilian applications. In a video presentation included with Gong’s submission, Gong used a video containing the model number of a sensor developed by an international defense, aerospace, and security company where Gong worked from 2015 to 2019.

According to the affidavit, Gong also travelled to China several times to seek Talent Program funding to develop sophisticated analog-to-digital converters. In his Talent Program applications, Gong underscored that the high-performance analog-to-digital converters he proposed to develop in China had military applications, explaining that they “directly determine the accuracy and range of radar systems” and that “[m]issile navigation systems also often use radar front-end systems.” In a 2019 email, translated from Chinese, Gong remarked that he “took a risk” by traveling to China to participate in the Talent Programs “because [he] worked for . . . an American military industry company[]” and thought he could “do something” to contribute to China’s “high-end military integrated circuits.” The affidavit states that Gong “continued to seek funding from Chinese government programs through at least March 2022.”

BIS and the FBI are investigating the case.

Assistant U.S. Attorneys Nisha Chandran and David Lachman for the Central District of California are prosecuting the case, with valuable assistance provided by Trial Attorney Brendan Geary of the National Security Division’s Counterintelligence and Export Control Section.

These cases were coordinated through the Disruptive Technology Strike Force, an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation-states. Under the leadership of the Assistant Attorney General for National Security and the Assistant Secretary of Commerce for Export Enforcement, the Strike Force leverages tools and authorities across the U.S. government to enhance the criminal and administrative enforcement of export control laws.

An indictment and a criminal complaint are merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Updated February 7, 2024

Source: Justice.org – Midtown Tribune news –
Big New York news

Big New York – New Jersey, Connecticut News Business – Job- Moneymakers – Resume – Services – Hospitals-ITTri-state area –  New York – New York City – Manhattan – Brooklyn – Queens – Staten Island – Bronx – Long Island

Please follow and like us: