Chinese Agent Asks U.S. Court to Overturn Convictions

When agents arrested Chi Mak in California on charges that he tried to slip U.S. naval technology to China, the government’s list of material restricted for export didn’t specifically name the items he was caught trying to send abroad.

After his arrest, prosecutors asked the State Department whether the information was indeed restricted and were told it was. The U.S. Munitions List, which contains categories of items requiring a license to export, covered the material without actually naming it, prosecutors argued. The list says technical data related to defense are subject to restriction, whether the precise subject matter is listed or not.

A jury convicted him of arms-export law violations, and a judge sentenced him to 24 years in prison. Lawyers for Mak, 71, are to appear today before a federal appeals court in Pasadena, California, and claim the export regulation is unconstitutional.

The engineer was prosecuted for conduct that wasn’t a crime when he did it, he argues. That would make his an ``ex post facto'' prosecution, which is forbidden under the U.S. Constitution.

Mak, a naturalized American citizen, was a senior engineer at Power Paragon, a defense contractor and unit of L-3 Communications Holdings Inc. (LLL)

Agents found the material in 2005 encrypted on a computer disk behind other, innocuous files in a jacket of learn-English disks in family luggage. Relatives were trying to board a flight from Los Angeles to China.

Quiet Submarines

One of the encrypted documents was about making submarines quieter, according to the prosecution. The other had to do with handling power disruptions aboard ship. The defense claimed the data were either obsolete or widely available, and that Mak didn’t knowingly break the law.

A search of his home turned up more defense-related papers, along with “tasking lists” written in Chinese and asking for information on war planes and other military equipment, a government brief stated.

In addition to finding him guilty of the export counts, the jury convicted Mak of acting as an unregistered foreign agent and for lying to federal investigators. He isn’t appealing those convictions, which account for all but 10 of his 24 year- sentence. His conviction led to guilty pleas by four relatives.

The government disputes the claim that the conviction was unconstitutional by saying the State Department’s post-arrest determination merely confirmed that the items were already covered by general terms on the U.S. Munitions List.

Government Argument

“There was no ex post facto violation because the State Department certifications meant the charged documents were covered by the USML at the time defendant attempted to export them,” prosecutors said in court papers, referring to the munitions list.

Mak also argued the law violates the First Amendment by restraining free expression without procedural safeguards and gives “unbridled discretion” to officials to say which data can be freely exported. Those arguments have been previously rejected by the appeals court hearing today’s arguments, the prosecution responded.

Mak isn’t the only export defendant raising constitutional issues under the law. In federal courts from New Jersey to Hawaii, lawyers for others have argued that enforcement of the arms-export statute ignores the constitution’s promise of due process and its protection against prosecution for acts that were legal when done. Results have been mixed.

Boston Case

Two defendants won a partial dismissal of charges in Boston last year. In the U.S. appeals court circuit where Mak’s case is being argued, past decisions have favored the prosecution.

He is one of at least 30 people prosecuted in the past five years for moving, or trying to move, restricted material to China without a license in violation of the Arms Export Control Act. Another dozen have been charged with breaking other export laws for dealings with China.

Among them is an engineer for Northrop Grumman Corp., Noshir Gowadia, convicted in Hawaii of exporting classified information to China on the B-2 bomber, among other charges. He was sentenced to 32 years and has filed an appeal.

“We are very focused in the national security division on the national security threat posed by efforts to steal our research, our classified information, or our sensitive technology, whether from private contractors or from the military,” Lisa Monaco, assistant attorney general for national security, said in an interview. “That’s a priority for us.”

Arms Regulations

To implement the law, the State Department wrote the International Traffic in Arms Regulations, called ITAR. The munitions list is part of the rules and occupies 25 fine-print pages in the Code of Federal Regulations.

Some items are quite specific, such as particular explosive chemicals. Otherwise, categories such as “Missile Technology” contain some specifications for forbidden materials but don’t list everything the category covers, in part because technology changes quickly.

Companies honestly trying to comply are sometimes baffled by what’s allowed and what isn’t, said Steven Brotherton, a San Francisco lawyer who manages the export-controls practice for Fragomen, Del Rey, Bernsen & Loewy, LLP.

“If I drill a hole in a box, is that subject to ITAR because I did that for a military customer,” he said. In some cases the State Department has said yes, and in similar cases it has said no, said Brotherton. “They do not explain the basis for their ruling.”

Mysterious Process

“The real challenge with us practitioners is we don’t have any insight as to how they’re making decisions,” Brotherton said. “This aluminum box isn’t subject to ITAR and other one is, and we don’t know what distinction they’re making.”

Asked about seemingly contradictory determinations, the State Department said that previous decisions are “integral” in deciding whether an item is restricted.

The munitions list has been under review since 2009 as part of a White House effort to eliminate “catch-all language in favor of identifying controlled items based on clear, objective data,” according to the State Department.

In Boston, Zhen Zhou “Alex” Wu and Yufeng “Annie” Wei, a former married couple, were convicted in 2010 on four counts each of violating the arms-export law and other crimes. Before and after the trial, they argued that they didn’t have enough notice of what conduct was illegal.

Wu owned Chitron Electronics, based in Shenzhen, China, with an office in Waltham, Massachusetts, which Wei managed.

Exports to China

The company bought parts in the U.S. and exported them to Hong Kong, advertising that it dealt in “military and industrial” goods. Some went to the Chinese military, the prosecution said.

U.S. District Judge Patti B. Saris set aside two convictions apiece over the export of power amplifiers. At the time of the export, the State and Commerce departments disagreed on whether the items were covered by the list, Saris wrote.

The judge called it “fundamentally unfair” to convict the exporters when the status of the amplifiers was unsettled within the government. The items themselves weren’t obviously defense related, she wrote.

Saris let stand guilty verdicts on the export of microchips, which were clearly declared as export-controlled by the distributor. She also left in place convictions on other export and cover-up charges that left Wu with 16 convictions and an eight-year sentence and Wei with 12 convictions and three years.

Specifics Lacking

Alan Dershowitz, a Harvard University law professor who represents Wu before the U.S. Court of Appeals in Boston, wrote with a co-counsel in February that the U.S. Munitions List “covered such a broad category of items and was so lacking in specific technical parameters” that it didn’t inform the accused brokers that exporting the microchips required a license.

The government’s answer is due next month.

The cases are U.S. v. Mak, 08-50148, U.S. Court of Appeals for the Ninth Circuit (San Francisco); U.S. v. Wu, 1:08-cr- 10386, U.S. District Court, District of Massachusetts (Boston); and 11-01115 and 11-01114, U.S. Court of Appeals for the First Circuit (Boston).

To contact the reporters on this story: Ann Woolner in Atlanta at awoolner@bloomberg.net; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.