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Ex-L-3 Worker Convicted of Exporting Arms Data to China

A former employee of L-3 Communications Holdings Inc. (LLL) was found guilty of stealing files related to military technology from the defense contractor and illegally sending them to China.

A federal court jury in Newark, New Jersey, yesterday convicted Sixing Liu, also known as Steve Liu, of six counts of violating the Arms Export Control Act, as well as possessing stolen trade secrets, transporting stolen property and lying to federal agents, according to court records.

Liu, a Chinese citizen who had lived in Flanders, New Jersey, was convicted of stealing thousand of electronic files detailing performance and design of guidance systems for missiles, rockets, target locators and unmanned aerial vehicles in 2010. Prosecutors alleged that he delivered presentations about the technology at several Chinese universities, the Chinese Academy of Sciences and at government conferences with the aim of securing future employment.

He faces as long as 20 years in prison and a $1 million fine for violating export restrictions applying to arms, according to the government. The U.S. maintains an arms embargo with China, the government said in a statement.

“We will not tolerate the exploitation of this country’s opportunities through the theft of our secrets,” U.S. Attorney Paul J. Fishman in New Jersey said in a statement.

A lawyer for Liu, James Tunick, said his client plans to appeal the conviction.

‘State of Mind’

“It was our contention that he didn’t do anything with a state of mind to be criminal,” Tunick said in a phone interview. “The jury rejected that contention.”

Sentencing was scheduled for Jan. 7. Liu was taken into custody following the verdict on fear that he would flee, the government said.

Jennifer Barton, a spokeswoman for New York-based L-3 Communications, said the company is pleased the jury reached a verdict.

“L-3 has fully cooperated with authorities throughout the investigation and we continue to have comprehensive policies and protocols in place to ensure the highest level of security is observed by all employees,” she said in an e-mailed statement.

Also yesterday, charges were unsealed in federal court in Brooklyn, New York, against another Chinese national, Ming Suan Zhang, on charges of violating U.S. trade restrictions.

Carbon Fiber

Zhang, who is accused of attempting to illegally export thousands of pounds of aerospace-grade carbon fiber to his home country, appeared yesterday before U.S. Magistrate Judge Vera Scanlon. The government alleged that he was involved in a proposed multimillion-dollar deal to export material for possible use in a test flight of a new Chinese fighter jet.

The Commerce Department restricts the export of goods that could contribute to the “military potential or nuclear proliferation of other nations or that could be detrimental to the foreign policy or national security of the U.S.,” according to a criminal complaint. It’s a crime to willfully export those materials without an appropriate license, the government said.

Zhang, who is in U.S. custody, didn’t request bail. Prosecutors declined to comment on where or when Zhang was arrested. If convicted, Zhang faces as long as 20 years in prison, according to the government.

A court-appointed lawyer for Zhang, Daniel Nobel, told reporters after the hearing that his client is “an honest businessman who was caught up in something he didn’t fully understand but he believed to be legal.”

Zhang is from Quanzhou, China, and was in the business of manufacturing sports equipment, Nobel said.

‘Somewhat Sensitive’

Nobel declined to discuss the circumstances of Zhang’s arrest, saying the “government regards it to be a somewhat sensitive matter.”

Zhang came to the attention of U.S. authorities through an investigation into two individuals in Taiwan who were attempting to locate large quantities of the specialized carbon fiber, according to the government.

In a recorded phone call in July, one of the Taiwanese individuals discussed the order with Zhang, the government alleged. Zhang said during that call, according to the complaint, “When I place the order, I place one to two tons.”

Zhang later agreed to meet with an undercover Homeland Security agent posing as a carbon fiber seller, according to the complaint. Zhang said he needed a sample because it would be used in the test flight of a “fighter plane,” the government said in the complaint.

Travel Plans

In an e-mail to the agent, Zhang said he planned to travel to the U.S. on Sept. 10 and provided the name of his hotel, according to the complaint.

One ton of the carbon fiber Zhang was seeking, manufactured by Tokyo-based Toray Industries Inc. (3402), typically costs about $2 million, according to the filing.

“The defendant allegedly tried to break laws that protect our national security by preventing specialized technologies from falling into the wrong hands,” U.S. Attorney Loretta Lynch in Brooklyn said in a statement. “We will use every tool at our disposal to protect the homeland and give teeth to the laws that maintain our technological superiority on the battlefield and in the skies.”

The New Jersey case is U.S. v. Liu, 2:11-cr-00208, U.S. District Court, District of New Jersey (Newark).

The New York case is U.S. v. Zhang, 12-mj-00829, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Christie Smythe in New York at csmythe1@bloomberg.net

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

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