Another Suspicious Chinese Espionage Case

http://www.reuters.com/investigates/china-military/#article/part3

http://m.ice.gov/news/releases/1309/130906denver.htm?f=m

A Chinese national, who was residing in Oakland, Calif., pleaded guilty Sept. 3 to conspiracy to violate the Arms Export Control Act and to Smuggle Goods from the United States.

This guilty plea was announced by U.S. Attorney John Walsh, District of Colorado, and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar C. Kibble.

Philip Chaohui He, aka Philip Hope, is scheduled to be sentenced by Senior U.S. District Court Judge Wiley Y. Daniel Dec. 18. He is currently in federal custody.

According to court documents, including the stipulated facts contained in the plea agreement, He attempted to illegally export to China radiation-hardened computer memory circuits used in satellite communications with a value of almost $550,000. He, the only employee of Oakland, California-based Sierra Electronic Instruments (SEI), purchased 312 radiation-hardened circuits from a Colorado manufacturer. The circuits purchased by He are categorized as defense articles within the International Trafficking in Arms Regulations (ITAR). Lawfully exporting defense articles requires licensing from the U.S. State Department’s Directorate of Defense Trade Controls.

Oh joy!  The Company, Aeroflex claimed some credit on this “busting” espionage.

http://denver.cbslocal.com/2013/09/03/springs-company-had-role-in-cracking-international-smuggling-ring/

For Aeroflex in Colorado Springs it was an order that just didn’t seem right. The company provides high-tech products for aerospace industry, defense industry and others. Aeroflex became highly suspicious of an order for nearly $500,000 worth of radiation-hardened integrated circuits.

Agents from the Department of Homeland Security were notified. Their investigation uncovered an international smuggling ring. It found almost $500,000 was wired from a bank in the People’s Republic of China to the bank account of Phillip Chaohui in Oakland, Calif. The money was then used to purchase the products from Aeroflex by claiming they would not leave the country.

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Except:

If you really want to dig fishy stories, the company in Colorado, Aeroflex, has manufacturing facility in China.

And Aeroflex just settled ($8 Million) with US Justice Department in August 2013, for ITAR violation, for what? YEARS of SAME export violations to China.

http://www.cov.com/files/Publication/807c6166-b09d-4d0f-9648-7672b45a2348/Presentation/PublicationAttachment/27dc2af8-9b85-4d05-ac9f-7afea3660b56/Aeroflex_Inc_Agrees_to_8_million_Penalty_to_Settle_Alleged_Violations_Related_to_Satellite_Technology_to%20_Ch.pdf

HMMM??? So, US company does it, Settle.

Some immigrant does it. SPY?!

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I do have to say, Mr. He is quite stupid.  As a Chinese immigrant, he should have known that he can’t get away with Sh*t pulled by the “too big to prosecute” types of Americans.  (American dream doesn’t include letting you, a Chinese immigrant, get away with stuff RESERVED ONLY for the finest vintaged Americanness.  You can just forget about it.  No way in Hell.  Never ever.)

When it comes to the likes of Mr. He, it’s the US policy that “too Chinese NOT to Prosecute.”

And what’s worse, Mr. He actually LOST money in the deal:  he was paid about $490K from the “Chinese co-conspirators”, but then he had to pay Aeroflex about $550K to just to order the parts!!  Mr. He actually lost $60K on the deal!!

http://blogs.sacbee.com/the_state_worker/120206b%20philip_he_indictment.pdf

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You know, I really smell something fishy about this whole deal, which simply makes no sense to me.

It frankly feels like a set up to start with.  Mr. He’s mistakes were just too stupid to be real, including the silly cliched meet at the docks bit.

And “rad hard memory chips”??!  Come on.

 

5 thoughts on “Another Suspicious Chinese Espionage Case

  1. In Aeroflex’s settlement agreement:

    “Third, between 2005 and 2008, Aeroflex exported 259 ITAR-controlled radiation-tolerant “field programmable gate array” circuits without proper authorization to numerous countries. The end-user of 170 of these circuits was the Chinese Academy of Space Technology.”

    These were the same type of chips that Mr. He tried to smuggle just 3 years later.

    Oddly coincidental, EH?

    My theory:

    (1) Aeroflex had tried to arrange for this smuggling, by using their Chinese side personnel to encourage someone like Mr. He to do the dirty work on US side. (probably instructed him on what to do).

    (2) Aeroflex perhaps even knew Mr. He would get caught, and set him up as a fall guy, and used him in the settlement bargaining. (Oh, we’ll help you investigate, and catch some spies, in exchange for lower settlement fines).

    It’s just too damn convenient and too neat and too coincidental.

  2. If the parts can be sell to a one room operation it is definitely not classified. It is another red herring. Classified info can only be accessed by those with clearance, not even a regular USAF general!

    The reality is, if any party want to have access to top grade stuff they only need to know how it works. The authors of this article are amateurs, no space industry in the right mind will put an uncontrolled part in their satellite which cost easily $50 million to launch (but hey this is China we are talking about here, so they would do it, da). So all this bs about classified stuff being bought by alleged Chinese spies then sending them back to China are completely false.

    This is a sad dumbing down article that is prevalent in the western free press.

    http://news.yahoo.com/special-report-china-39-weapon-snatchers-penetrating-u-150652962.html

  3. @Ray
    Having read the article, it sounded more like a bad Hollywood movie. It amazing how Orwellian the public relations branch of the U.S. government can mix “fact” with fiction when it comes to their version of “journalism” Hollywood style. “Freedom of expression” at it’s “best”.

  4. @ersim
    Articles like this feed the crowd that want to believe the idea that “Chinese steal all the technology”. What actually happened in this case and many others before it, is mostly there is a buyer for the end product, who may or not be Chinese and the seller violated US export law.

    To steal truly classified information, only leak from the highest level will allow that to happen. No defence industries mainframe is link to the internet! It can never be hacked. To get that info, it has to be an insider with top level access who copy and bring out the design. A next to impossible task, not even possible for CEO of Raytheon, Lockheed Martin, Boeing etc.

    Wen Ho Lee was charged because he downloaded stuff. However, he was eventually cleared because there is no proof that anything classified was ever downloaded. Above all, many employees do that all the time but since he is Chinese he was singled out. The spark that caused his arrest was Pentagon discovered a new miniaturized warhead tested by China. They assume China can never managed that in that time frame and assumed they must have stolen it!

    Robert Gates once made a fool of himself when he publicly states that China’s stealth jet won’t fly until at least 2015. And when the J-20 made a flight in 2011, most haters comment was that somehow China managed to steal design from the F-117 shot down in Serbia in 1999.

    Basically, those bigots want to believe that Chinese cannot innovate and can only steal design. However, it seems not even the regular Joes believe in this but people high level up in the government also believe that.

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