Two Men Arrested for Planning to Smuggle High-Tech Encryption Devices to China

[InfoSec News <isn () c4i org>]

Forwarded by: William Knowles <wk () c4i org>

http://ap.tbo.com/ap/breaking/MGAJ2GYKZQC.html

By Christopher Newton 
Associated Press Writer 
August 29, 2001

WASHINGTON (AP) - Two men have been arrested and accused of scheming
to smuggle military encryption technology to China, the Customs
Service said Wednesday.

The technology, two devices known as KIV-7HS units, are used to encode
classified government communications.

"The technology that these individuals were attempting to export to
China is among the most sensitive items on the U.S. munitions list,"
said Allan Doody, the U.S. Customs Service special agent in charge in
Baltimore. Doody said sale of the technology must be approved by the
National Security Agency.

Customs agents have arrested Eugene Hsu of Blue Springs, Mo., and
David Yang of Temple City, Calif. Carlson Ho, also charged with
attempting to smuggle the technology, is in Singapore and has not been
arrested. Ho is affiliated with the Singapore-based Wei Soon Loong
Pvt. Ltd., which intended to buy the technology, according to a
federal affidavit.

The maximum sentence for smuggling sensitive technology is 10 years in
prison and a $1 million fine for each violation.

Wei Soon Loong, the Singapore company, did not immediately return
telephone calls by The Associated Press.

Customs agents discovered the alleged scheme when Hsu contacted
representatives of the company Mykotronx, a private defense contractor
based in Maryland. Hsu asked about the encryption technology and
wanted a price quote.

Company executives reported Hsu's telephone call to Customs agents in
Baltimore. Undercover agents replaced Mykotronx representatives in
later telephone conversations with Hsu.

Hsu made clear that he understood the technology could not legally be
sold to China, according to the Customs Service.

In a taped conversation in May, an undercover agent told Hsu, "I can
make a domestic sale to you, and then you can get it out however you
want. But that would not be legal. It would be illegal, ... and I just
want your assurance it's not going to come back to burn me."

Hsu replied, "Everyone will keep their mouths shut."

The Customs Service says that Hsu contacted David Yang to ship the
freight, and Yang was informed that it was an illegal shipment. Yang
told undercover agents that he'd been doing this businesses for 20
years and that he knew "how to handle these types of problems."


 
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