LOS ANGELES - Two Southern California men were arrested Tuesday morning for their role in separate schemes to illegally export controlled items to China, in violation of the International Emergency Economic Powers Act (IEEPA). The defendants are also charged with illegally purchasing counterfeit electronic components.
Michael Ming Zhang, 49, of Rancho Cucamonga, Calif., and Policarpo Coronado Gamboa, 40, of Foothill Ranch, Calif., were arrested without incident early Tuesday morning at their respective residences. The arrests are part of a multi-agency probe involving the Federal Bureau of Investigation (FBI); the U.S. Department of Commerce's Bureau of Industry and Security - Office of Export Enforcement; the U.S. Defense Criminal Investigative Service - Office of Inspector General; U.S. Postal Inspection Service; U.S. Immigration and Customs Enforcement (ICE); and officers with the Orange County Sheriff's Department.
Zhang is president of "J.J. Electronics," a company he operates out of his home in Rancho Cucamonga. Gamboa owns and operates Sereton Technology Inc., located in Foothill Ranch. As part of the investigation, federal search warrants were executed at both locations.
According to an indictment returned by a federal grand jury here January 13, Zhang allegedly exported U.S. Department of Commerce (DOC) controlled electronic components to his company's branch office in Shenzhen, China, and to a transshipment point company, Fangyuan Electronics Ltd. (Fangyuan), in the PRC and Hong Kong.
It is illegal to export Department of Commerce-controlled electronic items to China without an export license for specified end-users. The items, known as dual-use technology, are controlled by the Department of Commerce for export to China for national security reasons since they have civilian and military applications. Among the illegal exports were components manufactured by a U.S.-based company, Vetronix Research Corporation, which are currently used in the U.S. Army's battle tanks.
Zhang allegedly obtained the restricted technology from various U.S. suppliers and exported the components to the PRC without obtaining the required export license. The indictment alleges Zhang refrained from purchasing the technology from the supplier after he was made aware a particular component was export-controlled. Zhang then allegedly obtained technology from a different supplier and exported it to the PRC.
The indictment further alleges that Zhang knowingly and intentionally trafficked in counterfeit Cisco electronic components bearing counterfeit marks from the PRC for distribution in the United States. The indictment alleges that Zhang illegally imported at least 4,300 counterfeit Cisco computer networking components with an estimated retail value of more than $3.3 million.
The second indictment alleges that Zhang and Gamboa conspired to import Sony electronic components bearing counterfeit marks from the PRC for distribution in the United States. According to the court documents, the two men conspired to purchase the counterfeit electronic components in at least 10 separate transactions. The components were then sold in the United States and around the world.
Zhang and Gamboa made their initial appearance before a federal magistrate in Los Angeles Tuesday afternoon. Zhang is charged with five counts of exporting controlled items to the PRC without a license and two counts of trafficking in counterfeit goods. Both men are charged with conspiracy to traffic in counterfeit goods. If convicted on all counts, Zhang faces a statutory maximum sentence of 125 years in prison. Gamboa faces a statutory maximum sentence of five years in prison.
This case was worked in cooperation with the recently created Export and Anti-proliferation Global Law Enforcement (EAGLE) Task Force. The counter-proliferation task force was established by the United States Attorney's Office for the Central District of California in conjunction with federal law enforcement agencies to jointly investigate and combat the illegal exports of arms and sensitive technologies. Members of the EAGLE Task Force include the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export and Enforcement; the FBI; the Defense Criminal Investigative Service - Office of Inspector General; U.S. Customs and Border Protection; ICE; the Diplomatic Security Service and the Transportation Security Administration.