These charges resulted from an investigation by the following agencies: U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); the FBI; and the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement.
Hsien Tai Tsai, aka "Alex Tsai," who is believed to reside in Taiwan, was arrested May 1 in Tallinn, Estonia. His son, Yueh Hsun Tsai, aka "Gary Tsai," who is from Taiwan and is a U.S. permanent resident, was arrested the same day at his home in Glenview, Ill.
Gary Tsai, 36, was ordered held in custody pending a detention hearing May 6 before Magistrate Judge Susan Cox in U.S. District Court in Chicago. Alex Tsai, 67, remains in custody in Estonia pending proceedings to extradite him to the United States.
Both men were charged in federal court in Chicago with three identical offenses in separate complaints that were filed previously and unsealed following their arrests. Each was charged with the following counts:
- conspiring to defraud the United States in its enforcement of laws and regulations prohibiting the proliferation of weapons of mass destruction;
- conspiring to violate the International Emergency Economic Powers Act (IEEPA) by conspiring to evade the restrictions imposed on Alex Tsai and two of his companies by the U.S. Department of the Treasury; and
- money laundering.
According to both complaint affidavits, federal agents have been investigating Alex and Gary Tsai, as well as Individual A (a Taiwanese associate of Alex Tsai), and a network of companies engaged in exporting U.S.-origin goods and machinery that could be used to produce weapons of mass destruction. Alex and Gary Tsai, and Individual A, are associated with at least three companies based in Taiwan – Global Interface Company Inc., Trans Merits Co. Ltd., and Trans Multi Mechanics Co. Ltd. They allegedly purchased and exported, and attempted to purchase and export, from the United States machinery used to fabricate metals and other materials with a high degree of precision.
On Jan. 16, 2009, under Executive Order 13382, which sanctions proliferators of weapons of mass destruction and their supporters, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Alex Tsai, Global Interface, and Trans Merits as proliferators of weapons of mass destruction. This designation isolated them from the U.S. financial and commercial systems and prohibited any person or company in the United States from knowingly engaging in any transaction or dealing with Alex Tsai and the two Taiwanese companies.
In announcing the January 2009 OFAC order, the Treasury Department said that Alex Tsai was designated for providing, or attempting to provide, financial, technological, or other support for, or goods or services in support of, the Korea Mining Development Trading Corporation (KOMID), which was designated as a proliferator by President George W. Bush in June 2005.
The Treasury Department asserted that Alex Tsai "has been supplying goods with weapons production capabilities to KOMID and its subordinates since the late 1990s, and he has been involved in shipping items to North Korea that could be used to support North Korea’s advanced weapons program." The Treasury Department further said that Global Interface was designated "for being owned or controlled by Tsai," who is a shareholder of the company and acts as its president. Tsai is also the general manager of Trans Merits Co. Ltd., which was designated as a subsidiary owned or controlled by Global Interface Company Inc. http://www.treasury.gov/press-center/press-releases/Pages/hp1359.aspx
After the OFAC designations, Alex and Gary Tsai and Individual A allegedly continued to conduct business together, but attempted to hide Alex Tsai’s and Trans Merit’s involvement in those transactions by conducting business under different company names, including Trans Multi Mechanics.
For example, by August 2009 – about eight months after the OFAC designations – Alex and Gary Tsai, Individual A and others allegedly began using Trans Multi Mechanics to purchase and export machinery on behalf of Trans Merits and Alex Tsai. Specifically, the charges allege that in September 2009 they purchased a Bryant center hole grinder from a U.S. company based in suburban Chicago, and exported it to Taiwan using the company Trans Multi Mechanics. A Bryant center hole grinder is a machine tool used to grind a center hole, with precisely smooth sides, through the length of a material.
The charges further allege that by at least September 2009, Gary Tsai had formed a machine tool company named Factory Direct Machine Tools in Glenview, Ill. The company imported and exported machine tools, parts, and other items to and from the United States. However, the charges allege that Alex Tsai and Trans Merits were active partners in Factory Direct Machine Tools, in some instances procuring the goods for import to the United States for Factory Direct Machine Tool customers.
Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine; money laundering carries a maximum of 20 years in prison and a $500,000 fine; and conspiracy to defraud the United States carries a maximum of five years in prison and a $250,000 fine.
The Department of Justice’s National Security Division and Office of International Affairs also assisted with this investigation. U.S. officials thanked the Estonian Internal Security Service and the Estonian Prosecutor’s Office for their cooperation. Assistant U.S. Attorneys Patrick Pope and Brian Hayes, Northern District of Illinois, are prosecuting this case.
The public is reminded that a complaint is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.