SAN DIEGO - A Chinese resident faces up to 45 years in prison following his conviction Tuesday on multiple felony charges that he sought to illegally export military-grade encryption technology to Macau, China and Hong Kong. This conviction stems from an investigation by U.S. Immigration and Customs Enforcement (ICE) and the Defense Criminal Investigative Service.
Chi Tong Kuok, 43, of Macau, was arrested by ICE agents at the Hartsfield-Jackson Atlanta International Airport in June 2009 while en route to Panama. There Kuok planned to meet with an ICE undercover agent to finalize the illegal sale and export of highly sensitive military communications equipment. The equipment included military-grade encrypted communications devices for use on the battlefield and high-tech global positioning systems (GPS) employed by the United States and NATO military personnel to route secured communications data to and from tactical radios.
A federal jury convicted Kuok on four felony counts: conspiring to export defense articles without a license and smuggling goods from the United States, smuggling goods from the United States, attempting to export defense articles without a license, and money laundering. Federal law prohibits exporting such items without a license from the U.S. Department of State. Kuok's sentencing is set for Aug. 23 before U.S. District Judge Roger T. Benitez.
"The United States is engaged in a daily cat-and-mouse game to keep sensitive technology from falling into the hands of those who might seek to harm America or its allies," said Department of Homeland Security Assistant Secretary John Morton, who oversees ICE. "The enforcement of arms export controls keeps America safe, and Kuok's arrest and conviction have done just that when sensitive encryption technology is not taken overseas by someone whose interests are not in line with those of the United States."
According to evidence presented at trial and in court documents, in late 2006, Kuok contacted a company in the United Kingdom (U.K.) to obtain various components related to a device manufactured and sold by Viasat Inc., a defense contractor based in Carlsbad, Calif.
The company referred Kuok to an ICE undercover agent who subsequently negotiated with Kuok for more than two years, primarily through emails, while he sought to obtain the devices. During that same time frame, Kuok also sought to obtain these and other items from individuals in Los Angeles, Phoenix and Hanover, Mass. On April 29, 2009, Kuok wired $1,700 to Imperial County, Calif., to pay for an encryption device manufactured by General Dynamics under a contract with the National Security Agency for use by the U.S. military. Kuok also negotiated with ICE undercover agents to purchase additional items, including a multi-band handheld radio system that was originally designed for use by the U.S. Special Operations Command.
"This conviction underscores the threat posed by illicit efforts to obtain sensitive U.S. technology and the need for continued vigilance against such schemes," said David Kris, assistant attorney general for National Security. "The military encryption technology at the heart of this conspiracy is controlled for good reason, and I applaud the agents, analysts and prosecutors who kept these goods from falling into the wrong hands."
"Safeguarding our military equipment and technology is vital to our nation's defense and the protection of our war fighters," said James Burch, deputy inspector general for Department of Defense Investigations. "We know foreign governments are actively seeking our equipment for their own military development. Thwarting these efforts is a top priority of the Defense Criminal Investigative Service. I applaud the agents and prosecutors who worked tirelessly to bring about this result."
In fiscal year 2009, ICE counter-proliferation investigations led to more than 700 arrests and about 300 indictments, which resulted in more than 250 convictions for export-related criminal violations. Thus far in fiscal year 2010, ICE has made 96 arrests and generated 52 indictments, resulting in 40 convictions for export-related violations. These efforts are essential to preventing sensitive U.S. technologies and weapons from reaching the hands of terrorists, hostile countries and violent criminal organizations.