Navy contractor pleads guilty to federal arms export control law violations

SEATTLE — A Woodinville company contracted by the U.S. Navy to manufacture high-tech components, and the company's owner, pleaded guilty Tuesday to violating the Arms Export Control Act and to wire fraud, following a probe by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Naval Criminal Investigative Service.

Precision Image Corporation and company owner Chih-Kwang Hwa, of Woodinville, admitted to illegally sending restricted U.S. Navy technical information to a Taiwanese integrated circuit board manufacturer that was sub-contracted to make the circuit boards for the Navy. Under the terms of the contract, the components were required to be made in the United States.

According to court records, between 2009 and 2011, Hwa obtained contracts worth more than $180,000 to supply circuit boards to the U.S. Navy. The Navy supplied technical data to Precision Image Corporation that contained the technical specifications for the circuit boards – information that was listed on the United States Munitions List, International Traffic in Arms Regulations – and prohibited from being transmitted outside the U.S. without a license from the State Department. Prosecutors say Hwa knew about this restriction at the time he received the technical data from the Navy.

"Our national security depends upon protecting our military systems and their specifications. Going 'on the cheap,' gave this defendant an unfair advantage over other suppliers and risked our security," said U.S. Attorney Jenny A. Durkan. "Protecting our military technical data and enforcing our export restrictions are critical priorities of the U.S. Attorney's Office."

"U.S. export controls are in place to keep sensitive technology from falling into the hands of our nation's enemies," said Brad Bench, special agent in charge of HSI Seattle. "One of HSI's highest priorities is to prevent illicit procurement networks, terrorist groups, and hostile nations from illegally obtaining military items and controlled dual-use technology."

Maximum penalties include a $1 million fine and up to 20 years in prison. Sentencing is set for Oct. 28 before U. S. District Judge James L. Robart.