Prosecutions have since gone up

The Massachusetts firm, federal authorities now say, was merely a front to facilitate the export of defense technology from U.S. manufacturers to Chinese military-related institutes. And Wu now sits in a federal prison after being sentenced in January to eight years for conspiring to illegally export restricted technologies. According to the Department of Defense, the exported items are "vital for Chinese military electronic warfare, military radar, fire control, military guidance and control equipment, and satellite communications." Also included: parts "that the People's Liberation Army actively seeks to acquire." The use of front companies, or private firms that may also do legitimate business, is a common way that China seeks information, said Pelak, who in 2007 was appointed the Justice Department's first national export control coordinator, focusing on illegal export of munitions and sensitive technology. Prosecutions have since gone up, and today two-thirds of federal illegal export cases involve either China or Iran. "Those private firms, in China and operating elsewhere, they're paid money to do this and they have great incentive to be doing it," said Pelak. Take the case of William Chi-Wai Tsu, a naturalized U.S. citizen and electrical engineer serving a three-year prison sentence for illegally shipping several hundred thumbnail-size integrated circuits to a Beijing company called Dimagit Science & Technology. Investigators said the circuits have a variety of potential applications, including use in sophisticated communications and military radar systems. Dimagit's catalog, according to court records, displayed images of Chinese military craft and promised: "We unswervingly take providing the motherland with safe, reliable and advanced electronic technical support to revitalize the national defense industry as our mission. Ride Rosetta Stone Arabic the wind and cleave the waves, and set sail to cross the sea." Among Dimagit's clients: a research institute affiliated with the state-owned China Aerospace Science and Technology Corp. Court records reviewed by the AP describe how Tsu went about acquiring restricted parts: He created a fictitious company called Cheerway Trading and used the California address of a friend for shipping. He then provided false end-user statements to American electronics distributors, promising that the parts he sought were not for export but for domestic use specifically a project with Cisco Systems. If a distributor pressed Tsu, he would claim that nondisclosure agreements prevented him from providing more detail. Similar tactics were used in a case still awaiting sentencing in Seattle. Lian Yang, a former software engineer at Microsoft, pleaded guilty in late March to attempting to buy restricted technology for a "partner" in China specifically 300 radiation-hardened programmable semiconductor devices that are used in satellites. Yang told a confidential FBI source that he had old school friends in China who'd made money importing electronic components from the United States. He suggested creating a fake U.S. company to list as the end-user for parts that would, in actuality, be exported to China. "Say we need it (the parts) for R and D," he said, meaning research and development, further suggesting that the informant be listed as the company contact because that individual had a non-Chinese name. "And I will be the secret shareholder," said a laughing Yang, according to a court affidavit. Yang was arrested last Dec. 3 after he handed $20,000 to undercover agents in exchange for five of the semiconductor devices. He later confessed that he intended to drive to Canada and then fly to China to deliver the parts himself. His sentencing is set for June 30. "Boiled down to its essence, the defendant's offense amounted to a form of espionage on behalf of the People's Republic of China," prosecutors argued in court papers.

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