The Federal Bureau of Investigation (FBI) on April 25, 2012 released the following:
“Alleged Conspiracy Uncovered Through Investigations into Large-Scale, International Schemes to Import Counterfeit Goods and Drugs Through Port Newark
NEWARK—Two Taiwanese nationals are charged for allegedly seeking to export sensitive U.S. military technology to China after federal agents investigating counterfeit goods smuggling uncovered plots to smuggle drugs into and sensitive defense articles out of the United States, Paul J. Fishman, U.S. Attorney for the District of New Jersey; and Michael B. Ward, Special Agent in Charge for the FBI Newark Division, announced today.
Hui Sheng Shen, aka “Charlie,” 45; and Huan Ling Chang, aka “Alice,” 41, were previously charged in connection with an alleged scheme to import 50 kilograms of crystal methamphetamine, or “meth,” from Taiwan into the United States. Those charges arose as a result of parallel international investigations that also disrupted conspiracies to import hundreds of millions of dollars in counterfeit goods from China.
Federal agents arrested Shen and Chang on February 25, 2012 in New York. The pair was charged in a criminal complaint unsealed March 2, 2012, with one count of conspiracy to import and one count of importation of meth. The amended complaint unsealed today also charges Shen and Chang with conspiracy to violate the Arms Export Control Act.
According to the amended complaint, approximately one kilogram of nearly pure crystal meth was purchased from Shen and Chang as part of an undercover law enforcement operation, which stopped the importation of dozens of additional kilograms of the drug. Based on relationships undercover law enforcement agents built with Shen and Chang, the two defendants allegedly provided a list of sensitive defense articles they sought to buy and planned to return to connections in China. The articles included unmanned aerial vehicles (commonly known as drones), E-2C Hawkeye surveillance airplanes, and stealth technology relating to F-22 fighter planes.
Shen and Chang are scheduled to appear before U.S. Magistrate Judge Cathy L. Waldor this afternoon in Newark federal court.
“Initial investigations into counterfeit goods importation led federal law enforcement to a meth trafficking operation and an alleged plot to export some of America’s most sensitive weapons and related technology to China,” said U.S. Attorney Fishman. “The charges against Shen and Chang illustrate starkly why we do this work, and what is at stake when the security of our ports is breached for any reason. National security isn’t an a la carte enterprise. The same conduits that bring knockoff sneakers flood our communities with illegal drugs and establish dangerous criminal relationships.”
According to documents filed in this and related cases and the amended criminal complaint unsealed today:
Soon Ah Kow, 72, of Hong Kong, was charged by indictment with drug importation, smuggling, and counterfeit goods trafficking offenses by a Newark federal grand jury on January 6, 2012 and arrested on February 25, 2012 in Manila, the Philippines. Ah Kow was in the business of brokering international transactions of illegal goods. Operating out of Southeast Asia, he met with and introduced his co-conspirators to undercover federal agents (FBI UCs) for the purpose of importing counterfeit goods and narcotics from Asia to the United States.
In late 2010, Ah Kow began discussions with FBI UCs about narcotics importation, meeting in February 2011 with FBI UCs in Manila where he introduced them to his associates, Shen and Chang. In Manila, Ah Kow told the FBI UCs that Shen and Chang represented the interests of Ah Kow’s associates, wealthy narcotics dealers who had been trafficking drugs for more than 25 years. Ah Kow and Shen arranged for the delivery of a sample of crystal meth to the FBI UCs’ hotel lobby, which arrived within hours of a call Ah Kow placed to an associate.
Following negotiations over recorded telephone calls and intercepted e-mails, the FBI UCs arranged payment to cover the price of one kilogram of crystal meth, shipping costs, and a broker’s fee for Ah Kow. In July 2011, the FBI UCs received a bill of lading for the container that included the meth, which arrived at the port on August 9, 2011. The drugs were discovered secreted within the container in the exact location described by Shen and Chang.
During negotiations for the one kilogram meth deal, Shen and Chang made clear they usually did larger transactions, but agreed to do a smaller transaction to establish trust among the parties. They discussed shipping more than 50 kilograms of meth to the United States.
In September 2011, Shen and Chang asked whether the FBI UCs could obtain and pass along highly sensitive military technology, specifically, a Hawkeye reconnaissance aircraft, which the defendants instructed should be referred to as the “big toy.”
During other recorded conversations, the defendants indicated their clients were interested in a range of American military technology. Shen, Chang, and an FBI UC met in October 2011 in Las Vegas, where they discussed narcotics and the export of the technology. Chang provided the FBI UC with a list of specific military technology items they sought.
At a Las Vegas meeting, FBI UCs asked what purposes Shen and Chang had for any military technology they were seeking to obtain. When an FBI UC stated, “I would prefer not to make money on something that would hurt the United States,” Shen replied, “I think that all items would hurt America.”
During a series of recorded phone conversations and in-person meetings, the defendants told FBI UCs that their associates were connected to the Chinese government, worked for a Chinese intelligence company like the CIA, and would be using government money to make the purchases.
Describing their associates in one call, Chang said, “Their status is a bit special, so in order to travel to U.K. or United States, all developed countries, for them it’s hard for them to…” Shen interrupted, “They are spies. They, they, they are very hard to get a visa. They cannot go to U.S. or U.K.”
Shen and Chang returned to the United States in February 2012 to finalize negotiations for a series of larger drug transactions and to look at and photograph certain military technology that the FBI UCs said they had acquired. Shen and Chang met with FBI UCs in New York to see a small drone, used by the U.S. military, as well as manuals associated with other drones. Shen and Chang had purchased cameras for the explicit purpose of taking photographs of the defense technology. The pair planned to avoid law enforcement detection by taking photographs, deleting those photographs, and bringing the memory cards back to China, where a contact had the ability to recover deleted items. The defendants took the photos, but FBI agents were there to arrest them before the photos could be deleted.
The conspiracy to violate the Arms Export Control Act charge carries a maximum potential penalty of five years in prison and a $250,000 fine. The meth importation conspiracy and meth importation charges each carry a mandatory minimum penalty of 10 years in prison and a maximum penalty of life in prison and a $4 million fine.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Ward in Newark, for the investigation leading to the export violation conspiracy charge, as well as ICE Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees, for its work in the parallel investigation. He also thanked Customs and Border Protection, under the direction of Robert E. Perez, Director, New York Field Operations, for its important role. U.S. Attorney Fishman also credited the U.S. Air Force Office of Investigations; FBI special agents in Manila, Beijing, Hong Kong, and Taiwan; the Philippine authorities; and the Department of Justice’s Organized Crime and Gangs Section, National Security Division, Office of Enforcement Operation, and Office of International Affairs for their contributions.
The government is represented by Assistant U.S. Attorney Zach Intrater and Chief Erez Liebermann of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit and Assistant U.S. Attorney Andrew Pak of the Office’s General Crimes Unit in Newark.
The charges and allegations contained in the amended complaint charging Shen and Chang and the indictment charging Ah Kow are merely accusations, and the defendants are considered innocent unless and until proven guilty.”
Douglas McNabb – McNabb Associates, P.C.’s
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