Background

The Department of Justice announced July 16 that a Chinese national has been sentenced to three years and six months in federal prison in connection with an attempt to export defense-related items to China. The man was also ordered to forfeit $114,834.27, the amount he attempted to pay for the items.

A DOJ press release states that the man was chairman of a company headquartered in Shanghai and wanted to purchase U.S.-manufactured combat rubber raiding craft equipped with engines that can operate using gasoline, diesel fuel, or jet fuel. These vessels and multi-fuel engines are used by the U.S. military and can be operated after being launched from a submerged submarine or dropped into the ocean by an aircraft. No comparable engine is manufactured in China.

One of the man’s U.S.-based employees, after being told by one of her Chinese co-workers that U.S. manufacturers would be more likely to sell to an entity in Hong Kong than one in mainland China, falsely represented that the customer for the intended transaction was an entity in Hong Kong. DOJ states that by misrepresenting what company was buying the equipment and where it was located this employee caused the entry of false information in the Automated Export System.

To facilitate the purchase the man arranged for wire transfers to a separate company in Hong Kong, which in turn wired the money to the U.S. manufacturer. He also coordinated plans to send an employee to Hong Kong to receive the items and transship them to mainland China.

For more information on export compliance issues, please contact Kristine Pirnia at (202) 730-4964 or via email.

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