Guilty Verdict in Scheme to Send Military Tech to China

(AP Photo/Jim Gomez, FILE)

LOS ANGELES (CN) – A federal jury has found a Los Angeles electrical engineer guilty of conspiring to send computer parts used for missile guidance systems and other military applications to China and funneling the proceeds through a shell entertainment consulting company.

Jurors found Yi-Chi Shih, 64, guilty in a scheme that involved conspiring to illegally send semiconductor chips manufactured in the United States over to China. The chips have both military and civilian uses, according to the Department of Justice.

On Monday, U.S. District Judge John Kronstadt discharged the jury, deciding to handle the forfeiture portion of the case – involving potentially hundreds of thousands of dollars – himself.

An unnamed U.S. chip manufacturer was targeted in the scheme and was unaware Shih intended to export the chips, according to the criminal complaint filed in January 2018 when Shih and an accomplice were arrested.

The jury convicted Shih on all 18 counts, including violation of the International Emergency Economic Powers Act which criminalizes certain unauthorized exports.

The U.S. Air Force, U.S. Navy and the Defense Advanced Research Projects Agency (DARPA) uses the chips in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications.

Shih and Kiet Ahn Mai, 65, of Pasadena, California, conspired to violate multiple federal laws in a scheme that involved mail fraud, wire fraud, filing false tax returns, making false statements to a government agency and other charges.

Shih gained unauthorized access to the unnamed manufacturer’s protected computer after Mai posed as a domestic customer seeking to obtain custom-designed chips. Mai acted as a middleman without revealing that the chips would be sent to China, according to the criminal complaint.

The monolithic microwave integrated circuits (MMIC) require a Commerce Department license for national security purposes in order to be exported to China. Prosecutors say Shih did not apply for a license.

Instead, Shih funneled funds from Chinese entities to buy the chips from the unnamed company through his Hollywood Hills-based company, Pullman Lane Productions. The money came from a Beijing-based company that was on a federal government watch list “due to its involvement in activities contrary to the national security and foreign policy interest of the United States – specifically, that it had been involved in the illicit procurement of commodities and items for unauthorized military end use in China” according to court documents.

Prosecutors say Shih was also president of Chengdu GaStone Technology Company, a Chinese company that was building its own semiconductor manufacturing facility in China. That company was placed on the federal government’s watch list the same day the Beijing-based company was flagged by the Commerce Department, according to prosecutors.

Mai is a naturalized U.S. citizen born in Vietnam and met Shih while the two worked at California-based MMCOMM Inc., which was acquired in 2007 by an unnamed U.S. defense contractor. Shih was a senior technology manager until 2011 and was familiar with U.S. export control laws, according to prosecutors.

Mai pleaded guilty in December 2018 to one felony count of smuggling.

 

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