Two men charged with illegal China export scheme

The U.S. Justice Department said Yi-Chi Shih and Kiet Ahn Mai were arrested on Jan. 19 and subsequently charged with illegally obtaining technology which they in turn exported to China without a U.S. export license.    The U.S. Justice Department said Tuesday that two individuals, Yi-Chi Shih and Kiet Ahn Mai, were arrested on Jan. 19 and subsequently charged with illegally obtaining technology and integrated circuits with military applications that were exported to a Chinese company without the required U.S. export license.
   Sixty-two-year-old Shih is an electrical engineer who is a part-time Los Angeles resident and a naturalized U.S. citizen originally from Taiwan, while Mai, 63, who resides in Pasadena, Calif., is a naturalized U.S. citizen originally from Vietnam. Both men had worked together at two different companies.
   Shih is also charged with violating the International Emergency Economic Powers Act (IEEPA), a federal law that makes illegal, among other things, certain unauthorized exports.
   The complaint alleges that Shih and Mai conspired to illegally provide Shih with unauthorized access to a protected computer of a U.S. company that makes specialized, high-speed computer chips, known as monolithic microwave integrated circuits (MMICs). The conspiracy count also alleges that the two men engaged in mail fraud, wire fraud and international money laundering to further the scheme.
   “As part of the scheme, Shih and Mai accessed the victim company’s computer systems via its web portal after Mai obtained that access by posing as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States,” the Justice Department explained.
   MMICs have both commercial and military applications, requiring exporters of these items to obtain U.S. export licenses when being shipped to China. Shih and Mail allegedly concealed Shih’s true intent to transfer the U.S. company’s technology and products to China, the department added.
   The semiconductor technology in this case was illegally exported to Chengdu GaStone Technology Co. (CGTC). Shih was the president of CGTC, which in 2014, was placed on the U.S. Commerce Department’s Entity List, according to the affidavit, “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 technologies for unauthorized military end use in China.”
   Because CGTC was placed on the Entity List, a license from the Commerce Department was required to export U.S.-origin MMICs to the company, and there was a “presumption of denial” of a license.
   Shih used a Los Angeles-based company he controlled – Pullman Lane Productions – to funnel funds provided by Chinese entities, one also on Commerce’s Entity List, to finance the manufacturing of MMICs by the victim U.S. company.
   Mai acted as the middleman by using his Los Angeles company – MicroEx Engineering – to pose as a legitimate domestic customer that ordered and paid for the manufacturing of MMICs that Shih illegally exported to CGTC in China, according to the complaint.
   If convicted of the charges, Mai faces a maximum sentence of five years in prison, and Shih faces a maximum sentence of 25 years in prison.