Asahi Shimbun, 19 May 2010: Lin Yi-lin stood before a tall, “faceless” member of Taiwan’s intelligence community, in a room without windows at Taipei international airport. Lin, 40, had just returned to his homeland following his release from prison in mainland China, where he had spent 14 years and 10 months behind bars for espionage.
A paper bag was on the table. Lin instinctively knew it was stuffed with cash. A thought crossed his mind: “It must be money to buy my silence.” Lin told the stranger he would not accept the money. The man frowned and said, “You’ll never get the same chance again.” It was the only time Lin would meet the man, a senior officer in the Military Information Bureau (MIB) of Taiwan’s Defense Ministry.
Lin, who was born in Yilan, a city in northeastern Taiwan, was part of an army of “non-official” espionage agents recruited by the MIB.
His saga began when he was approached by the MIB to spy on China during visits there for his company. At that time, Lin operated an import-export business, trading in quarried stone. The MIB official made contact through a distant relative of Lin’s, who was in the military. Lin agreed to work for the MIB and signed a “contract.” He was paid 50,000 New Taiwan dollars (15,000 yen, or U.S. $160) a month, sometimes more. It was about double the normal salary of a college graduate today, plus expenses for round-trip flights between Taiwan and China.
“It was not such big money actually, but I felt satisfied (working for the MIB) because I was doing something for my country.” The MIB counted on that mentality to recruit hundreds of middle-aged Taiwanese like Lin, who as school children were educated to be patriotic and anti-communist.
In his new role as a civilian spy, Lin invited selected Chinese officials to expensive dinners and lavished them with gifts. Such largess helped to loosen tongues. This was before the Chinese economy took off in the late 1990s. All his expenses were financed by the MIB. Lin developed a wide network of contacts in the military, the government and the Chinese Communist Party. . . . .
DOJ, 13 May 2010: Yi-Lan Chen, aka Kevin Chen, 40, a Taiwan passport holder, and his Taiwan corporation, Landstar Tech Company Limited, pleaded guilty today in Miami to charges of conspiring to illegally export dual-use commodities to Iran, announced David Kris, Assistant Attorney General for National Security; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; Michael Johnson, Special Agent in Charge, U.S. Department of Commerce, Office of Export Enforcement; and Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations. Chen appeared on behalf of himself and Landstar Tech in federal court today to announce their guilty pleas. Sentencing is scheduled for July 30, 2010, at 10:00 a.m. before U.S. District Judge Adalberto Jordan.
Chen pleaded guilty to all three counts filed against him, and Landstar Tech pleaded guilty to count 1 of the criminal information. Count 1 charges conspiracy to export and cause the export of commodities from the United States to the Islamic Republic of Iran, in violation of the embargo imposed upon that country by the United States and in violation of the International Emergency Economic Powers Act. Counts 2 and 3 charge attempts to export and cause the export of commodities from the United States to the Islamic Republic of Iran, in violation of the U.S.-Iran Embargo and in violation of the International Emergency Economic Powers Act. On the conspiracy count, Chen faces a maximum statutory term of 20 years in prison and a maximum fine of $1 million. Landstar Tech also faces a statutory maximum fine of $1 million.
According to documents filed with the court during the plea hearing, Chen, a Taiwan national who was residing in that country during the time of the acts charged in the information, by and through his corporation, Landstar Tech, communicated and coordinated with co-conspirators in the United States, Iran, Hong Kong and elsewhere and facilitated the attempted export of dual-use goods from the United States to Iran. In so doing, Chen communicated with and took requests for U.S. manufactured goods from customers in Iran. Chen and Landstar Tech then purchased those U.S.-manufactured goods from U.S. companies and misrepresented to those companies the ultimate end-user or consignee of the goods.
With respect to the particular items charged in the information, Chen made arrangements with a federal agent acting in an undercover capacity to have those U.S. goods hand-delivered by the undercover agent to Chen in Guam, a territory of the United States. Chen then planned to transport those goods back to Taiwan and then on to his customers in Iran. Chen and Landstar Tech also received payment for the purchase and shipment of the U.S. goods from his customers in Iran and then used funds received from the customers in Iran to pay the U.S. companies for those goods.
Specifically, Chen and Landstar Tech conspired to export and cause the export of and attempted to export and cause the export of 120 circular hermetic connectors (Model MIL-C-81703/Part No. 8403-7-50P) and 8,500 glass to metal seals of various item numbers. The circular hermetic connectors and the glass to metal seals were manufactured in the United States and are dual-use commodities. While the goods or technologies have commercial application, they also could make a significant contribution to the military or nuclear potential of other nations and could be detrimental to the foreign policy or national security of the United States.
Chen ultimately failed to deliver the circular hermetic connectors or the glass to metal seals to his customers in Iran due to the intervention of U.S. Department of Commerce agents. The agents seized the first attempted shipment of 60 glass to metal seals prior to their export from the United States. Agents from the Commerce Department, as well as from the Department of Homeland Security, Immigration and Customs Enforcement (ICE), arrested Chen in Guam before he took delivery of the 60 additional circular hermetic seals or the 8,500 glass to metal seals from a federal law enforcement agent acting in an undercover capacity.
Chen has been in federal custody since his arrest in February of this year and will remain in custody pending his sentencing.
The investigation was conducted by the U.S. Department of Commerce, Office of Export Enforcement; and the U.S. Immigration and Customs Enforcement, Office of Investigations. The case is being prosecuted by Assistant U.S. Attorney Melissa Damian.
AP, 13 May 2010: A Taiwanese businessman pleaded guilty Thursday to federal charges arising from an undercover investigation into the illegal export to Iran of items that can be used for missiles, unmanned drones and other military purposes.
Yi-Lan Chen, 40, pleaded guilty to conspiring to violate the U.S. embargo against Iran and attempting to export prohibited goods that have dual civilian and military uses. Chen, a citizen of Taiwan who used the name “Kevin Chen,” also entered guilty pleas on behalf of his Landstar Tech Co. . . .
. . . . Chen was arrested in February in Guam in the midst of a transaction to ship to Iran some 8,500 glass-to-metal seals and 120 military-grade connectors. Commerce Department investigators said he had arranged at least 30 banned shipments to Iran since 2007, falsely telling U.S.-based suppliers in Lakewood, N.J., Cincinnati and elsewhere that the goods were destined for Hong Kong or Taiwan.
In one August 2009 e-mail exchange with a buyer in Tehran, Iran, Chen described his practices this way: “As you know we cannot tell USA this connector is for you. So we have to tell a white lie to USA that this is for our factory in Hong Kong.” . . .
Focus Taiwan, 15 April 2010: A Taiwanese businessman with operations in China was indicted by the Shihlin Prosecutors Office Thursday for spying for China, according to the indictment released that day.
Ho Chih-chiang, a China-based Taiwanese businessman, had been recruited by China’s national security authorities since 2007 to collect Taiwanese national security secrets in return for financial subsidies and other privileges, the indictment said.
Acting under the instructions of Chinese officials, Ho returned to Taiwan and tried to recruit a Taiwan National Security Bureau (NSB) officer, surnamed Chao, to serve as a Chinese spy by collecting information related to the government’s policies on Falun Gong, Tibetan independence, Japan and diplomacy, between December 2008 and February this year.
Ho also offered Chao US$20,000, liquor and additional pay several times that of Chao’s retirement pension in exchange for information on NSB overseas deployments and its satellite communication routings, but this was rejected by Chao. . . .
♦ CI CENTRE COURSE: 207–An Introduction to the People’s Republic of China’s (PRC) Intelligence and Counterintelligence Methodologies
DOJ, 4 Feb 10: David Kris, Assistant Attorney General for National Security, Jeffrey H. Sloman, U.S. Attorney for the Southern District of Florida, Michael Johnson, Special Agent in Charge, U.S. Department of Commerce, Office of Export Enforcement, Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations, and James M. Foster, Special Agent in Charge, U.S. Department of State, Diplomatic Security Service, announced that defendant Yi-Lan Chen, aka “Kevin Chen,” 40, a Taiwan passport holder, was arrested on Feb. 3, 2010, on charges of illegally exporting commodities for Iran’s missile program.
More specifically, the complaint charges defendant Chen with exporting and attempting to export U.S. commodities to Iran in violation of the International Emergency Economic Powers Act (IEEPA) and the United States Iran Embargo (the Embargo). The Embargo prohibits the exportation from the United States to Iran of any goods, technology, or services, with limited exceptions, unless authorized by the Department of Treasury, Office of Foreign Assets Controls (OFAC). The Embargo is enforced through the IEEPA.
According to the affidavit filed in support of the criminal complaint, Chen facilitated the purchase and export of various dual use goods from the U.S. to Iran by way of Taiwan and Hong Kong. “Dual use” goods are goods and technologies that have commercial application, but also could make a significant contribution to the military or nuclear potential of other nations and could be detrimental to the foreign policy or national security of the United States.
U.S. Attorney Jeffrey H. Sloman stated, “Keeping our nation safe is the number one priority of the Department of Justice. To that end, we will vigorously investigate and prosecute individuals who export items to prohibited entities such as the Islamic Republic of Iran. Iran has been designated a state sponsor of terrorism and remains subject to United States, United Nations and European Union economic sanctions and export controls because of its continued involvement in terrorism and its nuclear weapons ambitions. The dual use items allegedly exported in this case could easily be used in missile development and other military components. Such conduct poses a serious threat to our national security, and will not be tolerated.”
“Today’s arrest is the result of ongoing cooperation between government agencies to combat the illegal transshipment of U.S.-origin items to Iran,” said Michael Johnson, Special Agent in Charge, U.S. Department of Commerce’s Miami Office of Export Enforcement. “We will continue to work together to pursue willful violators no matter where they set up their networks and protect our national security.”
“This investigation is another fine example of how effective these law enforcement partnerships can be at ensuring that the sale and distribution of dual-use technology is done lawfully,” said Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations in Miami. “This case will send a message to those individuals who attempt to profit by illegally supplying improper dual-use technology to other countries. ICE will continue to aggressively pursue those who violate U.S. export laws.”
The complaint alleges that Chen caused dual use goods to be exported from the U.S., including P200 Turbine Engines and spare parts, MIL-S-8516 Sealing Compound, Glass to Metal Pin Seals, and Circular Hermetic Connectors (Model MIL-C-81703). P200 Turbine Engines are designed for use as model airplane engines but can also be used to operate unmanned aerial vehicles and military target drones. MIL-S-8516 Sealing Compound is an accelerated, synthetic, rubber sealing compound used for sealing low-voltage electrical connectors, wiring and other electrical equipment against moisture and corrosion. This particular sealant is designed to military specifications and has numerous applications in military, aerospace, and automotive industries. It is also considered a hazardous material for shipping purposes.
Glass to Metal Pin Seals are commonly used to seal a conductor pin in a metal feed thru in an electrical device. These have many applications, such as vacuum components, sensor or transducer housings, feedthroughs for harsh environments and battery headers. The pin seals exported by Chen were designed with the nickel alloy known as “Alloy 52″ and have dual applications in aerospace industries, thermal imaging devices, chemical agent monitors, and weapons systems. Circular Hermetic Connectors are designed to facilitate the flow of electrical current across two devices and can be mechanically coupled to, or uncoupled from, another connection. These connectors are designed to military specifications and have aerospace, defense, industrial and petrochemical applications.
As alleged in the complaint affidavit, federal agents learned of Chen’s efforts to obtain and export U.S. goods and commodities after Chen attempted to export detonators through a California company using unsatisfactory information in documents regarding Chen’s ultimate customers. The investigation revealed that Chen’s ultimate customers for the dual use exports listed in the complaint are all in Iran.
The investigation also revealed that Chen’s customers included buyers for Electro SANAM Industries. According to www.iranwatch.org, part of the Wisconsin Project on Nuclear Arms Control, Electro SANAM Industries is a known front company for Aerospace Industries Organization (“AIO”) in Iran and has been linked to Iranian ballistic missile programs. AIO conducts research and development on ballistic missiles and is a leading industrial and military subsidiary of the Ministry of Defense and the Ministry of the Armed Forces Logistics of Iran. In addition, Electro SANAM Company is listed in annex IV of U.N Security Council Resolution 1803, dated March 3, 2008, for links to nuclear proliferation activities.
The complaint also alleges that another customer for receipt of the dual goods listed in the complaint is the owner of the Noavaran Sooyab Sanat Co. in Tehran, Iran. Sooyab Sanat Co. was founded in 1989 as an instrumentation division of Jahad Engineering Research Center. Jahad Engineering Research Center is one of many names used by the Engineering Research Center for the Construction Crusade (Jihad-e Sazandegi), located in Tehran, Iran, which has been linked to chemical research and development facilities. According to www.iranwatch.org, part of the Wisconsin Project on Nuclear Arms Control, in 2006, Jahad Engineering Research Center has been listed as an entity of concern by the British government regarding the procurement of weapons of mass destruction.
According to the complaint affidavit, customers in Iran sent orders by e-mail to Chen for specific U.S.-manufactured goods. Chen then requested quotes, usually by e-mail, from U.S. businesses and made arrangements for the sale and shipment of the goods to one of several freight forwarders in Hong Kong and Taiwan. Once in Hong Kong or Taiwan, the goods were then shipped to Iran.
