- The Washington Times - Thursday, August 30, 2001

Two men, one a naturalized U.S. citizen and the other a permanent resident alien, were arrested yesterday by the U.S. Customs Service on charges of attempting to export military encryption technology to China.
Eugene You Tsai Hsu of Blue Springs, Mo., and David Tzu Wvi Yang of Temple City, Calif., were taken into custody by undercover Customs Service agents following a four-month investigation by the agency's Baltimore field office.
Mr. Hsu, who became a U.S. citizen in 1999, and Mr. Yang, a Taiwan native who is a resident alien, were accused in an affidavit of attempting to export to China encryption devices used to safeguard classified communications, in violation of the Arms Export Act.
A third man, identified as Charlson Ho, also was named in the conspiracy and is believed to be in Singapore. Mr. Hsu was arrested at his Missouri home. Mr. Yang was taken into custody at his office in Compton, Calif.
"The technology that these individuals were attempting to export to China is among the most sensitive items on the U.S. munitions list," said Agent Allan Doby, who heads the Baltimore office. "The sale of these units is so tightly controlled that the National Security Agency must approve it."
According to an affidavit by Customs Service Agent Mary Hamman, the agency was notified May 2 by the Defense Security Service that Mr. Hsu was attempting to purchase KIV-7HS encryption devices and user manuals for export to China. The devices, authorized for government use only, are designed to secure classified communications.
Ms. Hamman, in the affidavit, said Mr. Hsu sought to buy the equipment from Mykotronx Inc., a private company located in Columbia, Md. Officials at Mykotronx called the Customs Service office in Baltimore, which told the firm to direct Mr. Hsu to an "intermediary representative."
That representative, an undercover Customs agent, later engaged in what the affidavit said was a series of telephone conversations between May 2 and Aug. 18 with Mr. Hsu, Mr. Yang and Mr. Ho, which were tape-recorded. The telephone conversations showed that the men were working for a Singapore firm, Wei Soon Loong Private Ltd., that wanted to buy the encryption devices.
During the conversations, according to the affidavit, Mr. Hsu confirmed that the end user of the encryption devices was located in China. The affidavit does not elaborate.
Ms. Hamman wrote that Mr. Hsu, after being told that the purchase of the equipment would be illegal and that permits to send the devices to China could not be obtained, said he wanted to proceed anyway, suggesting to the undercover agent that "everyone will just keep their mouths shut."
The affidavit said Mr. Hsu then suggested that the agent talk directly with his buyer in Singapore, who would receive the equipment and forward it to China. The agent them spoke with Mr. Ho, who also confirmed that the equipment was bound for China.
In one conversation, the affidavit said, Mr. Ho told the undercover agent the Chinese buyers "don't want too many people to know" about the deal. The document said Mr. Hsu later suggested that instead of a check or wire transfer as payment for the encryption equipment, cash would be better "so there's no trail."
In a conversation with Mr. Yang, the affidavit said, the undercover agent was told by Mr. Yang that he had agreed to "move the merchandise" for Mr. Hsu and Mr. Ho, and that he "fully understands the whole situation."
"I've been doing this business for more than 20 years, I know how to handle these problems," Mr. Yang is quoted as saying.
The affidavit said Mr. Yang told the agent the encryption equipment would be shipped from Los Angeles through Taiwan to Singapore, where it would then be forwarded "to the end user in China."
Mr. Hsu and Mr. Yang were not available yesterday. Wei Soon Loong, the Singapore company, did not return calls for comment.
The maximum sentence for smuggling sensitive technology is 10 years in prison and a $1 million fine for each violation.
Customs spokesman Dean Boyd said people or companies engaged in the export of items included on the U.S. Munitions List to all foreign countries, except Canada, must be registered with the State Department. In addition, he said, persons or companies must obtain a license from the department for each item on the list before it can be exported.


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