Friday, November 4, 2005

Four persons arrested in Los Angeles are part of a Chinese intelligence-gathering ring, federal investigators said, and the suspects caused serious compromises for 15 years to major U.S. weapons systems, including submarines and warships.

U.S. intelligence and security officials said the case remains under investigation but that it could prove to be among the most damaging spy cases since the 1985 one of John A. Walker Jr., who passed Navy communication codes to Moscow for 22 years.

The Los Angeles spy ring has operated since 1990 and has funneled technology and military secrets to China in the form of documents and computer disks, officials close to the case said.

The ring was led by Chi Mak and his wife, Rebecca Laiwah Chiu, along with Mr. Chi’s brother, Tai Wang Mak, and his wife, Fuk Heung Li, officials said.

Key compromises uncovered so far include sensitive data on Aegis battle management systems that are the core of U.S. Navy destroyers and cruisers.

China covertly obtained the Aegis technology and earlier this year deployed its first Aegis warship, code-named Magic Shield, intelligence officials have said.

The Chinese also obtained sensitive data on U.S. submarines, including classified details related to the new Virginia-class attack submarines.

Officials said based on a preliminary assessment, China now will be able to track U.S. submarines, a compromise that potentially could be devastating if the United States enters a conflict with China in defending Taiwan.

Mr. Chi, an electrical engineer, also had access to details on U.S. aircraft carriers and once was aboard the USS Stennis. A Pentagon report made public earlier this year said China’s military is building up capabilities to attack U.S. aircraft carriers.

China also is thought to have obtained information from the spy ring that will assist Chinese military development of electromagnetic pulse weapons — weapons that simulate the electronic shock caused by a nuclear blast — that disrupt electronics.

It also is thought to have obtained unmanned aerial vehicle technology from the spy ring.

All four persons were arrested yesterday and charged with theft of government property. Law-enforcement officials said that the charges are expected to be upgraded to espionage or espionage-related once the nature of the information involved is fully investigated.

Investigators seized hundreds of thousands of pages of documents and computer data from Mr. Chi’s home in Downey, Calif., after the arrest.

Mr. Chi and his wife were born in China and are naturalized American citizens. Mr. Tai and his wife are resident aliens who came to the United States from China in May 2001.

The arrests were made after electronic surveillance revealed Mr. Tai and his wife planned to travel to Guangzhou, China, to pass to Chinese officials several CDs that contained Navy weapons data, specifically information on Quiet Electric Drive (QED) systems used in Navy warships, officials said. An FBI affidavit in the case described the QED technology as “extremely sensitive” and banned from export.

The affidavit stated that surveillance showed that Mr. Tai and his wife were “very nervous” and had discussed the risks of carrying the disks to China.

“They were funneling information to 2 PLA,” one official said, referring to the military intelligence unit of the People’s Liberation Army. “The Chinese now know more about our military than we know about their entire country.”

Lawyers for the four arrested yesterday could not be reached for comment.

Investigators think Mr. Tai worked as either a courier or a spy handler with China’s Ministry of State Security or the 2 PLA.

Intelligence officials said Mr. Chi held a secret-level security clearance and worked on more than 200 U.S. defense and military contracts as an electrical engineer with the defense contractor Power Paragon, a subsidiary of L3/SPD Technologies/Power Systems Group in Anaheim, Calif.

FBI Agent James E. Gaylord stated in an affidavit made public Monday that Mr. Chi had access to Navy technical records, schematics and other documents that, while unclassified, were “restricted” and barred from foreign distribution.

“Chi uses his workstation at Power Paragon to collect the information he has been tasked to provide to the PRC,” Mr. Gaylord stated.

Mr. Chi obtained the information from his office and took it home, where it was copied on CDs and passed to Mr. Tai, who encrypted the data using a coding software program, the affidavit said. Mr. Tai had planned to take the encrypted disks to China on Oct. 28 to give them to an unidentified recipient.

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