California Couple Charged with Conspiring to Export Sensitive Technology to People’s Republic of China

LOS ANGELES—A Southern California man was ordered held without bond today after being arrested on charges of conspiring to export restricted electronics technology to the People’s Republic of China (PRC) without obtaining the necessary licenses.

York Yuan Chang, 53, also known as David Zhang, was ordered detained late this morning by United States Magistrate Judge Fernando M. Olguin.

Chang and his wife, Leping Huang, 49, both residents of Diamond Bar, were charged in a criminal complaint filed October 9 in United States District Court. Chang, who is a naturalized United States citizen, and Huang, who is a Chinese national, were arrested without incident Monday morning at their residence.

Huang was released yesterday after posting part of a $1 million bond that was set on Tuesday during her first court appearance.

The criminal complaint accuses the couple of violating the International Emergency Economic Powers Act and the Export Administration Regulations by conspiring to export restricted items to the PRC without a license. The complaint also charges both defendants with making false statements to federal agents.

According to the affidavit in support of the complaint, Chang and Huang are the longtime owners of GTSI (General Technology Systems Integration, Inc.), an Ontario, California company involved primarily in the export of technology and equipment to the PRC. GTSI entered into contracts with the Sichuan Institute of Solid-State Circuits (also known as the 24th Research Institute of the China Electronics Technology Corporation Group) in Chongqing to design and transfer to the PRC technology for the development and production of two types of high-performance analog-to-digital converters (ADCs). The contracts called for GTSI to provide technical experts to design, develop and oversee the production of ADCs that would match the specifications, functionality and characteristics of two ADCs produced by United States manufacturers.

In early 2009, Chang and Huang hired two engineers to design the technology and provide training to engineers in the PRC. On separate occasions in 2009, the engineers were inspected by officials with U.S. Customs and Border Protection (CBP) when they returned to the United States following trips to the PRC. On each occasion, CBP officials discovered computer files and documents that supported allegations of an illegal technology transfer involving GTSI. After authorities contacted the engineers, Chang and Huang allegedly sought to cover up the project and convince the engineers to keep working on the ADC project.

The complaint alleges that in a September 2009 interview with federal agents, Huang falsely told agents that the engineers had declined to undertake the project three months earlier. The complaint further alleges that in February 2010, Huang made additional false claims to federal agents about the project. In February 2010, Chang allegedly falsely told agents that the ADC project had been cancelled in May 2009.

The ADC technology that Chang and Huang allegedly attempted to export to the PRC has both commercial and military applications. The ADCs are subject to export controls for national security and anti-terrorism reasons. According to official determinations by the United States Department of Commerce, neither the ADCs, nor their related technology, may be exported from the United States to the PRC without a valid export license.

Chang and Huang are scheduled to be arraigned on November 1.

Chang and Huang are both charged in the export conspiracy count, which carries a maximum statutory penalty of 20 years in federal prison. Additionally, Chang is charged with one count of making false statements, and Huang is charged with two counts of making false statements. Each count of making false statements carries a statutory maximum penalty of five years in federal prison.

A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

This case is the product of an investigation by the Federal Bureau of Investigation; the United States Department of Commerce, Bureau of Industry and Security, Office of Export and Enforcement; U.S. Immigration and Customs Enforcement, Homeland Security Investigations; IRS - Criminal Investigation; and the Defense Criminal Investigative Service. The investigation was coordinated by the Export and Anti-proliferation Global Law Enforcement (EAGLE) Task Force. The EAGLE Task Force was created by the United States Attorney’s Office for the Central District of California, in conjunction with federal law enforcement agencies, to investigate and combat the illegal exports of arms and sensitive technologies.