[ISN] Two Men Arrested for Planning to Smuggle High-Tech Encryption Devices to China

From: InfoSec News (isnat_private)
Date: Wed Aug 29 2001 - 22:41:19 PDT

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    Forwarded by: William Knowles <wkat_private>
    By Christopher Newton 
    Associated Press Writer 
    August 29, 2001
    WASHINGTON (AP) - Two men have been arrested and accused of scheming
    to smuggle military encryption technology to China, the Customs
    Service said Wednesday.
    The technology, two devices known as KIV-7HS units, are used to encode
    classified government communications.
    "The technology that these individuals were attempting to export to
    China is among the most sensitive items on the U.S. munitions list,"
    said Allan Doody, the U.S. Customs Service special agent in charge in
    Baltimore. Doody said sale of the technology must be approved by the
    National Security Agency.
    Customs agents have arrested Eugene Hsu of Blue Springs, Mo., and
    David Yang of Temple City, Calif. Carlson Ho, also charged with
    attempting to smuggle the technology, is in Singapore and has not been
    arrested. Ho is affiliated with the Singapore-based Wei Soon Loong
    Pvt. Ltd., which intended to buy the technology, according to a
    federal affidavit.
    The maximum sentence for smuggling sensitive technology is 10 years in
    prison and a $1 million fine for each violation.
    Wei Soon Loong, the Singapore company, did not immediately return
    telephone calls by The Associated Press.
    Customs agents discovered the alleged scheme when Hsu contacted
    representatives of the company Mykotronx, a private defense contractor
    based in Maryland. Hsu asked about the encryption technology and
    wanted a price quote.
    Company executives reported Hsu's telephone call to Customs agents in
    Baltimore. Undercover agents replaced Mykotronx representatives in
    later telephone conversations with Hsu.
    Hsu made clear that he understood the technology could not legally be
    sold to China, according to the Customs Service.
    In a taped conversation in May, an undercover agent told Hsu, "I can
    make a domestic sale to you, and then you can get it out however you
    want. But that would not be legal. It would be illegal, ... and I just
    want your assurance it's not going to come back to burn me."
    Hsu replied, "Everyone will keep their mouths shut."
    The Customs Service says that Hsu contacted David Yang to ship the
    freight, and Yang was informed that it was an illegal shipment. Yang
    told undercover agents that he'd been doing this businesses for 20
    years and that he knew "how to handle these types of problems."
    "Communications without intelligence is noise;  Intelligence
    without communications is irrelevant." Gen Alfred. M. Gray, USMC
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