US strike force discloses multiple defence tech theft cases

The Justice Department announced criminal charges in five cases and four arrests from the recently launched multi-agency Disruptive Technology Strike Force in the US.

The strike force is co-led by the Departments of Justice and Commerce to counter illicitly acquired sensitive US technology and its transportation by hostile nation-states.

Assistant Attorney-General Matthew G Olsen, US Justice Department national security division, said the cases involve the disruption of alleged procurement networks created to help the Russian military and intelligence services obtain sensitive technology in violation of US law.

“These charges demonstrate the Justice Department’s commitment to preventing sensitive technology from falling into the hands of foreign adversaries, including Russia, China, and Iran,” he said.

“We will not tolerate those who would violate US laws to allow authoritarian regimes and other hostile nations to use advanced technology to threaten US national security and undermine democratic values around the world.”

Netherlands-Greece-based defence company Aratos Group was swept up in the charges when corporate head Dr Nikolaos Bogonikolos was charged with wire fraud conspiracy and smuggling.

Bogonikolos was arrested in Paris on 9 May and remains in custody pending extradition proceedings after it was alleged he had been involved in smuggling US-origin military and dual-use technologies to Russia in violation of US law.

“As alleged, while ostensibly operating as a defence contractor for NATO and other ally countries, the defendant and his Aratos Group were double-dealing, helping to fuel Russia’s war effort and their development of next-generation weapons,” said US Attorney Breon Peace for the Eastern District of New York.

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It’s alleged Aratos claimed to be using tactical battlefield equipment, advanced military electronics, and sophisticated testing equipment used in quantum cryptography and nuclear weapons testing, but instead reshipped them to Russia and the Russian Foreign Intelligence Service in violation of US law.

It’s also alleged Bogonikolos was recruited as a procurement agent for Russia in 2017 and later signed several false end-use statements and provided them to US companies.

The FBI New York field office is continuing to investigate.

FBI counterintelligence division assistant Director Suzanne Turner said the recently announced charges aren’t the only instances of foreign adversaries trying to steal US technology.

“The theft of technology and trade secrets from US companies is a threat to our economic and national security,” she said.

“Combating the illegal transfer of technology is one of the FBI’s highest priorities, and we will continue to work with our federal partners, including the Department of Commerce, to investigate those who steal US technology to ultimately use it in weapons that threaten us and our allies.”

Two Russian nationals, Oleg Sergeyevich Patsulya and Vasilii Sergeyevich Besedin, were arrested in Arizona and charged via criminal complaint with conspiracy to violate the Export Control Reform Act and conspiracy to commit international money laundering, on 11 May.

The complaint alleges Patsulya and Besedin used their Florida limited liability company, MIC P&I, LLC, and worked with others to evade US export laws and regulations to send aircraft parts to Russian airline companies.

It’s alleged the pair fielded requests for parts directly from the Russian airlines and used intermediary companies and foreign international bank accounts to mask the true identity of those customers and payments. They then approached US aircraft parts suppliers and attempted to purchase export-controlled aircraft equipment, including brake systems.

In a separate case, charges were laid on 6 May against California man Liming Li in relation to alleged theft of sensitive technologies from a Southern California employer and their use to market his own competing company in the People’s Republic of China.

US Attorney Martin Estrada for the Central District of California said Li was arrested at Ontario International Airport on 6 May and has been detained after arriving on a Taiwanese flight pursuant to a criminal complaint that charges him with theft of trade secrets from two employer companies.

“Li stole thousands of files of sensitive technology that did not belong to him and used it to help foreign companies build competing technology,” he said.

“(Manufacturing and 3D model) technology that could be used in the manufacture of nuclear submarines and military aircraft.

“Protecting our nation’s national security is paramount, and my office will aggressively investigate and prosecute those who misappropriate sensitive intellectual property to the benefit of foreign actors.”

The investigation against Li allegedly found that his employer-issued laptop contained a folder labelled “ChinaGovernment” with numerous documents showing his efforts to participate in the PRC Thousand Talents Program and he had created a separate company (JSL Innovations) to provide services to PRC businesses and government entities.

In another case, former Apple Incorporated employee Weibao Wang was indicted on charges relating to alleged theft and attempted theft of trade secrets in connection with a scheme to access, download, and steal Apple technology related to autonomous systems.

According to the investigation, Wang was employed as a software engineer, signed a confidentiality agreement, and worked with a team at Apple that designed and developed hardware and software for autonomous systems for a variety of applications, including self-driving cars.

Following a review of access logs on Apple’s network, Wang was identified as having accessed large amounts of sensitive proprietary and confidential information. A search by law enforcement of his residence discovered large quantities of data taken from Apple, and he boarded a one-way plane ticket from San Francisco International Airport to Guangzhou, China, later that night.

The FBI continues to investigate this case.

In a separate case, Xiangjiang Qiao of the People’s Republic of China was charged in relation to sanctions evasion, money laundering, and bank fraud offences from an alleged scheme to provide materials used in the production of WMDs to Iran, in exchange for payments made through the US financial system.

US Attorney Damian Williams for the Southern District of New York said the Chinese national created a bank account in the name of a front company to receive two transfers from a US bank totalling over $15,000 as part of his efforts to facilitate the supply of isostatic graphite to Iran.

“As alleged, Xiangjiang Qiao conspired to send isostatic graphite to Iran, in violation of US sanctions,” he said.

“Isostatic graphite is a high-tech material used in the nose tips of intercontinental ballistic missiles.

“The Iranian regime of terror and repression, and those who facilitate it, pose a grave threat to our national security.

“This office will continue to work relentlessly to bring to justice those who advance the interests of the Iranian regime and thereby threaten the safety and security of the American people.”

Qiao is at large in China. The FBI New York field office and counterintelligence division are investigating the case.

This article was originally published on Defence Connect.