Case Study DR. QUAN-SHENG SHU. VEDP Export Training FCPA. FBI NORFOLK 04/15/2014 SA Kevin P. Rojek

Transcription

1 Case Study DR. QUAN-SHENG SHU VEDP Export Training FCPA FBI NORFOLK 04/15/2014 SA Kevin P. Rojek

2 Export Control Concurrent Jurisdiction Effective November 15, 2004 the FBI was designated by the Attorney General: to take charge of investigative work in matters relating to espionage, sabotage, subversive activities, and related matters, including investigating any potential violations of the Arms Export Control Act, the Export Administration Act, the Trading with the Enemy Act, or the International Emergency Economic Powers Act, relating to any foreign counterintelligence matter. AG Order No

3 Background Dr. Quan-Sheng SHU AMAC International, Inc. Plead Guilty in x counts AECA 1 x count FCPA Sentenced to 51 months

4 Predication & Chronology JAN 2001: Lead from Philadelphia Division informing Norfolk that SMX Corporation was hosting visitors from 3 PRC high tech entities; visits all set up by SHU JUL 2003: Begin collecting Trash SEP 2005: Court authorized electronic surveillance initiated on SHU and AMAC International, Inc. SEP 2006: Begin meeting with U.S. Attorney s Office SEP 24, 2008: SHU arrested NOV 2008: Guilty plea APR 7, 2009: Sentence: 51 Months

5 Charges 22 U.S.C. 2778, Export of Defense Article Without a License (1 Count) Technical information associated with 100 M3 LH2 Storage Tank 22 U.S.C. 2778, Export of Defense Service Without a License (1 Count) Providing assistance in the design, development, assembly, testing or modification of 100 M3 LH2 Tank and related components of fueling system for a foreign launch facility 15 U.S.C. 78dd-1 & 78dd-2, Bribery of Foreign Official (1 Count)

6 Key Evidence - Trash SHU s Ties to PRC Military war crossed out and replaced with preferred The specifications are the same with Ariane 5 s

7 Electronic Surveillance False End-Users / Support to PLA November 30, 2005: SHU instructed AMAC Beijing Employee C that, in the future, the employee should make up an end-user when dealing with the PRC military because of U.S. restrictions on military technology being sent to the PRC.

8 Electronic Surveillance Witting Support to PLA "The 101 thing, if, if we said that was for launching satellites, we wouldn't be able to get the 101 deal that's worth three million you need to find a reason. Everyone hides it in the end, the manufacturers also help to hide it. The French, also. If you said you wanted to launch, eh, rockets or something, then France won't be able to sell to you France belongs to the NATO Let me tell you, that's how the military industry buys things. Right, we've done military industry business." Quote by SHU, April 10, 2007

9 Defense Article 100m3 Liquid Hydrogen Storage Tank Document certified by DOS DDTC as a Defense Article covered by Category IV (h) on the USML

10 Key Evidence Items discovered in Trash Defense Article Technical Data Original Translation

11 Defense Service Support to Hainan Island The liquid hydrogen and liquid oxygen will burn then the missile is launched. This is for the Lunar Mission Launch Facility on Hainan Island For use in the largescale lunar landing rockets' launch facility this project has been established for three years, that is, and we have followed it for three years." Quote by SHU, July 6, 2007

12 Bribery of a Foreign Official Foreign Corrupt Practices Act April 7, 2006: SHU talked to his wife about how to best offer percentage points to the 101 Institute Deputy Director (PRC Official C), to induce him to select French Company A for the hydrogen liquefier project. Sheng stressed the importance of communicating to PRC Official C that the "kickbacks" would only go through AMAC and not any third party, there would be no need for a signature or receipt from PRC Official C, and, with that, there would be no trace left behind.

13 Bribery of a Foreign Official Foreign Corrupt Practices Act April 7, 2006: SHU called 101 Institute Deputy Director, PRC Official C, and stated that AMAC s typical practice is to distribute a certain percentage to leaders after the conclusion of a project for the leaders to use for either scientific research or other uses at their discretion. In response, PRC Official C stated that SHU was very thoughtful.

14 Bribery of a Foreign Official Foreign Corrupt Practices Act April 8, 2006: SHU told his wife, about his conversation with PRC Official C the previous day. SHU stated that PRC Official C did not refuse SHU's offer. SHU, referencing also the need to call PRC Official D, stated that "the three percent to be shared between the two is pretty solid.... More than 40,000 U.S. dollars a person."

15 Post Arrest 40+ hours of debriefings 10 x IIR s published to date Data mining by subject matter experts Spin off White Collar Crime Investigation

16 Questions? SA Kevin P. Rojek FBI Norfolk (757)