US Navy Officer’s Wife Pleads Guilty in Scheme to Ship Military Boats to China

September 17, 2020 Updated: September 17, 2020

The wife of a U.S. Navy officer based in Jacksonville has pleaded guilty on Sept. 16 to charges related to her role in a scheme to smuggle military-grade equipment to a company in China.

Yang Yang, a 34-year-old naturalized citizen who immigrated from China, pleaded guilty to two charges: submitting false information to export, and attempting to fraudulently export, maritime raiding craft and engines to China in violation of federal law, according to a Sept. 16 press release from the Department of Justice (DOJ).

Yang is the wife of Yang Fan, a U.S. Navy Lieutenant who is based at Naval Air Station Jacksonville. According to court documents, her husband, born in China around 1985, became a U.S. citizen around 2006. He trained to be a naval flight officer and held a top-secret U.S. security clearance. The two got married around 2013.

He and Yang Yang were among four defendants arrested in October last year in connection to the scheme. The other two defendants were Ge Songtao, 50, a Chinese national living in China, and Ge’s employee Zheng Yan, a 28-year-old resident of China.

Yang Fan also faces federal charges in a separate scheme to run a “firearm tourism” business for Chinese tourists.

According to court documents, Ge was the alleged mastermind of the scheme. He identified himself as the chairman of a Chinese firm named Shanghai Breeze Technology Corporation on his U.S. visa application. He was issued a B1/B2 non-immigration visa in September 2016.

Yang Yang became an employee of Shanghai Breeze in November 2016. In 2019, she placed an order with a California-based manufacturer of inflatable watercraft called Wing, wanting to purchase seven combat rubber raiding craft and eight Evinrude multi-fuel engines, according to court documents. Her husband acted as her adviser, according to an indictment.

These military-model engines can run on gasoline, diesel fuel, or jet fuel. Vessels equipped with these engines can operate after being launched from a submerged submarine or dropped into the ocean from an aircraft. According to court documents, no comparable engine was being manufactured in China.

An unnamed Wing representative suggested Yang purchase a cheaper model, engines that only run on gasoline, but Yang refused and insisted on buying the multi-fuel engines.

The scheme involved not using the name Shanghai Breeze as the company placing the order with Wing. Instead, Zheng Yan asked Yang that the order be shipped to Hong Kong, rather than mainland China, saying that “Americans were more sensitive about doing business with the mainland, as opposed to Hong Kong.”

Yang falsely said that her order was intended for a consumer in Hong Kong, a company called United Vision Ltd. Another Hong Kong-based company, Belt Consulting, paid for the order, wire-transferring about $114,834.27 to Wing as down payments for the order, according to court documents.

Neither of the two Hong Kong companies had any “presence on the internet” in 2019, according to court documents. And the United States did not have any records of exporting goods to either of the two companies.

Wing initially indicated that it would ship two raiding craft and two multi-fuel engines by air freight on Oct. 8, but the shipment was subsequently delayed until Oct. 15, 2019.

The four defendants were arrested on Oct. 17 last year, according to the DOJ. On that day, agents with the Federal Bureau of Investigation (FBI) and the U.S. Naval Criminal Investigative Service (NCIS) raided the Yangs’ San Jose home.

According to the DOJ press release, Zheng Yan pleaded guilty to conspiring to submit false export information and to fraudulently export the raiding craft and engines on Aug. 13. Meanwhile, Fan Yang and Ge have pleaded not guilty and are set to go on trial on Feb. 1 next year. Yang Yang faces a maximum of 15 years in federal prison, according to the DOJ.

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