US Residents Prosecuted for Exporting Restricted Military-Related Tech to Hong Kong, China

August 12, 2020 Updated: August 12, 2020

U.S. authorities recently announced two criminal cases involving individuals who allegedly skirted U.S. export rules to illegally ship restricted electronics to Hong Kong and mainland China.

In one of the cases, Alex Yun Cheong Yue, 69, of South El Monte, California, is charged with conspiring with Wai Kay Victor Zee, 56, of Hong Kong, in attempts to purchase cesium atomic clocks and send them to Hong Kong without obtaining required export licenses, beginning in December 2015, according to court documents.

Atomic clocks are devices used to synchronize time in modern technology, such as global positioning systems. They measure time using the frequency of atomic emission from certain elements, such as hydrogen and cesium.

Cesium atomic clocks are controlled for export by the Department of Commerce—meaning businesses and individuals must apply for special licenses to export them—due to national security and anti-terrorism reasons. For example, the devices can be used in defense and space applications.

Yue successfully purchased cesium atomic clocks from an unnamed U.S. seller using a fictitious company called “Ecycle Tech International Ltd.” and falsely told the seller that the clocks would be used only in the United States for cordless phone research and development, according to the Department of Justice (DOJ).

Three days after receiving the clocks, on Feb. 22, 2016, Yue shipped the clocks to Zee and his company, Premium Tech Systems, in Hong Kong. Two days later, Zee confirmed receiving the devices.

Yue tried to purchase more cesium atomic clocks from the same U.S. seller in December 2017 and again falsely declared that he had no intention to export the items. After the seller demanded a visit to the lab in California where Yue claimed the clocks would be used, Yue abruptly canceled the order.

Yue was arrested and charged in June 2019. In the same month, Zee and Premium Tech were also charged.

On Aug. 10, Yue pleaded guilty to one count of conspiracy to commit export violations, two counts of unlawful exports and attempted exports of U.S. goods to Hong Kong, and one count of smuggling, according to a DOJ statement.

If convicted, Yue faces up to 20 years in prison and a fine of $1 million for the export violations. The smuggling charge carries a potential sentence of up to 10 years in prison and a fine of $250,000.

Yue is scheduled to be sentenced on Dec. 10, while Zee remains at large in Hong Kong.


In the other case, Chong Sik Yu, 58, of Oradell, New Jersey, and Yunseo Lee 33, of Fort Lee, New Jersey, were arrested on Aug. 6, according to a DOJ statement. They face multiple charges, including unlawful export of dual-use electronics components, wire fraud, bank fraud, and money laundering.

“Chong Sik Yu and Yunseo Lee are accused of violating U.S. export laws by sending electronics components with military applications to Hong Kong and China,” Audrey Strauss, acting U.S. attorney for the Southern District of New York, said in the statement.

Yu was president of a U.S.-based company called America Techma Inc. (ATI), while Lee was the company’s sales representative. ATI began illegally exporting electronic components from the United States to Hong Kong for re-export to countries including China since at least 2019, according to prosecutors.

For instance, in June 2019, ATI obtained electronics components—items that are export-controlled because they are “dual-use,” or have both civilian and military applications—from a U.S. supplier and sent them to a trading company in Hong Kong.

According to the DOJ, ATI shipped more than 200 packages to the Hong Kong trading company between August 2016 and July 2020. From May 2019 to June 2020, in exchange for the goods, the trading company transferred more than $800,000 into a U.S. bank account belonging to ATI.

The trading company also instructed ATI on how to evade U.S. export controls, such as having the items placed within electrostatic discharge bags and taking out original documents related to the items.

In February, in an email exchange with another customer in Hong Kong, Lee stated that the company was considering sending shipments to South Korea before forwarding them to Hong Kong to dodge customs scrutiny.

The alleged export violation of dual-use electronics components carries a sentence of 20 years in prison. The charge of wire fraud and bank fraud carries a sentence of up to 30 years in prison. Money laundering carries a maximum sentence of 20 years in prison.

Follow Frank on Twitter: @HwaiDer