DOJ Charges 3 People, 1 Company in Scheme to Ship Export-Controlled Data to China
Three U.S. citizens and Quadrant Magnetics were charged with wire fraud, violating the Arms Export Control Act and smuggling goods relating to their participation in an illegal scheme to ship export-controlled defense-related technical data to China, DOJ announced. They also allegedly supplied DOD with Chinese-origin rare earth magnets for aviation systems and military items, DOJ said.
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An indictment was unsealed Nov. 9 in the U.S. District Court for the Western District of Kentucky alleging that Phil Pascoe and Monica Pascoe, both of Floyds Knobs, Indiana, and Scott Tubbs of Georgetown, Kentucky, conspired from 2012 to 2018 to ship around 70 drawings with export-controlled data to a Chinese company without a license, in violation of the AECA and International Traffic in Arms Regulations. The drawings belonged to two U.S. companies and concerned end-use items for "aviation, submarine, radar, tank, mortars, missiles, infrared and thermal imaging targeting systems, and fire control systems for DOD," DOJ said.
Quadrant Magnetics also allegedly imported rare earth magnets smelted and magnetized by a Chinese company, then sold the magnets to two U.S. firms that included them in parts sold to DOD for use in the F-16, F-18 and other defense assets, DOJ said. The three individuals face a maximum 20-year prison sentence for each wire fraud count, 20 years in prison for each count of exporting without a license, and 10 years in prison for smuggling goods.