Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Mary B. McCord, the Acting Assistant Attorney General for the National Security Division of the Department of Justice (“NSD”), announced that FUYI SUN, a/k/a “Frank,” a citizen of the People’s Republic of China (“China”), pled guilty today before U.S. District Judge Alvin K. Hellerstein to violating the International Emergency Economic Powers Act (“IEEPA”) in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber, which is used primarily in aerospace and military applications.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As Fuyi Sun admitted today in court, he tried to skirt U.S. export laws by hiding his purchase of high-grade carbon fiber for the Chinese military. Sun used fraudulent documents and codewords in his efforts to obtain this highly protected material, which is used in aerospace and defense programs, and to avoid detection. Together with our law enforcement partners, we will continue to enforce the laws that protect our national security.”
NSD Acting Assistant Attorney General Mary McCord said: “Today, Fuyi Sun admitted to attempting to procure high-grade carbon fiber – which has sophisticated aerospace and defense applications – for the Chinese military. The defendant was willing to pay a premium to evade U.S. export laws and illegally transfer this highly protected material. The National Security Division will continue to identify those who violate IEEPA and other laws that protect our national assets from reaching the hands of potential adversaries.”
According to the allegations contained in the Complaint and the Indictment filed against SUN and statements made in court filings and proceedings, including today’s guilty plea:
Since approximately 2011, SUN has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”). M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as “drones”) and other government defense applications. Accordingly, M60 Carbon Fiber is strictly controlled – and requires a license for export to China – for nuclear non-proliferation and anti-terrorism reasons.
In furtherance of his attempts to illegally export M60 Carbon Fiber from the United States to China without a license, SUN contacted what he believed was a distributor of carbon fiber – but was, in fact, an undercover entity created by HSI and “staffed” by HSI undercover special agents (the “UC Company”). SUN inquired about purchasing the M60 Carbon Fiber without the required license. In the course of his years’ long communications with the undercover agents and UC Company, SUN repeatedly suggested various security measures that he believed would protect them from “U.S. intelligence.” Among other such measures, at one point, SUN instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications. Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000. In order to avoid detection, SUN also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.
On April 11, 2016, SUN traveled from China to New York for the purpose of purchasing M60 Carbon Fiber from the UC Company. During meetings with the undercover agents, on or about April 11 and 12, among other things, SUN repeatedly suggested that the Chinese military was the ultimate end-user for the M60 Carbon Fiber he sought to acquire from the UC Company, and claimed to have personally worked in the Chinese missile program. SUN further asserted that he maintained a close relationship with the Chinese military, had a sophisticated understanding of the Chinese military’s need for carbon fiber, and suggested that he would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it.
On April 12, 2016, SUN agreed to purchase two cases of M60 Carbon Fiber from the UC Company. On that date, SUN paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license. SUN was arrested the next day, April 13, 2016.
SUN, 53, pled guilty today to attempting to violate IEEPA, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. SUN is scheduled to be sentenced by Judge Hellerstein on July 26, 2017 at 11:00 a.m.
Mr. Kim praised the extraordinary investigative work of the New York Field Office of the Department of Homeland Security, Homeland Security Investigations; the New York Field Office of the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Northeast Field Office of the Department of Defense, Defense Criminal Investigative Service. Mr. Kim also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.
