Sensitive Military Encryption Technology to China 

On October 19, 2012, Chi Tong Kuok, a resident of Macau, China, was sentenced in the Southern District of California to time served. Previously, on July 31, 2012, Kuok pleaded guilty to one count of conspiracy to illegally export defense articles and to smuggle goods from the United States. According to the plea agreement, Kuok and others conspired to purchase and export from the United States defense articles, including communication, precision location and cryptographic equipment, without a license from the State Department. Kuok also caused $1,700 to be sent to the United States for the purchase and unlicensed export of a KG-175 Taclane Encryptor. According to court documents, the KG-175 Taclane Encryptor was developed by General Dynamics under a contract with the National Security Agency for use by the U.S. military to encrypt Internet Protocol communications. Kuok was first arrested on June 17, 2009 in Atlanta, Ga., after he arrived from Paris to catch a connecting flight to Panama in order to meet with undercover federal agents to take possession of controlled U.S. technology. A criminal complaint was filed on June 23, 2009 and an indictment returned on July 7, 2009. On May 11, 2010, Kuok was convicted at trial of conspiracy to export defense articles without a license and smuggling goods to Macau and Hong Kong, China; smuggling goods; attempting to export defense articles without a license; and money laundering. On September 13, 2010, Kuok was sentenced to 96 months in prison. Kuok appealed and on July 2, 2012, the 9th U.S. Circuit Court of Appeals vacated Kuok’s convictions on counts three and four and remanded to the district court for a new trial on counts one and two. The appeals court ruled that Kuok should have been allowed to put on a defense that he was forced into trying to procure the equipment by the Chinese government. Kuok pleaded guilty prior to the second trial. This investigation was conducted by ICE and DCIS.