US says 2 in China tried to buy sensitive devices

By JONATHAN J. COOPER
Of the Associated Press

PORTLAND — Two Chinese nationals tried to buy high-tech devices that could be used in missile and radar systems and illegally export them to China, federal authorities allege in an indictment unsealed Tuesday.

The men, who live in China, have not been arrested. They were indicted Sept. 28, 2011, by a grand jury in U.S. District Court in Portland.

The indictment alleges that Wan Li Yuan and Jiang Song created fake identities and pretended to represent a legitimate New York business to purchase computer chips from Lattice Semiconductor Corp. of Hillsboro, Ore. Authorities say they created a fictitious website and email accounts for the company, which wasn't identified and wasn't involved in the alleged scheme.

Investigators weren't aware of the men successfully obtaining any of the sensitive chips, said Assistant U.S. Attorney Charles Gorber, who is prosecuting the case.

Authorities say the men wired $414,000 to the United States in 10 transactions as down payments for two models of Lattice chips known as programmable logic devices. The money was seized.

The devices can be used for civilian purposes including mining operations. The indictment alleges the men specifically sought military-grade devices, which are coated in ceramic instead of plastic and are capable of withstanding harsh conditions like extremely hot or cold temperatures.

Export of both models sought by the men is restricted for national security reasons and requires a permit from the U.S. Department of Commerce.

According to prosecutors, Yuan, calling himself Nick Bush, first contacted Lattice in May 2010, pretending to be a representative of the New York company and expressing interest in purchasing a device for use in a U.S. coal mine. He tried to get the devices shipped to a freight forwarder in New York.

Later, he also offered to pay an undercover FBI employee $10,000 to deliver parts to Hong Kong, according to prosecutors, and he offered to pay a distributor a “commission” to look the other way about his suspicions that the parts were destined to China.

Gorber, the prosecutor, declined to comment on why the men may have wanted to the sensitive technology. The U.S. does not have an extradition treaty with China, he said.

Lattice occasionally receives suspicious inquiries from people trying to obtain access to military-grade parts, said Byron Milstead, the company's general counsel.

“When we are suspicious, we typically turn the matters over to appropriate investigatory agencies to run it to ground,” Milstead said. “This particular situation was an example of that.”

Chinese Embassy officials did not immediately respond to a request for comment.