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3 Chinese Nationals Charged In Military Semiconductor Scheme In Connecticut

U.S. Attorney for Connecticut Deirdre Daly announced the arrest of three Chinese nationals in a scheme to sell stolen U.S. military semi-conductor parts.
U.S. Attorney for Connecticut Deirdre Daly announced the arrest of three Chinese nationals in a scheme to sell stolen U.S. military semi-conductor parts. Photo Credit: File

STRATFORD, Conn. -- Three Chinese nationals have been arrested on federal criminals complaints in connection with a scheme to obtain and illegally export sophisticated semiconductors stolen from the U.S. military, according to Deirdre M. Daly, United States Attorney for Connecticut.

Daofu Zhang, 50; Jiang Guangzhou Yan, also known as “Ben,” 33; and Xianfeng Zuo, 37, were arrested Thursday, Dec. 10 and are being detained, Daly said.

Federal agents began investigating Yan and a Chinese company known as HK Potential in 2012 for trafficking in counterfeit semiconductors. In October 2014 and in March, he sold a total of 45 counterfeit Intel microprocessors to an undercover agent who had advised Yan that the components would be used on a U.S. Navy contract involving submarines.

According to information provided in a criminal complaint, in July 2015, Yan asked whether the undercover agent could obtain 22 Xilinx semiconductors, military grade, for which he would pay $37,000 each. After the undercover agent advised Yan that the Xilinx components could be stolen from a U.S. Navy base, Yan offered to provide fake components that could be substituted for the stolen components in order to prevent detection of the theft.

In November, Yan shipped eight of the fake Xilinx components to the undercover agent. Zhang, Yan, and Zuo traveled to the U.S. on Dec. 6, and were arrested attempting to take delivery of the Xilinx semiconductors from the undercover agent, Daly added.

The three men are charged with violating the International Emergency Economic Powers Act, which carries a maximum penalty of 20 years and a $1 million fine; and receipt of stolen government property, which carries a maximum penalty of 10 years and a $250,000 fine.

Zhang and Yan are also charged with trafficking in counterfeit goods, which carries a maximum penalty of 10 years and a $2 million fine; and mail fraud, which carries a maximum penalty of 20 years and a $250,000 fine. In addition, both men were charged with conspiracy, which carries a maximum penalty of five years and a $250,000 fine.

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