Chinese Man Allegedly Illegally Exported DOD Data, Illegally Imported Rare Earth Materials
Prosecutors say Hang Sun, aka Cody Sun, lied to U.S. defense contractors and concealed the origins of goods that were used in the production of F-16s.
Hang Sun, aka Cody Sun, a Chinese national who became a U.S. citizen in 2015, was charged with smuggling, wire fraud, conspiracy, and violations of the Arms Export Control Act of 1976 in an indictment unsealed on Dec. 10, according to a DOJ press release.
Sun faces a maximum of 55 years in prison if convicted of all counts.
Rare Earth Materials Sourced from China
Prosecutors accuse Sun of sending technical data about defense to China in exchange for supplying the Department of Defense (DOD) with rare earth magnets sourced from China for use in U.S. military systems, including fighter aircraft.
It all began when Sun purchased Quadrant Magnetic LLC, a U.S.-based company with defense contracts, in 2014. That company supplied the DOD with rare earth samarium-cobalt and neodymium-iron-boron magnets, according to the indictment. Sun also reportedly owned the Chinese-based company that provided the magnets to Quadrant Magnetic, as well as its Chinese-based parent company.
DOD contractors sourced magnets from Quadrant Magnetic, which procured them from Chinese-based companies, according to the indictment. Quadrant Magnetic subsequently repackaged these magnets and delivered them to the DOD-contracted firms.
Sun allegedly ran both Quadrant Magnetic and the Chinese-based companies until 2018, when he reportedly appointed Phil Pascoe as the President of Quadrant Magnetic, the indictment details.
Prosecutors: Sun Exported Controlled Defense Drawings to China-Based Company
Between January 2012 and December 2018, Quadrant Magnetic allegedly exported around 70 drawings of export-controlled technical data to Sun’s Chinese-based company, according to the indictment. The information provided was controlled by the International Traffic in Arms Regulations (ITAR), which requires a license to export.
Sun allegedly oversaw co-conspirators, who reportedly transmitted electronic data files controlled by ITAR to non-Americans outside of the U.S., according to the indictment. Sun also reportedly managed the magnets imported from his Chinse-based facility. These magnets were smelted and magnetized using the ITAR-controlled data Sun allegedly provided.
Sun Allegedly Aware Chinese Parts Would Be Used in U.S. Military Systems
Prosecutors claim that Sun and his co-conspirators were aware that the magnets were going into military equipment and aviation systems, and they misrepresented where the magnets were coming from, according to the indictment.
The magnets that Sun’s companies sold to the two U.S. contractors were used in the production of the F-16 Fighting Falcons aircraft and F-18 Super Hornets, as well as other military defense equipment, according to the DOJ. This violated the Defense Acquisitions Regulations System, which regulates the goods and services of companies servicing the DOD.
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