Taiwanese man pleads guilty over DPRK weapons shipments

UPDATE 4 (2015-4-24): The yonger Tsai has been sentenced to three years probation. According to the Chicago Sun Times:

After professing to a judge that he loves America, a 39-year-old immigrant from Taiwan was sentenced Friday to probation for helping his father supply North Korea with weapons manufacturing machinery.

Yueh-Hsun “Gary” Tsai, of Glenview, received three years of probation. In 2009, he formed a company, Trans Merits, to export machine tools to North Korea in violation of a U.S. trade ban, prosecutors said.

Some of the machinery could have been used to produce rocket parts, prosecutors said.

In March, U.S. District Judge Charles Norgle sentenced Tsai’s father, 69-year-old Hsein Tai “Alex” Tsai, to two years in prison for leading the scheme. Alex Tsai had been barred from doing business in the United States because of prior business dealings with North Korea.

Father and son have both pleaded guilty to a conspiracy to defraud the United States.

Gary Tsai was earning about $140,000 a year as an actuary before he was arrested in an FBI raid on his home in 2013, said his attorney, Theodore Poulos. His decision to assist his father in the scheme has ruined his life and prompted his wife to divorce him, Poulos said, calling the case a “great tragedy.”

“He is not a threat in any way to the national security of the country,” Poulos said.

Tsai, wearing a dark pinstriped suit, stood next to an interpreter who translated the proceedings for him in Chinese.

But when he addressed the court, he gave an impassioned defense of his patriotism in English, telling Norgle in a soft voice: “I love the United States of America and I would never do anything to hurt America.”

“America is my country and now is my home,” he said. “I am very sorry for everything I did.”

Federal prosecutor Brian Hayes recommended a sentence of up to six months of detention for Tsai for making a “very grave mistake.”

Although Poulos originally sought probation for his client, he said he changed his mind when he recently learned the government is seeking to deport him.

In an unusual move, Poulos asked the judge to give Tsai up to six months of home incarceration to keep him in the United States during his deportation proceedings.

But Norgle said Tsai’s crime, while serious, did not merit detention. The judge said Tsai’s “expression of love and concern for the United States” convinced him that Tsai would stay out of trouble while on probation.

UPDATE 3 (2015-3-16): Tsai sentenced to two years. According to the Wall Street Journal:

A Taiwanese businessman was sentenced to two years in prison after pleading guilty to conspiring to evade sanctions that prohibit weapons-related exports to North Korea.

Hsien Tai Tsai, who pleaded guilty in October 2014, admitted that he was involved in multiple commercial and financial transactions to undermine sanctions against proliferating weapons of mass destruction, prosecutors said. He admitted to buying a center hole grinder from a U.S. company based in suburban Chicago and exporting it to Taiwan in 2009 using his company, Trans Multi Mechanics.

The judge credited Mr. Tsai for the assistance he provided to the U.S. government as it investigates proliferators of weapons of mass destruction, prosecutors said.

Mr. Tsai and two of his companies were placed under U.S. sanctions in January 2009, with the U.S. Department of the Treasury saying at the time that he had, since the 1990s, supplied goods with weapons production capabilities to the premier North Korean arms dealer. Treasury targeted Trans Multi Mechanics with sanctions in 2013.

“These sanctions are meant to raise the cost for WMD proliferators to do business and deter others from proliferating by denying them access to our financial and commercial systems,” said John P. Carlin, assistant attorney general, in a statement.

Here is coverage in the Chicago Tribune.

UPDATE 2 (2014-12-17): Gary Tsai has pleaded guilty. According to the Chicago Tribune:

A Glenview man accused of teaming up with his Taiwanese dad to evade a U.S. ban on selling weapon-making equipment to North Korea pleaded guilty Dec. 16 to a lesser charge of lying on export documents.

Gary Tsai, 37, was accused of exporting machinery with his dad, Alex Tsai, that could be used to make weapons of mass destruction.

On Dec. 16, he agreed to a plea deal with prosecutors under which he admitted lying on shipping documents about who would receive an industrial grinder he was selling. In return, any sentence he receives at a sentencing hearing in March will be capped at five years in prison.

His frail father pleaded guilty in October and had agreed to testify against him if he insisted on going to trial. Alex Tsai also faces a maximum of five years.

The FBI and the Department of Homeland Security say the Tsais were part of a web of people who export metal-fabrication machinery — using companies with different names — that could be used to create WMDs.

Alex Tsai was previously indicted in 2008 by Taiwanese prosecutors for forging invoices and shipping restricted materials to North Korea, according to federal records.

In 2009, the Treasury Department identified him as a proliferator of weapons of mass destruction and prohibited anyone from doing business with him or his two Taiwanese companies.

UPDATE 1 (2014-10-9): Hsien Tai Tsai to plead guilty. According to Fox News:

Taiwanese man accused of trying to bypass bans on supplying weapons machinery to North Korea is expected to change his plea to guilty.

A court document says Hsien Tai Tsai (SEHN’ SUHN’ SEYE’) will attend a change-of-plea hearing Thursday in federal court in Chicago.

The 68-year-old man has been charged with conspiring to thwart laws on the proliferation of weapons of mass destruction. It’s unclear what counts Tsai will plead guilty to.

He was arrested while visiting Estonia. The Baltic Sea-coast nation worked with the U.S. to capture him, then jailed him for five months. Estonia extradited Tsai a year ago.

Tsai’s son was arrested in the Chicago area last year on similar charges.

Defense attorney Steven Shobat didn’t immediately respond to a message left Wednesday seeking comment.

ORIGINAL POST (2013-5-6): Here is a summary provided by ISIS.

Here is a statement taken from the FBI web page:

Taiwanese Father and Son Arrested for Allegedly Violating U.S. Laws to Prevent Proliferation of Weapons of Mass Destruction

U.S. Attorney’s Office, Northern District of Illinois
May 06, 2013
(312) 353-5300

CHICAGO—A resident of Taiwan whom the U.S. government has linked to the supply of weapons machinery to North Korea, and his son, who resides in suburban Chicago, are facing federal charges here for allegedly conspiring to violate U.S. laws designed to thwart the proliferation of weapons of mass destruction, federal law enforcement officials announced today.

Hsien Tai Tsai, also known as “Alex Tsai,” who is believed to reside in Taiwan, was arrested last Wednesday in Tallinn, Estonia, while his son, Yueh-Hsun Tsai, also known as “Gary Tsai,” who is from Taiwan and is a legal permanent resident in the United States, was arrested the same day at his home in Glenview, Illinios.

Gary Tsai, 36, was ordered held in custody pending a detention hearing at 1:30 p.m. today before Magistrate Judge Susan Cox in U.S. District Court in Chicago. Alex Tsai, 67, remains in custody in Estonia pending proceedings to extradite him to the United States.

Both men were charged in federal court in Chicago with three identical offenses in separate complaints that were filed previously and unsealed following their arrests. Each was charged with one count of conspiring to defraud the United States in its enforcement of laws and regulations prohibiting the proliferation of weapons of mass destruction, one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA) by conspiring to evade the restrictions imposed on Alex Tsai and two of his companies by the U.S. Treasury Department, and one count of money laundering.

The arrests and charges were announced by Gary S. Shapiro, U.S. Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent in Charge of the Chicago Office of the FBI; Gary Hartwig, Special Agent in Charge of Homeland Security Investigations in Chicago; and Ronald B. Orzel, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Chicago Field Office. The Justice Department’s National Security Division and Office of International Affairs assisted with the investigation. U.S. officials thanked the Estonian Internal Security Service and the Estonian Prosecutor’s Office for their cooperation.

According to both complaint affidavits, agents have been investigating Alex and Gary Tsai, as well as Individual A (a Taiwanese associate of Alex Tsai) and a network of companies engaged in the export of U.S. origin goods and machinery that could be used to produce weapons of mass destruction. The investigation has revealed that Alex and Gary Tsai and Individual A are associated with at least three companies based in Taiwan—Global Interface Company Inc., Trans Merits Co. Ltd., and Trans Multi Mechanics Co. Ltd.—that have purchased and then exported, and attempted to purchase and then export, from the United States machinery used to fabricate metals and other materials with a high degree of precision.

On January 16, 2009, under Executive Order 13382, which sanctions proliferators of weapons of mass destruction and their supporters, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Alex Tsai, Global Interface, and Trans Merits as proliferators of weapons of mass destruction, isolating them from the U.S. financial and commercial systems and prohibiting any person or company in the United States from knowingly engaging in any transaction or dealing with Alex Tsai and the two Taiwanese companies.

In announcing the January 2009 OFAC order, the Treasury Department said that Alex Tsai was designated for providing, or attempting to provide, financial, technological, or other support for, or goods or services in support of the Korea Mining Development Trading Corporation (KOMID), which was designated as a proliferator by President George W. Bush in June 2005. The Treasury Department asserted that Alex Tsai “has been supplying goods with weapons production capabilities to KOMID and its subordinates since the late 1990s, and he has been involved in shipping items to North Korea that could be used to support North Korea’s advanced weapons program.” The Treasury Department further said that Global Interface was designated “for being owned or controlled by Tsai,” who is a shareholder of the company and acts as its president. Tsai is also the general manager of Trans Merits Co. Ltd., which was designated for being a subsidiary owned or controlled by Global Interface Company Inc.

After the OFAC designations, Alex and Gary Tsai and Individual A allegedly continued to conduct business together but attempted to hide Alex Tsai’s and Trans Merit’s involvement in those transactions by conducting business under different company names, including Trans Multi Mechanics. For example, by August 2009—approximately eight months after the OFAC designations—Alex and Gary Tsai, Individual A, and others allegedly began using Trans Multi Mechanics to purchase and export machinery on behalf of Trans Merits and Alex Tsai. Specifically, the charges allege that in September 2009, they purchased a Bryant center hole grinder from a U.S. company based in suburban Chicago and exported it to Taiwan using the company Trans Multi Mechanics. A Bryant center hole grinder is a machine tool used to grind a center hole, with precisely smooth sides, through the length of a material.

The charges further allege that by at least September 2009, Gary Tsai had formed a machine tool company named Factory Direct Machine Tools in Glenview, Illinois, which was in the business of importing and exporting machine tools, parts, and other items to and from the United States. However, the charges allege that Alex Tsai and Trans Merits were active partners in Factory Direct Machine Tools, in some instances procuring the goods for import to the United States for Factory Direct Machine Tool customers.

Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine; money laundering carries a maximum penalty of 20 years in prison and a $500,000 fine; and conspiracy to defraud the United States carries a maximum penalty of five years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines. The government is being represented by Assistant U.S. Attorneys Patrick Pope and Brian Hayes.

The public is reminded that a complaint is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

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