Chinese Man Gets 8 Years in (Another PRC) Spy Case

By Greg Moran

Monday, September 13, 2010 at 7:47 p.m.

SAN DIEGO — Chi Tong Kuok, with his slight build and boxy wire-rimmed glasses, might not look the part of a persistent spy, but federal prosecutors contend he spent the better part of a decade trying to obtain sensitive military equipment from the US that could have compromised national security.

In San Diego federal court Monday, US District Court Judge Roger Benitez sentenced the 43-year-old Kuok, a native of the Chinese-controlled island of Macau, to eight years in prison for trying to get communication, encryption and GPS equipment that is used by the US military. Federal law prohibits exporting such items without a license from the State Department. Though he was not indicted on a charge of spying, federal prosecutors in court papers said his crimes were “remarkable and extraordinarily serious” and implicated national security concerns.

“There is little, if any, functional difference between Kuok’s crimes and espionage,” wrote Assistant U.S. Attorney Peter Ko.

The trial capped a nearly three-year long international investigation conducted by agents with the US Immigration and Customs Enforcement who posed as willing providers of the equipment Kuok sought, communicating with him via e-mail over that time. Kuok was convicted by a federal jury on May 11 of four charges, including conspiracy to export defense articles without a license, smuggling and money laundering.

Prosecutors have not specifically identified Kuok as an agent of the Chinese government, and instead have obliquely referred to how he worked “with others to defeat U.S. communications and cryptographic systems for a foreign power.”

But in court Monday, Benitez said that Kuok previously admitted to arresting agents that he was working on behalf of the Chinese equivalent of the National Security Agency. “There is no question Mr. Kuok has been involved in this for a long, long period of time,” the judge said.

The investigation began in late 2006 when Kuok e-mailed a company in the United Kingdom trying to get components for a data controller manufactured by the Carlsbad company ViaSat. The equipment, known as a VDC-300, is used by US and NATO authorities to route communications to and from tactical radios. The request aroused suspicion at the company, which contacted ICE officials who soon set up an undercover agent to communicate with Kuok.

For the next two years, the two wrote back and forth. Prosecutors say Kuok developed a long list of gear he wanted that amounted to several dozen items.

Those included a data transfer device used by the military to load encryption software into radios and other communication devices.

At the same time, Kuok — using several aliases — tried to get equipment from Los Angeles, Massachusetts and Arizona. In 2009, a second agent posing as a supplier from Arizona arranged to sell to Kuok an encryptor made by General Dynamics, as well as hand held digital military radios.

Kuok wired $1,700 for the encryptor and then arranged to meet the agent posing as the seller in Panama. His flight from Macau took him through the Atlanta airport, and he was arrested there on June 27, 2009.

At the trial, his lawyer, federal defender Todd Burns, tried to argue that Kuok was acting under duress. He said the Chinese government had threatened Kuok’s wife and son if he did not cooperate. In addition, he noted that some of the items Kuok sought were readily for sale on eBay. But Benitez did not allow that defense, saying there was little evidence aside from Kuok’s own statements to support it.

On Monday, Benitez again discounted that argument, noting Kuok told agents after his arrest he had been trying to get US equipment since 2000. He said that Kuok had worked to “surreptitiously damage the national security of this country by his actions.”

Kuok is the latest example of a push by federal prosecutors to target people trying to obtain technology and equipment on behalf of China, or Chinese state-run companies, in the past several years, said Larry M. Wortzel, a commissioner with the United States-China Economic Security Commission.

The group produces an annual report to Congress on the national security implications of the economic relationships between the two nations. In its 2009 report, the commission noted FBI Director Robert Mueller and others have testified in front of Congress about the increasing espionage efforts by China targeting US national security and defense systems as well as economic secrets, Wortzel said. Nearly 40 people have been prosecuted nationwide in the last two years, according to the Justice Department.

“It is something that is far too common,” Wortzel said. “This is one of the classic examples of the kind of espionage threat we face from China.”

The 2009 report called China the “most aggressive country conducting espionage against the United States.” Often this is carried out by “nonprofessional collectors” — people like Kuok, who worked for an unidentified engineering company. Also, the majority of cases brought by federal prosecutors involve violations of export control laws, as in Kuok’s case. Wortzel said they are often filed this way because prosecutors do not have enough evidence to prove espionage, which carries a far higher penalty.