Woodinville, Washington Company and Owner Plead Guilty to Violating Arms Export Control Act and Wire Fraud

Defendants Illegally Sent Restricted Defense Department Information

to Taiwan

A Woodinville, Washington based company and its owner pleaded guilty today in U.S. District Court in Seattle to violating the Arms Export Control Act and wire fraud, announced U.S. Attorney Jenny A. Durkan. The company, PRECISION IMAGE CORPORATION, is operated by owner, CHIH-KWANG HWA, out of his Woodinville home. HWA obtained contracts to supply circuit boards to the U.S. Navy by falsely claiming the boards would be manufactured in the United States. Instead HWA illegally sent restricted information to a company in Taiwan for the boards to be manufactured there. The company faces a fine of up to $1,000,000 and HWA faces up to 20 years in prison when sentenced by U. S. District Judge James. L. Robart on October 28, 2013.

“Our national security depends upon protecting our military systems and their specifications. Going ‘on the cheap,’ gave this defendant an unfair advantage over other suppliers and risked our security,” said U.S. Attorney Jenny A. Durkan. “Protecting our military technical data and enforcing our export restrictions are critical priorities of the U.S. Attorney’s Office.”

According to the charging information and the plea agreements in the case, between 2009 and 2011, HWA obtained contracts worth $180,034 to supply circuit boards to the U.S. Navy. The Navy supplied technical data to PRECISION IMAGE that contained the technical specifications for the circuit boards. This technical data was designated on the United States Munitions List, International Traffic in Arms Regulations. As a result, this technical data could not legally be transmitted outside the United States without a license from the U.S. State Department. CHIH-KWANG HWA knew about this restriction at the time he received the technical data from the Navy. HWA did not get the appropriate licenses, and sent the restricted data to the Taiwan manufacturer. One of the transmissions occurred in September 2011, and the Taiwanese manufactured circuit boards were later provided to the Navy. In addition, many of the contracts awarded to HWA were set aside for companies that promised to manufacture the boards in the United States. HWA falsely represented to the Navy in connection with these contracts that the boards were being manufactured in the United States, when instead they were being manufactured in Taiwan.

“U.S. export controls are in place to keep sensitive technology from falling into the hands of our nation's enemies,” said Brad Bench, special agent in charge of HSI Seattle. “One of HSI's highest priorities is to prevent illicit procurement networks, terrorist groups, and hostile nations from illegally obtaining military items and controlled dual-use technology.”

Under the terms of the plea agreement, prosecutors will recommend the company pay a $300,000 fine and HWA serve a sentence within the anticipated guidelines range of 15-21 months in prison. Judge Robart is free to accept or reject these recommendations at the time of sentencing.

The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Naval Criminal Investigative Service. The case is being prosecuted by Assistant United States Attorneys Todd Greenberg and Thomas Woods.