The Department of Justice (DOJ) recently unsealed a federal indictment against three U.S. citizens and Quadrant Magnetics LLC. The defendants allegedly sent technical data drawings related to U.S. military projects to China and then supplied the Department of Defense (DOD) with prohibited Chinese-origin Items.
The three U.S. citizens are being accused of exporting defense-related technical data. These controlled drawings required an export license since they were sent to foreign nationals. They allegedly sent 70 technical data drawings that belonged to two U.S. companies with end-uses for “aviation, submarine, radar, tank, mortars, missiles, infrared and thermal imaging targeting systems, and fire control systems for DOD,” stated the DOJ.
Quadrant Magnetics allegedly imported rare earth magnets smelted and magnetized by a Chinese company, then sold the magnets to two U.S. firms that included them in parts sold to DOD for use in the F-16, F-18, and other defense assets, stated the DOJ. Under the DFARS specialty metal clause, rare earth magnets sold to DOD must be produced and magnetized in the United States or an approved country. China is not an approved country.
Arraignments will be scheduled before a U.S. Magistrate Judge in the U.S. District Court for the Western District of Kentucky. They are faced with charges on three counts—a 20-year sentence for each wire fraud and each export without a license in violation of the Arms Export Control Act and 10 years for smuggling goods.
It is crucial for your business to always triple-check the origin of your materials and have a trusted resource on staff or a logistics partner who understands regulations to ensure your license requirements are processed for export. This will save you time, money, and delays in the long term.
Looking for more information about export controls or need a logistics partner for your supply chain? Reach out to Mohawk Global.
By Clarissa Chiclana