Justice Department Announces Five Cases as Part of Disruptive Technology Strike Force

Justice Department Announces Five Cases as Part of Disruptive Technology Strike Force

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Good morning. I'm Matt Olsen, the assistant attorney general for national security. Thank you all very much for being here. I'm joined by Matt Axelrod, the assistant secretary for export enforcement at the Department of Commerce. Exactly Three months

ago, we launched the disruptive technology strikeforce. This is an interagency enforcement effort led by the departments of Justice and Commerce. The FBI and homeland security investigations. Our law enforcement partners who are

integral to this effort are also represented here on stage. I also want to thank the attorney general and the deputy attorney general for their support of our work. The mission of the strike forces to prevent foreign adversaries from obtaining critical advanced technologies. We've established 14 local cells

around the country. More than a third of which are represented here today on stage to investigate and prosecute violations of US laws. Our work is supported by an interagency team of data analysts who identified gaps and enforcement and prioritize our lines of effort. Collectively Our work is critical to defend US military readiness. To preserve our technological advantage over our adversaries and to protect human rights and democratic values worldwide. Five U. S Attorneys

from around the country are here with US Brian Piece of the Eastern District of New York. Gary Rothstein, o of the District of Arizona. Martina Strada of the Central District of California. Ismail Ramzy of the Northern District of California, and Damian Williams of the Southern District of New York. Today We are announcing five cases from each of these districts. The cases, which were brought by the U. S attorney's

offices in partnership with the National Security Division span , a range of emerging technologies and malicious actors. These cases demonstrate the breadth and complexity of the threats we face. As well as what is at stake. And they show our ability to our ability to accelerate investigations and Serge our collective resources to defend against these threats.

As you'll hear more about in a moment. Two of the five cases involve dismantling alleged procurement networks. Created to help the Russian military and intelligence services obtained sensitive technologies in violation of U. S export control laws. These technologies include military tactical equipment.

Airplane braking, braking technology and quantum cryptography. Two other cases charged former software engineers was stealing software and hardware source code from US tech companies in order to market it to Chinese competitors , including in one of the cases Chinese state owned enterprises. The stolen code is alleged to be trade secrets used by the U. S companies to develop self driving cars and advanced automated manufacturing equipment. The final case charges the Chinese nationals with violating US sanctions in attempting to sell to Iran. Materials used to produce weapons of mass destruction. The defendant tried to arrange the

sale using two Chinese companies. That the US government has sanctioned for supporting Iran's ballistic missile program. We stand vigilant and enforcing U. S laws to stop the flow of sensitive technologies to our foreign adversaries. And that means everything using our criminal

investigations and prosecutions to administrative enforcement actions to private sector outreach. So let me be clear. We are committed to doing all we can to prevent these advanced tools from falling into the hands of foreign adversaries who wield them in ways that threatened not only our nation's security but democratic values everywhere. And with that, let me turn it over to Assistant Secretary Axelrod and then to the U. S attorneys to discuss these prosecutions. Um, thanks, Matt. When we announced the disruptive technology strikeforce in February. We said it would bring together top

experts to attack tomorrow's national security threats today. That's exactly what we've done. We brought together agents, analysts and prosecutors across the country to disrupt foreign actors who are trying to siphon advanced U. S technology and then use that technology for malign purposes Contrary to our national security interests. Today, we're starting to see

results. Five coordinated enforcement actions across the country, including arrests, indictments and a temporary denial order that demonstrate the strike forces impact and it's just the beginning. Stopping sensitive technologies like those used to develop quantum cryptography from being misappropriated from foreign countries is a critical national security priority. As assistant secretary for export enforcement at the Department of Commerce. I lead a team of law enforcement

agents and intelligence analysts whose mission is clear and singular. Keeping our country's most sensitive technologies out of the world's most dangerous hands. What qualifies as the most dangerous hands has changed over time. 20 years ago in the

post 9 11 world. It was primarily Al Qaeda and other non state actors in 2023, though our greatest national security concerns stem from the actions of nation states like China, Russia, Iran and North Korea Nation states that want to acquire sensitive U. S technology to advance their military capabilities. With their ultimate goal being to shift to the world's balance of power. We formed the disruptive

technology strikeforce, a powerful partnership between DOJ commerce FBI, HSI and others to help combat this threat. Foreign nation states are working hard to acquire our most sensitive technologies were working even harder to stop them. We're committed to using an all tools approach, including both administrative and criminal authorities, and that's part of what you see in today's actions . In addition to the criminal charges announced today, we also took administrative action in the Arizona case this morning, I signed a temporary denial order suspending the export privileges of a Florida company called My C P, and I The Russian airline Smart Avia. A freight forwarder in the Maldives called Intermodal Maldives and two Russian nationals residing in Florida. For diverting civilian

aircraft parts to Russia. The two Russians were also indicted criminally as you'll hear short shortly from U. S attorney Rusty No. The message coming from our collective agencies could not be clearer. We are working in lockstep to protect American

technology and to counter the threat posed by nation states seeking to exploit that technology to threaten our national security. Thank you and I'll turn it over to U. S Attorney Bryan piece. Thank you. Assistant Secretary Axelrod. Good morning. I am pleased to announce charges against Nicholas Nicholas. As a legend. The complaint for years the defendant was involved in smuggling US origin, military and dual use technologies to Russia. The defendant was recruited to Russia in 2017 to procure highly controlled technologies for Russia's military and research and development efforts. The sensitive items included

advanced electronics and sophisticated testing equipment used in military applications, including quantum cryptography and nuclear weapons testing. As well as tactical battlefield equipment. The defendant personally certified that these items were to be used by the Arlotto's Group, a collection of defense and technology companies in the Netherlands and Greece that he controlled. In reality. He unlawfully re shipped them to Russia helping to fuel Russia's war effort. The recipients in

Russia included nuclear and quantum research facilities, as well as Russian intelligence agencies. The defendant was arrested last week in France, and my office will seek to extradite him. Our office has intensified our investigations and prosecutions of sanctions and export violations in light of Russia's aggression in Ukraine. We are committed to

working with our law enforcement partners, both in the strike force and around the world to combat and mitigate the unlawful proliferation of American made technologies. With this prosecution, we again show our global reach and our shared commitment to preventing disruptive technologies from falling into the wrong hands. I want to recognize the incredible effort by my team assistant U. S Attorney RT McConnell and

litigation analyst Benjamin Richmond had also like to convey special thanks to trial Attorney Scott Claffey from the National Security Division and the special agents of the FBI and U. S Department of Commerce Office of Export Enforcement who worked on the case. And finally I want to thank our partners in France and the Netherlands for their assistance. Now turn it over to

U. S. Attorney Gary Christine o . Good morning last Thursday to Russian nationals were arrested in Arizona for conspiring to send export controlled aircraft parts from the United States to Russia. Oleg Pat, Saliyah and Vasily beset in Are charged with conspiracies to violate the Export Control Reform Act and to commit money laundering. As alleged in the complaint. The conspirators fielded requests for parts directly from Russian airlines. The conspirators then went to parts suppliers in the

United States and lied to these American companies about where the parts would be going. In particular, the defendant's traveled to Arizona last September and attempted to purchase export controlled aircraft brake systems from an Arizona company. The conspirators used the millions of dollars they receive from Russian airlines to fund the scheme and to furnish their lifestyles. On Thursday of last week, federal authorities seized luxury goods purchased with proceeds of the scheme, including a late model BMW and a 38. Ft. Sea Ray Sun Dancer boat. This case is a great example of a collaborative strikeforce. First among the prosecutors. It's a partnership between the U. S attorney's office in

Arizona. And the National Security Division in Washington , and we also appreciate the support of the U. S Attorney's office in Miami on this investigation. We also commend the collaboration of the investigators. Foremost among

them or the Phoenix Field Office of Commerce is Bureau of Industry and security. Supported by agents from Boston and elsewhere around the country. And the FBI's Phoenix field office supported by Miami agents. The Department of Homeland Security through Homeland security investigations , as well as customs and border protection also assisted, as did the United States Marshal service in the investigative efforts on the case. On that turn it over to the United States Attorney Martin Estrada from the Central District of California. Good morning. My name is Martin

Estrada and the U. S attorney for the Central District, California, which is based in Los Angeles. My district is home to some of the nation's great universities, military installations and high tech companies. All these institutions are developing cutting edge technologies critical to both our economy and our national security. As U. S attorney in a city that serves as the gateway to the Pacific Rim. I've committed to disrupting criminal efforts by

foreign nations to steal this technology. Last week, prosecutors in my office and sealed a criminal complaint charging a Southern California resident. Li Ming Li was stealing technology from two companies he worked at In order to provide that technology to businesses in the People's Republic of China. As legend complaint for years, Mr Lee

worked at two companies in Southern California. In the business of creating software. Used in what is known as smart manufacturing. This is advanced technology for making sophisticated equipment, including parts for nuclear submarines and military aircraft. Because of its sensitive military applications . The software belonging to the Duke companies cannot be exported without a license from the Department of Commerce. Yet. While working for both companies

. Mr Lee allegedly stole the source code for the company's software. Then created a separate business enterprise in the People's Republic of China. And sought to participate in the PRC s 1000 Talents program. Mr Lee marketed himself to businesses in China. Including enterprises controlled by the People's Republic of China. He offered to use the technology had stolen. Help them develop their own capabilities. He

entered into a contract with the PRC based company. And he recently traveled to China. Based on this conduct. Last week , Mr Lee was arrested upon returning to this country from China. I don't think the FBI Department of Commerce and all our partners and the disruptive technology strike force for their work on this case. The mission of the Department of Justice is to protect our nation and all of its residents. And my office will continue to safeguard our country by prosecuting those who steal our technology in order to provide it to foreign actors now like to introduce US Attorney for the Northern District of California is male, Ramsey. Good morning.

Again I'm his mail. Ramsey in the United States, attorney for the Northern District of California. The Northern district encompasses generally the northwest quadrant of the state. And includes the San Francisco Bay area and the innovation capital of the world. Silicon Valley. Earlier today. The court unsealed a six count indictment. The indictment handed down by a federal grand jury on April 11th 2023 charges We bow Wang With theft and attempted theft of trade secrets from Apple Incorporated. The alleged trade secrets concerned

apples, research and development of technology related to autonomous systems. Which has a variety of applications, including self driving cars. According to the indictment. While employed with Apple as a software engineer working on a secret project. Wang accepted a job with the US based subsidiary of a company headquartered in the People's Republic of China. That company was working to develop self driving cars. Wang

did not inform Apple that he was resigning until April. 2018 Five months later. But after accepting employment with the other company And before leaving Apple. Wang access a large amount of apples sensitive proprietary information.

Including various trade secrets. That were later found on his own personal devices. Law enforcement searched Wines Bear a resident for Apple's proprietary materials. Wang was

present during the search. Among the materials discovered from the devices in Wang's home was the source code for Apple's entire autonomous systems project as it existed around the time that Wang left Apple. Investigators also found many computer files containing confidential proprietary apple materials. And determined that several of these files were last accessed after Wong's departure from Apple. Later that day. Wang

Burden a flight from San Francisco, San Francisco to Guangzhou, China. I do want to note that is an all criminal cases. Wang should be considered innocent until proven guilty beyond a reasonable doubt. But if convicted, Wang faces up to 10 years in prison for each trade secret violation. We are

pleased that the renewed focus and then your energy that the disruptive technology task force brings to securing Silicon Valley's innovation. We also appreciate the support of our law enforcement partners and the National security Division. Pursuing this prosecution. I also want to thank our team at

the U. S Attorney's office are special Prosecutions division Let it but led by EOUSA, Laura Barton and our FBI partners in the field office in San Francisco now like to introduce the U. S attorney for the Southern District of New York, Damian Williams, Good morning. A few months ago, I stood here announcing charges by my office against members of a conspiracy directed from Iran to assassinate in New York City, a journalist who has helped expose the brutal human rights violations of the Iranian government. Today. I'm here to

announce that my office in partnership with the strike force has indicted a China based defendant for participating in a scheme to supply Iran with technology use to produce weapons of mass destruction. As alleged the defendant Chengjiang show conspired to send a static graphite to Iran in violation of U. S sanctions. Static graphite is a high tech material used in the nose tips of intercontinental ballistic missiles. Let me be clear about two things. First the Iranian regime of terror and repression and those who facilitated pose a grave threat to our national security. Second my office will continue to work relentlessly to bring to justice those who advance the interests of the Iranian regime and thereby threaten the safety and security of the American people. I want

to thank a G. Olsen and assistant Secretary Axelrod for their leadership of the strike force. Our partners at FBI's New York counterintelligence division for their exceptional investigative work. In our colleagues at the department's national security division for their assistance. I also want to commend the career. Prosecutors in my office is national security unit handling the case , Julian Grossman and Nicholas Bradley. And Matthew Hellman, my offices strikeforce coordinator.

Thank you. I guess the question for Matt and Matt, Um So these cases they seemed, uh, you know , uh, different kind of across the board. I mean, I know they all relate to technology, but they're all kind of different. Is this what we can expect from the task force going forward that you'll just be kind of Funneling the You know these cases that are kind of across the board, or is the task force going to Um, bring some kind of , you know better coordination to the efforts. So a couple of

thoughts on that? I mean, First of all, the goal of the task force of the strike forces to ensure that we are prioritizing these cases and what unifies them is the fact that they involve the transfer or effort to transfer sensitive technologies. To our adversaries . And as you know, in your question, Chris, there's a number of countries are involved, right? We have Russia, Iran as well as China, Um and not only will we be able to prioritize these cases, but well, maybe be able to make sure that we're bringing resources to bear across the country and then, really, thirdly, By which represented here with the with the offices in the U. S Attorney's on stage is that we are sharing best practices.

We're learning about the intelligence. We have an analytic cell that is supporting the work of the strike force so that we are able to take advantage of what we're learning from each of these types of cases that each of these officers bringing are bringing Not only among these five officers but across the entire strike force, which consists of 14 different cells around the country, So I think again in answer to your question. There's going to be a variety of the types of cases that we're going to bring. But what unifies them is the fundamental mission of the strike Force, which is to prevent the transfer of the types of sensitive technologies that we're talking about today. Um, this is a pretty startling

array of sensitive technologies that you're alleging is it was adversaries trying to steal here . Okay If we can assume that you're only as hard as you're working, you're only catching a fraction of this conduct. How big A problem is this for us National security and I've got just ask specifically the defendant Wang. How do you get on a plane to China if the FBI had probable cause searches house I'll take the first question and I'll I'll defer the second. Um um I mean, look, this

is a big problem, and that's why we stood up the strike force, and it was a recognition of the challenges we face, I think is as as assistant secretary, Axelrod said. You know, 20 years ago, we were focused on Al Qaeda. Today as much as anything we're focused on these nation states that are posing a threat. Across a variety of threat vectors, but in particular the transfer of sensitive technology . So um, what this strike Force represents is a is a recognition of that threat and a determination to bring all the tools that we have to bear to address it. And look, Are we going to stop every transfer of every sensitive technology? You know, we're not going to get to zero, but I think you're seeing in places like Russia, where the efforts of not only United States but our allies and partners around the world. To prevent the transfer of

technology to Russia in support of its war effort is having a significant and detrimental effect. On the on the Russian economy and in particular on its military readiness, So I think it is having an impact. Um, let me ask you to address the way in question for me. Unfortunately, the same need evening as that search warrant was served at approximately 8 30 for that evening, he was able to purchase a one way ticket and fly out that same night at 11 55 is alleged in the indictment. For you, Matt. Two Quick questions one on top of one off topic. I'm

wondering. Some of this conduct seems to date back many years just in terms of the general thrust of the theft of sensitive technology. Is there something about 2023 and what's happening now in the current landscape that makes this task force especially pertinent on in this context, especially pernicious and the second question is in light of the Durham report yesterday. Does that affect your messaging at all on 702 in terms

of how you pitch to Congress about the need for 702 in light of the harsh criticism of the FBI? Let me um, take the first question first. So, yes. Um these cases as you know, they're complex cases. I was in a U. S A for many years. I understand how hard it is to bring cases like this. It takes months, if not longer to put them together. And you know you have some of the top U. S attorneys in the country represented here and

some of the biggest offices. Um there's no doubt that that these cases go back some period of time. Um and that just reflects the complexity of them. But your you know your question about why are we doing this now? One as I mentioned in in the last question from Ken, this is this threat is a significant as ever. So we are trying to marshal our resources and prioritize prioritize these cases. And by doing so, by bringing the strike

force to bear around the country. By marshaling our efforts. We were able to push these cases forward and help bring them to this important milestone that we have today in which we're able to announce charges and five separate cases, So this is our first set of cases were announcing you can expect more. Um and as again as the task forces as of today,

exactly Three months old, I expect will continue. To move down this path. Let me actually ask Secretary Axelrod to see if there's anything more on that question our return and answer your second Um yeah. So. Why now ? Because the threat is that

important. I think if you look at this year's annual threat assessment that the office of the director of national intelligence puts out the beginning of that report is all about nation State actors. It's China. It's Russia. It's Iran, North Korea. And as assistant attorney general, Olson said, You know those threats come in a variety of ways, but one of them that is pressing and persistent , is the attempts by those governments to acquire U. S technology in order to try to

advance their military capability so that it can leapfrog hours and we want to do everything in our power to prevent that from happening, and it's one of the reasons why we stood up the strikeforce and why the strike force has been so Active and three months after it was announced. It's starting to, um you're starting to see results. As Matt said. Obviously, the cases began a while ago. But by sending that demand signal from headquarters here in D. C that this is a

priority for the attorney general for the deputy attorney general for the assistant attorney general and for us over at the Commerce, as well as the FBI and HSC. I think we're really doing what we can to make sure that these cases get the priority they need and deserve because obviously, um, prosecutors are busy. Agents are busy. They have lots of different cases to work. And we want these right at the top of their pile. And I think by the actions today we're showing that they are. On your second question on there. The Durham

report, which was released yesterday afternoon, I had the chance to first review it when it was released to the public yesterday afternoon. As you know, it's hundreds of pages long. Um you know, as you can imagine, uh, that's being carefully reviewed within the department and to ensure that we take any necessary steps in response to the report on section 702. As you know, I've been very engaged on Seeking to make the case for the reauthorization of Section seven or to the FISA as the attorney general and the director of National Intelligence, said earlier this year. It is an absolutely essential authority for the collection of foreign intelligence and then the protection of our national security and we are actively engaged now, with Congress in. Describing the need for Section seven or two, as well as explaining some of the steps we've taken to address. Some of

the concerns that have been raised about its implementation and that progress that effort is ongoing and will continue until we get the authority reauthorized. Kevin one more. This is a question for the gets to mats Mats squared. So the one of the more devastating weapons in the Russian arsenal in Ukraine has been the use of Iranian drones and we've seen pictures certainly from the Ukrainian government should showing a lot of common American technologies, Another Western technologies being used in these in these drones and other weapons. Can you tell us whether you know there's any changes? That is there? Is there any more restrictions being put on some of these? Technologies Is there something more that we can expect to see from? You know, the U. S Attorney's were from you from the year of the N s. D uh, you know, in reaction to

that. So let me let me say first of all as you as you know, I'm not going to comment on any ongoing investigations in in regard to the your question. I'm gonna ask. Maybe Matt actually do address the broader question. Yeah Thank thanks, Evan. No it's something that we're highly focused on which is making sure that Western parts that were able to reduce and restrict the flow of Western parts so they don't end up in missiles and drones that are killing civilians and soldiers in Ukraine, and we're doing that in a bunch of ways. First you know, the controls themselves have been overwhelmingly successful.

Overall exports to Russia have dropped nearly 90. But That has led sort of your questions suggest the Russian government the Russian military, trying to evade find ways to evade our controls and still get the parts they need. So what we're doing is we are focused intently on the specific categories of items and they're mostly semiconductors and electronic circuits that are being used to power those missiles and drones and we're going after that problem and a number of ways one. We're talking to us manufacturers of those Problems

to show the data of how those items are getting transshipped through third countries to Russia to ask them to be extraordinarily careful when they have customers, for example, who didn't exist. Prior to the invasion and now pop up in our ordering lots of these items were talking with them. We're talking with foreign governments. I was in Kazakhstan and Kyrgyzstan a few weeks ago, along with counterparts from the Treasury Department, as well as colleagues from the UK and EU to deliver this message to share data that shows transshipment of the semiconductors going through Central Asia to Russia and to ask the governments in those countries to help us with that we've all Also put Companies in third countries on our entity list we had did that I think a few weeks ago, 28 companies in a number of foreign countries that are being used to transship items to Russia. So yes, it's something that we're aware of, and are taking a multi pronged approach to work on. I also

think later this week or maybe earlier early next week, will also be putting out some guidance that can help financial institutions and Industry now what to focus on to deal with this problem as well.

2023-05-19 04:50

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