Chinese national gets 3 years in federal prison in fraudulent export scheme

U.S. District Judge Harvey Schlesinger sentenced Ge Songtao ;ast week. Photo credit Mark Wilson/Getty Images

U.S. District Judge Harvey Schlesinger sentenced Ge Songtao 51, from Nanjing, People’s Republic of China, to three years and six months years in federal prison last week for conspiring to submit false export information through the federal government’s Automated Export System and to export maritime raiding craft and engines to China fraudulently, and attempting to fraudulently export that equipment.

"The illegal exportation of sensitive technology poses a clear, significant threat to our national security,” said Brian Dugan, special agent in charge of the FBI Norfolk Division in a Department of Justice release  

According to court documents, Ge Songtao was the chairman of Shanghai Breeze Technology Co. Ltd., a company headquartered in Shanghai, China. Beginning in 2018, he was interested in identifying a source of supply of U.S.-manufactured combat rubber raiding craft equipped with engines that could operate using gasoline, diesel fuel, or jet fuel.

These vessels and multi-fuel engines are used by the U.S. military and can be operated after being launched from a submerged submarine or dropped into the ocean by an aircraft. No comparable engine is manufactured in China.

One of Ge Songtao’s U.S.-based employees, co-defendant Yang Yang, attempted to order seven of the raiding craft equipped with these engines from a U.S. manufacturer, according to the release. When the U.S. manufacturer suggested that Yang Yang purchase cheaper gasoline-fueled engines, she insisted that she wanted to purchase the military-model multi-fuel engines.

To induce the manufacturer to sell this equipment, Yang falsely represented that her customer was an entity called United Vision Limited in Hong Kong.

“One of Yang’s Chinese co-workers had told her that American manufacturers would be more likely to sell to an entity in Hong Kong rather than one in mainland China,” the release reads. “By misrepresenting what company was buying the equipment, and where it was located, Yang caused the entry of false information in the Department of Commerce’s Automated Export System in violation of federal law.”

To facilitate the purchase, Ge Songtao arranged for wire transfers to a separate company in Hong Kong, Belt Consulting Company Limited, which in turn wired $114,834.27 to the U.S. manufacturer. He also coordinated plans to send an employee to Hong Kong to receive the raiding craft and engines and transship them to mainland China.

“The plot failed and authorities arrested Ge Songtao and his co-defendants before the raiding craft and engines were shipped overseas,” states the release.

As part of his plea agreement, Ge Songtao agreed to the administrative forfeiture of $114,834.27, the amount caused to be wired to a U.S. manufacturer to purchase the raiding craft and engines.

At the sentencing hearing, Schlesinger found that Ge Songtao intended to buy the engines in order to reverse-engineer them and supply his own version to the Chinese military. Schlesinger also found that after being charged in this case, Ge Songtao attempted to obstruct the proceedings in multiple ways, including soliciting an associate in China to help him manufacture false documents for use in court.

Ge Songtao had pleaded guilty on Nov.  2, 2020.

On Sept. 15, 2020, Yang Yang pleaded guilty to the same two charges to which Ge Songtao has pleaded guilty to the same two charges as Ge Songtao. She  was sentenced to a time-served sentence or the equivalent of approximately 14 months’ imprisonment, on Dec. 9, 2020.

Defendant Zheng Yan pleaded guilty to conspiring to submit false export information and to export the raiding craft and engines fraudulently and on March 31, 2021, was sentenced to a time-served sentence or the equivalent of approximately six months imprisonment and 11 months home detention.

The trial of the remaining co-defendant, Fan Yang, is scheduled to begin on Aug. 2.

The case was investigated by the FBI, the U.S. Naval Criminal Investigative Service, the U.S. Department of Commerce – Bureau of Industry and Security, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

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