A four-count indictment was unsealed today, charging Hang Sun, also known as Cody Sun, with several offenses including conspiracy, wire fraud, smuggling, and violating the Arms Export Control Act. These charges relate to an illegal scheme involving the export of controlled defense-related technical data to China and supplying the Department of Defense (DOD) with Chinese-origin rare earth magnets.

The indictment alleges that between January 2012 and December 2018, Sun conspired to send approximately 70 drawings containing export-controlled technical data to a company in China without obtaining a U.S. government license. This action violated both the Arms Export Control Act and International Traffic in Arms Regulations. The technical data pertained to items for aviation, submarine, radar systems, tanks, mortars, missiles, infrared targeting systems, and fire control systems for DOD.

Further allegations state that Quadrant Magnetics imported rare earth magnets processed by a Chinese company. Quadrant sold these magnets to two U.S. companies that incorporated them into components sold to DOD for use in aircraft such as the F-16 and F-18. This sale contravened the Defense Acquisition Regulations System (DFARS), which mandates that such magnets be produced in the United States or an approved country; China is not on this list. Quadrant Magnetics and three employees were separately charged in a superseding indictment filed in Kentucky on December 5, 2023.

If convicted on all counts, Sun could face up to five years for conspiracy; 20 years each for wire fraud and exporting technical data without a license; and ten years for smuggling goods from the United States. Sentencing will be determined by a federal district court judge after considering various guidelines and statutory factors.

The announcement was made by Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division among others from different investigative bodies involved in this case.

Investigations are being conducted by agencies including DCIS, FBI, Department of Homeland Security, IRS-CI among others.

Prosecution is being handled by Assistant U.S. Attorneys Joshua Judd and Christopher Tieke along with Trial Attorneys Alexander Wharton and Leslie Esbrook from relevant divisions.

It is important to note that an indictment is merely an allegation at this stage; all defendants are presumed innocent until proven guilty beyond reasonable doubt in court proceedings.