http://www.connpost.com/Stories/0,1413,96~3750~2307947,00.html
Waging war on state's illegal arms trade
This is the first of a two-part series on illegal military equipment trafficking in Connecticut. On Monday, the Post examines the case of a mystery woman involved in trafficking illegal parts and another woman charged with solving such cases.
By MICHAEL P. MAYKO
[email protected]
They shopped for radar components for HAWK missile systems and Phantom F-4 fighter jets in Connecticut.
They purchased Black Hawk helicopter engines and illegally shipped them to China.
They enlisted companies to export helicopter gun mounts that found their way to Iran and nuclear weapons testing parts that ended up in Pakistan.
They are people like Yasmin and Tariq Ahmed of Pakistan and the United Arab Emirates, Kwonhwan Park of South Korea and Leib Kohn, a Hasidic Jew from Brooklyn.
In the past 18 months, each has been charged in Connecticut with conspiring to violate federal export laws by attempting to ship military parts overseas without the proper approvals or licenses.
Several more cases are under investigation.
Why all these cases in a tiny state like Connecticut?
"We [the U.S.] are world leaders in this type of technology," said Robin Avers, the regional head of Immigration and Customs Enforcement. "There are a lot of these [defense] companies in Connecticut."
There's also "a lot of money being thrown around out there" in the shadowy world of arms and military parts traffickers, said Tom Marzullo, a Green Beret veteran of Vietnam who also served in the U.S. Navy working submarine special operations and now is a counter-terrorism consultant.
That is what worries U.S. Attorney Kevin J. O'Connor, who sits as the chief federal prosecutor in a state filled with dozens of small manufacturers who live off defense work.
"Our No. 1 priority is to prevent another terrorist attack," O'Connor said.
One way to do that, he said, is to make sure companies comply with federal licensing laws and regulations involving military parts.
"There are reasons items are placed on the U.S. Munitions List [a catalogue designating categories of items subject to restrictions]. There are reasons our government requires licenses and approvals to be obtained," O'Connor said. "And there are reasons our government decided certain countries should not be getting certain parts."
But Marzullo says there is only one reason why a U.S. company would violate the law.
"It boils down to pure greed," he said. "Some folks just don't care."
Growing caseload
Nationwide, Avers said, Immigration and Customs Enforcement has investigated more than 3,000 cases of illegal exports in the past year.
"The amount of successful prosecutions we've brought and new cases we've opened has nearly doubled," she said. "We are cracking down."
Still O'Connor does not "want to see anyone in this state or this country harmed because some parts slipped through. I know the members of my office and the agents feel the same."
So, he assigned Assistant U.S. Attorney Robert Appleton to work with agents in building illegal arms cases.
"He has a great understanding of the law and the restrictions involved," O'Connor said of Appleton. "He also has a great relationship with the agents who work these cases."
Of the five cases Appleton has recently brought, two are pending and three have resulted in the convictions of five people and two companies.
One of the companies is OMEGA Engineering Inc. of Stamford. It paid a $313,000 fine and a $187,000 civil penalty last year for exporting materials that could be used to test nuclear weapons after the government rejected its request in 1997.
Appleton said in court that OMEGA sold the parts to a subsidiary in Germany, which, in turn, resold them to an entity controlled by the Pakistan Ministry of Defense.
In a company statement following their guilty plea, OMEGA denied the parts were on a prohibited list or that Pakistan was an embargoed country.
Piles of paperwork
Investigating these cases is a time-consuming task, often requiring the review of mountains of documents encompassing several regulatory and investigative agencies, according to Avers, O'Connor and Kathryn Feeney, resident agent in charge of the Defense Contract Investigative Services.
Often Immigration and Customs Enforcement and Defense Contract Investigative Services work together.
"They [Defense Contract Investigative Services] are one of our natural partners," Avers said. "Each agency brings their own technical experience and their own database of knowledge."
Frequently, the cases involve "U.S. military hardware or spare parts for equipment we know is in the military inventory of unfriendly nations," Feeney said.
This includes parts for stinger missiles supplied in the 1980s to Afghanistan rebels during their war with Russia.
Or replacement parts for F-14 fighter jets and M-113 armored personnel carriers the United States sold decades ago to the shah of Iran.
"There are parts that go bad," Marzullo said. "They [the users] don't have direct access to national military goods producers. Often the only way to get the replacement parts is from the U.S."
That's done, according to Feeney, "through a shadowy network of international arms dealers."
In March, federal agents arrested Leib Kohn for allegedly buying and then shipping five wiring harnesses used in a HAWK missile system's guidance radar to an Israeli arms dealer without obtaining the proper licenses.
The items were delivered to Kohn's Brooklyn home by a federal agent posing as a UPS driver.
The harnesses were seized by the Israeli National Police at a warehouse in Binyamina, Israel.
The Israeli police arrested Eli Cohen, an arms dealer who has been investigated in the past for shipping military parts to Iran
one of Israel's arch-foes.
"I have to credit the Israeli National Police with their quick work in seizing these items," O'Connor said.
Kohn, along with his companies L&M Manufacturing Corp. and Nesco N.Y. Inc., both in Brooklyn, pleaded not guilty to charges of violating the Export Control Act. That case is pending in federal court.
Cohen has not been charged in the United States.
Tracking down parts
Both O'Connor and Avers said it is easier to track illegal sales by first focusing on the prohibited parts.
"We know what parts are on the munitions list and we know what companies manufacture them," O'Connor said. "That's where the cases often begin. Once they're out of the country, our ability to track them is minimal."
That's why Avers said Project Shield America, an outreach program involving federal agents and officials of defense contractors, is so important.
"This industry has become so technical and complex that we need the companies to be our eyes and ears," Avers said.
"For example, a company that makes radar parts might get an order for five devices to be used in a hospital overseas. They know a hospital wouldn't need more than two, so immediately they become suspicious. At that point, we want them to contact us."
O'Connor agrees.
"I can't stress how important these companies are as a first line of defense," he said.
O'Connor credited General Electric Co. with playing a key role in the recent arrest of Kwonhwan Park, 35 of Seoul, South Korea.
A federal indictment alleges that in September 2001, Park negotiated and purchased two GE-built Black Hawk helicopter engines from Sikorsky's Helicopter Support International in Orange for $2.1 million.
He and Sung-Ryul "Roger" Chan, partners in SGS Corp. in Malaysia, obtained permission from the government to purchase and export the engines to the Malaysian Army. But instead the engines ended up in the People's Republic of China, the indictment charges.
The following year, Park allegedly tried to purchase four more Black Hawk engines, again for the Malaysian Army.
This time a suspicious GE employee questioned the order and contacted government agents. He told them that the Malaysian Army has only two Black Hawks and he could see no need for another four engines.
"That's a textbook case of a company being a good citizen," O'Connor said.
Catching the offenders
A different type of case, O'Connor said, is the one involving Rotair Industries Inc. in Bridgeport, which manufactures helicopter replacement parts.
On Thursday, Rotair paid a $500,000 fine after being caught in two separate U.S. Customs undercover schemes. The company pleaded guilty to violating the federal Arms Export Control Act for shipping military parts overseas without the necessary approvals and licenses.
Appleton said the government made "extraordinary efforts" dating back to 1991 to get Rotair to comply with export rules and regulations. He said Herbert Harrington Jr., the company's founder and president, was in on these discussions.
In 1998, U.S. Customs agents discovered Rotair shipped prohibited items without first obtaining government licensing and approval to Topcast Aviation Supplies Co. Ltd. in Hong Kong. Once there, Topcast resold them to Jetpower Industrial Ltd., also in Hong Kong. Jetpower then shipped the parts to Iran, according to an affidavit filed by an Immigration and Customs Enforcement agent.
Customs agents set up separate undercover stings with bogus corporations
MLP Logistics in Vienna and Charlton Group Ltd. in London.
In both cases these bogus companies ordered military helicopter parts from Rotair, according to the affidavit. The parts were shipped overseas through a freight forwarding company without the required government licenses and approvals.
In addition to the fine, the company agreed that Harrington will resign at the end of January.
But all that may be the least of its worries. Rotair has been suspended from bidding or obtaining business from any federal agency while the military determines if the firm should be banned permanently.
"Rotair represents the best example of a company on the first line of our national defense," the company said in a statement. Rotair said 80 percent of its business in the past 40 years "has been to provide products and services to the U.S. military with unmatched quality at the lowest possible prices. The exports, which are the subject of Mr. O'Connor's invective, represent approximately 1 percent of Rotair's business," the company said.
William F. Dow III, the company's lawyer, said Rotair has undertaken a wholesale revision of the firm's export practices. In the company statement, the Harringtons vowed to "keep abreast of developments in the law as changes are made and contingencies arise."
"Export laws are extremely complex and involve numerous agencies," Dow said. "Some of these parts are dual use
meaning they have a civilian use and a military use. Rotair's mistake was not placing a properly trained person in this small portion of their business."
"One of the items they shipped was a gun-stop mount," O'Connor said.
"It's a rubber device about the size of an apple that prohibits a machine gun from swinging back inside," O'Connor said. "That's the reason that it is on the Munitions List."
Specifics not outlined
But Stuart Quigg said the Munitions List is not "like a car parts catalogue and specifically lists parts like a machine gun mount" that require State Department approval.
"The Munitions List is a chapter in a very small regulation," said Quigg, head of Q International Group in Falls Church, Va., which helps companies that export defense articles comply with the licensing and approval requirements. "Rather than specific parts, it [the Munitions List] lists generic categories."
"The key test is whether the device was specifically designed or modified for military use," Quigg said. "If it was, it requires State Department approval before it can be exported."
But U.S. District Judge Janet Bond Arterton questioned how a machine gun mount could be considered dual use.
"The legal requirements, as complex as they may be, serve an important and serious objective," Arterton said.
That objective, she said, is "to keep them out of the hands of people who the U.S. doesn't want" to have them.
Michael P. Mayko, who covers legal issues, can be reached at 330-6286.
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