U.S. Department of Justice

United States Attorney
District of Maryland

Thomas M. DiBiagio
United States Attorney
101 West Lombard Street
Baltimore, MD 21201-2692

Northern Division
6625 United States Courthouse
410-209-4836
FAX 410-962-0693
410-209-4800
TTY/TDD:410-962-4462

Southern Division
400 United States Courthouse
6500 Cherrywood Lane
Greenbelt, MD 20770-1249
301-344-4433
301-344-4422
FAX 301-344-4516

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Northern Division

FOR IMMEDIATE RELEASE

FOR FURTHER
INFORMATION CONTACT
VIRGINIA EVANS, AUSA
(410) 209-4885

Baltimore, Maryland - United States Attorney Thomas M. DiBiagio and Allan J. Doody, Special Agent in Charge, United States Customs Service, Baltimore Office, announced that Eugene You-Tsai Hsu, age 60, of Blue Spring, Missouri, and David Tzuwei Yang, age 49, of Temple Hills, California, were sentenced to jail terms today by United States District Judge Andre M. Davis in connection with their roles in attempting and conspiring to export encryption devices in violation of the Arms Export Control Act. Judge Davis sentenced Yang to two concurrent 30 month terms of incarceration on each of the two charges for which he was convicted to be followed by a two year period of supervised release. Hsu was sentenced to two concurrent 41 month terms of imprisonment on each of the charges for which he was convicted to be followed by a two year period of supervised release.

Hsu and Yang were indicted by a Federal Grand Jury in Baltimore in September of 2002, each charged with one count of conspiring to violate the Arms Export Control Act and one count of attempting to violate the Act. The charges centered around their attempt to export two KIV-7HS encryption units manufactured by Columbia, Maryland based Mykotronx, Inc., to the People's Republic of China. Both Hsu and Yang were convicted on both counts in the indictment after a three-week jury trial in April 2002.

The indictment arose after the U.S. Customs Service received information that Hsu, was attempting to acquire KIV-7HS encryption units which are used to secure classified communications. Specifically, the KIV-7HS unit is a "type 1" encryption device and the unit and its technology are "defense articles" listed on the United States Munitions List. The device's designation prohibited its export from the United States without first obtaining an export license from the Office of Defense Trade Controls of the U.S. State Department. In addition, sale of this encryption technology requires prior approval by the National Security Agency. As such, its export is more strictly controlled than most U.S. Munitions List articles.

Evidence produced by the government at trial showed that in early May, 2001, undercover U.S. Customs agents made contact with Hsu regarding the purchase of the encryption units. In order to avoid the export requirements for the technology, Hsu assisted in formulating a plan to disguise the true nature of the product to facilitate the illegal shipping.

The evidence at trial further showed that Hsu and Ho intended to use a "forwarder" named David Yang of Dyna Freight Inc., in California. Ho arranged that Yang would handle the shipment/export from the U.S. to Ho in Singapore, then Ho would transfer the units and other electronic technology to the People's Republic of China. Yang admitted to undercover agents that he fully understood "the whole situation" and that he had agreed to "move the merchandise" for them. Yang also provided the agent with the air waybill number for tracking the KIV-7HS units which Yang was going to ship from Los Angeles through Taipei to Singapore.

This case was investigated by the United States Customs Service and was prosecuted by Assistant United States Attorneys Tarra DeShields and Kathleen O. Gavin.