Businessman pleads guilty to smuggling space technology to Russia, China

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A Texas man pleaded guilty to federal charges that he conspired to smuggle military equipment and space technology from the U.S. to China and Russia, according to a newly-released Department of Justice (DOJ) statement.

Peter Zuccarelli, 62, of Plano, Texas, pleaded guilty to the charges in court Thursday for working with co-conspirators to illegally export and smuggle radiation-hardened integrated circuits (RHICs) outside the United States – without a license for use in Chinese and Russian space programs – and using his company as a cover for the operation.

He admitted that between June 2015 and March 2016, he attempted to profit from smuggling radiation-protected microchips, such as those used in space probes and satellites or even ballistic missiles, by using his eyeglass-lens coating company to purchase the microchips from U.S. manufacturers.

Zuccarelli’s co-conspirator received orders from customers seeking to purchase RHICs for use in China and Russia’s space programs.

“In furtherance of the conspiracy, Zuccarelli’s co-conspirator received purchase orders from customers seeking to purchase RHICs for use in China’s and Russia’s space programs,” the DOJ statement reads. “Zuccarelli received these orders from his co-conspirator, as well as payment of approximately $1.5 million to purchase the RHICs for the Chinese and Russian customers.”

Additionally, he falsified documents with U.S. suppliers, claiming that his company, American Coating Technologies, was the end user of the RHICs.

Upon receiving the RHICs, he then repackaged them and misrepresented labels to read “touch screen parts” before shipping the highly-restricted RHICs to China and Russia. He also falsified paperwork and made false statements to the U.S. government, in an attempt to hide the conspiracy.

Zuccarelli faces a maximum prison sentence of five years and a maximum fine of $250,000.

A sentencing hearing will be scheduled, pending the finalization of an investigation conducted by the U.S. Probation Office.

Unfortunately, cases such as Zuccarelli’s are a growing trend, with others arrested and prosecuted for conspiring with foreign rivals to illegally export U.S. technology and military equipment overseas.

A recent example occurred this past May when a California woman of Chinese descent, Si Chen, was arrested for smuggling $100,000 worth of U.S. space equipment to China, and for falsifying immigration documents and money laundering.

The Daily Caller also reports that last year, a Chinese businessman living in America, Su Bin, pleaded guilty to co-conspiring with Chinese agents between 2008 and 2014 to steal U.S. military secrets regarding F-22 and F-35 jets.

This case is being investigated by the Dallas and Denver Offices of the Department of Homeland Security, Homeland Security Investigations; the FBI; the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Department of Defense, Defense Criminal Investigative Service. This case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Texas together with the Counterintelligence and Export Control Section of the Justice Department’s National Security Division.

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