California Export Broker Sentenced to Two Years for Illegally Exporting National Security-Sensitive Technology to China

Dec. 3, 2007

Defendant Brokered Illegal Sale of Night Vision Technology

SAN JOSE , Calif., Dec. 3 /PRNewswire-USNewswire/ -- U.S. Attorney Scott N. Schools announced today that Philip Cheng was sentenced today to two years in prison and ordered to pay a $50,000 fine for his role in brokering the illegal export of a night vision camera and its accompanying technology to China in violation of federal laws and regulations. This sentence is the result of a joint investigation by the Department of Homeland Security's Immigration and Customs Enforcement (ICE), the Federal Bureau of Investigation (FBI), the Department of Commerce's Office of Export Enforcement, and the Internal Revenue Service (IRS) Criminal Investigation Division.

Mr. Cheng pleaded guilty on Oct. 31, 2006 , to brokering the illegal export of Panther-series infrared camera, a device which makes use of "night vision" technology. Mr. Cheng failed to obtain required authorization of the United States Department of State prior to the export of the camera. The technology used in the device was controlled for national security reasons by the United States Department of State.

Mr. Cheng , 60, of Cupertino, was indicted by a federal grand jury on June 3, 2004 . He was charged with conspiracy to violate the federal Arms Export Control Act and the International Traffic in Arms regulations, brokering the illegal export of defense articles and services, and three counts of money laundering.

Mr. Cheng's guilty plea followed a trial in February and March 2006 which ended in a hung jury. Following the mistrial, Mr. Cheng agreed to resolve the case through his guilty plea to the willful illegal brokering of a night vision camera to China .

An affidavit filed by an agent of the Department of Homeland Security, Immigration and Customs Enforcement in connection with a criminal complaint filed in the case provides a detailed factual background of the investigation in the case, including: (1) information provided by a confidential informant regarding Cheng's involvement in conspiring to illegally export thermal imaging and infrared technology, and the manufacture, use, and testing of such technology, to China ; (2) a highlighting of specific documents seized from Cheng's trash which reveal the involvement of a co-conspirator, Martin Shih (now deceased), and his company in entering into agreements to export thermal imaging and infrared technology to China ; (3) contracts and memoranda seized from Cheng's residence pursuant to a search warrant which reveal specific written agreements between Shih's company Night Vision Technology, and Chinese entities to purchase thermal imaging and infrared technology controlled under federal law; and (4) Cheng's statements, in interviews conducted on June 17, 2003 , that he had served as Night Vision Technology's agent with Chinese entities, had brokered the sale of items to China , and that he was "probably wrong" in transferring a Panther I camera-a "defense article" pursuant to federal law-to the North China Research Institute of Electro-Optics and the China National Electronics Import & Export Corporation.

The sentence was handed down by U.S. District Judge Ronald M. Whyte following a guilty plea to one count in violation of 22 U.S.C. § 2778(b)(1)(A)(ii)(III) and 22 C.F.R. §§ 129.3, 129.6. Judge Whyte also sentenced the defendant to a three-year period of supervised release. The defendant will begin serving the sentence on Feb.12, 2008.

Jeff Nedrow is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Susan Kreider . The prosecution is the result of a two-and-a-half year investigation by agents of the Department of Homeland Security, ICE; the FBI; the Office of Export Enforcement, Department of Commerce; and the IRS, Criminal Investigation Division.

A copy of this press release may be found on the U.S. Attorney's Office's website at Electronic court filings and further procedural and docket information are available at

Judges' calendars with schedules for upcoming court hearings can be viewed on the court's website at

SOURCE U.S. Department of Justice

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