HOLLYWOOD HILLS—On July 22, the U.S. Department of Justice announced that a Hollywood Hills engineer was sentenced to 63 months in federal prison for scheming to illegally obtain integrated circuits with military applications that were exported to China without the required filing.
Yi-Chi Shih, 66, was also ordered to pay $362,698 in restitution to the IRS and was fined $300,000 by United States District Judge John A. Kronstadt. Shih was convicted of one count of conspiracy to violate the Export Administration Regulations (EAR) and the International Emergency Economic Powers Act (IEEPA). Shih also was convicted of one count of making false statements to an FBI agent, one count of conspiracy to gain unauthorized access to a protected computer to obtain information, three counts of subscribing to a false tax return, four counts of mail fraud, and four counts of making false statements to the IRS about his foreign assets.
According to trial evidence, Shih defrauded a United States company that manufactured broadband, high-powered semiconductor chips known as monolithic microwave integrated circuits (MMICs) out of its confidential and proprietary business information that was part of its manufacturing services.
“Shih accessed the victim company’s web portal after obtaining that access through an associate who posed as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States,” the U.S. Justice Department stated. “In this way, Shih concealed his true intent to export the U.S. company’s MMICs to the People’s Republic of China.”
The victim company’s semiconductor chips have several commercial and military applications. MMICs are used in radar applications, missiles, missile guidance systems, electronic warfare, fighter jets, and electronic warfare countermeasures. The MMICs Shih exported to China were intended for AVIC 607, a state-owned entity in the People’s Republic of China.
Shih was the President of a Chinese company known as Chengdu GaStone Technology Company (CGTC) which was building a MMIC manufacturing facility in Chengdu. In 2014, CGTC was placed on the Commerce Department’s Entity List, “due to its involvement in activities contrary to the national security and foreign policy interest of the United States – specifically, that it had been involved in the illicit procurement of commodities and items for unauthorized military end use in China,” according to court documents.
Shih used a company he controlled in Hollywood Hills called Pullman Lane Productions, LLC in order to funnel funds provided by Chinese entities to finance the manufacturing of the MMICs by the victim company. Pullman Lane received financing from a company in Beijing that was placed on the Entity List the same day as CGTC “on the basis of its involvement in activities contrary to the national security and foreign policy interests of the United States,” court documents state.
Kiet Mai, Shih’s associate, pleaded guilty to one felony count of smuggling and was fined $5,000 and sentenced to 18 months probation.