Damian Williams, the United States Attorney for the Southern District of New York, Matthew G. Olsen, the Assistant Attorney General for National Security, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Matthew S. Axelrod, Assistant Secretary for Export Enforcement of the Commerce Department, announced the unsealing of an Indictment charging XIANGJIANG QIAO, a/k/a “Joe Hansen,” with sanctions evasion, money laundering, and bank fraud offenses based on QIAO’s alleged participation in a scheme to use a sanctioned Chinese company to provide materials used in the production of weapons of mass destruction (“WMDs”) to Iran, in exchange for payments made through the U.S. financial system. QIAO is at large in China.
U.S. Attorney Damian Williams said: “As alleged, Xiangjiang Qiao conspired to send isostatic graphite to Iran, in violation of U.S. sanctions. Isostatic graphite is a high-tech material used in the nose tips of intercontinental ballistic missiles. The Iranian regime of terror and repression, and those who facilitate it, pose a grave threat to our national security. This Office will continue to work relentlessly to bring to justice those who advance the interests of the Iranian regime and thereby threaten the safety and security of the American people.”
Assistant Attorney General Matthew G. Olsen said: “These charges demonstrate the Justice Department’s commitment to preventing sensitive technology from falling into the hands of foreign adversaries, including Russia, China, and Iran. We will not tolerate those who would violate U.S. laws to allow authoritarian regimes and other hostile nations to use advanced technology to threaten U.S. national security and undermine democratic values around the world.”
FBI Assistant Director in Charge Michael J. Driscoll said: “Qiao, as alleged, participated in a yearslong scheme that directly violated United States sanctions by seeking to provide components used in manufacturing Weapons of Mass Destruction to Iran. Evasions of sanctions designed to deter hostile foreign nations from producing dangerous weapons is a threat to the national security of the United States and our allies. The FBI will be aggressive in its pursuit of any individual willing to deliberately violate imposed sanctions.”
Assistant Secretary for Export Enforcement Matthew S. Axelrod said: “Protecting sensitive American technology – like source code for ‘smart’ automotive manufacturing equipment or items used to develop quantum cryptography – from being illegally acquired by our adversaries is why we stood up the Disruptive Technology Strike Force. The Strike Force actions announced today reflect the core mission of our Export Enforcement team – keeping our country’s most sensitive technologies out of the world’s most dangerous hands.”
According to the allegations contained in the Indictment unsealed today in Manhattan federal court:[1]
XIANGJIANG QIAO, a/k/a “Joe Hansen,” is a national of the People’s Republic of China (“China”) and an employee of the China-based company Sinotech Dalian Carbon and Graphite Manufacturing Corporation (“Sinotech Dalian”). Sinotech Dalian is part of a network of Chinese companies involved in the proliferation of WMDs and that, in particular, provide assistance in the procurement of materials for Iran’s ballistic missile program. In 2014, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned Sinotech Dalian, adding the company to OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”), explaining that Sinotech Dalian is part of a network of China-based entities used to proliferate WMDs and, specifically, to aid Iranian ballistic missile procurement. Sinotech Dalian’s inclusion on the SDN List prohibits it from using the U.S. financial system to conduct transactions without authorization from OFAC. QIAO is an associate of Li Fangwei, a/k/a “Karl Lee,” who managed the Sinotech Dalian network of companies and was charged in 2014 in the Southern District of New York with sanctions evasion and other offenses based on his alleged illicit activities as a principal contributor to Iran’s ballistic missile program through China-based entities that have been sanctioned by the U.S. Government. See United States v. Li Fangwei, 14 Cr. 144 (S.D.N.Y.).
In willful violation of U.S. sanctions on Iran and Sinotech Dalian, between at least March 2019 and September 2022, QIAO participated in a scheme to use Sinotech Dalian, including through transactions involving the U.S. financial system, to supply isostatic graphite to Iran for the production of WMDs. Isostatic graphite is a type of graphite with an ultra-fine grain that is used in the manufacture of WMDs. In particular, isostatic graphite is used in the manufacture of rocket nozzles and reentry vehicle nose tips in intercontinental ballistic missiles. QIAO further took steps to conceal Sinotech Dalian’s involvement in the transaction by creating a bank account in the name of a front company to receive two transfers from a U.S. bank totaling over $15,000 as part of his efforts to facilitate the supply of isostatic graphite to Iran.
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QIAO, 39, a Chinese national, is charged with one count of conspiracy to violate U.S. sanctions against Iran and Sinotech Dalian, in violation of the International Emergency Economic Powers Act (“IEEPA”), which carries a maximum sentence of 20 years in prison; two counts of violating the IEEPA, which each carry a maximum sentence of 20 years in prison; one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison; two counts of attempted bank fraud, which each carry a maximum sentence of 30 years in prison; one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; and two counts of money laundering, which each carry a maximum sentence of 20 years in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division. Mr. Williams also thanked the Department of Justice’s National Security Division, Counterintelligence and Export Control Section, for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Gillian S. Grossman and Nicholas S. Bradley are in charge of the prosecution, with assistance from Trial Attorney S. Derek Shugert of the Counterintelligence and Export Control Section.
Today’s actions were coordinated through the Disruptive Technology Strike Force, an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states. Under the leadership of the Assistant Attorney General for National Security and the Assistant Secretary of Commerce for Export Enforcement, the Strike Force leverages tools and authorities across the U.S. Government to enhance the criminal and administrative enforcement of export control laws.
The charges in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
