FBI: Evidence mistakenly returned to alleged spy's Woodinville home Second Eastside home raided in tech smuggling probe

The night of his arrest, potentially key evidence was mistakenly returned to the Woodinville home of the man federal prosecutors claim was in "essence" a spy for the Chinese government, according to unsealed court documents.

At the same time, other FBI statements also unsealed Wednesday show that agents raided the Redmond home of a man -- as yet uncharged -- suspected of helping in the alleged smuggling scheme.

Now charged with attempting to smuggle sensitive military equipment to China, 46-year-old Lian Yang was arrested Dec. 3 during a meeting with undercover FBI agents.

The arrest followed a nine-month investigation that saw an informant offer to help Yang obtain satellite parts barred from export, federal prosecutors claim in charging documents filed in U.S. District Court at Seattle. The day of his arrest, prosecutors contend Yang was prepared to pay $20,000 for five components that he intended to personally smuggle to China.

Shortly after Yang was arrested, agents served a search warrant on his home. There, they seized electronics and documents allegedly related to the purported smuggling attempt.

According to an FBI agent's statement unsealed Wednesday, agents arresting Yang also took custody of his personal effects -- an iPhone, a shoulder bag and several notes. The agent -- a member of a Seattle-based counter-intelligence squad -- intended to examine those items after booking Yang into federal detention.

Instead, Yang's possessions were returned to his car, which was then driven to his home, the agent told the court. Yang's wife was given the key.

"I intended to maintain the iPhone as evidence in this case, and to conduct a more thorough search of the phone pursuant to the consent Yang provided," the agent said in court documents. "In addition, I intended either to search the contents of Yang's shoulder bag … (and) review the contents of the small documents that were seized from Yang's pockets.

"It was an inadvertent oversight that these items were placed in the trunk of the 1991 Toyota Camry and returned prior to these searches taking place."

During a search of the car conducted three days after Yang's arrest, agents recovered documents, an iPhone and an external hard drive, according to court documents.

Also detailed in the recently unsealed search warrant affidavits was a raid on a Redmond home belonging to a man suspected of assisting Yang.

Writing the court, investigators claimed $60,000 was wired from accounts belonging to a corporation based at the alleged helper's home as part of the scheme. During the search, which occurred the same day as Yang's arrest, agents seized various electronic storage devices and documents.

What role the man is suspected of having remains unclear, though additional details about Yang and the prosecution have made their way into the court record. Yang's attorneys have fought for his release from federal detention.

Prosecutors contend Yang had arranged a meeting with undercover FBI agents on Dec. 3 at which he planned to pay $20,000 for five "sensitive military" parts he planned to send to China.

Charging him with conspiring to violate federal arms control laws, prosecutors claim Yang was attempting to pay $620,000 to acquire 300 satellite components. Sales of such items requires State Department approval.

"Boiled down to its essence, the defendant's offense amounted to a form of espionage on behalf of the People's Republic of China to acquire the United States' sensitive military technology," Assistant U.S. Attorney Todd Greenberg told the court, expounding on allegations.

"There is also no doubt that Yang was aware of the nefarious purpose to which his contacts in China intended to put the parts he was attempting to acquire," Greenberg continued.

Greenberg went on to contend the components have no non-military purpose.

Yang allegedly told an informant the parts were meant for the China Space Technology Co.'s spacecraft program. On another occasion, federal investigators contend Yang said some of the parts would be used in the design of "China's new generation of passenger jet."

A Seattle FBI special agent assigned to counterintelligence noted that Yang later said he didn't know how the high-tech components would be used.

"I don't know where it goes exactly," Yang is alleged to have said. "Maybe … I know something totally different. … At the end, it's used in a commercial airline. That's what they say, anyway."

Writing the court, Yang's attorney described him as the son of a Chinese dissident who made a life for himself in the United States during his 22 years in the country. A former Microsoft employee and Portland State University alum, Yang became a citizen in 1999.

Defense attorney John Henry Browne also assailed the allegations offered by prosecutors and asserted his client may have been entrapped by the FBI informant.

"The evidence is underwhelming -- at best -- with potentially serious overtones of entrapment," Browne told the court.

Yang remains jailed at the Federal Detention Center in SeaTac. Federal prosecutors have until March to return an indictment.