BOSTON – A California man was arrested and charged in an indictment unsealed today in federal court in Boston with illegally exporting cesium atomic clocks to Hong Kong.

Alex Yun Cheong Yue, 67, of South El Monte, Calif., was indicted on one count of conspiracy to commit export violations, two counts of unlawful exports and attempted exports of U.S. goods to Hong Kong, and one count of smuggling. Yue will appear this afternoon in federal court in Los Angeles. Wai Kay Victor Zee, 56, of Hong Kong, along with his company, Premium Tech Systems, Limited were also charged. The two defendants remain at large in Hong Kong Special Administrative Region of the People’s Republic of China.

According to the charging document, beginning in December 2015, Yue, Zee, and Premium Tech conspired to procure U.S.-origin cesium atomic clocks and export them to Hong Kong without obtaining the required export licenses. Cesium atomic clocks are used in global positioning system solutions, network timing protocols, encryption programs, and national defense and space applications. They are controlled for export by the U.S. Department of Commerce for national security and anti-terrorism reasons.

To obtain the atomic clocks, Yue allegedly used a fictitious company, “Ecycle Tech International Ltd.,” to purchase them by falsely representing to the U.S. seller that the atomic clocks would be used solely in the United States for cordless phone research and development. Based on Yue’s false representations, the U.S. seller sold the cesium atomic clocks to Ecycle. On Feb. 19, 2016, the atomic clocks shipped from the manufacturing facility in Beverly, Mass., to Yue in California. Three days later, on Feb. 22, 2016, Yue reshipped the controlled cesium atomic clocks to Zee at Premium Tech in Hong Kong. Neither Yue, Zee, nor Premium Tech ever applied for or obtained the required export licenses from the U.S. Department of Commerce. On Feb. 24, 2016, Zee confirmed receipt of the cesium atomic clocks in Hong Kong.

In December 2017, Yue allegedly attempted to purchase an additional cesium atomic clock. Prior to the sale, however, the U.S. seller required Yue to provide an end-user statement detailing where and for what the clocks would be used. In April 2018, Yue sent an end-user certificate on Ecycle letterhead stating that the atomic clocks would be used in a calibration lab in California. It is alleged that in response to further inquiries from the U.S. seller, Yue falsely declared that he was not intending to export the cesium atomic clocks. When the U.S. seller insisted on a site visit to the California location where the atomic clocks would be utilized, Yue abruptly canceled the order. On July 13, 2018, Yue received a refund payment from the U.S. seller. Three days later, on July 16, 2018, Yue sent a wire transfer to Premium Tech’s bank account in Hong Kong with the refunded money.

The charge of conspiring to commit export violations and unlawfully exporting and attempting to export U.S. goods provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $1 million. The charge of smuggling goods from the United States provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew Lelling; William Higgins, Acting Special Agent in Charge of the Department of Commerce, Office of Export Enforcement, Boston Field Office; and Peter C. Fitzhugh, Special Agent in Charge of the Homeland Security Investigations in Boston, made the announcement today. Assistant U.S. Attorney George P. Varghese of Lelling’s National Security Unit is prosecuting the case.

The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.