A naval flight officer and his wife conspired to smuggle military-style boats to China and sold a firearm to a Chinese national, federal prosecutors allege.
Lt. Fan Yang and his wife, Yang “Yuki” Yang, were arrested following a joint FBI and NCIS raid on their home, Amy Filjones, a spokeswoman for the U.S. District Court for Florida’s Middle District, said.
Lt. Yang, 34, has been assigned to the Maritime Patrol and Reconnaissance Weapons School at Naval Air Station Jacksonville since May 2018, according to a Navy biography.
He was arrested on base. Yuki Yang was arrested at the couple’s home.
The couple appeared to fall under the feds’ scrutiny while Lt. Yang held a top secret security clearance and was assigned to Patrol Squadron 5, which flies the P-8A Poseidon anti-submarine aircraft.
From September 2018 through October 2019, the Yangs allegedly attempted to smuggle U.S.-made inflatable boats and equipment to China by way of a shell company they represented as based in Hong Kong, according to court documents obtained by Navy Times.
The Yangs also are accused of violating federal laws barring the transfer of a firearm to a Chinese man between March 2017 and Sept. 2019.
Lt. Yang faces additional charges of lying to both a firearms dealer and the Navy about his ties to the Chinese national.
Two Chinese nationals — Ge “Sherman” Songtoa, 49, and his associate, Zheng “Kari” Yan, 27, also known as “the Mistress” in court documents — were arrested Thursday in Louisiana, Filjones said.
Both held temporary visas allowing them to travel to the U.S. for business and tourism.
Yan’s nickname isn’t explained in the court filings.
They’ve been charged with conspiring to submit false and misleading export information and attempting to export sensitive equipment to China, according to federal court records.
In affidavits filed in the case, Songtoa is described as the chairman of Shanghai Breeze Technology Co., Ltd. and Yan is described as his associate.
Prosecutors allege that Yuki Yang doubled as the “chief consultant” for BQ Tree, LLC, a company run by the couple and which was described to Navy Federal Credit Union as an online office products and cellphone accessories retailer and wholesaler.
Yuki Yang signed an employment contract with Shanghai Breeze and was paid up to $5,000 monthly to handle U.S.-based business for the company, records reveal.
Investigators sifting through emails and court-ordered surveillance allege that Yuki Yang worked with Yan and Sangtao behind the scenes to broker deals with two companies — listed as California-based “Business-5” and Louisiana-based “Business-6” in the affidavit — to purchase multiple vessels intended for China.
While it appears Yang initially told the California-based “Business-5” that the vessels would be exported to China, the FBI suspects she sought to skirt federal laws and later told the company that they were bound for Hong Kong-based United Vision Limited.
The purchasing party on the invoice was listed as Belt Consulting, which also is based in Hong Kong. Belt also made two international wire transfers to “Business-B.”
On Oct. 7, “Business-B” told Yang that it was ready to export the order after receiving a shipping address and end user information. She responded with an address for United Vision in Kawloon, Hong Kong.
But a special agent for the U.S. Department of Commerce intercepted the transaction the next day. The shipping address traced back to a company called LT Chemicals International.
Subsequent searches of U.S. shipping records showed no exports for LT Chemicals, Belt Consulting or United Vision Limited but 24 shipments to Shanghai Breeze, including two from BQ TREE in Oct. 2018 and Jan. 2019.
The contents were listed as flash drives.
“The illegal exportation of sensitive technology to prohibited entities poses a clear, significant threat to our national security,” Rachel L. Rojas, the special agent in charge of the FBI’s Jacksonville division, said in a statement Tuesday to Navy Times.
“Although challenging, the FBI remains dedicated to preventing the theft of vital technologies. We are committed to working with our law enforcement partners to identify, investigate, and eliminate any effort to circumvent the laws that protect this technology so it does not fall into the wrong hands.”
A series of emails included in the affidavit also detailed another transaction that BQ TREE handled at the direction of Yan and Sangtao.
Between March 2017 through January 2019, Yang worked with “Business-6” on behalf of Shanghai Breeze to purchase 10 vessels for shipment to China. In March 2018, Yang emailed Yan photos of a prototype boat, one of which was labeled the winner of a U.S. Navy PB(X) patrol boat contract.
An internet search revealed that company as Jeanerette, La.-based Metal Shark, which makes a host of military and law enforcement boats. Josh Stickles, a spokesman for the company, declined to say which type of boats Shanghai Breeze purchased but added that Metal Shark was contacted by law enforcement “some time ago and we cooperated fully in the investigation.”
While Yuki Yang appeared to be the U.S. face for Shanghai Breeze, she kept her husband apprised of her work with “Business-B,” and acknowledged to him her worry that the company was barred from selling its boats in China because it manufactures vessels for the U.S. Navy.
When she further complained that Yan and Singtao had not wired money to her, Lt. Yang told her “that they did not need the additional money, but told her that he hoped she would not make him regret getting her the job,” the affidavit says.
In addition to the smuggling scheme, investigators describe Songtoa as a man with an affinity for shooting. Officials suspect the Yangs bought him a SIG Sauer 9mm pistol inscribed with the initials “G.S.T” and the phrase “NEVER OUT OF THE FIGHT.”
Songtoa sought training by former special forces personnel and visited ranges in Virginia Beach, North Carolina as well as in Orange Park, Florida, a Jacksonville suburb where he allegedly fired the SIG Sauer. The weapon was uncovered by federal officials in September during a raid on a storage facility in nearby Fleming Island, Florida, according to court records.
Emails also uncovered expense reports from BQ TREE to Songtoa that included entries for the purchase of the SIG Sauer as well as an instruction to “store the gun.”
Officials also question a July 2018 trip in which Lt. Yang requested time off, telling Navy supervisors that he wanted to take his family to Disney World. Instead, investigators allege that the Yangs flew to Sioux City, Iowa.
Airline and credit card records show the couple purchased a meal, rented a car and bought a one-way flight for Songtao departing from Omaha Eppley Airfield in Nebraska, investigators said in court filings.
But when it came time for Lt. Yang to update his security clearance in January he alluded to only one link to the Songtoa.
When asked if he’d been offered work by a foreign national in the last seven years, he answered “yes” but added that he turned down the offer. Pressed for more information, he said that in late 2017 Songtoa offered him a position consulting for a business that imported U.S. speedboats for sale in China.
Lt. Yang said he told Songtoa “he was still in the Navy and could not take on additional work,” according to the filing.
But emails submitted with the affidavit revealed that months earlier Lt. Yang sent emails to an Orlando business owner saying he was consulting for a client in China looking to bring Chinese citizens over for “firearm tourism.”
Lt. Yang’s civilian attorney is reviewing the case and indicated he would discuss the matter later.
Yuki Yang does not appear to have retained an attorney yet, according to court documents.
Both have detention hearings scheduled for Wednesday afternoon.
Lt. Yang immigrated to the U.S. as a teenager in 1999 and enlisted in the Navy six years later, according to court documents and a military biography released to Navy Times.
A LinkedIn account appearing to belong to Lt. Yang indicates he rose to electrician’s mate second class during active and reserve duty while assigned to the guided-missile cruiser Cape St. George and Naval Reserve Cargo Afloat Rig Team 1′s Detachment A.
He earned an undergraduate degree in computer engineering at the State University of New York at Binghamton in 2011 and then a master’s degree in computer engineering from Syracuse University the following year.
He was commissioned in 2012.