2 charged with trying to export material to Iran

Two men have been charged with trying to illegally export nuclear-related material to Iran that could be used in gas centrifuges to enrich uranium, the Justice Department announced Friday.

A grand jury indictment in the case also charged one of the men with conspiring to procure radioactive material from the United States for customers in Iran.

Parviz Khaki, a citizen of Iran, was arrested in May by authorities in the Philippines on a U.S. provisional arrest request. The other man, Zongcheng Yi, a resident of China, is a fugitive.

The grand jury charged that in 2008, Khaki asked someone in China to obtain 20 tons of C-350 maraging steel from the U.S. for Khaki's customer in Iran. The enhanced strength of maraging steel is especially suited in gas centrifuges for uranium enrichment. Khaki also communicated with Yi about buying 20 tons of maraging steel from a U.S. company with which Yi was in contact.

In pursuit of maraging steel, Khaki allegedly began communicating with an undercover U.S. federal agent posing as an illegal exporter of U.S. goods.

"You know and I know this material" is "limited material and danger goods," Khaki told the undercover agent.

Khaki also is accused of seeking to obtain mass spectrometers from the U.S. In a May 2009 email to the undercover agent, Khaki said one magnetic mass spectrometer he sought was for the isotopic analysis of gaseous uranium hexafluoride, the government said. Uranium hexafluoride is the chemical compound used in the gas centrifuge process to enrich uranium.

In May 2009, Khaki allegedly asked the undercover agent to buy radioactive materials from a U.S. company, including barium-133 and europium-152. In January 2011, Khaki again asked the undercover agent to purchase radioactive sources. Khaki allegedly sent the agent a product catalog for radioactive materials, including cobalt-57. In another email, he requested that the agent purchase cadmium-109.

Lisa Monaco, the assistant attorney general in charge of the Justice Department's national security division, said the case sheds light on the reach of Iran's illegal procurement networks and the importance of keeping U.S. nuclear-related materials from being exploited by Iran.

Monaco said Iranian procurement networks continue to target U.S. and Western companies for technology acquisition by using fraud, front companies and middlemen in nations around the globe.

John Morton, director of Immigration and Customs Enforcement, said U.S. law enforcement had disrupted a significant threat to national security by dismantling a complex conspiracy to deliver nuclear-related materials to Iran. The case was handled by the Seattle office of ICE's Homeland Security Investigations directorate.

According to federal law enforcement officials, the probe began in 2008 when the directorate engaged in routine outreach to the business community in the Pacific Northwest and one U.S. company relayed a suspicious event. A supposed Chinese toy company wanted to place an order for 20 tons of maraging steel, a product for which no toy company could possibly have any legitimate use.

HSI decided to investigate using an undercover agent to contact the Chinese company, which didn't respond. Eventually, the same U.S. company that had originally alerted ICE reported getting an identical request for maraging steel from a Chinese man, who turned out to be Yi. Yi referred the undercover agent to Yi's boss, Khaki.

The law enforcement officials spoke on condition of anonymity because the criminal case is ongoing. The indictment alleges that the efforts of the defendants actually did result in the illegal export of lathes and nickel alloy 120 wire from the U.S. through China to Iran. In February 2009, Khaki asked Yi to contact a U.S. company about procuring two Twister Speed Lathes. Yi allegedly purchased these items and arranged for them to be shipped from the U.S. to Hong Kong and ultimately to Iran in June 2009. At Khaki's request, an unnamed conspirator sent a U.S. company an order for nickel alloy, falsely stating that a company in China was the buyer. The U.S. company shipped the nickel alloy to Yi in Hong Kong, who shipped it on to Iran.

Khaki and Yi are each charged with one count of conspiracy to violate the International Emergency Economic Powers Act by conspiring with others to export U.S. goods to Iran without a required U.S. Treasury Department license. Both are also charged with one count of conspiring to defraud the U.S., two counts of smuggling, two counts of illegally exporting U.S. goods to Iran in violation of IEEPA and one count of conspiracy to engage in money laundering.

Both defendants face a maximum sentence of 20 years in prison for conspiring to violate IEEPA, five years for conspiring to defraud the U.S., 10 years for each smuggling count, 20 years in prison for each IEEPA count and 20 years in prison for conspiracy to commit money laundering.