Woodinville man charged with trying to export banned space technology to China

Questions swirl around the arrest of a Woodinville man for alleging trying to arrange the sale of sensitive military and aerospace technology to China, possibly for use in the country's "next-Gen spaceship program," according to charges unsealed Monday in U.S. District Court.

Federal prosecutors who appeared Monday at the arraignment of 46-year-old Lian Yang, including the head of the office's terrorism and violent crime unit, declined to speak about the case outside the courtroom.

U.S. District Judge James Donohue ordered Yang held at the Federal Detention Center in SeaTac pending a detention hearing Monday. Yang is set to appear at a preliminary hearing Dec. 20 if the federal grand jury doesn't issue an indictment first.

Yang's defense attorney, John Henry Browne, declined to comment on the case — a rarity that the normally talkative Browne acknowledged underscored how unusual the case was.

"You're going to hear words rarely heard from me: No comment," Browne said.

A criminal complaint and a 27-page affidavit signed by an agent from the FBI's counterintelligence program said Yang wound up negotiating with two undercover FBI agents to purchase 300 radiation-hardened semiconductors used by the military in satellites, for $700,000. He and unnamed "co-conspirators" deposited a $60,000 down payment in an account set up by the agents, the complaint alleges.

He was arrested Saturday while dropping off an additional payment of $20,000, according to the charges.

Yang came to the FBI's attention when a businessman approached the agency in March after being introduced to Yang by a mutual friend. The businessman, who went on to work as a confidential source, told agents Yang had said he had "old school friends" in China who make money importing electronic components from the United States, the complaint alleges.

The charges say Yang was employed as a consultant at Microsoft who sometimes traveled to China as a recruiter. The company was not able to confirm this information late Monday.

The source said Yang assured him he was not a spy.

According to the documents, Yang traveled to the People's Republic of China on July 22 and returned July 31. He was stopped and interviewed by U.S. Customs and Border Patrol (CBP) agents, who found a number of documents pertaining to electronics parts in the briefcase, including some referencing items banned by the International Traffic in Arms Regulations (ITAR).

When first interviewed, Yang said he was a consultant for Microsoft who was recruiting in China. After agents found 10 small "LCD display units" in his computer case, Yang said he had been in China to sell the units and was returning some that were defective.

"The CBP officers then asked Yang why he had not told them the real purpose for his travel at the beginning of the interview, and Yang replied, 'I don't know. I lied,' " according to the affidavit.

The complaint says the LCD screens were not on any banned list.

Yang was warned about the need to follow U.S. export laws and released.

Yang related the episode to the confidential source but continued his efforts to obtain the banned parts and get them to China, the charges allege.

At one point, he had suggested to the source that they start their own business. According to the charges, Yang told the source in a secretly recorded conversation at a Bellevue restaurant that it would be best if the source be listed as the company's contact person, "since you have a better [non-Chinese] name ... I will be the secret ... shareholder."

He told the source at a later meeting that he and his partners had purchased similar parts from Russia in the past, but that they had "quality control issues."

Eventually, the source introduced Yang to "contacts" in the industry — a pair of undercover FBI agents, posing as exporters. At a meeting with the agents in Seattle in September, Yang again outlined his desire to obtain 300 of the banned semiconductors. At this meeting, he said he did not want to know what they were going to be used for.

"But of course, if you want, I can ask them," Yang said at the meeting, which was recorded. "And they may not want me to share all the details."

The complaint says that the agents told Yang repeatedly that what they were doing was illegal.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com