Sunday, July 12, 2009

Chinese Spying Claimed in Purchases of NSA Crypto Gear

Via -

A Chinese national was indicted this week for conspiring to violate U.S. export law, following a nearly three-year investigation into his alleged efforts to acquire sensitive military and NSA-encryption gear from eBay and other internet sources.

Chi Tong Kuok, of Macau, told Defense Department and Customs investigators that he had been “acting at the direction of officials for the People’s Republic of China,” according to a government affidavit in the case. “Kuak indicated he and PRC officials sought the items to figure out ways to listen to or monitor U.S. government and military communications.”

Kuok was arrested at the Atlanta International Airport last month en route from Paris to Panama, where he allegedly planned to meet an undercover federal agent he believed was going to provide him with military radios. He was transferred to California, where he was indicted (.pdf) Tuesday for money laundering, conspiracy, smuggling and one count of attempting to export a defense article without a license.


Using a Yahoo e-mail address and a different name, Kuok also allegedly contacted an Arizona company this year that had posted on eBay a KG-175 TACLANE — an NSA designed encryption device used to communicate with classified military computer networks, such as the Defense Department’s SIPRNet.

It’s legal to own the equipment, which can’t access anything without the proper crypto key, but export is tightly restricted. The Arizona company initially refused to ship the NSA gear to Macau, but at the government’s request, later allowed another undercover agent to negotiate a deal with Kuok while posing as a company official.

“In subsequent e-mails, Kuok indicated he was interested in buying the KG-175 if it came with a particular key,” reads an affidavit by John Helsing of the Defense Criminal Investigative Service, who does not elaborate. Kuok allegedly sent the undercover agent $1,700 by Western Union for the crypto device, and then forwarded a list of additional items he wanted. “I am also thinking about if you are FBI or something like that,” Kuok allegedly wrote in an e-mail.

Despite his misgivings, Kuok sent the agent another $10,000 for more PRC-148 radios. “When you send the radios, remove all label and write it as vintage walkie talkie, thank you,” he allegedly instructed.

The undercover agent and Kuok agreed to meet in Panama to complete the delivery. Unfortunately for Kuok, his plane stopped in Atlanta, where he was arrested and held without bail. Investigators reviewed Kuak’s eBay and PayPal accounts and determined he had successfully purchased other export-controlled items online, beginning in 2005.

On Wednesday, the government obtained search warrants for two USB flash drives, a laptop computer and several cell phones Kuok had in his carry-on bag, as well as for a cell phone SIM card in his possession.

“Kuok claimed in his post-arrest interview that his PRC ‘handlers(s)’ gave him a SIM card and instructed him to place it in his phone once he landed in Panama,” wrote Helsing in his affidavit.

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