Mentioned Suspect Entities & Suppliers:
Manhattan District Attorney Robert M. Morgenthau announced today a 118-count indictment of a Chinese citizen and his company for charges relating to the misuse of Manhattan banks and the proliferation of illicit missile and nuclear technology to the Government of Iran. The Chinese company, known as LIMMT, is a major supplier of banned weapons material to the Iranian military.
The defendants, LI FANG WEI (a/k/a KARL LEE, a/k/a PATRIC, a/k/a SUNNY BAI, a/k/a K. LEE a/k/a KL, a/k/a DAVID LI, a/k/a F.W. LI) and LIMMT ECONOMIC AND TRADE COMPANY, LTD., (a/k/a LIMMT (DALIAN FTZ) METALLURGY AND MINERALS CO., LTD., a/k/a LIMMT (DALIAN FTZ) MINMETALS AND METALLURGY CO., LTD., a/k/a LIMMT (DALIAN FTZ) METALLURGY AND MINERALS CO., LTD., a/k/a ANSI METALLURGY INDUSTRY CO. LTD., a/k/a BLUE SKY INDUSTRY CORPORATION, a/k/a SC (DALIAN) INDUSTRY & TRADE CO., LTD., a/k/a SINO METALLURGY AND MINMETALS INDUSTRY CO., LTD., a/k/a SUMMIT INDUSTRY CORPORATION, a/k/a LIAONING INDUSTRY & TRADE CO., LTD., a/k/a WEALTHY OCEAN ENTERPRISES LTD.) (LIMMT) were indicted on charges of falsifying business records and conspiracy.
The investigation leading to today's indictment revealed that the defendants engaged in fraudulent business practices to gain access to the U.S. financial system. LI FANG WEI is the manager of LIMMT, a provider of metal alloys and minerals to the global market. LIMMT has two primary lines of business. First, LIMMT sells standard metallurgical products to commercial customers throughout the world. Second, LIMMT sells high strength metals and sophisticated military materials, many of which are banned from export to Iran under international agreements, to subsidiary agencies of the Iranian Defense Industries Organization (DIO).
In June 2006, the United States Department of the Treasury, Office of Foreign Assets Control (OFAC) sanctioned LIMMT for its support of and role in the proliferation of weapons of mass destruction (WMD) to Iran. As a result of the sanctions, LIMMT was banned from engaging in transactions with or through the U.S. financial system, and remains banned to this day. Subsequently, LI FANG WEI and LIMMT used alias names and shell companies to continue LIMMT's international business. LI FANG WEI and LIMMT's purpose in doing so was to use fraud and deception to gain access to the U.S. financial system, to deceive U.S. and international authorities, and to continue the proliferation of banned weapons material to the Iranian military. The aliases presented above and charged in the indictment were some of the names employed by LIMMT in its fraudulent scheme.
The indictment charges that during the period from November 2006 through September 2008, LIMMT sent and received dozens of illegal payments through U.S. banks by using aliases and shell companies. Because LIMMT was banned from transacting with U.S. banks, any transfers sent in its real name would have been blocked by the U.S. banks. U.S. banks employ sophisticated anti-fraud and anti-money laundering computer systems to detect illegal payments from sanctioned entities and people. By substituting aliases in the place of its true name, LIMMT deceived U.S. banks into processing its transactions. The result was the falsification of the records of banks located in Manhattan relating to dozens of illegal transactions.
Mr. Morgenthau said, "Our banks have high standards and sophisticated systems to stop these transactions, but this conduct was specifically designed to defeat their systems."
Mr. Morgenthau noted the parallels between this investigation and his Office's ongoing investigation into "stripping," as announced in the recent $350 million settlement with Lloyds TSB Bank of the United Kingdom. Like that investigation, the investigation of LI FANG WEI and LIMMT presents an example of the use of fraud and deceit to access the world's financial systems, including banks in Manhattan.
LIMMT conducted its non-military commercial business primarily with U.S. dollar payments. These payments were processed, or "cleared," by U.S. banks. These payments, although from non-military customers, were nonetheless illegal under U.S. law because of LIMMT's status as a proliferator of WMD. LIMMT's Iranian military shipments were paid for primarily in Euros. For all of these payments, from both the Iranian military subsidiaries and LIMMT's commercial customers, LIMMT used its alias names to complete the transactions.
In all of LIMMT's transactions, the wire payments were sent to and from a limited number of Chinese banks that handled the accounts of LIMMT's front companies. The investigation into the role of the stripping banks and the Chinese banks continues. Mr. Morgenthau said, "Banks that provide access to the world's financial systems to criminals, proliferators and terrorists should expect that they will be found out and prosecuted. Sanctions are effective only if they are enforced. We may not be able to shut down Mr. LI's factories, but we can shine a spotlight on his conduct and the conduct of the foreign banks that permit these types of operations to flourish."
The investigation revealed that in the almost three-year period since LIMMT's designation, LIMMT used its aliasas to continue sending banned missile, nuclear and so-called dual use materials to subsidiary organizations of the DIO. The investigation identified subsidiary organizations set up by the DIO to procure and produce high-tech weapons systems, including: Amin Industrial Group, Khorasan Metallurgy Industries, Shahid Sayyade Shirazi Industries, and Yazd Metallurgy Industries. Mr. Morgenthau noted, "Materials may be dual-use, but when they are sent to front companies set up by the Iranian military, and the defendants use false end-user certificates and dummy names, there's not much doubt that the use is for weapons. There is no greater threat to the world today than Iran's efforts to procure nuclear weapons and long range ballistics missiles."
Some of the materials shipped from LIMMT to the DIO included:
- 15,000 kilograms of a specialized aluminum alloy used almost exclusively in long range missile production
- 1700 kilograms of graphite cylinders used for banned electrical discharge machines
- more than 30,000 kilograms of tungsten-copper plates
- 200 pieces of tungsten-copper alloy hollow cylinders
- 19,000 kilograms of tungsten metal powder
- 24,500 kilograms of maraging steel rods
- 450 metric tons of furnace electrodes, and
- 1,400 metric tons of high carbon ferro-manganese.
In addition, LIMMT and the DIO engaged in negotiations to have LIMMT send the DIO 400 Gyroscopes, 600 Accelerometers, and 100 pieces of Tantalum. Gyroscopes and Accelerometers are crucial technology for Iran's development of long range missiles.
In a coordinated action announced today, OFAC is designating the four Iranian DIO subsidiaries, along with several of LIMMT's aliases and LI FANG WEI personally as Specially Designated Nationals, all for activities relating to the proliferation of WMD. Mr. Morgenthau said, "We worked closely with the Treasury Department to identify the entities and individuals engaged in the proliferation of weapons material to Iran."
The defendants were each indicted on 117 counts of Falsifying Business Records in the First Degree, a class E felony, which is punishable by up to 1? to 4 years in prison; and one count of Conspiracy in the Fifth Degree, a class A misdemeanor, which is punishable by up to 1 year in jail.
Mr. Morgenthau thanked the Office of Foreign Assets Control of the United States Department of the Treasury; the Federal Reserve Bank of New York; the Wisconsin Project on Nuclear Arms Control; the Institute for Science and International Security; and the compliance departments of The Bank of New York Mellon, Citibank, N.A., JPMorgan Chase & Co., Wachovia Bank/Wells Fargo, N.A., Bank of America, N.A. and Standard Chartered Bank.
Assistant District Attorneys Adam S. Miller and Aaron T. Wolfson led the investigation and grand jury presentation, under the supervision of Adam Kaufmann, Bureau Chief of Investigation Division Central. Intelligence Analyst Jasmine Sicular and Investigative Analysts Lauren Lichtman and Max Adler worked on the investigation and grand jury presentation. Financial Intelligence Director David Rosenzweig and Assistant District Attorneys Marc Krupnick and Marc Frazier Scholl, Senior Investigative Counsel, assisted. Investigators Jonathan Savel and Alex Arenas of the DANY Special Investigations Group also worked on the investigation.
Li Fang Wei, a/k/a Karl Lee, a/k/a Patric, a/k/a Sunny Bai, a/k/a K. Lee a/k/a KL, a/k/a David Li, a/k/a F.W. Li
Dalian, Liaoning Province
People's Republic of China
LIMMT ECONOMIC AND TRADE COMPANY, LTD.,
a/k/a LIMMT (DALIAN FTZ) METALLURGY AND MINERALS CO., LTD.,
a/k/a LIMMT (DALIAN FTZ) MINMETALS AND METALLURGY CO., LTD.,
a/k/a LIMMT (DALIAN FTZ) METALLURGY AND MINERALS CO., LTD.,
a/k/a ANSI METALLURGY INDUSTRY CO. LTD.,
a/k/a BLUE SKY INDUSTRY CORPORATION,
a/k/a SC (DALIAN) INDUSTRY & TRADE CO., LTD.,
a/k/a SINO METALLURGY AND MINMETALS INDUSTRY CO., LTD.,
a/k/a SUMMIT INDUSTRY CORPORATION,
a/k/a LIAONING INDUSTRY & TRADE CO., LTD.,
a/k/a WEALTHY OCEAN ENTERPRISES LTD.
2501/2508 Yuexiu Mansion
No. 82 Xinkai Road
No. 08 F25 Yuexiu Mansion,
No. 210 Bayi Road
Suite 13, First Floor Oliaji Trade Centre
Francis Rachel Street
Republic of Seychelles
No. 188 Zhongshan Road
No. 100 Zhongshan Road
Xinkai Road Xigang District