As Iran expands its development and production of unmanned aerial vehicles (UAVs), it continues to seek sensitive electronics manufactured in the United States and other Western countries. Iranian UAV producers cannot legally obtain these goods, so they often turn to procurement agents—private traders willing to violate U.S. export controls to funnel key technologies to Iran for a profit.

Late last year, the United States shed light on two such figures when the Justice Department unsealed an indictment charging Hossein Hatefi Ardakani, an Iranian national, and Gary Lam (Lin Jinghe), his Chinese accomplice, for their involvement in a scheme to procure U.S. electronics for UAVs developed by Iran’s Islamic Revolutionary Guard Corps (IRGC). Further, the Treasury Department sanctioned both individuals and their respective networks.

The case of Ardakani and Lam illustrates some of the key tactics used by illicit procurement agents: routing items through third countries, falsifying shipping forms, and using offshore financial facilitators. But their story also demonstrates how these networks can evolve and expand to overcome challenges or take advantage of opportunities.

A Shahed-238 UAV on display in Iran. (Credit: User @projectmeshkat, via X.)

An Early Partnership

According to the indictment, Ardakani and Lam collaborated to procure electronics from U.S. companies and export them to Ardakani’s Iranian clientele on four occasions between September 2014 and September 2015.

In one instance, Lam arranged for 10 U.S.-origin high-electron mobility transistors (HEMTs), versatile chip components with applications ranging from cell phones to radar equipment and ballistic missiles, to be sent to Ardakani in Iran by shipping them through unwitting intermediaries in Canada and Hong Kong. Lam also lied to a Dutch shipping company conveying the items on the final leg of their journey about the true origin and value of the goods. Moreover, he falsely indicated that no license was needed for delivery to Iran.

To pay for the goods, Ardakani and Lam likewise relied on middlemen to get around U.S. economic sanctions hindering financial transactions with Iran. During a December 2014 discussion of another 10-HEMT shipment, Ardakani emailed Lam: “As you know the Iranian Banks are in sanctions and we cannot pay you using bank. So we have to use these agents. And they sometimes use 2 or 3 other persons in Dubai or Turkey to pay you.” The scheme relied on multiple forms of currency, with Ardakani indicating in January 2015 that he would pay Lam in Chinese renminbi (yuan).

Ardakani always requested electronics in batches of 10 items or fewer. This tactic is common among illicit procurement agents, as it may allow them to avoid the scrutiny that a larger order might attract. For example, Ardakani at one point in the scheme requested just five monolithic microwave integrated circuit (MMIC) power amplifiers, electronic chips with applications in broadband wireless and radar equipment.

Despite these precautions, Ardakani and Lam ran into challenges. In May 2015, for example, Lam emailed Ardakani that the manufacturer of one of Ardakani’s desired U.S.-made products “can not ship it to China,” Lam’s preferred waystation for shipments to Iran. Lam overcame a similar obstacle with a shipment later that year of analog-to-digital converters (ADCs), chips used in communications and infrared imaging equipment and radar. After a U.S. manufacturer refused to ship two ADCs requested by Ardakani to China, Lam arranged for an unwitting intermediary in France to order the products and ship them to Hong Kong. Lam then sent the ADCs on to Iran.

The press release that accompanied the indictment’s unsealing states that Ardakani and Lam were procuring dual-use microelectronics for the IRGC Aerospace Force Self Sufficiency Jihad Organization’s (ASF SSJO) UAV program. Although not widely known, the ASF SSJO is run by a central figure in Iran’s UAV industry, Abdollah Mehrabi, and can be considered a sister organization to Shahed Aviation Industries, which produces the Shahed series of UAVs that Russia has employed against Ukraine. A U.S. State Department request for information on Ardakani notes that components procured by his network have been recovered from the wreckage of Shahed drones in Ukraine and other conflict zones.

A U.S. State Department poster requesting information on Ardakani.

Lam’s Network

Although the indictment centers on crimes that occurred almost a decade ago, the U.S. government charges that Ardakani and Lam remain involved in many of the same activities. Yet the pair have since assembled new networks that appear to be operating separately, and Lam has taken on at least one more Iranian customer.

On October 18, 2023, the Treasury sanctioned Lam for obtaining items on behalf of the Iranian national Alireza Matinkia, who was blacklisted concurrently. According to a Treasury press release, Matinkia has himself served as a procurement agent for Saberin Kish Company, an Iranian firm that has assisted the IRGC with surveillance equipment.

Notably, the Treasury indicated that the United States is hardly the only source of products that Lam has sent to Iranian customers. He has also obtained Japanese, Swiss, Taiwanese, and U.K.-origin electronics for Matinkia, among them “dual-use circulators, amplifiers, inductors, and other electronic components.” The heart of Lam’s network, however, remains in China. He facilitated procurements for Matinkia and related financial transactions through two Hong Kong-based firms, Dali RF Technology Co., Limited and Nanxigu Technology Co., Limited.

According to Hong Kong corporate records, Nanxigu Technology was dissolved on May 3, 2024, and Dali RF has been “dormant” since December 20, 2023. Lam remains Dali RF’s owner and director.

Ardakani’s Network

Ardakani’s own procurement network probably began taking shape when he and a colleague set up Teyf Tadbir Arya Engineering Company around 2012, a few years before the events described in the indictment. Ardakani had recently earned his master’s degree in electrical engineering and had gotten a job at the ICT Research Center, the main research arm of Iran's Ministry of Information and Communications Technology.

As he was making a deal with Lam in early 2015, Ardakani set up a second company, Basamad Electronic Pouya Engineering LLC. The following year, he registered Kavan Electronic Sadr Aria Engineering LLC, later renamed Kavan Electronics Behrad LLC. In both instances, he enlisted the help of Iranian national Mehdi Dehghani Mohammadabadi as an investor and company official. These companies continued to operate after Ardakani had carried out his collaboration with Lam.

According to the Treasury, Ardakani’s main customer in Iran remains the ASF SSJO. To avoid directly transacting with Ardakani, however, it seems that the ASF SSJO has used a front company called Saman Industrial Group as a go-between with Kavan Electronics.

Lam’s network was just one of many across the Middle East and Asia that Ardakani has cultivated to supply the ASF SSJO. Other companies used by Ardakani include trading firms in Hong Kong such as Integrated Scientific Microwave Technology and Dirac Technology (HK) Limited, brokers in Malaysia such as Arta Wave SDN BHD and Nava Hobbies SDN BHD, and shippers in the United Arab Emirates such as Smart Mail Services and Ring Field FZE. In total, he has orchestrated the procurement of hundreds of thousands of dollars’ worth of dual-use components and equipment for the ASF SSJO, including inertial measurement units, servomotors, antennas, gas thrusters, and electrical fuel pumps, all of which have applications in UAVs.

Ardakani is also an associate of Mahdi Ebrahimzadeh and Hamed Dehghan, both of whom were sanctioned by the Treasury in 2019 for procuring electronic components for the IRGC. Ardakani and Ebrahimzadeh have multiple points of contact: they are from the same home town, they both studied electrical engineering at Isfahan University of Technology in the early 2000s, and they both worked at the ICT Research Center in the early 2010s. Ebrahimzadeh, in turn, might have introduced Ardakani to his (Ebrahimzadeh’s) relative, Gholamreza Ebrahimzadeh. According to the Treasury, Gholamreza has procured antennas, U.S.-origin gas thrusters, modular measurement systems, servomotors, spectrum analyzers, and other UAV-applicable items for Ardakani's network.

Interactive Network Map

Credit: Wisconsin Project

Conclusion

In sum, the indictment of Ardakani and Lam shows the juncture of two procurement networks and illustrates the tactics they employed. But their 2014-2015 collaboration was not the end of either individual’s illicit activities: Lam found other customers in Iran, and Ardakani found other suppliers across Asia.

Permanently dismantling networks like Ardakani’s and Lam’s can be all but impossible so long as its key figures remain out of reach. Despite the indictment and, in Ardakani’s case, a $15 million reward offered by the U.S. State Department for actionable information leading to the disruption of his network, the arrest and extradition of either individual to the United States is unlikely so long as they remain in Iran and China.

Nonetheless, by publicly describing their tactics through the indictment and sanctions announcements, the U.S. government is providing examples of red flags that legitimate businesses can be on the lookout for to avoid becoming unwitting accomplices to export control violations. This public attention, combined with the threat of sanctions and the risk of implication in an active criminal case, may also deter less-scrupulous businesses from dealing with Ardakani, Lam, or their known associates. At a minimum, these risks could raise the price threshold at which a witting intermediary would be willing to sell to the Ardakani and Lam networks, thereby raising their cost of doing business.

Furthermore, the Justice Department has been able to target more vulnerable members of these networks. On the same day that Ardakani and Lam’s indictment was unsealed, for example, the department revealed ongoing proceedings to seize more than $800,000 in property from Arta Wave and Nava Hobbies. While Ardakani and Lam may never see a U.S. courtroom, their networks are hardly untouchable.