Cupertino man gets 2 years for exporting military technology to China

Article Link

Henry K. Lee, Chronicle Staff Writer
Tuesday, December 4, 2007

(12-04) 08:03 PST SAN JOSE -- (12-04) 10:16 PST SAN JOSE - A Cupertino man has been sentenced to two years in federal prison for illegally exporting night-vision technology to China that could be used for military purposes.

Philip Cheng, 60, was also ordered to pay a $50,000 fine in a hearing Monday before U.S. District Judge Ronald Whyte in San Jose. Cheng will begin serving his sentence Feb. 12.

Cheng, who operated a San Jose company called SPCTEK, pleaded guilty in October 2006 to brokering the sale of a thermal-imaging infrared camera called Panther I without the approval of the State Department. He pleaded guilty after a trial last year ended in a hung jury.

A second defendant, Martin Shih of San Jose, owner of Night Vision Technology of Cupertino, died after being indicted with Cheng. Shih had been accused of overseeing the manufacture of materials that were exported to China in 2001 and 2002, authorities said.

Shih's company designed and made military-application devices that use infrared technology to enhance night vision. Cheng established a separate technology-transfer company with the intention of producing the camera in China, court records show.

Cheng initially denied that the Panther I was for military applications, saying it was for commercial use. But he later acknowledged that he was "probably wrong" in shipping the technology to China, according to Special Agent Philip Young of U.S. Immigration and Customs Enforcement, a bureau of the Department of Homeland Security.

"Cheng told the agents that he and Shih had been working together to transfer night-vision technology to the People's Republic of China for approximately three years," Young wrote in an arrest warrant affidavit filed in U.S. District Court in 2004.

Federal agents built the case with information provided by an informant who was familiar with Shih's activities and came forward in August 2001, the affidavit said. Investigators also seized Cheng's trash and reviewed documents obtained through searches of the men's homes and offices, authorities said.

The informant "stated that Cheng was aware that export controls restricted the export of this particular night-vision technology to China," the affidavit said.

The men tried to avoid detection by the U.S. government, meeting in Asia to discuss the export of the technology and establishing a camera factory in China, authorities said.

The informant also told agents the defendants "were likely to create shipping documents stating that Taiwan was the final destination for the cameras, when in fact the cameras were to be diverted to China," the affidavit said.

Cheng reported a net loss of business income "in the thousands of dollars" from 1999 to 2002, but he owns three properties in the South Bay, paid $58,000 in cash for a Mercedes-Benz and transferred $644,000 to U.S. accounts, the affidavit said.

E-mail Henry K. Lee at