Friday, May 24, 1996
‘Operation Dragon Fire’ yields $4 million in weaponsBy Richard
Cole
Associated Press
SAN FRANCISCO — A top Chinese arms official was among 14 people
charged with smuggling 2,000 automatic AK-47 rifles into the United
States, federal prosecutors said Thursday.
"Involvement of the Chinese government is under investigation,"
said San Francisco U.S. Attorney Michael Yamaguchi.
Along with the automatic rifles, the Chinese arms dealers had
proposed shipping far more sophisticated weapons to the United
States, said Wayne Yamashita of the U.S. Customs Service.
"Weapons such as hand-held rocket launchers, anti-aircraft
missiles, silenced machine guns and even tanks," he said.
The guns were shipped by the Chinese government companies China
Northern Industrial Corp., also known as Norinco, and Poly
Technologies, a related company that makes weapons for the Chinese
military.
Among those charged in a federal complaint unsealed Thursday was
Lu Yi Lun, second-in-command of Norinco. His boss, Fnu Zhang, the
head of Norinco, sent him to negotiate the deal, but was not
charged.
The companies attempted to disguise the origin of the weapons,
according to the federal complaint, listing them as "hand tools"
and shipping them through Japan and Hong Kong.
"The weapons were to have all Chinese markings removed and North
Korean markings stamped on … to further establish plausible
deniability," the complaint said.
Ring members had erased the serial numbers and converted the
weapons to illegal, fully automatic rifles before the sale. The
weapons had an estimated street value of $4 million.
But the sale of the weapons  which Chinese officials
apparently thought were going to U.S. street gangs  was
actually a 16-month sting operation called "Dragon Fire" by the
Bureau of Alcohol, Tobacco and Firearms and Customs Service.
"Automatic assault weapons represent a grave and serious threat
to our public safety and the security of our country," Yamaguchi
said. "They are often the choice of street gangs." He refused to
say if the same group was responsible for previous successful
shipments.
The Dragon Fire trap had to be sprung prematurely because of
leaks, and it failed to lure the top man in the ring to U.S. shores
for arrest, said a federal law enforcement official on condition of
anonymity. The weapons were seized March 18 in the port of Oakland
after being smuggled in on the ship Empress Phoenix.
Yamaguchi said The New York Times and Los Angeles Times had
agreed to withhold stories about the operation, but agents decided
to strike quickly for safety reasons.
The arrests came as the United States and China face off on
trade and human rights issues, and federal officials say the arms
deal increases tension between the two countries.
"We consider this to be a very serious case," Deputy Attorney
General Jamie Gorelick said. "Smuggling 2,000 AK-47s into this
country is a very serious matter."
Fourteen people were charged in the case  eight U.S.
citizens or residents, and six from the People’s Republic of
China.
Seven of the U.S. residents were in custody, and five appeared
Thursday before a federal magistrate in San Francisco on smuggling
and conspiracy charges.
A key U.S. figure, prosecutors say, was Hammond Ku, 49, of San
Jose, who was the original middleman and contact for the undercover
agents. He was arrested Wednesday but did not appear in court.
Another key figure, Richard Chen, 65, of Aptos, was allegedly
the U.S. representative of the two Chinese arms companies. But his
attorney Michael Stepanian called Chen a respected
restaurateur.
He said it was "ironic" that the government "aided and abetted
gun sales to Bosnia, and now they do a sting on these guns."
Prosecutors opposed Chen’s release on bond and the judge continued
the matter. His wife, Ching Hua Chen, 68, who was also charged, has
been freed, however.
Kevin Wong, 36, of Hayward, allegedly converted the
semi-automatic AK-47s into illegal, fully automatic weapons and
obliterated the serial numbers, Assistant U.S. Attorney William
Schaefer told the magistrate. He was to be released on bond as
well.
Defendant Linda Huang, 55, of Atherton, was a travel agent who
made and arranged "numerous trips overseas for the express purpose
of arranging importation of thousands of automatic weapons,"
Schaefer said. Prosecutors agreed to her release.
The seventh person arrested, Kevin Frank Taylor, 40, of
Carmichael, was in custody in Sacramento.
Of the other seven defendants at large in the case, all except
one, Bao Pin Ma, 44, of Los Altos, are residents of China.
The Chinese government refused immediate comment today on the
smuggling arrests. "We’re looking into the case," Foreign Ministry
spokesman Cui Tiankai told reporters.
More than 90 federal agents seized the weapons and made the
arrests Wednesday night in the San Francisco Bay area. The suspects
included American citizens and Chinese visiting or living in the
United States.
A secretary in the general manager’s office of China Northern
Industries said the company did not know about the allegations but
thought they were unfounded.
"Our representatives do not engage in weapons deals," said the
secretary, who only gave his surname, He. The general manager was
not available for comment, he said.
Norinco and Poly Technologies are two of China’s biggest arms
traders, although in the past few years they have tried to
diversify into other areas of industry and commerce. Both have
strong ties to the military and senior leadership; Poly
Technologies’ president is He Ping, Deng’s son-in-law.
Officials said they focused on the companies because they have
evidence that they had previously smuggled other weapons into the
United States.