HSI investigation leads to OFAC sanctions, indictment charging Iranian national with unlawfully procuring microelectronics used in unmanned aerial vehicles

WASHINGTON – Today, the Justice Department and the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced actions against an Iranian national as a result of an investigation by Homeland Security Investigations (HSI) special agents based in Boston.

Following a multi-year HSI investigation into global trade networks, the Justice Department unsealed an indictment charging Iranian national Hossein Hatefi Ardakani and co-defendant Gary Lam, who worked for a Chinese company, with crimes related to the procurement of U.S.-manufactured dual-use microelectronics for the Islamic Revolutionary Guard Corps (IRGC) Aerospace Force Self Sufficiency Jihad Organization’s (ASF SSJO) one-way attack unmanned aerial vehicle (UAV) program. Concurrent with this unsealing, OFAC designated Ardakani and Lam (also identified by OFAC as Lin Jinghe), as well as two other individuals and ten entities involved in the procurement network used by Ardakani in support of Iran’s production of UAVs.

“Ardakani and his co-conspirators crafted a sophisticated web of front companies to obscure the illicit acquisition of U.S. and foreign technology to procure components for deadly UAVs. These very components have been found in use by Iran’s allies in current conflicts, including in Ukraine. The disruption of these criminal networks by Homeland Security Investigations means that hundreds of thousands of critical UAV components will never again be used for malign purposes,” said Michael J. Krol, Special Agent in Charge for Homeland Security Investigations in New England.

“Today’s coordinated action with the Treasury Department demonstrates the Justice Department’s commitment to keeping military-grade equipment out of the hands of the Iranian regime,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “We will aggressively investigate, disrupt, and hold accountable criminal networks that supply sensitive technology to hostile and repressive governments in contravention of U.S. sanctions.”

“Today’s announcements show that we remain focused on disrupting the efforts of Iran and its agents to circumvent U.S. sanctions in support of Iran’s weapons programs, including its drone program, which have been used to support and supply terrorist organizations and other foreign adversaries – such as Russia – around the globe,” said U.S. Attorney Matthew M. Graves. “This whole-of-government approach is one more step in stopping the acquisition of drones for nefarious purposes such as attacks on innocent civilians and civilian infrastructure.”

According to the DOJ indictment, HSI agents found that between at least September 2014 and September 2015, Ardakani and Lam, who was based in China and Hong Kong, as well as other associates, conspired to illegally purchase and export dual-use microelectronics that are commonly used in UAV production from the United States to Iran. These include high electron mobility transistors (HEMTs), monolithic microwave integrated circuit (MMIC) power amplifiers, and analog-to-digital converters. Each of these components are subject to U.S. export controls for anti-terrorism, national security, and regional stability reasons.

The indictment further alleges that HSI agents found on four separate occasions Ardakani and his co-conspirators used a web of foreign companies to accomplish their obfuscation and evasion efforts. For example, between June and September 2015, Ardakani and Lam caused an unwitting French company to purchase from a U.S. company several pieces of analog-to-digital converters with applications in wireless and broadband communications, radar and satellite subsystems, multicarrier, multimodal cellular receivers, antenna array positioning, and infrared imaging. Lam then caused a division of the French company to ship the analog-to-digital converters to Hong Kong, where they were reexported to Iran. A variation of this tactic – involving witting and unwitting companies in Canada, Hong Kong, and China – was used on the other three occasions.

In addition to the indictment, DOJ unsealed a separate, related seizure action based on HSI investigation targeting Nava Hobbies SDN BHD (“Nava Hobbies”) and its property. Nava Hobbies is one of the 10 entities designated by OFAC in its action announced today. The funds are subject to seizure based on violations of U.S. law, including U.S. economic sanctions targeting Iran and money laundering violations. The seizures, totaling nearly $600,000, aim to further degrade this network’s ability to procure UAV components. Proceedings involving this property remain ongoing.

HSI special agents assigned to the agency's counter-proliferation investigations program are on the front lines of the U.S. government's fight to prevent the illicit export and transfer of sensitive military and dual-purpose technology and defense articles to transnational criminal organizations, terrorist groups, adversarial nation states and other nefarious entities operating around the world. As the only U.S. government agency with full statutory authority to enforce all U.S. export control laws relating to military items, controlled dual-purpose goods and sanctions violations, HSI stands at the forefront of the government’s counter-proliferation mission.

Assistant U.S. Attorney Jolie Zimmerman for the District of Columbia is prosecuting the case, with valuable assistance from Assistant U.S. Attorney Sean Heiden for the District of Columbia and Trial Attorneys Heather Schmidt and Brendan Geary of the National Security Division’s Counterintelligence and Export Control Section.

Source: U.S. Immigration and Customs Enforcement (ICE.gov)