Defense Contractor Hides China Subcontracting, Violates AECA
On July 12, 2011, the U.S. Attorney's Office for the District of New Jersey announced that a New Jersey-based defense contracting company, Swiss Technology, Inc., has pleaded guilty to exporting Department of Defense drawings and specifications to China, in violation of the Arms Export Control Act (AECA).
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Swiss Tech Agreed to Manufacture DoD Defense Articles & Parts
According to documents filed in this case and statements made in court, from August 2004 through June 2009, Swiss Tech entered into contracts with the U.S. Department of Defense (DoD) to manufacture defense articles and parts for use in military operations. Rather than manufacture the parts, Swiss Tech exported DoD drawings, specifications, and sample parts to China without obtaining a license from the State Department.
Subcontracted with Chinese Company to Save Money
Swiss Tech contracted with a company in China which manufactured the items at a cheaper price per unit than they would have cost to make in the U.S. using domestic product. The items included parts to be used with M4 and M16 rifles and M249 machine guns, some of which were to be used in U.S. military operations.
Fraudulent Contracts Caused DoD to Sustain Losses of over $1.1M
Swiss Tech admitted that it entered into the agreement with the company in China for the financial benefit of Swiss Tech and its co-conspirators and to hide its activities from the U.S. government. As a result of the conspiracy, Swiss Tech caused the DoD to sustain losses of more than $1.1 million in connection with the fraudulent contracts.
Swiss Tech to Pay $1.1M in Restitution, Will be Sentenced in Nov 2011
Under the terms of the plea agreement, Swiss Tech consented to the court ordering restitution in the amount of $1,148,051.80 to the DoD. Sentencing is currently scheduled for November 15, 2011.