Two held in U.S. for smuggling encryption units to China

Two men have been arrested for trying to sell advanced communication encryption devices to China, the U.S. Customs Service said in a statement Thursday.

The men were named by Customs as Eugene You Tsai Hsu and David Tzu Wvi Yang. Hsu is a naturalized U.S. citizen. Yang, born in Taiwan, is a permanent resident of the United States.

The devices, known as KIV-7HS, are so advanced that special approval is needed from the National Security Agency (NSA) before they can be exported from the United States. They are among the most sensitive items on the U.S. munitions list, and are used to secure and safeguard classified communications, Customs said.

According to the Web site of Rainbow Technologies Inc., developer of the KIV-7HS, the device provides high-speed cryptographic functions in Time Division Multiple Access (TDMA) architectures to provide secure high-bandwidth, wide area, networked data exchange via satellite over a broad range of data rates.

The arrests came after a four-month investigation carried out with the help of Mykotronx Inc., a Rainbow subsidiary and a supplier of the device. Customs officers posed as intermediaries who could help export the devices to a third man, Charlson Ho, affiliated with Singapore-based company Wei Soon Loong Pte. Ltd.

Even after the undercover agent told Hsu that no license would be approved for export to China and that export to China would be a violation of the Arms Control Export Act, Hsu continued to show interest, according to the statement from the Customs Service.

On Aug. 24, Yang confirmed to the U.S. Customs undercover agent that the KIV-7HS units would be shipped from Los Angeles through Taipei to Singapore, where Ho would then forward the units to China, the statement said.

Rainbow Technologies, in Irvine, Calif., can be contacted at The U.S. Customs Service can be found at