Federal prosecutors recently unsealed a superseding indictment accusing Hang “Cody” Sun, CEO of Quadrant Magnetics LLC, of conspiring to export sensitive U.S. defense data to China while unlawfully selling Chinese-made rare earth magnets to U.S. defense contractors. The indictment outlines multiple criminal charges, including conspiracy, wire fraud, smuggling, and violations of the Arms Export Control Act.
Allegations Against Hang Sun
Sun, a Chinese national who became a permanent U.S. resident in 2015, purchased Quadrant in 2014. He is accused of using the company to export technical defense data from the U.S. to China between January 2012 and December 2018. Specifically, prosecutors claim that Sun sent around 70 technical drawings of sensitive military systems to a Chinese company without the required government license. These drawings detailed U.S. defense systems used in aviation, submarines, radar, tanks, missiles, infrared systems, and more.
In addition to the data exports, the indictment alleges that Sun illegally repackaged Chinese-manufactured rare earth magnets and sold them through Quadrant to U.S. defense contractors. These magnets were allegedly incorporated into systems used by the U.S. Department of Defense, including components for F-16 and F-18 fighter jets. Under U.S. Defense Acquisition Regulations, rare earth magnets used in DOD systems must be sourced from domestic or authorized countries, with China explicitly excluded from this list.
