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.

Charges and Legal Consequences
The charges carry severe penalties, including up to 20 years in prison upon conviction. This indictment follows a previous round of similar charges against Quadrant and three of its employees: Phil Pascoe, Monica Pascoe, and Scott Tubbs. The employees are accused of being involved in the same conspiracy, facilitating the illegal transactions related to defense materials.

The government alleges that this operation undermined U.S. national security by providing China with access to critical defense data and technology, while violating U.S. laws meant to protect military technologies from foreign threats.

Defense and Next Steps
At this time, no representatives from Quadrant Magnetics or Sun’s legal team have responded to requests for comment. The U.S. government is being represented by Christopher C. Tieke and Joshua D. Judd from the U.S. Attorney's Office for the Western District of Kentucky. As this case unfolds, the legal teams will continue to argue the extent of Sun’s involvement in the conspiracy.

This case, U.S. v. Hang Sun (Case No. 3:23-cr-00120), is being heard in the U.S. District Court for the Western District of Kentucky.