Authorities Say 2 in N. Korea Deal Stood to Gain Millions

Times Staff Writer

Ronald Howard Semler has a great deal going for him. At 43, he owns a vast estate in Malibu, a Rolls-Royce and 40% of his family’s North Hollywood export business, Associated Industries.

But, according to federal law-enforcement authorities, Semler wanted more--$5 million to $9 million more. That’s the profit authorities say Associated stood to gain by exporting more than 100 helicopters to North Korea.

Semler and his brother, 37-year-old M. Barry Semler, were indicted by a federal grand jury Jan. 21 on 27 counts including conspiracy, illegal exportation and filing false income-tax returns. The Semlers’ riches came in handy when bail was set at $1 million each, a sum they met.

U. S. Atty Robert C. Bonner said the helicopter deal was worth more than $40 million to Associated, which allegedly exported 87 helicopters to North Korea between the spring of 1983 and January, 1985. Fifteen more were prevented from leaving Los Angeles, authorities say.


The Semlers’ export concern is a relative newcomer to the aircraft business. For most of its 40 years in operation, the company has acted as an electronics middleman.

“The vast majority of their business is electronics,” said the Semlers’ lawyer, Vincent J. Marella.

Clients Included Government

Associated has mainly bought and sold radar, communications and other electronic equipment for foreign and dom e stic buyers, including the U. S. government. Federal authorities say that U. S. government business could be cut off in the event of a conviction.

Marella said that Associated has about 80 employees but that sales figures were unavailable. The firm does very little manufacturing, and most of its sales are derived from exporting, he said.

The Semlers are not well known in the large San Fernando Valley aviation community. Several well-placed executives in the business said last week that they never heard of the brothers or Associated.

Authorities said that Barry Semler was responsible for the firm’s branching out into aircraft but that brother Ronald actually runs the business, which was founded by 73-year-old Arnold A. Semler, their father, of Studio City.

Marella said Arnold remains chief executive, but authorities say he transferred a 40% share of Associated to Ronald in January, 1984. Ronald also owns the 360-acre Saddlerock Ranch in the Santa Monica Mountains above Malibu, the site of a cave decorated with genuine 18th-Century Chumash Indian art.


Exotic Car Collection

Besides the Malibu estate, the Semlers own industrial and residential property in the Valley. Ronald Semler also has a car collection that includes at least one Rolls-Royce and a number of other exotic vehicles, some of them antiques, according to motor vehicle records. Both he and his brother own boats, the records indicate.

The Semler brothers, trim, brown-haired men of moderate height, declined to be interviewed. But Marella said, “They feel very strongly that they are absolutely not guilty of these charges.”

The indictments came after a two-year investigation that Assistant U. S. Atty. Jeffrey Modisett said is continuing. During the investigation, according to an affidavit filed in Municipal Court by an investigator for the Los Angeles County district attorney’s office, Ronald Semler, through an employee, threatened to kill former Associated controller Martin L. Schneider, who allegedly knew that company officials had falsified business records relating to corporate taxes and helicopter sales.


Trading with North Korea has been severely restricted since 1950, when the Korean conflict prompted President Harry S. Truman to add that nation to the U. S. Trading with the Enemy Act. Modisett said there is no evidence the Semlers or their firm have broken federal trade laws in the past.

The helicopters the Semlers allegedly sold to North Korea were small, civilian aircraft that their manufacturer, the former Hughes Helicopter business now owned by McDonnell Douglas, says would be hard to turn to military use.

Federal authorities say the North Korean deal was conducted through a West German company called Delta Avia Fluggerate GmbH Sales & Services, which secretly was two-thirds owned by the Semler brothers and their father.

The indictment says the Semlers provided all the capital to establish the business. A Dane living in West Germany, Kurt E. Behrens, allegedly had a one-third interest in Delta Avia and served as managing director.


Formed in August, 1981, Delta Avia was the Western European distributor for Hughes Helicopters Inc., which was sold in January of 1984 to McDonnell Douglas. Associated itself was the Nigerian distributor for Hughes Helicopter at the time, the indictment says.

Modisett said Hughes never knew about the Semlers’ control of Delta Avia, or that Hughes helicopters might be bound for an illegal trading partner. According to the indictment, Hughes was told the helicopters were bound for Nigeria but were being sent to Europe first for some special fitting.

Robert Mack, a spokesman for McDonnell Douglas Helicopters in Mesa, Ariz., also said the company did not know the destination of the helicopters.

Authorities say the Semlers masked their ownership of Delta Avia through a holding company called World Aviation Industries, and that Tony Lok, a stockroom worker at Associated, was listed as World’s president.


Authorities say the exports began with two helicopters, a Hughes model 300C and a model 500D, shipped as “demonstrators” by Delta Avia through Yokohama, Japan, in early 1983 for $490,000. Two Delta Avia workers even went to North Korea to assemble the craft, according to the indictment.

Apparently satisfied, the North Koreans agreed to buy 100 of the model 500 series helicopters that same year, the indictment says. Associated allegedly took delivery of the helicopters from Hughes, installed radios and other components and shipped the helicopters and spare parts from Los Angeles-Long Beach Harbor to Rotterdam, the Netherlands.

From there, the indictment says, they went aboard Soviet vessels to Hong Kong, where the helicopters and parts were shipped to North Korea.

Swiss Bank Accounts


The indictment says that the finances for the transactions were handled through Swiss bank accounts and that Ronald Semler wrote Behrens urging that he respond in “an unsigned letter on plain paper. We shouldn’t discuss these types of matters by phone and also I cannot over emphasize that I think we really have to watch this. . . .”

Modisett said Associated, which occupies a small, nondescript building at the corner of Tujunga Avenue and Vanowen Street, was not indicted because the goal of preventing future illegal exports by the company could be accomplished by convicting the two Semlers. Modisett said this would likely prompt the Department of Commerce to revoke the firm’s export license.

Although Arnold Semler is mentioned in the indictment and was a “knowing owner” of Delta Avia, the prosecutor said, he was not charged because “the evidence at this stage was not sufficient to prove beyond a reasonable doubt that Arnold knew the destination was North Korea.”

Modisett said the Semlers’ trial probably will not begin before late April. If convicted, they would face up to 10 years imprisonment and fines of up to $100,000 for each violation.