Vietnamese Gangs Tied to Thefts of Computer Chips

Several Vietnamese crime rings based in Southern California are under investigation by federal and local authorities for stealing millions of dollars worth of computer chips from high-tech companies and selling them on the international black market.

The groups operate mostly out of Orange County in the Vietnamese communities of Westminster, Garden Grove and Santa Ana, investigators said. But robberies as far east as Phoenix and as far north as Silicon Valley in the San Francisco Bay Area are being linked to the gangs.

The bandits have typically struck late at night and carried out highly organized, paramilitary-type missions at some of California’s best known computer concerns--binding and gagging workers and routinely issuing death threats against them, authorities said.

“Vietnamese subjects come in--usually four to five at a time--and completely take over a company,” said Santa Clara Police Sgt. Pete Pearson. “It’s totally out of control.”

Federal agencies including the FBI and U.S. Customs Service acknowledged that they are looking into the Vietnamese gangs as part of broad investigations of microchip thefts and a black market that reaches into Pacific Rim countries including Taiwan, Japan and Vietnam.

“We are trying to get a handle on it,” said Chuck Latting, an FBI spokesman in San Francisco.

Because chip theft has only begun to emerge as a significant problem in the last year, there are no reliable national statistics on the amount or value of chips stolen annually. But several major companies have reported large losses from the thefts in recent months.

For instance, Irvine-based computer giant Western Digital Corp. said that microchip thefts have cost it $7 million so far this year.

“There is not a company that hasn’t had some form of theft,” said Robert Erickson, a Western Digital vice president.

Microchips--which are used in everything from toasters to missiles--make attractive booty because they are small but valuable. Just a handful can bring several thousand dollars. Furthermore, very few chips have serial numbers, so they are difficult to trace.

For those reasons, microchip theft is quickly becoming a crime-of-choice for an increasing number of people.

“It’s like a disease right now that we are seeing grow in the electronics industry and I don’t think by any means we’ve seen the peak,” said Lee Roberts, a private detective for several corporate victims. “There’s going to be more.”

Purchasers range from unwitting computer hackers picking up supplies at local swap meets to the small electronics shops in the Little Saigon area of Orange County that police say fence hot chips and are a key cog in the black market.

Ordinarily, the types of chips being stolen--mostly DRAMs or dynamic random-access memory chips--retail for either $5 or $15 depending on capacity, although in a few instances bandits have made off with chips worth $400 each. Thieves then sell them at a reduced price.

“Prices are usually much lower and that’s what induces that businessman to want to buy that product,” said Irvine Police Sgt. Dick Bowman.

The chips are being stolen in three ways--armed robbery by organized gangs, random burglaries and small-time thefts by employees, authorities said.

Those officials confirmed that there have been at least 12 armed robberies in which microchips were stolen in the last year in the Orange County and San Jose area, two regions of California with high concentrations of computer companies. At least eight of them were carried about by Vietnamese groups.

Police say the heavy Vietnamese involvement in microchip theft is because such a high number of them are employed in the electronics industry.

Express Manufacturing Inc., an electronics company in Santa Ana, was a recent victim of an armed robbery pulled off by Vietnamese bandits.

On Aug. 16, shortly after midnight, owner Chauk Chin was leaving the company when two young Vietnamese men approached him, police said. The men pulled out handguns and ordered the owner to return to his office. Once inside, they let in three accomplices through the back door.

The group’s leader was barefoot and dressed in black pajamas. He referred to his compatriots not by name but by number. He shouted out instructions with military precision. One suspect was ordered to search the premises for more employees and found three.

“The employees were bound with their arms behind their backs using duct tape,” said Santa Ana Police Detective Bill Chaney. “Legs were taped together and eyes and mouths were taped. They were told to lie on the floor face down with one of the suspects standing guard over them with a gun.”

Chin--with a pistol pointed to the back of his head--led the suspects to the company’s inventory. No one was injured, but $500,000 worth of microchips were taken, police said.

Nearly all of the chips were subsequently recovered by police inside a Santa Ana residence. Police arrested three men--An Dinh Le, 26, and Vu Van Pham, 24, both of Santa Ana, and Benedi Pabillore, 23, of Downey--on suspicion of possessing stolen property. They were released pending further investigation, and police have not charged the men with any crime including gang-related theft.

Besides Express Management, police said at least eight other companies in California were robbed by Vietnamese gangs in the last year, including the following:

* ISIS Surface Mounting Inc. in San Jose, Aug. 31. Two Vietnamese suspects with semiautomatic pistols tied up two employees and escaped with $400,000 worth of microchips.

* Vantronic Corp. in San Jose, April 28. Three Vietnamese suspects told late-shift employees to lie face down on the ground or be shot. They made off with $100,000 worth of microchips.

* Telecomputer Inc. in Westminster, March 31. A Vietnamese suspect and a Cambodian suspect tied up an employee and stole $100,000 in microchips.

* Data Technology Corp. in Santa Clara, Dec. 30. Four Vietnamese suspects commandeered an employee’s vehicle and forced him back into the company, where they stole about $126,000 worth of computer equipment, mostly microchips.

* W. G. Holt Inc. in Irvine, Nov. 24--Thanksgiving Day. Two Vietnamese suspects tied up a security guard and took $150,000 worth of microchips.

Police detectives in Southern California and the Silicon Valley recently found evidence that the Vietnamese crime rings sometimes work together, trafficking stolen chips--sometimes known as semiconductors or integrated circuits--from Northern California through Orange County.

The first link between the gangs was established after an investigation into a murder at a San Jose restaurant Feb. 25.

One suspect--later charged with murder--was one of several San Jose residents who ate dinner at the Tu Do restaurant the same night with a group of men from Orange County.

Police were certain the reason for the murder was simply the result of a fight with a diner at a nearby table. But they continued to interview witnesses anyway as bits and pieces of that night’s table talk leaked out. Before long, investigators had pieced together a connection between the two groups.

“The purpose of their meeting at that restaurant was to discuss the sale of stolen integrated circuits,” said San Jose Police Detective Walt Robinson. “Stolen integrated circuits from San Jose are being negotiated and sold off to a group in Orange County.”

The man charged with murder even had a stash of chips in his car, police said.

Two months later on April 25, a similar murder occurred at the Phu Khanh restaurant in Garden Grove around 10:30 p.m. Garden Grove Police Detective Ron Shave is trying to find Hung Tien Tran, a Vietnamese man charged with murder who has disappeared.

Shave said police have evidence to indicate that Tran is dealing in stolen microchips. “And we know that one of Hung’s (Tran’s) acquaintances was also at the San Jose murder,” Shave said.

Despite the links, police admit they are still a long way from cracking any of the robbery rings largely because members can hide in the closed-mouthed Vietnamese community.

“We haven’t been able to infiltrate it,” said Lt. Mike White of Irvine.

Privately, many law enforcement officials concede that gangs are probably responsible for at least a part of the burglaries, some of which are just as well thought out as armed robberies but occur at times when companies are completely empty of employees.

Burglars stole $176,000 worth of computer equipment--mostly microchips--from Unitex Inc. in Tustin over the July 4 weekend, police and company officials said. The company’s alarm system never rang through to the local police station because the phone lines it needs to work were severed.

“They cut the phone lines into our complex, pried our door open and came in and just cleaned us out,” said Don Smith Jr., the company’s manager.

Tustin Police Lt. H.D. Williams says his investigation of the incident is “dead in the water.”

Nevertheless, the modus operandi in the Unitex burglary is rather common.

“These guys are so sophisticated that in many of the instances they are actually defeating the alarm system,” said Roberts. “On one occasion they came prepared enough to where they brought a saw to actually cut through a metal door.”

But some chip burglaries are committed by small-time operators rather than Vietnamese gangs.

For instance, on Aug. 3, 27-year-old Johnny Charles Gallo showed up in a United Parcel Service uniform at Toshiba America Electronic Components Inc. in Irvine.

“He came up to the loading dock, identifies himself as a UPS driver and attempts to take possession of electronic components,” said White.

The employees called police.

“They got a little suspicious when they didn’t see the (UPS) truck,” explained White.

Police arrested Gallo after they found microchips inside a Ryder rental truck he was driving. Schweber Electronics in Irvine claimed the chips inside Gallo’s truck were stolen from them a day earlier.

Gallo pleaded guilty to burglary and was sentenced to 240 days in jail.

Besides battling armed robberies and burglaries, computer firms are desperately trying to put down a series of microchip thefts by their own employees.

Western Digital has caught workers trying to take home 100 to 200 chips.

“That’s a lot of money for some guy making $4, $5, $6 an hour,” said Bowman of the Irvine police department.

AST Research Inc. in Irvine discovered late last year that some workers in its order department were creating phony invoices and then sending chips to addresses where they could later pick them up, according to police reports.

The company estimated it lost $184,000 as a result of the scheme. No arrests have been made, but the case is still under investigation, Irvine police said.

Some police are convinced that some electronics shops in the Little Saigon area of Orange County are the primary buyers and sellers of hot chips.

“You can pick any shop in the area which sells loose chips and chances are they are selling stolen chips. It’s that prevalent,” said Westminster Police Detective Marcus Frank. “We know a lot of the chips stolen in Orange County and California are being brought into this area to be resold.’

Garden Grove police recovered $5,000 worth of stolen chips in April from an electronics company called AQA Inc., which recently moved to Cypress. The chips were taken from a Houston firm, which recognized them in an advertisement.

AQA manager Conn Wong refused to comment on the advice of his attorney but one of his employees said the company did not know the chips were stolen.

Convicting a store owner selling stolen chips is nearly impossible because state law requires he must have knowingly purchased hot property.

“The people are smart and they know that if somebody comes in and says ‘I just stole this’ then they probably won’t buy it,” said White. “And that’s what we need to do to make arrests.”

Foreign traffic in stolen chips is believed to be considerable because of the number of computer manufacturers in the Pacific Rim clamoring for chips.

Western Digital discovered that 500,000 defective chips had been stolen from its inventory and that some of them were on their way to Taiwan. Fearing that if the bad chips were sold it would damage the firm’s reputation, Western Digital tried to buy them back for $11 a chip. Somebody else got them for $12.

The international black market for stolen chips is perhaps the most troubling aspect for many companies. The U.S. government strictly forbids sales of microchips to certain countries and any violations are dealt with severely.

Private consultants and local police stress that computer companies need to improve security in order to prevent further thefts.

“The electronics industry is such an easy target,” said Roberts. “It’s easier than a bank, it’s easier than an armored car, it’s easier than a jewelry store.”

Some companies have heeded the warnings. ICL North America in Irvine recently installed security cameras and started an anonymous hot line for employees to report internal thefts.

But few companies are eager to go much further, refusing to consider such things as searching employees when they leave work.

Police and industry leaders meet regularly in the San Jose area to discuss strategies to reduce microchip thefts under the auspices of the District Attorneys Technology Theft Assn. Southern California does not have anything similar.

“There needs to be a concentrated effort by the electronics industry and law enforcement,” said Roberts. “Until that’s done, I don’t see any resolution of the problem.”

Le Kim Dinh served as a translator in the reporting of this article.