BROOKS OHLSON : High-Tech Cops and Robbers : Enforcement Officer Tries to Keep Exporters Honest

Times staff writer

Brooks Ohlson has helped bring down the long arm of the law on Hells Angels, dope dealers and organized crime figures.

His latest assignment: catching high-tech crooks.

Last month, Ohlson began his new job as the special agent in charge of the Office of Export Enforcement's office in Irvine, overseeing the region that consists of Southern California, Arizona, Colorado, Hawaii, New Mexico and Nevada. The agency, an arm of the Commerce Department, is responsible for enforcing U.S. export laws and preventing the illegal diversion of sensitive technologies and military secrets to the nation's adversaries.

The Commerce Department decided to move the office from Burbank to Irvine to be more centrally located near the high-tech and aerospace industries of Los Angeles, Orange and San Diego counties, and Orange County's growing computer industry in particular.

A native of the San Joaquin Valley, Ohlson has worked as an investigative agent with the Drug Enforcement Agency, the Bureau of Alcohol, Tobacco and Firearms and with the Justice Department's organized crime strike force. He was detailed to the Secret Service during former President Reagan's 1980 and 1984 campaigns, helping to keep tabs on security during Reagan's trip to his Pacific Palisades home.

Ohlson, 42, of Mission Viejo, joined the Commerce Department's export enforcement agency in 1983 and worked as an agent in the Silicon Valley. He was assigned to the U.S. Embassy in Stockholm in the mid-1980s, primarily to investigate a highly publicized case involving the illegal diversion of a Digital Equipment Corp. VAX computer to the Soviet Union.

He returned to Silicon Valley in 1987 as supervisor of the export enforcement office there, until his reassignment to Irvine earlier this year.

In a recent interview with Times staff writer David Olmos, Ohlson talked about high-tech crime in Southern California, the type of people who steal the nation's secrets and some of the more interesting cases he has worked on.

Q. Is high-tech smuggling on the rise?

A. There really has not been a perceptible increase or decrease in hightech smuggling crimes. If you look at the number of cases uncovered in recent years, it's pretty consistent, both internationally and domestically. I don't know that there is any underlying reason for that. There are probably cases out there that we haven't seen and some that we've uncovered that will come back in a new form. (Technology smuggling) is a very lucrative business for some people.

Q. How important is it for the United States to get the cooperation of its allies in fighting illegal technology transfers?

A. It's critical. In 1992, when the Western European economic community goes into effect, all of the customs barriers in those countries will go down at the borders. Commodities and technology will be freely flowing throughout Europe on highways and through airports with no kinds of customs checks. It will be very difficult to track militarily strategic technology exported into Europe, because the export trail will die once the goods enter a European nation. Those border checks have been important to sting operations. We've been able to use border checks to effectively stop diversions in Europe and in Asia.

Q. Are other countries as vigilant as the United States in ensuring their technology and military secrets don't fall into the wrong hands?

A. The United States is the most vigilant of countries in protecting its technology interests. That is the reason for CoCom (the Paris-based Coordinating Committee on Multilateral Exports, a 17-nation group of Western nations that monitors high-tech exports to communist countries). CoCom was formed specifically for the purpose of enhancing the control of illegal exportation of technology. The countries in CoCom determine what technologies are strategically important and which might have a dual (commercial and military) purpose.

Q. Are CoCom's regulations in restricting technology exports less strict than the United States?

A. The CoCom allies and partners have agreed to collectively control certain technologies. The CoCom list of strategically important technologies has about 700 types of technology. The United States controls about three times as many items as CoCom does. Within the last two years, the list of commodities that the U.S. unilaterally controls has dwindled and come more in line with what CoCom regulates. The United States is one of the most concerned countries in the world and is at the forefront of export controls. But the 2,000 items on the U.S. list is not practical anymore. As we see that the same kinds of computers and software (that are restricted by CoCom or the Commerce Department) are being made in Taiwan or Singapore or Japan, we are decontrolling more items.

Q. In line with decontrolling goods that are available from other countries, the Commerce Department loosened restrictions on exports of some personal computers earlier this year.

A. Yes, there has been a liberalization of exports of personal computers based on Intel's 80286 microprocessor chip. On the whole, most PCs now fall under the threshold of control. Above that threshold, you still must get an export license. As you reduce the number of items on the list, it becomes easier to identify, for enforcement purposes, the most strategic commodities we should be focusing on: encryption devices, mainframe computers, laser technology, sophisticated security systems, nuclear technology.

Q. What type of restricted technologies are our foreign adversaries most anxious to get ahold of?

A. Historically, it has been semiconductor manufacturing equipment. The East Bloc and the embargoed countries do not have the expertise to manufacture large quantities of microchips of sophisticated quality. They need basic semiconductor technology to do that, such as the know-how for making integrated circuits or silicon wafers. That technology is unknown to the East Bloc at the levels we have in the West today. For example, we now have the (Intel Corp.) i486 microprocessor, which has the power of a supercomputer on a chip. You can imagine that no matter how we may persevere at the borders, that anybody could walk across the U.S. border with a sandwich bag full of these chips and no one would ever stop them. We need the industry's cooperation to stop that from happening.

Q. How do you control an item that is so easily stolen as a fingernail-sized microchip? You mentioned you need the help of the companies themselves. Can you talk more about that?

A. If you saw the outflow of commodities from Los Angeles International Airport, it would be staggering. There is no way you could examine all that. We basically rely on the industry to monitor their customers and tip us off when they see something funny. There has never been an export diversion case made by any agency that hasn't been as a result of an industry tip. Border searches have never uncovered a major smuggling scheme. With a major diversion, everything looks good on the surface. The smugglers have their shipping documents, invoices and bills of lading. They even may go to the trouble of getting an export license--but to a free-world destination. The red flags we look for are shipments where they don't request warranties, servicing or installation, which are all part of a normal delivery. Those are the real keys.

Q. It sounds as if technology smugglers are quite sophisticated in their techniques. Is that so?

A. Very sophisticated. They are not your typical drug smugglers. They might be engineers or another type of highly technical person. I've seen people in the industry who have worked for major corporations then gone out on their own and opened their own small business. Then their business went bankrupt. They got hungry for money; they had bills; they were used to a fast lifestyle and were wooed by the lure of big cash--maybe two or three times the money they would receive for selling the same equipment legally.

Q. Can you describe the typical "front company" that a high-tech smuggler might set up in this country?

A. It's usually a one-, two- or maximum four-man company that has no credit history and opens up overnight. It has no history in the industry of ever using this technology before. They have no use for the technology and know very little about the equipment to begin with. They may have some engineering background or might have knowledge of what the equipment does, but not the intricacies of how it works.

Q. What effect, if any, will the easing of tensions between the United States and the Soviet Union and the political and economic reforms sweeping through Eastern Europe have on the issue of technology transfer?

A. I think it's too early to tell. I think it hasn't had any effect to date. The Commerce Department has said that if it gets to the point of easing export controls on certain East Bloc nations, we will ask for some type of assurance that the commodities that we export are (not diverted to other nations for use in military applications). It would be some kind of delivery verification program in which we would require that we be allowed to inspect the equipment to make sure it wasn't being sent other Communist nations for military use.

Q. How do you balance the interests of industry, which wants to export more, and the government, which doesn't want Western technology getting into the hands of the Soviets or other adversaries?

A. As a government agency you have to be sensitive to both the commercial and national security issues. Having an open-door policy with the industry at the Commerce Department level, where the export-control policies are made and carried out, is the only thing that will make the laws work. If it wasn't for the cooperation of industry, there would be no effective technology transfer controls.

Q. Do most of the smuggling cases you work on seem like a true-life spy novel? Or are most more mundane than that?

A. There are some schemes that have been uncovered that had that aura. Some of these well-known smugglers have spent years establishing a myriad of front companies throughout the world--South Africa, West Germany, Switzerland, Austria--and gone through the exercise of setting up credit reports and bank accounts in the country. We find a lot of East Europeans coming into Southern California and Silicon Valley. They're not coming in to look at the scenery. They're visiting high-technology firms. At least, that's one part of their visit. The question we have is: What are they doing during the rest of their stay and who else are they meeting with?

Q. When you expect someone might be up to no good, do you have them followed?

A. We have, sure. We've arrested people who have come into the country and have attempted to get technology.

Q. Do you pay particular attention to visitors from the East Bloc?

A. We know that a given number of the East European visitors that come into California and the rest of the United States are here solely for the purpose of trying to acquire whatever technology they can. They know exactly what they need. They know exactly what part numbers they have to have, and they are here for that purpose. In San Jose, we were contacted by a software company that had two East Germans approach them about buying out their company in a very quiet transaction. They knew that that San Jose company was undergoing an economic hardship and they offered to extricate that company from its hardship. They offered cash to buy them out and take a controlling interest. The principal reason was they wanted this CAD/CAM software. The man they went to was an ex-Marine colonel, and he called us very quickly and was very helpful. We checked the phone calls from the hotel rooms that they stayed in and were able to track down some of their other cohorts in the country.

Q. How does Southern California compare with Silicon Valley as a center of high-tech smuggling activity?

A. I worked in Silicon Valley as an export enforcement officer for two years before I came here. Although Southern California does not have a great deal of research and development activity in the semiconductor field, that is more than made up for by research activity in the aerospace industry. We've certainly had our share of investigations involving the attempted diversion and diversion of aerospace-related technology from Southern California. These involved diversions or the unlawful export of military and aerospace technology that goes to enhance the aerospace industry in the East Bloc or Mediterranean countries that are under embargo.

Q. Why the move to Orange County?

A. This office at the beginning was located at the Los Angeles airport. There was a move made in the mid-1980s to the Burbank airport. When I came into this office I found that we were driving principally to the San Diego and Orange County areas most frequently. The majority of our preventive enforcement efforts are down in Orange County because the high-tech industry is here. And it is an emerging industry that is growing by leaps and bounds. Also, our Western regional export licensing office is here. The licensing office was located here after a major study showed that the center of all export licensing activity on the West Coast was here in the Newport Beach-Irvine area.

Q. What is the most interesting case you've worked on?

A. couple years ago, myself and another agent posed undercover as packers at a hard-disk manufacturing test equipment company in the San Jose area. The company had allowed us into their plant. These two Taiwanese men came in and several questions came up as to how they wanted the equipment packed. We wanted to get some information from these two Taiwanese men on where this equipment was going, although we already knew it was going to Bulgaria. We had this conversation about how they wanted the equipment packed--for warm weather in your own country, which is where they said it was going to be used. After awhile they said it was going to a snowbound area, very cold and it might be sitting for a long time. This was completely contrary to what they had told the businessmen.

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