U.S. Agents Say Chinese Tanks, Rockets Offered

A key middleman arrested in an alleged arms smuggling ring was negotiating with U.S. undercover agents--including one he believed represented the Mafia--to sell them Chinese-made munitions ranging from hand-held rocket launchers to tanks to surface-to-air missiles, according to court documents released Thursday.

Arms broker Hammond Ku also repeatedly told the federal undercover operatives that the Chinese government knew thousands of automatic assault rifles were being illegally shipped to America.

Ku boasted to the agents that the surface-to-air missiles, known as “Red Parakeets,” were so powerful that they could bring down a jumbo jet, according to a complaint filed by the U.S. Customs Service. “Ku said they could take out a 747, that they were hard to get and that they were very effective,” the complaint noted.

Ku was one of seven people arrested Wednesday in Northern California on charges of conspiring to smuggle 2,000 fully automatic AK-47s from China to the United States through the Port of Oakland.

The shipment, which arrived in March, was the largest seizure of fully operational automatic weapons ever in the United States, said U.S. Atty. Michael Yamaguchi.

Yamaguchi said the Chinese smugglers apparently were motivated solely by money and were unconcerned that the weapons could end up in the hands of gang members in the United States.

Investigators are attempting to determine the full extent of participation by Chinese government officials, Yamaguchi said, but noted that the arms shipment was a direct challenge to “the sovereignty of the United States.”

“The shipment of the weapons from the Dalian [China] plant of Norinco involved the active participation of that firm’s [China-] based vice president, export manager and other officials,” according to a statement released by Yamaguchi’s office.

The arrests climaxed an 18-month sting investigation in which a U.S. Customs agent posed as a smuggler who could get shipments past customs in Oakland, and a Bureau of Alcohol, Tobacco and Firearms agent posed as a member of the Mafia from Miami. Neither of the agents spoke Chinese.

The agents were negotiating as recently as last week to buy more sophisticated munitions. But federal officials, concerned that word of the investigation was beginning to leak out, began making arrests in the case Wednesday.

Seven other people--including high-ranking officials of the Chinese munitions manufacturing firm Norinco--are wanted by federal agents but are not believed to be in the United States, officials said.

Under investigation by the United States are two companies at the center of China’s military-industrial complex: Norinco and Poly Technologies. Poly Technologies operates directly under the People’s Liberation Army and has been run by children of several of China’s top leaders, including the son-in-law of China’s ailing leader, Deng Xiaoping.

One of the suspects being sought by federal agents is Baoping Ma, also known as Robert Ma, who is the head of Poly Technologies for the United States, according to an American weapons industry source. Also active in real estate investments in Thailand, Ma recently moved from Atlanta to Los Altos, Calif.

The U.S. government, which had spent $700,000 to buy the automatic weapons, recovered $80,000 in cash and seized more than 800 weapons in a series of searches of the suspects’ homes, offices and a storage facility Wednesday.

In addition to Ku, 49, of San Jose, those arrested included restaurateur Richard Chen, 65, and his wife, Ching Hua Chen, 68, both of Aptos; travel agent Linda Wei Lin Huang, 55, of Atherton; Susan Hong Lin, 39, of San Jose; Kenneth Frank Taylor, 40, of Carmichael; and Kai Wan “Kevin” Wong, 36, of Hayward.

Charges against the suspects include conspiracy, smuggling, firearms importation without a license, importation and sale of firearms with obliterated serial numbers and transfer and possession of machine guns.

The 34-page complaint, filed by U.S. Customs Agent Matthew H. King, details the contacts between undercover agents and suspects dating back to Dec. 1, 1994.

During protracted negotiations, the agents and Ku discussed various sizes of shipments of the AK-47, an assault rifle used by armies around the world.

As early as March 1995, Ku told the undercover agents that the Chinese government was aware of the plan to smuggle the weapons to the United States.

Again in May 1995, the complaint says: “Ku stated that the Chinese government knew exactly what was going on.”

Arms brokers also told the undercover agents that they could have the markings removed or altered to hide their origin. In February 1996, the complaint noted: “Ku said he could get more guns stamped any way the [undercover agents] wanted. Ku said these could be sold to ‘gangbangers.’ ”

After the seemingly successful shipment of the 2,000 assault weapons, Ku said the deal had led to the promotion of a vice president at the Norinco plant, Guo Cheng Kun, a key participant in the transaction.

After the guns reached the United States, Ku offered the agents a variety of other items--including tanks, antitank rockets, 57-millimeter recoilless rifles, mini-machine guns, heavy machine guns and silenced machine guns, and Chinese-made copies of Uzis and M-16 assault rifles.

Dubbed Operation Dragon Fire, the Customs Service and ATF sting used a wide variety of high-tech methods, including intercepting faxes sent from China by alleged participants in the deal.

In Washington, Deputy Atty. Gen. Jamie S. Gorelick declined to say whether there is evidence that Chinese government officials knew about, participated in or sanctioned the smuggling.

Asked if China has been “a big source of smuggled arms into the United States,” Gorelick said: “All I’m going to say is that we consider this to be a very serious case. . . . The importation into this country of 2,000 AK-47s is a very serious matter.”

The State Department was consulted and briefed about the operation but did not discuss it with Chinese government officials before it was initiated “because of the need for secrecy,” spokesman Nicholas Burns said. “Now that arrests have been made, we have contacted the Chinese government . . . to inform them about the reasons for the operation,” he said at a State Department briefing Thursday.

“I don’t see why this needs to complicate U.S.-China relations at all,” Burns said.

Paddock reported from San Francisco and Ostrow from Washington. Times staff writer Jim Mann in Washington also contributed to this story.