United States v. Eugene You-Tsai Hsu, United States of America v. David Tzuwei Yang

364 F.3d 192, 2004 U.S. App. LEXIS 7215
CourtCourt of Appeals for the Fourth Circuit
DecidedApril 14, 2004
Docket02-4859, 02-4860
StatusPublished
Cited by47 cases

This text of 364 F.3d 192 (United States v. Eugene You-Tsai Hsu, United States of America v. David Tzuwei Yang) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Eugene You-Tsai Hsu, United States of America v. David Tzuwei Yang, 364 F.3d 192, 2004 U.S. App. LEXIS 7215 (4th Cir. 2004).

Opinion

Affirmed by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Judge WIDENER and Judge GREGORY joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

A jury convicted Eugene You-Tsai Hsu and David Tzuwei Yang of violations of the Arms Export Control Act and related offenses. On appeal, Hsu and Yang principally challenge their convictions on the ground that the Arms Export Control Act is unconstitutionally vague as applied to them and that the district court erred in refusing to instruct the jury on entrapment. Finding these and their other contentions to be without merit, we affirm.

I.

A.

The Arms Export Control Act (“AECA”), 22 U.S.C. § 2778 (2000), regulates the export of military products. The AECA authorizes the President to “designate those items which shall be considered as defense articles,” and “promulgate regulations for the import and export of such articles-” § 2778(a)(1).

The President has delegated his rule-making authority to the Secretary of State, see Exec. Order No. 11,958, 42 Fed. Reg. 4311 (Jan. 24, 1977), who has promulgated the International Traffic in Arms Regulations (“ITAR”), 22 C.F.R. §§ 120.1-130.17 (2003). These regulations contain the United States Munitions List (“Munitions List”), a categorical list of “defense articles” that cannot be exported without first obtaining a license from the Department of State. See § 2778(b)(2); 22 C.F.R. §§ 120.6,121.1,123.1(a).

*195 Of particular relevance here, the Munitions List includes military encryption devices, 22 C.F.R. § 121.1, Category XIII(b), such as the KIV-7HS (“KIV”) encryption unit manufactured by Mykotronx, Inc. Because of the United States’ arms embargo with the People’s Republic of China, the State Department will not approve a license to export any Munitions List items, including KIV units, to that country. 22 C.F.R. § 126.1(a) (2003).

The AECA imposes both civil and criminal penalties for its violation. § 2778(c), (e). A criminal sanction requires that a person “willfully” violate the statute or its regulations. § 2778(c).

B.

On May 1, 2001, at the request of a business associate in China, Eugene You-Tsai Hsu telephoned Mykotronx seeking information on the company’s KIV encryption device. A Mykotronx employee referred Hsu to “Daniel Stevenson,” who was described to Hsu as a sales representative working for “Stellar International,” a company purportedly selling Mykotronx products. Unbeknownst to Hsu, “Daniel Stevenson” was in fact Dan Supnick, an undercover agent with the United States Customs Office, and “Stellar International” was an undercover company. It is undisputed that at the time Hsu made this initial call to Mykotronx, he did not know that exporting the encryption device without a license was illegal.

The following day, Hsu spoke with Agent Supnick (hereinafter “Stevenson”) and requested information on the KIV unit; Hsu explained that he was planning on exporting it to a customer in China. (Stevenson recorded all of the conversations discussed herein, and the government played those tapes for the jury.) Stevenson immediately informed Hsu that the device was on the Munitions List; that it required a license for export; that no license would be approved if the end-user was in China; and that export of the device without the required license violated the law. After making these disclosures, Stevenson suggested “off the record,” that he would still be willing to “make the sale” and “work with” Hsu if Hsu had “a way to get [the equipment] out” of the country. When Hsu stated that he did not want to do anything illegal, Stevenson responded, then “I don’t think it’s worth ... sending] you any information,’cause it can’t go legally to China.” Nevertheless, Hsu insisted that Stevenson send him a brochure on the KIV unit, which Stevenson did.

More than two weeks passed without any interim contact between the parties. Hsu then telephoned Stevenson to discuss further the purchase and export of the encryption device. This phone call marked the beginning of a negotiation process spanning roughly the next three months. During this time, Stevenson repeatedly told Hsu that shipment of the KIV encryption device without a license violated the law and clarified that the shipment would still be illegal even if the devices were sent to Singapore or another country if the end-user remained in China. Hsu never stated that he did not want to go forward with the transaction.

At first these negotiations involved only three parties — Stevenson, Hsu, and Wing Chung Ho (an indicted co-conspirator residing in Singapore). But in June, Stevenson informed Hsu and Ho that although he would ship the units domestically, he would not personally export them, and so Hsu and Ho would have to find someone Stevenson could trust to actually export the units. Eventually, Ho informed Stevenson that David Tzuwei Yang, a freight forwarder residing in California, would serve as that person.

*196 Stevenson initially spoke with Yang on July 25, 2001, and continued to discuss the illegal exportation with him numerous times over the following month. During the course of these conversations, Stevenson repeatedly informed Yang that export of the KTV units required a license and that a license would not be approved if the end-user was in China, and even expressly stated that export of a unit without the required license violated the law. Yang displayed some initial reluctance but eventually agreed that Stevenson would ship Yang two encryption devices, Yang would export the devices to Ho in Singapore, and Ho would ultimately send them to the end-user in China. Stevenson shipped the devices to Yang on August 27, and the following day, after Yang received the equipment, authorities arrested Hsu and Yang.

A jury convicted Hsu and Yang (collectively “Defendants”) of two criminal offenses: (1) conspiracy to export Munitions List articles without a license in violation of the AECA or to make materially false statements to the United States Customs Service in violation of 18 U.S.C. § 371 (2000), and (2) attempt to export items covered by the Munitions List without a license, in violation of the AECA.

II.

Defendants first contend that the AECA and its implementing regulations are unconstitutionally vague as applied to them. In particular, they argue that the regulations fail to provide sufficient clarity as to what encryption devices qualify as “military,” and so are included on the Munitions List. Id. We review challenges to the constitutionality of a statute or regulation de novo. United States v. Sun, 278 F.3d 302, 308-09 (4th Cir.2002).

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Bluebook (online)
364 F.3d 192, 2004 U.S. App. LEXIS 7215, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-eugene-you-tsai-hsu-united-states-of-america-v-david-ca4-2004.