Last Call For Feeding The Dragon

Here in NKY the talk is about the case of Louis and Rosemary Brothers, who are both facing ugly federal charges of selling high-tech military grade microchips to the Chinese.

A Union, Kentucky, couple are accused of potentially jeopardizing the future safety and security of the United States by illegally selling satellite and missile circuitry to China, and laundering those proceeds through Russian banks. 

Louis and Rosemary Brothers, both 62, are accused in federal court of selling $37 million of sophisticated technology to China –technology that could help that nation weaponize space. 

Selling any defense technology to the People's Republic of China is strictly prohibited under U.S. law. 

Radiation-hardened microcircuits, like those manufactured and sold to China by Louis Brothers' company, Valley Forge Composite Technologies, are essential to recent Chinese attempts to arm themselves in space, according to Rick Fisher, a senior fellow at the International Assessment and Strategy Center, a Virginia think tank.

Selling military tech to the Chinese is bad enough, but using Russian banks to launder the transactions?  The Brothers are going to end up in very substandard federal housing for the rest of their lives, I would think.

"Starting in 2009 ... the company, at the direction of Brothers, began the illegal exportation of millions of dollars worth of military semiconductors to" China, the suit alleges. It also alleges Brothers lied by saying all of the company's revenues were from momentum wheels, when they actually came from illegal microcircuit sales to China. 

The law requires such sales – before they are made – to be submitted to the U.S. government for approval under the International Traffic in Arms Regulation, or ITAR. 

That is done to try to prevent sales to foreign governments of items that could imperil American safety. Brothers is accused of making the sales without government approval. 

The result was lucrative for Valley Forge – ironically named after a seminal place in Revolutionary War history – and Brothers. 

The company had zero annual revenues in 2007 and $132,000 in 2008. After it started selling radiation-hardened microcircuits to China, its annual revenues rose to $3.2. million in 2009, $18.7 million in 2010 and $15 million in 2011.

That's usually the kind of thing that gets the attention of the Feds when looking at a defense contractor that went from zero revenues to tens of millions.  Pretty sure this case is going to be brutal and short.