Executive Summary / Key Takeaways

• A Chinese national, Shenghua Wen, pleaded guilty in 2024 to conspiring with North Korea to export restricted items without a license, violating the U.S. International Emergency Economic Powers Act (IEEPA), the North Korea Sanctions Regulations, and Executive Orders.
• At the direction of the North Korean government, Wen acted from his private residence in the United States, buying military goods domestically and providing false shipping information to send the items to Hong Kong, and then to North Korea.
• The case demonstrates that though North Korea can achieve limited success through such schemes, its agents face a high risk of exposure, detainment, and prosecution.
• Beyond firearms, ammunition, and other military equipment, North Korea sought civilian aircraft engine blueprints to manufacture engines for its drone program.
• At present, Wen’s scheme does not appear to indicate the presence of a more sophisticated smuggling network.
• Thus far, Wen’s partners/co-conspirators, the unnamed Hong Kong-based “broker,” and front company mentioned in the criminal complaint have not faced any punitive action from the U.S. government.

Overview

In November 2024, Shenghua Wen, a Chinese national residing in the United States, pleaded guilty to “conspir[ing] with others known and unknown to smuggle firearms, ammunition, and export-controlled technology” from the United States to the Democratic People’s Republic of Korea (North Korea).^[1]  Beginning in September 2024, Wen cooperated with U.S. authorities in a series of Miranda-compliant interviews and was subsequently arrested on December 4, 2024. Wen admitted to participating in the scheme despite knowing that the activities he was undertaking were illegal. 

An investigation conducted by the Federal Bureau of Investigation (FBI) revealed four areas in which Wen violated U.S. law.^[2]  First, Wen conspired to illegally export firearms, ammunition, and military dual-use goods to North Korea at the direction of the North Korean government. Second, Wen was illegally in possession of two electronic devices and 50,000 rounds of ammunition at his home in Ontario, California.  Third, Wen did not obtain the licenses required to export goods and services to North Korea.  Fourth, Wen was unlawfully residing in the United States after overstaying a 2012 student visa and was thus prohibited from possessing firearms or ammunition.

Legal Background of Charges 

Wen violated 50 U.S.C. § 1705(a) and (c) of the IEEPA, which prohibits willful violations of any license, order, regulation, or prohibition issued under the IEEPA.^[3]  Furthermore, Wen violated 31 C.F.R. § 510.206(a) and 510.212(b) of the North Korea Sanctions Regulations (NKSR).  The NKSR prohibits the exportation or re-exportation, directly or indirectly, of goods, services, or technology to North Korea without a license from the Office of Foreign Assets Control.^[4]  In addition, the NKSR prohibits conspiracy or attempts to evade or violate the sanctions.^[5]

Wen also violated two Executive Orders related to the export of goods, services, or technology to North Korea.  First, Wen violated Executive Order 13466, which declared a national emergency regarding the proliferation threat posed by North Korea and imposed sanctions (promulgated in June 2008).^[6]  Second, Wen violated Executive Order 13722, which expanded sanctions against North Korea, including “prohibitions on new investment, exports, and services” (promulgated in March 2016).^[7] 

The Scheme

Before entering the United States on a student visa in 2012, Wen met with two North Korean officials on two occasions at separate North Korean consulates located in China.  Once in the United States, Wen overstayed his student visa, and in 2022, two North Korean officials identified as “Jin Yong Nan” and “Cui,” established contact with Wen via Wickr, an encrypted messaging platform.^[8]  Wen knew that both individuals were operating on behalf of the North Korean government, and he stated that he was likely selected to procure goods on behalf of the North Korean government because he was “good at smuggling.”^[9]

At the behest of his North Korean contacts, Wen began to procure weapons and other military-related items in 2023.  At the time, Wen resided in Houston, Texas, where he used his partner’s identity to purchase an AK5000 INC (a super armory) and a federal firearms license.  Wen claimed that his partner, identified in court documents as Individual 1, was unaware that his or her identity was used to obtain such licenses.  These initial purchases cost Wen approximately USD 150,000. 

Following his purchase of the AK5000 and federal firearms license, Wen used several “straw buyers” to purchase additional firearms and ammunition for illegal export.  Wen used straw buyers, knowing that, given his immigration status, stores would contact the Bureau of Alcohol, Tobacco, Firearms, and Explosives if he attempted to purchase the firearms himself.  The total number of firearms and ammunition Wen purchased remains undisclosed, but Wen’s North Korean contacts reimbursed him for these efforts by wiring approximately USD 2,000,000 to Wen’s partner’s Hong Kong-based personal and business bank accounts.

On three separate occasions, Wen drove the goods from Texas to his homes in Brawley and Ontario, California.  In California, he packed the items into shipping containers, deceptively labeled to contain refrigerators.  Wen then shipped these containers from a port in Long Beach, California, to Hong Kong, China. In Hong Kong, another agent working on behalf of the North Korean government (with whom Wen coordinated and communicated) verified the contents of the shipment and redirected the containers to Nampo, North Korea.  A bill of lading provided in the complaint identified the entity redirecting the firearms from Hong Kong to Nampo, North Korea, as Able Leader Trading Limited, which is, based on the company’s online profile, likely a front company.^[10]  Ultimately, Wen successfully shipped two containers of firearms from Long Beach to Nampo via Hong Kong: once in October 2023 and once in December 2023.  Figure 1 illustrates the route of Wen’s procurement network.

 

Figure 1.  Visualization of Wen’s illicit procurement network; top, dark blue boxes represent the pathway of the shipped goods, while the bottom, light blue boxes represent Wen’s trade methodology.

During the FBI’s 2024 investigation of Wen, analysis of Wen’s mobile phone revealed his research on other technologies to send to North Korea. Wen’s North Korean handlers requested that Wen obtain civilian plane engines, which Wen specified “would be used to help develop the North Korean military drone program.”  Wen had taken steps to obtain these items, having gone so far as to conduct an in-person inspection of a plane engine for purchase and negotiate a price with the broker.  Furthermore, the North Korean handlers tasked Wen with obtaining U.S. military uniforms, which Wen believed North Korean soldiers would use as disguises during an eventual surprise attack on South Korea.  Photos found on Wen’s phone further indicated that he intended to ship additional electronic devices, including the Gimbal, Central Electronic unit, and hand controller of the STAR SAFIRE (a product of FLIR Systems Incorporated).  The STAR SAFIRE, in particular, is a defense article on the U.S. Munitions List, Category XII (c) (3), controlled for export under the International Traffic in Arms Regulations. However, these activities were discovered by the FBI, so Wen did not have the opportunity to purchase them successfully. 

Moreover, a 2024 search of Wen’s home and van in Ontario, California, revealed that Wen possessed two electronic devices he admitted to have procured to send to the North Korean government––a Serstech Arx mkII Pharma (chemical threat detector)^[11] and an ANDRE Deluxe Near-Field Detection Receiver (used to find hidden eavesdropping devices)^[12]––and 50,000 rounds of ammunition.  Further investigation revealed that Wen had never applied for the required export license  However, he was taking steps to provide a required end-user statement to the unnamed supplier.  Wen created a front company named JS Trading to list as an end-user, falsifying purchase order documents to obtain the Arx mkII Pharma and ANDRE Receiver.

“Red Flags” and Warning Signs Exhibited in the Case Study

Wen’s illicit procurement pathway exemplifies several illicit ordering, purchasing, and financing tactics identified in Illicit Trade Networks: Connecting the Dots, Vol. 1: 

Applied Tactics and Warning Signs of Illicit Trade	Wen’s Procurement Network
States may order items in small quantities, so as not to attract attention, even if there are economic incentives to order larger quantities.[13]	Wen purchased firearms in multiple orders using several “straw buyers.”
Goods are obtained within the supplier state through what appears to be a domestic sale, but goods are then illegally shipped abroad with false documentation.[14]  Though such methodology “bears the risk of arrest for the local intermediary,” it also “avoids the need to supply a false end-user declaration for export licensing purposes.”[15]	Wen purchased the goods domestically in the United States before shipping them abroad, labeled as refrigerators.  The FBI arrested Wen at his California residence in the United States.  Wen also successfully purchased other export-controlled items by listing a false U.S. end-user.
Intermediaries in third-party countries will often route proliferant state payments to supplier country banks using personal accounts.[16]	The North Korean government compensated Wen for his efforts through a personal bank account in Hong Kong.
Customs, shipping, and product labels or documents are altered to have phony product descriptions, undervalued contents, or to hide the goods’ nature.[17]	Wen falsely labeled his shipping containers to contain refrigerators and labeled the containers as destined for Hong Kong, where a co-conspirator re-routed them to North Korea.
The listed end-user is inconsistent with the end-use, such as a trading company or a company with a low online profile.	Wen created a front company, JS Trading, to list as an end-user in a purchase order of export-controlled items.

Table 1.  Aspects of Wen’s scheme that reflect red flags identified in Illicit Trade Networks

Lessons and Recommendations

Wen’s two successful shipments of firearms to North Korea illustrate that despite concerted governmental and private sector efforts to adopt “risk-based approaches for inspecting parcels or cargos going to certain countries or common transshipment points,” illicit networks continue to proliferate.^[18]  As such, both private and public entities must increase vigilance to prevent illicit arms shipments. 

Both the government and the private sector must stay informed about the most common tactics and associated red flags to coordinate a response to such illicit activities.  Private sector companies must conduct thorough due diligence to identify instances of illegal activities and then notify the relevant law enforcement agencies. Even though an export license is not required for a domestic sale, suppliers of export-controlled technologies should thoroughly collect and assess end-user information to prevent similar schemes from succeeding.  In the case of Wen, it should have been a clear red flag that an entity with the word “Trading” was listed as the end-user of the sensitive technologies being purchased.

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