A West German businessman described as one of the world's top "techno bandits" who exported millions of dollars in state-of-the-art U.S. technology to the Soviet Union was convicted of 15 counts of wire fraud in Los Angeles federal court Friday.
U.S. District Judge Alicemarie H. Stotler, hearing the four-week trial without a jury, found "overwhelming" evidence that Werner Bruchhausen, 47, is guilty of defrauding U.S. manufacturers and lying to the government about equipment he bought and sold for huge profits.
Assistant U.S. Atty. William Fahey told reporters at a post-verdict press conference that the breaking up of Bruchhausen's sophisticated, international network to divert U.S. technology to the Soviet Bloc is the federal government's "most successful conviction of a high-tech violator."
Fahey said that for more than a decade Bruchhausen, an electronics engineer operating numerous companies in Southern California and elsewhere in the world from a mansion outside Munich, did "tremendous harm" to U.S. security by selling equipment to the Soviet Union.
The prosecutor estimated that Bruchhausen's operation allowed the Soviets to close a 10- to 12-year gap between the United States and the Soviet Union in the manufacture of computer chips for integrated circuits and military communications.
For example, Fahey said, Bruchhausen and his accomplices supplied American-made Watkins-Johnson military communications equipment that permitted the Soviet Union to monitor radio frequencies of North American Treaty Organization forces.
And, he said, that working through Bruchhausen, whom they recruited in the 1970s as a mercenary businessman, the Soviets acquired an entire plant that enabled them to greatly improve their quality control in computer microchip production, increasing the number of good chips from 10% to as much as 70% or 80%.
The government estimates that between 1977 and 1980 Bruchhausen sold more than $6 million worth of electronic systems and components, as well as military surveillance and communication systems, to the Soviet Bloc.
Bruchhausen's lawyer, Alan M. May, portrayed his client as an ambitious businessman who set out to make his fortune during a period of detente between the United States and Soviet Union and ended up being a victim of lying associates and conniving government officials who set him up.
"He was convicted because he's considered a political enemy of our state for the illegal export of technology to the Soviet Bloc," May said after Friday's verdicts.
When federal authorities found they could not extradite Bruchhausen because charges of illegally exporting American technology is a "political crime," May said they accused his client of defrauding manufacturers in a second indictment.
"I think the tragedy of this case in our fight against Communism is that our system of justice has become more Soviet in action," May said.
Bruchhausen and two Southern California residents who ran his firms here were indicted in 1981 on 60 counts of illegally exporting technology in violation of U.S. restrictions. His two accomplices, Russian-born Antoli (Tony) Maluta and Sabina Dorn Tittel, were convicted and sentenced to prison. Maluta, who served five years, testified for the government.
After Bruchhausen's arrest in Britain in May, 1985, authorities in Los Angeles again took the case to a federal grand jury. Bruchhausen was once again indicted, this time on charges of wire fraud. He was extradited last June. Evidence at Bruchhausen's trial revealed that he formed companies with different names, operating out of the same office. One entity would buy the equipment, and the other would ship it, listing only a fraction of its price and disguising the contents.
Maluta testified that acting on Bruchhausen's behalf he would order high-tech commodities and tell U.S. manufacturers that the equipment was to be used in Arizona or Alaska and would not be exported without licenses from the government.
Equipment was shipped to Switzerland or West Germany or Austria, but according to Fahey, it all eventually "ended up in the Soviet Union."
Bruchhausen faces a possible penalty of five years in prison on each of 15 counts for a total of 75 years and a $15,000 fine. Sentencing is scheduled for March 30.