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EIP Microwave Is Indicted Over High-Tech Sales : Shipments Went to Third Country, Federal Grand Jury Alleges

December 29, 1987|DAVID OLMOS | Times Staff Writer

EIP Microwave, a Newport Beach high-technology company, has been indicted on federal charges that it illegally shipped electronics instruments to England and Thailand.

The indictment alleges that EIP falsely stated in July 1984 that it was shipping microwave measurement devices to England, when the company knew that the equipment was actually destined for an unidentified third country.

EIP makes microwave test and measurement equipment for the defense and telecommunications industries.

The equipment shipped to England contained 10 so-called mixer assemblies--key components of electronic equipment that count the frequency of high-energy radio waves known as microwaves. The equipment has potential military applications for radar detection, federal officials said.

The indictment further alleges that EIP, in a separate transaction, failed to file the required shipper's declaration when the company exported equipment to Thailand in September 1985. The U.S. Customs Service requires companies to file a shipper's declaration for shipments valued at more than $1,000.

Fines of $2 Million

A federal grand jury in San Jose issued the indictment Dec. 18. EIP could face fines of $2 million if it is found guilty on all counts.

A secretary at EIP's corporate offices in Newport Beach said company officials were unavailable for comment Monday. But an attorney representing EPI said the firm does not believe it broke the law.

"We're going to vigorously contest the charges," said Edward P. Davis Jr., a San Jose attorney. "I think this is an example of government overreacting in its most extreme form."

Davis said the company will answer the federal charges at a court hearing Jan. 28. He declined to detail the transactions in question.

The indictment states that EIP failed to obtain a license when it shipped the mixer assemblies to HDC Consultancy in England. EIP probably would have been issued a license for the HDC shipment if it had filed the required papers, said Robert Keck, the agent in charge of the Customs Service office in San Jose.

Customs Crackdown

During the past five years, Keck said, the Customs Service has intensified its efforts to crack down on illegal shipments of U.S. technology to the Soviet Union, Eastern-bloc nations and other countries where technology exports are controlled.

The indictment does not identify the third country to which the mixer assemblies ultimately were delivered.

Davis, the EIP attorney, also declined to identify the third country. But he said the "end-users who got possession (of the equipment) were not people we would have had any problems sending this equipment to."

"We did nothing illegal. We neither intended to mislead the government, nor did we in fact do so."

EIP has been aware of the federal investigation since July 1986, when federal authorities requested company documents pertaining to the sales, Davis said. The Newport Beach firm, he said, has "cooperated fully" with investigators.

EIP has its corporate offices in Newport Beach and manufacturing operations in San Jose.

Illegal Shipments

In the last several years, technology-rich Orange County has been the site of a number of cases involving illegal shipments of electronics equipment.

In August 1987, county businessman Charles J. McVey was fined $1.24 million and barred from any export activities for 30 years for the illegal export of $15 million in computer equipment to the Soviet Union. Later that same month, McVey was captured in Canada, where he remains while U.S. authorities seek his extradition to the United States for trial, a Customs Service official said Monday.

In May, 1986, an Irvine computer engineer, Louis Luk, was ordered to pay a $50,000 fine after he pleaded guilty to federal charges that he illegally exported computer equipment to Hong Kong.

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