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Tech-stealing: An international problem
By Roger Phelps
Robert Scott/The Telegraph
Rajib Pandey, RF Engineer, builds a digital log video used by defense contractors.

Seemingly sleepy El Dorado Hills is a player in an international arena in which arms dealers, pirates and tech geniuses jostle, rub elbows and sometimes can't be told apart.

For good measure, throw in the U.S. government.

Rigors of playing on this fast court show up fast in the saga of Genesis Microwave, Inc. The firm makes, for example, particular amplifiers used by militaries, many of them foreign. A "video amplifier," as it is called, converts a simple detection of a radar signal into information allowing a fighter pilot or a ship commander to decide whether it's an enemy signal.

Sited in "Silicon Hills" — or, the El Dorado Hills Business Park — the company recently found itself with a pirate on its payroll. It was employee Allen Cotten, who recently pled guilty to illegally exporting technology useful in warfare. Cotten will be sentenced in May for illegally selling war-related microwave technology to companies in various foreign countries. Federal laws strictly confine export of technology with military application.

Previous to Cotten's admitted crime, some of the same basic technology he sold to illegitimate users in Taiwan had been going from California to Taiwan's sworn enemy, the People's Republic of China. The illegal export of microwave tech to China happened at a firm called Suntek, out of Newark in the Bay Area, whose assets Genesis Microwave acquired in 2004.

Santiago Cutia Jr., Genesis Microwave's chief executive officer, said no connection existed between Genesis and Suntek previous to the acquisition. Genesis bought Suntek assets at auction. Cotten did not work at Suntek previous to working at Genesis, Cutia said.

"Allen was in marketing for us," Cutia said. "He took 'quotes' but then converted them to a company he owns."

Most of the money used to start up Suntek had come from China, Cutia said. According to published reports, Suntek official Jason Liao invited Chinese nationals to Newark and delivered microwave tech items into their hands, thereby illegally skirting export controls.

Cutia will tell you that U.S. export controls on war-related technology are stringent enough that he's not surprised a black market arose.

"It's really hard," Cutia said. "When I see a request for quotation from a country on the National Security List, I know we would need to acquire an export license. For example, take a company from Iran. First, you need an end-user statement, who's going to be using the product. Then, you have to submit it to the federal Bureau of Industry and Security."

This must be done not just company by company that a U.S. firm might want to deal with, but rather contract by contract. The same government-approved Irani company that a U.S. firm sold to six months ago can call, and the entire licensing work must be repeated for each new contract, Cutia said.

Cutia acknowledges the feds' need to know everything, but he said he just doesn't have time for it. Licensing for a single contract can take months. Extend Genesis Microwave's viewpoint to a majority of domestic competitors, and that tends to leave some foreign countries with too little legitimate recourse to acquire war-related technology from U.S. companies, according to Cutia's account.

"People will say, 'I need this in 45 days,'" Cutia said. "That will happen 85 percent of the time. I will say, 'We could do it in 60 days, but this product requires an export license -- we can't just ship it, we're going to get dinged.' The last licensing I did took three months. So, even though it's business, I avoid selling to, for example, China."

In fact, federal hassle is severe enough, Cutia said, that he doesn't deal with any country not 100 percent lined up behind U.S. foreign policy, which is increasingly unpopular worldwide.

"We sell to Japan, Denmark, the UK -- allies," he said.

Federal tech-export regulations run to 61 pages, double-column.

The technology illegally sold by Cotten and previously by Suntek "detects a microwave signal and changes it to a video signal," said John Merriner, director of engineering and operations at Genesis Microwave. "Radar signals are sent in bursts. It's possible to measure the length of the bursts, and that gives a lot of information on where and whom it's coming from. Different countries have different standards for length of burst, and different types of radar equipment have different standards."

According to Merriner's account, access to an "amplified" signal makes using simple radar-detection equipment seem almost valueless.

"Without it, you could learn some things, bit it's also useful to know what direction it's from and how far away," Merriner said.

The Telegraph's Roger Phelps can be reached at rogerp@goldcountrymedia.com, or post a comment at folsomtelegraph.com

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