The US Department of Justice has unsealed a federal indictment after three individuals from Quadrant Magnetics, Louisville, Kentucky, USA, were arrested for illegally sending around seventy drawings to a Chinese company. The charges also include a scheme to sell prohibited materials of Chinese origin to the US Department of Defense (DOD).
The indictment alleges that from December 2018 to January 2020, Phil Pascoe, president of Quadrant; Monica Pascoe, Director of Accounting Operations and Scott Tubbs, VP of Sales & Marketing, violated the Arms Export Control Act International Traffic in Arms Regulations by sending certain technical drawings to a Chinese company without a US government licence. These schematics were related to end-use items for aviation, submarines, radar, tanks, missiles, mortars, and other systems.
The Pascoes, Tubbs, and the company are charged with wire fraud and violating the Arms Export Control Act, among other charges, and the individuals involved could receive a prison sentence of many years. Phil Pascoe is also charged in the indictment for importing rare earth magnets smelted and magnetised in China.
Quadrant sold the magnets to two US companies that used them in components for F-16s, F-18s, and other defence assets. This was in violation of the Defense Acquisition Regulations System (DFARS)’s speciality metal clause, which specifies that rare earth magnets sold to the DOD must be produced and magnetised in the US or an approved country. China is not approved.