Three people and a Kentucky-based magnetics company have been charged over allegations they conspired to send sensitive U.S. military data to China and illegally supply the Defense Department with Chinese-made materials for aircraft systems and other equipment.
The Justice Department announced Wednesday that Phil Pascoe, 60, and Monica Pascoe, 45, of Floyds Knobs, Indiana, and Scott Tubbs, 59, of Georgetown, Kentucky, had been arrested and charged with wire fraud, violations of the Arms Export Control Act, and smuggling of goods. The company, Quadrant Magnetics LLC, faces the same charges.
The three are accused of sending about 70 drawings of export-controlled technical data to an unspecified company in China, the Justice Department said in a news release. Export-controlled information requires a specific license or authorization to export in order to protect national security.
Read Next: Army Deploys Top Leaders to Schools Amid Recruiting Slump
The drawings, which were allegedly sent between January 2012 and December 2018, related to parts for U.S. military aviation, submarines, radar, tanks, mortars, missiles, infrared and thermal imaging targeting systems, and fire control systems, according to the release. The drawings were the property of two U.S. companies that the release does not name.
Meanwhile, Quadrant Magnetics is accused of importing rare earth magnets from China and selling them to two unspecified U.S. companies that then used them in parts sold to the Pentagon for F-16 Fighting Falcon and F-18 aircraft and other defense assets, according to the release.
In a statement about the indictment provided to Military.com after publication, Quadrant Magnetics said it is cooperating with the government.
"We will continue to do so, and we remain focused on our mission serving as an important partner to our customers," the company said.
By law, rare earth magnets have to be from the United States or an approved country. China is a prohibited country under the law. The same law recently caused the Pentagon to halt deliveries of the F-35 Lightning II fighter jet because Chinese-made magnets were discovered, but Pentagon officials in that case described the issue as an oversight and quickly signed a national security waiver.
The Justice Department news release does not specify the three people's relationship to the company or one another, but a Louisville, Kentucky, business journal previously reported that Phil Pascoe is Quadrant's president.
The company was also celebrated by Kentucky Gov. Andy Beshear as recently as January when it announced it was building a $95 million rare earth magnet manufacturing facility in the state. Bashear's office told the Louisville Courier-Journal that, in the wake of the indictment, it is reviewing the state's relationship with Quadrant, which included a deal for up to $3.4 million in tax breaks.
If convicted, Phil Pascoe, Monica Pascoe and Tubbs face sentences of up to 55 years in prison each for the charges against them, according to the Justice Department.
The case announced Wednesday marks the latest instance in which U.S. military information was allegedly sold or given to China. Earlier this week, the Justice Department announced that a defense contractor and former U.S. Army helicopter pilot was sentenced to 20 months in prison for selling aviation-related information to the Chinese government. A former Army reservist was also convicted in September on charges related to allegations he spied for China.
Editor's note: This article has been updated to include a statement from Quadrant Magnetics about the indictment.
-- Rebecca Kheel can be reached at rebecca.kheel@military.com. Follow her on Twitter @reporterkheel.
Related: Former Army Reservist Convicted of Charges Tied to Spying for China
