El Monte, CA
Since my first investigative piece on China’s commercial and intelligence operations in March 1995[1], I had published a half-dozen magazine-length articles in The American Spectator that exposed China’s U.S. networks. Some of these involved Chinese intelligence operations to fund the political campaigns of Bill Clinton. Others focused on Chinese investments on Wall Street or money-laundering. I became fascinated by the sheer number of Chinese front companies I was starting to unearth in Southern California. Many of them were engaged in real estate investing, and turned out to be secret bolt holes for the Princelings, the wealthy children and relatives of top Communist Party officials. Others were not-so-secretly stealing U.S. military technology.[2]
I was flying out to Los Angeles several times a year, staying in Marina del Rey so I could roller blade along the beach up to the Santa Monica pier in between my visits to the area I began calling “El Monte Central.” This was a cluster of suburban sprawl homes, office buildings, and strip malls ten miles east of Los Angeles on either side of the Santa Monica-San Bernardino freeway.
Soon I discovered something that was impossible to know unless you were actually on the ground. As I scoured the lobby directory at one nondescript office building, 9300 Flair Drive in El Monte, I found a half-dozen companies with offices on the sixth floor. But when I went up the elevator, more than forty companies had actually hung shingles on those same office suites. They had names such as Affirm Well Management, Bo Cheng International, Chang Da International, Chinauto, Guanxin Enterprise (USA), Hailicheng Trading (USA), Hairui International (USA), Hongteng International Corp., Jintime Comfort, Lirong (USA), Pan-China Investment, Plenty Fame (USA), Sang International Trading Ltd., and Xin Yu International.
Later, when I went to the Los Angeles County Clerk’s office in Norwalk and examined the corporate registry (yes, by hand), I found that fifty-five of them operated out of a single suite, which turned out to be the law office of two Chinese-American attorneys. None of these companies had listed phone numbers, which of course was odd if they were engaged in legitimate trade.
During these trips, I would regularly drive down to Long Beach to share my findings with “Lee,” a source at U.S. Customs. Lee’s main portfolio was arms smuggling, and he was actively chasing Chinese companies helping the Iranians to buy parts for their aging F-14 fleet from U.S. surplus and counterfeit parts manufacturers. But he was also watching the Chinese efforts to buy high grade aerospace components and production gear. I showed him my latest list of suspected People’s Liberation Army front companies and their local addresses. He chuckled when he saw it was 8-pages long.
“You’ve been busy,” he said.
Many of these companies had interlocking directors, I explained. One entity would be engaged in some form of import-export on behalf of the PLA, while another would be buying local real estate, apparently with the proceeds.
He got midway through the list and whistled.
“You’ve got to be kidding me.”
“What’d you find?”
“What do you know about these guys, Beta First, in Cerritos?” he said.
I explained that I found them through Dun & Bradstreet as a U.S. subsidiary of China North Industries, NORINCO, one of Communist China’s largest arms exporters. They claimed to be an optical-goods wholesaler.[3]
“Their office suite is located directly over the CIA liaison station to the Lockheed Skunk Works,” he said. “The Agency pukes are on the ground floor, the Chinese just above.”
He made a circular motion with his hands, as if operating an old-fashioned hand drill.
“Of course, the Chinese would never think of spying on the CIA.”
“I’m sure it never occurred to them,” I said.
Nor, apparently, had it ever occurred to the CIA that they had been made.
*****
NORINCO was not the only notorious PLA arms exporter doing business openly in the United States. One of my favorites was the Chinese Aerospace Technology Import-Export Company, CATIC. They were the ones who had purchased sophisticated production equipment from the B-1 bomber plant in Columbus, Ohio, a deal that formed my introduction to Chinese operations in the United States, ended my career with Time magazine, and landed me a new home in the conservative media.
For one story that appeared in The American Spectator in 1997, I interviewed Wang Meng, a CATIC official in Connecticut, after the company became embroiled in a dispute over purchasing F-14 production equipment from Northrop Grumman. “I don’t know what equipment was actually purchased,” he insisted. When told that Northrop Grumman had identified him as the purchaser, he fumbled: “I don’t know who put my signature there.” Finally, he said he was just following instructions from his head office. “I deal mainly in offsets and subcontracts for our exports to the United States.”
“What kind of exports?” I asked.
“Mainly fishing rods.”[4]
The more I learned about CATIC’s operations in the United States, the more I was fascinated. They had purchased production gear from aerospace plants in Maryland and Ohio, and owned real estate and dozens of front companies in California. What were they really up to? Was CATIC just an innocent aerospace company, legitimately buying parts and equipment from U.S. suppliers? If so, why all the corporate shenanigans and apparent efforts to mislead, disguise, and confuse?
I spent nearly two days at the Los Angeles county clerk’s office in Norwalk, combing through real estate records, corporate registries, mortgages and loans, searching for every company and property that might be remotely related to CATIC and its owners. I spent another full day in the L.A. courthouse downtown, looking up property tax payments, and sifting through civil and criminal court cases involving CATIC and related companies. I set up a data base on CATIC corporate officers and searched for other companies they owned under their own names. And then I tracked the officers of those new companies and their holdings.
I found some 40 CATIC companies, all with interlocking ownership and corporate boards, run by a half dozen PRC officials who rotated in and out of California. Just to confuse anyone trying to track them down, they regularly inverted their Chinese names, so that a last name search would not reveal the connections. Some of them also used Americanized forms of their names interchangeably with the Chinese names, just to add to the confusion. For instance, Michael D. Q. Li, listed as Manager of CATIC (USA) Inc., appeared as the U.S. agent of a CATIC front company, Tal Industries, under the name of as Quang Li. The only way of connecting the two was through the chance discovery of a shipping document made out in Quang Li’s name that gave me the name of a freight forwarder in El Segundo, California. A call to that company made it clear that Michael D.Q. Li and Quang Li were one and the same. Rare are the journalists or news outlets that do that type of investigative work anymore.
My story on the CATIC network, called “California Takeout,” received its name from my chance discovery of the eating habits of CATIC officers, which I parodied in the opening paragraphs. Arriving at 9645 Telstar Avenue in El Monte one day at lunch hour, I asked to interview CATIC president Mingqi Zhao. Katie de Sena, the dragon lady who doubled as receptionist, Notary Public, and Foil Extraordinaire, informed me he was not available. I insisted on waiting, causing her anger to rise almost as high as the piled coils of her graying hair, until an office worker came in carrying Chinese takeout from a nearby Panda Express.
“I hava Mista Zhao lunch,” he announced gaily as the door shut behind him.
The smoke rose from the piles of Ms. De Sena’s hair as she glowered at me.
“He owe me six dolla sevny-five,” the fellow said.
The lunch menu gave me an idea. I made mental notes of the office layout and, when it was clear that Mr. Zhao was not going to see me no matter how longer I hung out in his reception area, I went downstairs. After the glass door fell shut behind me, I turned around to take pictures of the building. I made sure I was directly in front of the security camera, and faced the main entry. What the security camera couldn’t detect was the slight angle of my camera.
*****
When I got back to my hotel I grabbed a quick dinner and went to sleep early, setting my alarm for 3 a.m. I reckoned it wouldn’t take more than a half hour to drive the thirty miles back to El Monte on the freeway in the dead of night. I was right.
I had located the service entrance earlier on, and sure enough, a blue dumpster had been pulled outside at the end of the day, awaiting the early morning trash collection. I drove a few blocks past the building. When I was certain that no one was out walking and no office windows were still lit, I turned around and parked right next to the dumpster. As far as I could tell, there were no security cameras here.
The dumpster was full, and luckily, a quick survey with my flashlight showed that all the garbage had been bagged. I leaned into it and started hauling out bags, leaving behind those that appeared to be filled with actual garbage. I settled on a half dozen large white plastic garbage bags that were mostly filled with papers. My heart pounding, I threw them into the trunk of my rental car and slowly drove out of the neighborhood. A car was coming toward me from the freeway exit. Had they seen anything? Had there been a security camera by the dumpster I had missed? I was prepared to just keep on driving if challenged, unless by the police. After all, according to the law whatever you threw in the trash in a public area was no longer personal or corporate property. Dumpster diving was fair game.
Thirty minutes later I arrived back at my hotel and started examining my haul in the covered (and thankfully, open air) parking garage. The first bags contained the leftovers from Mr. Zhao’s Panda Express takeout — hence the title I chose for my story. Mixed in with the dripping Sichuan hot sauce and leftover rice and dumplings, I found a treasure trove of corporate documents. Some of them had been torn hastily, but the pages still stuck together so it was easy to reassemble them. CATIC had not yet discovered the virtues of office shredders. They would soon.[5]
For several hours I reassembled documents with scotch tape, wiping them with paper towels. From that early morning foray, I learned where CATIC banked. I learned about secret real estate investment deals. I learned about a broader network of companies I had never heard of before, owned by CATIC officers.
But most remarkable were the shipping documents I found amidst Mr. Zhao’s Sichuan chicken. That very afternoon, a previously unknown CATIC front company called TAL Industries booked space through a local Chinese shipping agent to send a special consignment to the CATIC home offices in China. The contents? Military-grade GPS systems, made by Trimble Navigation in Sunnyvale, CA. The TAL booking request was signed by Mingqi Zhao, who as it turned out was president of both CATIC and TAL.
I shared those documents with my Customs source in Long Beach. He was familiar with the shipper. “They are a bad apple. We’ve subpoenaed them countless times.” But the GPS system had been decontrolled by the Clinton administration so his hands were tied.
In the end, I turned over my voluminous files on CATIC and hundreds of other Chinese front companies operating in the United States to Representative Christopher Cox (R, CA), who had been named to head a special commission to investigate Chinese espionage operations, and testified in closed session before his bipartisan panel.
The Cox commission, as it came to be known, finished its work on December 30, 1998, and immediately submitted its three volume report to the White House, which did nothing.
I remain convinced to this day that had the United States government acted at that time to curtail Chinese communist high-tech espionage and the high-tech trade, we could have delayed by a good twenty years the dramatic advances in Chinese military technology we are now having to confront today.
Kenneth R. Timmerman is writing a memoir, from which this article is taken. Author of 11 books of non-fiction, including two New York Times best-sellers, Timmerman was based in Paris and covered the Middle East and many of its wars during the 1980s and early 1990s, working for USA Today, the Atlanta Constitution, Newsweek, the Wall Street Journal, the New York Times, CBS News and many others. He was nominated for the Nobel Peace prize in 2006. His website is kentimmerman.com.
•••••
Footnotes:
[1] See Kenneth R. Timmerman, “China Shops,” The American Spectator, March 1995.
[2] I collected these investigative pieces, which provide a detailed record of Chinese Communist infiltration of the United States, into Selling Out America: The Whole Story of Bill Clinton’s Corrupt Relationship with Communist China.
[3] NORINCO had become infamous as the manufacturer of “sporting” rifles imported into the United States. These were single-shot versions of the AK-47 assault rifle that were modified locally to full automatic and become the favorite of L.A. street gangs. But under the Beta label, they were also selling Chinese-made toys to American chain stores, most likely manufactured in prison labor camps.
[4] Kenneth R. Timmerman, “While America Sleeps,” The American Spectator, June 1997.
[5] On my next 3AM visit to CATIC’s dumpster, a couple of months after this article came out, all office documents had been shredded.
