Three people and a magnetics company were federally charged for an alleged scheme to send military data to China and for illegally providing the Department of Defense with Chinese-made parts for military equipment.

Last Wednesday, the Justice Department announced that Indiana residents Phil and Monica Pascoe, along with Scott Tubbs of Kentucky, were arrested and charged with wire fraud, violating the Arms Export Control Act and smuggling goods. The company Quadrant Magnetics was also charged for the crimes.

Between January 2012 and December 2018, the group conspired to send approximately 70 drawings that contained technical data to a Chinese company, according to the indictment.

“The technical data drawings were the property of two U.S. companies and related to end-use items for aviation, submarine, radar, tank, mortars, missiles, infrared and thermal imaging targeting systems, and fire control systems for DOD,” the DoJ release said.

Meanwhile, the indictment also accuses Quadrant Mechanics of violating national regulations to import “rare earth magnets” from China and sell them to two unnamed U.S. companies that use them for as components when manufacturing F-16 and F-18 aircraft, as well as other defense assets.

The magnetics company, which is headquartered in San Diego but has facilities in Kentucky, positions itself on its website as the “worldwide leader in the magnetic industry.” Earlier this year, the company announced it was building a new $95 million facility in Louisville, Kentucky, the Louisville Courier Journal reported. Following the indictment, however, the state governor’s office says it’s reviewing whether it will proceed with a previous plan to offer the company $3.4 million in tax breaks.

Although the roles of the three individuals at the magnetics company are not noted in the DoJ release, Louisville Business First previously reported that Phil Pascoe is the company’s president.

Quadrant Mechanics told in a statement that it was 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 told them.

The three defendants each face up to 20 years in prison for wire fraud, 20 more for illegally exporting data, 10 for smuggling goods out of the U.S. and five for conspiracy to defraud the U.S.

Quadrant Mechanics was not immediately available for comment.

Jonathan is a staff writer and editor of the Early Bird Brief newsletter for Military Times. Follow him on Twitter @lehrfeld_media

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