John shiffman is maxim booktv. He talks about the department of Homeland Security sting operation codenamed operation shakespeare which was created to stop americans enemies from acquiring americanmade defense technology. This is about 45 minutes. Hi everybody and thanks for coming. My name is John Shiffman whenever reporter workers in washington. I first wrote about operation shakespeare two or three years ago when i worked as a reporter here for the philadelphia inquirer. This is dave paul. He is a partner at the whitman law office and before that he was the prosecutor. During this thing dave worked alongside a half dozen federal agents from Homeland Security investigations which is part of immigration customs enforcement. Dave and i first got to know each other many years ago when i was writing my first book which is called priceless which is about the founder of the fbis crime scene. Dave was also a prosecutor for our crime team all over the world, right . Dave has an unusual background. Almost simultaneously he spent about 30 years in the u. S. Navy and in the u. S. Navy reserve. Most of it in military intelligence and he is the only prosecutor i know who is a black belt and an expert rifle shot. Over the next 20 or 30 minutes a day that i hope to have a good conversation about a few things. We want to talk about why and how todays most coveted weapo weapons, miniature Technology Capable of providing missiles radar and countless different kinds of explosions are ending up in enemy hands. Well also talk about the serious threat giving away our technological advantage advantage poses two of eric and his troops not to mention the financial cost. U. S. Businesses and taxpayers spend billions every year developing bollettieri technology which china russia and north korea and pakistan simply steal for a fraction of the cost. We will also talk about why this threat is in some ways just as important and just as dangerous as the current cyberespionage threat and of course we are going to also talk about operation shakespeare itself. Let me start with a very brief overview of operation shakespeare and then i will turn to dave for conversation about the case and the larger Public Policy implications. At the end we will save time for some questions. Operation shakespeare uses the background the attention upon Homeland Security case, an extraordinary case comments describe describe a shadow where that takes takes place daily but is far removed from beit operation shakespeare was an undercover sting against one prolific iranian arms broker. It it was the first of its kind staying. Homeland Security Agency are in philadelphia created an undercover business to to lure of an iranian arms dealer from his base in southern iran in a city called shiraz to the republic of georgia the Capital Capital of tivoli see. The iranian sole customer was the iranian government. Sophisticated radar, copy computers and gyroscopes capable of steering missiles. American Law Enforcement had stings like this for many years but they never caught someone in this way. Something always went wrong. The book uses the background of the shakespeare sing to staying to describe two iranians pakistanis North Koreans to acquire americanmade technology. On todays battlefields the most lethal weapons are not necessarily that big ones but rather the smaller ones small enough twos smuggle inside a pack of chewing gum. Gyroscopes radar night vision and Technology Trade i have one such itemized here. Im sure you can barely see it but this is an actual microchip from the operation shakespeare. This is exactly what the iranian was trying to inquire. Its a phased radar microchip and smaller than a fingernail but if you string a bunch of these together you can use it in radar to shoot down american planes and to shoot down other things. There is actually a copy of it right here in the back of the book that you can see its smaller than the size of a dime. Its perfectly legal i should say to hold this United States and this ones worth about 1000. Its perfectly legal to have it in the United States. Whats illegal is to take it out of the guide states. I need a government license for that and that is what these agents are trying to prevent. Its a crime because the tiny weapons are vital to u. S. Troops for the kind of advantage they need. Its why our army mostly fights that night. Its why our fighter jets and bombers and submarines are nearly invisible to the enemy. Nobody wants to go to war but we do go to war they want our soldiers to have the best protection. Most of all we dont want our enemies to be able to use americanmade weapons against american troops. This is not some kind of future hypothetical threat. On the battlefields of iraq and afghanistan are military has peeled triggers inside of unexploded ieds, roadside bombs. The shocking thing is these triggers carry serial numbers that can be traced to factories inside the United States. Someone had smuggled them to the insurgents on the battlefield. In the book when what you learn is the main target of operation shakespeare order these very remote triggers from a company in arizona. As we talk about this i want to recognize someone who is here with us today because its important to remember who we are trying to protect. In the book i open with the story of a young Second Lieutenant in the army. His name is vested lauren. He was killed in action in iraq and his mother sue is here tod today. I just want to recognize the tenet warns service to the country but also the agents who are here i wanted them to meet sue if they get a chance afterwards to give you a sense of the kind of person youre working for and trying to protect in this happen to be someones son. Before we Start Talking about this thing dave can you talk a little bit about why these tiny components even ones that might seem innocuous, why they matter for the military . Well the cliche is that the chain is only as strong as its weakest link them at the cliche because its true in a case of change but also in the case of weapon systems. You know a bolt seems innocuous until its the thing that breaks and causes an aircraft to be down for maintenance. So, every one of these components matters. When forces deploy supply chains are stressed and often in those cases the failure rate goes up because of the absence of little components that fail. You told me once about something that the navy deploys something called the hangar queen. Can you talk about what a hangar queen is and what that tells you about the importance of having every little part . You have the hangar queen idea is not a desirable situation from the supply point of view. What happens with the deployed force is with a squatter for example is one of the airplanes goes down, its not functional so its sitting in the hangar and a second airplane goes down and the maintenance people start reading the first airplane for parts for the second airplane. At some point what happens is the first airplane isnt used anymore because its basically there for inventory. Thats obviously to be avoided but its just an example of what happens when the supply chain fails. So can you talk generally about how iran and china steel our military technology . How did they get it out of the country . Well they take advantage of whatever weak points they can find in our efforts to prevent that so in the case of iran, while in the case of china what you are seeing right now is that they have figured out that you know our cybersecurity is bad so they are hacking. That seems to be one of their main mechanisms for stealing u. S. Technology and its not that iran doesnt do that but iran takes other measures as well. They are often seeking physical components to supply their maintenance people. There are specific problem with the aircraft as the United States supply aircraft to iran in the 70s. F4, f5s f15s and of course after after the reveille should we the u. S. Stopped maintaining them and they stop supplying them with spare parts. So they had to do that themselves. And so they have the same problems that a Navy Squadron has when its deployed far from home. They start running out of things so they have acquisition age and sewer in the business of trying to acquire those things. They will use transshipment points. They use transshipment points like to buy in order to get u. S. Companies to supply them with components. So the target and operation shakespeare the iranian would do something similar. What he would do if he would g get, he would get marching orders from the iranian government. They would send it by facts and set up by email because if they send it by email they would worry that he might forward it on in they would have the fingerprints and that bothered him. So he would make queries to the United States. He would claim to be and the buyer other places and then he would have the equipment sent to dubai and within a day or two inside of iran. The targeting and operation shakespeare was prolific that but he was also fairly representative. What was this Business Model . What did he hope to achieve . Was a political . Was he after money . What drove him . Money. It was all about the money and thats ultimately what caused him to get arrested. He was not a religious zealot. He was not ideological. I dont think he really gave much thought. He was pretty much apolitical and didnt give a lot of thought to the implications of what he was doing. He was trying to get rich and you know, thats what drove his Business Model. His idea was to take the requirements list that you just mentioned that he got from the iranian government and to supply, to obtain those parts. He specifically wanted the u. S. Parts both because they were trying to you now maintain and upgrade u. S. Aircraft but also because the u. S. Parts are more reliable than other parts. In the book i wrote about the agents themselves and your backgrounds you talk about the dream team working in the government for a long time with the people working together to get the same time on the same project with a somewhat successful outcome. There were some supervisors i want to ask about three of them. P. J. Forgave a cryptology as setting up a undercover operation. P. J. Is a fund agent, under the and i am and deliver it isnt smart agent who was trying to think through the problem to undertake several it a serious way so he was an incredible as a businessman. He was young but he had a lot of experience also a Police Officer and also a customs agent. They do have john who was a supervisor in the case and it is interesting because he was a philadelphia Police Officer for decades and then he became the head of the counter proliferation has after 9 11 is set up operations overseas then to the end of his threat federal career came back to philadelphia to read that unit run that you did. The fact he was not my boss. [laughter] the thing about all these people is they are all one of the kind a straight ahead person not taking no for an answer to the ins for word no matter what and the person in you need trying to overcome obstacles and that is what we were trying to do. He was perfect for that. The agents set up an undercover platform as well the equivalent to cross the international out of Eastern Europe the reason is because the iranians were nervous to do with the Rating Company so they tried to open the second one overseas. The one agent who wants to keep his name secret they call him the acquired taste to have the drive the other agents have. Tell us he also spoke russian. A brilliant person and he can be challenging. The key to the overseas storefront first of all, that was the key part in order to appear credible it was in ivory and and so because he was will tiding goal was in a position where he could appear to be on american and give us that nonamerican face to deal directly with the iranian acquisitions agents. And to share them and that is part of what made the team so good. I think people challenged each other and for that reason at this some of its parts one important respect is i am told there are no photographs in here is there are no goodlooking agents. [laughter] another who did not want his photograph taken the agents used a british informant based in london with an arms dealer for about 50 years. And can you talk about him . He presented the same problems every informant presents he knows about criminal arms dealing because he is a criminal arms dealer and a 72 has to be treated carefully at arms length. He had been added to for about half a century and was extremely knowledgeable and taught us a lot how arms dealing works internationally and that is one of the ways we could find targets and also one way to look credible to the arms dealing world. He worked for the North Koreans and has quite the resonate. I think he was so steeped in this he tried to trajans at 1. What was that like . Having someone like this man talking to this agents that probably had nothing like kim . With is a project culture the approval of a true blue cleancut federal agents who tried to learn from someone who is exactly the opposite. Theyll learn how to be a criminal but he was an equally good position to teach that skill. I dont want to give away the whole story but about 1. To get the arms dealer with the undercover agents in georgia. Could you just read that quick excerpt to give the idea about the prolific iranian arms dealer . But this was written to have that georgians agreement and to give the u. S. Government to go along with that. And he is a notorious broker who has negotiated with storefronts and with the store friends he has requested place quotes for thermal weapons sites f14 Fighter Aircraft parts and underwater Communications Systems and with night vision goggles in the surveillance system. During which time using over 600 items and has recently sent quotes for those military helicopters. With leaf aircraft with the measures device in their refer to that. Intense capability is there used in Satellite Communications and a request for thousands of copies to suggest he has requirements such as the government of ivory and. What i meant is if he just as the tube shifters with that acquisition of reverse engineering review by thousands of copies that tells me you buy them for radar. Used as a message for acquiring multiple targets simultaneously which is a good example of being a force multiplier and if i ran could acquire radar that eliminates the technological and vintage through ivory and. This is all happening in 2007. It is the same time period homage in a shot visited new york city and the u. N. With these controversial remarks about the of holocaust much the same time president bush was doing some saber rattling of his own 58 you misstates would defend his troops there was the piece just published in the new yorker here talks about the battle plans for Foreign Invasion so all of this is going on coincidentally at the time you are supposed to reach the iranians. Andrew is one of the other agents waiting to meet coming off the plane very quickly wiring up lecter is so what goes through your mind as you wait . You have been doing this for three years spending over 1 million of the case. A very good memo. [laughter] there is a lot going through our minds. But then to do the real work back at the hotel. Waiting to see if he would actually show but you dont know. To have a copy of the passport giving its three indication he would appear so we were very focused on the question. We were hoping leges you dont want the to give away if he appeared or not. He appears. [laughter] has and what i found fascinating was all those hours of hidden video for those agents have believed where the european arms dealer they will all Work Together to make lots of money. One of the things they dont just hand him the phase shifters but they draw him now to find out what to he knows. One of the things that was the most fascinating was with refers engineering. What the agents told the arms dealer was they could make a lot of money but there were many things there radians do have to build night visions very sophisticated they did not have the capability for what they needed to make it work. His you think once you get the plants that is all you need but it many cases you need the last component or to. Uo6nxh÷4n he was describing the process that he wasr obtaining his requirements and basically was telling us theyre being given the increased requirements that everyone is preparing for war and this was one of the reasons he had some of the urgent requirements and went almost immediately into the computer dealer he just kept mentioning new deals he said to have given me your list of components but that is the whole airplane. He laughed and said basically that is true. At 1. The agents have the opportunity to clone his laptop he brings that into the meeting and they the ages can clone the the laptop with those Business Records that tell you how they tried to acquire military technology. With heavier image what the government of by rand was asking him to acquire it is not as complete picture foote focused mostly on electronics and aviation. But it reflected the i radian wish list with what they tried to acquire and it also showed what he had acquired he was successful to acquire different components said gave us an idea to be in the hands of the iranians. The other thing is is how he could not abiding strictly from the United States it was supposed to be impossible with the sanctions but would use switchbacks with the german banks to reroute the money and Credit Suisse later got in trouble to send out marketing brochures to irradiance he lived in saudi arabia and into by offering to strip out the persians have the names or with just customer access and theyve made billions doing this over years. They started in the 80s with the embargos. You got to meet him and what was he like . He was very smart and very diligent and detail oriented. B9c he was not a zealot but at one point he acquired the pirates that did not kill people. but he said the same sort of thing in court to deny being an arms dealer. And only in the sense he was clearly trafficking these items. So although he was smart is capable but not well considered. I am not interested with his perspective but most of them say i did not do it loris it is not all my fault to push the blade on somebody else. He said it is not against the law in my country to do this and the american system did not care but why a year during this to be . To be . But with my customs but talk about civic let me make 1. That is true he was not breaking any laws he was doing with his government wanted him to do. But he was aware he was breaking u. S. Laws and said as much with the undercover contacts thats what they would bring it out that this was illegal and acknowledge that and would take multiple steps to keep himself at arms length from the u. S. One thing we had to prove was will focus that he knew he was doing something illegal and hes admitted that by pleading guilty. Son operation shakespeare was successful so you use that to trade and other agents and have of this can be done. I am not aware there are other cases like this. We all hoped once we proved the concept this case would be more of the norm instead of the frontier with export enforcement that the concept involves take the the operation out of the United States to get as close to the adversary it is difficult and expensive with a lot of challenges. But it has not happened as much as we hoped it would but i am an optimist and i expect it to. You just retire from Government Service but the you get a sense with the iranian and Chinese Technology has changed at all the last five or six years . No. The pace has changed quite a bit but the government of ivory of their efforts continue with respect to china with public revelations show by private companies that discovered the same sort of thing that the last five years the chinese efforts have increased. Is the government doing enough to stop this . I get the sense that the rivalries between agencies and people are caught up in bureaucracies and paperwork instead of the dangers. The u. S. Government decided to have day Coordination Center and they all agreed to do but it took them nine months to put the memorandum together how they would cooperate they could not even agree how to cooperate. That is always a problem in the government and they still are. I would like to see export arms enforcement a greater priority with the government and the department of justice but department of Homeland Security once to do this and with the operation there that a Funding Source supply the money for travel. The department of Common Security has a strong and sincere interest to pursue this they could give more support for the department of justice but it has many things to worry about with many different types of crimes and everybody is advocating everyone thinks his is the important crime but if the seniors would focus on the fact the purpose is to protect servicemen to keep the war fighters safe to lose the technological a vintage at risk. It is a terrible and tragic thing with any Service Member to die in the line of charity but it is to be but it is aggravated when it was acquired in the United States with that purpose represents a failure and needs to be addressed. I am optimistic. I expect that to happen and maybe your book will do that. May be. We have time for questions. So when you have to shift of the political gimmick how does that impact i am not a politician. I can only give you my personal opinion. There was ever a normalization of iran and right now iran is under a near total embargo but it could be that part of the embargo are adjusted but those changes are prospective to the future and what has happened in the past doesnt change. It will affect lawenforcement priorities but not retrospectively. Is some of those changed over time. But i think the same thing is true with syria as the sanctions have changed over time. It has more to do with how we perceive different regimes in their british informant would say it deals in sanctions but it does change over time. Did that in answer your question . Severity you have to assess how many people like iran how big is this market . He claims to be in contact with and every time he would get a request he also had half a dozen competitiveness who were told to buy the same thing so you could will supply in that would say it is in the hundreds
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