Feds knock; a business is lost

Axion had received the original document on an Army compact disk, labeled "For Official Government Business Only" and "Distribution Statement C." Normally, government documents that cannot be released to foreigners carry explicit warnings to that effect. But on the Black Hawk part drawing, the space where the export-control warning customarily appears was blank.

Just to be safe, Hopkins called an engineer at Sikorsky, the Black Hawk's maker. The Sikorsky official told Hopkins the helicopter part had been in use for years and carried no export restrictions. "We went through the process of making sure that there were no restrictions," Hopkins testified.

Estes said Latifi had advanced Chinese manufacturing by sending the drawing. And even though the government failed to put any export warning on the original document, Latifi should have known he couldn't ship it abroad, the prosecutor said.

Get out of jail free

On Jan. 13, 2004, Axion submitted to the government two reports containing test results meant to verify its production processes for the Black Hawk part and the unrelated shock absorber. According to prosecutors, both reports were fraudulent. In the test report on the Black Hawk part, for example, Axion listed a Madison, Ala., company called Tungsten Products as its raw material supplier. The government argued that the supplier's sales records showed Tungsten Products wasn't the source.

Much of what the government knew came from Lemay, who wove a tale of a rogue contractor illegally employing foreign suppliers on a sensitive contract and faking the required tests.

On Jan. 15, 2004, Army investigator Mills wrote in a summary of an informant conversation that the Black Hawk part had been made in China "in violation of the Buy American Act," which mandates preference for U.S.-made goods in government procurements. Lemay later passed word that "the assembly was manufactured by a Chinese company" and that Latifi "might be paying" the government's inspector to overlook that fact.

By early April, Mills was ready to move. On April 9, he filed an affidavit seeking a warrant to search Latifi's home and business, based in part on Lemay's information. The affidavit didn't mention that Lemay had been fired almost two months earlier, just before being arrested on fraud charges.

Told she was under arrest, Lemay had replied smugly: "Before you do that, you better call the FBI." (She later pleaded guilty in state court to forgery, was given a suspended sentence of three years in jail and ordered to serve four years' probation.)

One of Latifi's attorneys, Henry Frohsin, argued that Lemay was wrong and that she had deliberately set up his client in hopes that her role in instigating, and then cooperating with, the government's probe would be her "get out of jail free card" if her forgeries were detected.

In court, Mills testified that the magistrate was aware that Lemay was an accused forger when he issued the search warrant — although the agent had not included that fact in the affidavit nor in any of his investigative summaries of his conversations with her. "So we don't have any proof of that other than your testimony, do we?" asked Judge Johnson.

"That's correct," Mills said.

A gamble pays off

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