Navy lieutenant and wife charged with conspiracy to defraud the US with inflatable boats, guns

A U.S. Navy lieutenant and his wife have been arrested for conspiracy to defraud the government, making false statements to investigators and illegally possessing a firearm, according to court documents.

The two, arrested Oct. 17, have been in custody and were expected to appear in court on Wednesday.

The indictment accuses Fan Yang, who was stationed in Jacksonville, Florida, and held a top secret clearance, and his wife, Yang Yang, of attempting to transport inflatable boats through Hong Kong with their final destination being the People's Republic of China.

The documents said Yang, who came to the United States in 1999 and became a citizen in 2006, was actively serving in the Navy in a "sensitive anti-submarine warfare unit."

The pair raised eyebrows when they attempted to purchase engines specifically marked "for military use" through a shell company they set up, authorities said.

The husband and wife, who lived on the base, requested time off to travel to "Disney" but allegedly traveled to Sioux City, Iowa, instead, the documents said.

It is not immediately known why they traveled to Iowa, and Yang lied to his Navy supervisors about the trip, according to court documents. Credit card records showed Fang purchased a one-way ticket for a Chinese national -- the person for whom the couple allegedly helped obtain illegal firearms.

In one instance described in court documents, Yang purchased a Sig Sauer MK25 P226 handgun with the Chinese national's initials on it with the inscription "Never out of the fight," engraved on the gun. Court documents said the two helped get the man, Ge Songtao, firearms for more than two years.

Court documents also said that Yang lied on his background check to acquire the top secret security clearance.

Between 2016 and 2019, Yang was listed as the Chief Consultant of BQ Tree Inc., the shell company, court documents said.

They were allegedly wired $205,000 over the course of the three years by Songtao's company.