## Facts

- The Arms Export Control Act (AECA) authorizes regulation of designated “defense articles” through the International Traffic in Arms Regulations (ITAR) and the United States Munitions List, which requires State Department export licenses for listed items.
- The Munitions List includes military encryption devices such as the KIV-7HS encryption unit; because of a U.S. arms embargo, export licenses for such items to the People’s Republic of China would not be approved.
- In May 2001, Eugene You-Tsai Hsu contacted the manufacturer seeking information about a KIV unit for a customer in China.
- The manufacturer alerted the FBI, which ran an undercover operation using an agent posing as a representative who communicated with Hsu and David Tzuwei Yang.
- The defendants sought to obtain KIV units and export them to China without a license, discussed concealment of the true end user, and took steps consistent with evading export controls (including misrepresenting destination/end user and arranging covert logistics and payment).
- A jury in the District of Maryland convicted both defendants of AECA violations and related offenses (including conspiracy and money laundering).

## Issues

1. Whether the AECA and implementing regulations (including the Munitions List) were unconstitutionally vague as applied to the defendants’ attempted export of a listed military encryption device to China.
2. Whether the district court erred by refusing to instruct the jury on entrapment in light of the government’s undercover participation.
3. Whether other asserted trial and sentencing errors required reversal.

## Decision

- The Fourth Circuit affirmed the convictions and sentences.
- The court held the AECA/ITAR regime was not unconstitutionally vague as applied because the KIV device was explicitly controlled and the evidence supported that defendants knew exporting it to China was unlawful.
- The court held the defendants were not entitled to an entrapment instruction because they failed to present sufficient evidence of government inducement; the government’s actions amounted to providing an opportunity, not persuasion or coercion.
- The court rejected the defendants’ remaining claims.

## Legal Principles

- An as-applied vagueness challenge focuses on whether the law provided fair notice and adequate standards in light of the defendant’s specific conduct and the case’s facts.
- Under the AECA, “willfulness” requires proof the defendant knew the conduct was unlawful; it does not require technical knowledge of export-control regulations.
- Circumstantial evidence such as concealment, misrepresentations about end user/destination, and efforts to bypass licensing can support a finding of willfulness.
- A defendant is entitled to an entrapment instruction only upon producing evidence of government inducement; mere solicitation or offering an opportunity to commit the offense is insufficient.
- Inducement requires more than opportunity and includes conduct such as persuasion, fraudulent representations, threats, coercion, harassment, promises of reward, or pleas based on need, sympathy, or friendship.

## Conclusion

The Fourth Circuit upheld AECA and related convictions arising from an undercover export-control investigation, concluding the licensing scheme gave adequate notice as applied and that the defendants were not entitled to an entrapment instruction absent evidence that the government induced the criminal conduct rather than merely facilitating an existing plan.


United States v. Hsu, 364 F.3d 192 (4th Cir. 2004)