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New Jersey Defense Contractor Pleads Guilty to Violating Arms Export Act

A New Jersey defense contractor pleaded guilty to conspiring to violate the Arms Export Control Act by sending drawings, specifications and sample gun parts to a Chinese company without obtaining a U.S. license.

Swiss Technology Inc., a maker of parts and other equipment, admitted today in federal court in Newark, New Jersey, that from 2004 until 2009 it contracted with the Defense Department to manufacture parts of M4 and M16 rifles and M249 machine guns.

Swiss Tech admitted that it contracted with the Chinese company to make the parts more cheaply than it would cost to make them in the U.S.

The company, based in Clifton, New Jersey, failed to get the required export license and told the Defense Department that it had made the parts, the government said. Swiss Tech agreed to pay $1.1 million in restitution for the Defense Department’s losses through the fraudulent contracts.

“We simply can’t risk that companies trying to manufacture military equipment on the cheap will expose our troops to more danger than they already face,” U.S. Attorney Paul Fishman said in a statement.

The company was debarred from government contracts by the Defense Department during the criminal investigation, said Swiss Tech attorney Michael S. Weinstein of Cole, Schotz, Meisel, Forman & Leonard in Hackensack, New Jersey.

Those Involved ‘Departed’

“The contracts were from many years ago during a time when the company was quite financially challenged,” Weinstein said in an interview. “The people involved have long since departed the company.”

Swiss Tech, which once had 45 employees, now has fewer than 10 and “there’s a real question as to whether the company will continue as a viable concern,” he said. “It’s likely that it will not.”

While the case was investigated by the Defense Department and the counterespionage section of the Justice Department’s National Security Division, it did not result in an espionage or national security charge.

The case is U.S. v. Swiss Technology Inc., 2:11-cr-00473, U.S. District Court, District of New Jersey (Newark).

Editors: Charles Carter,Fred Strasser

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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