A California resident was sentenced to three years and six months in prison after being found guilty of defrauding the Department of Defense’s Defense Logistics Agency (DLA) out of $3.5 million through sales of counterfeit or misrepresented electronics. Steve H.S. Kim, 63, from Alameda County, ran a sophisticated operation where counterfeit and substandard fan assemblies were passed off as high-quality components intended for use in sensitive military systems.

According to court documents, Kim controlled 'Company A', which sold the fan assemblies to the DLA, which were either counterfeit, used, or surplus, despite his claims of selling brand new equipment. He went to the lengths of creating counterfeit labels, some bearing the registered trademarks of 'Company B,' and attached them to his products to deceive the DLA. Kim provided false tracing documents when questioned, often backing his lies with forged signatures, according to the U.S. Attorney’s Office for the Northern District of California.

“Our military must be able to trust that the equipment it is receiving actually reflects what it has purchased,” U.S. Attorney Ismail Ramsey stated, as per the Department of Justice, highlighting the flagrant betrayal of trust inherent in Kim's actions. He stressed that the sentencing should serve as a stern warning against such fraudulent practices. The case paints a worrying picture of the vulnerabilities in the supply chain for military equipment, where even critical systems like nuclear submarines, laser systems on aircraft, and surface-to-air missile systems were compromised by Kim's scheme.

The case was investigated by various agencies, including the DoD Office of Inspector General, the Naval Criminal Investigative Service, Homeland Security Investigations, and the Department of the Army Criminal Investigation Division's Fraud Field Office. The collaborative investigation effort underscores the reach and the gravity of Kim's fraudulent actions.