CHICAGO (CBS) — A northwest suburban man pleaded not guilty Tuesday to federal charges that he conspired to bypass U.S. trade laws to help his father export weapons of mass destruction to North Korea.

Yueh-Hsun “Gary” Tsai, 36, of the 1300 block of Hawthorne Lane in Glenview, was arrested May 1, the same day his father, Hsien Tai “Alex” Tsai was arrested in Tallinn, Estonia, according to federal prosecutors.

A criminal complaint filed in U.S. District Court in Chicago said Alex Tsai has been linked to supplying weapons machinery to North Korea; and conspired with his son to violate laws to thwart proliferation of such weapons by exporting machinery and parts, partly through Factory Direct Machine Tools in Glenview.

Gary Tsai’s defense attorney said his client was just dealing in “inexpensive old machine tools.”

On Tuesday, Gary Tsai, 36, a native of Taiwan and legal permanent U.S. resident, pleaded not guilty, U.S. Attorney’s office spokesman Randall Samborn said. He remains free on a $500,000 bond and electronic monitoring, with a status hearing set for July 26.

Alex Tsai, 67, remains in custody in Estonia as U.S. authorities seek his extradition, according to Samborn, who said no further update on his status was available.

Both are charged in three criminal complaints with one count each of:

— conspiring to defraud U.S. laws prohibiting the proliferation of WMD;

— conspiracy to violate the International Emergency Economic Powers Act by evading earlier restrictions imposed on Alex Tsai and two of his companies by the U.S. Treasury; and

— money laundering.

According to the complaint affidavits, federal agents have been investigating both men, along with a Taiwanese associate of Alex Tsai, and three companies that purchase and export machinery used for the precision fabrication of metals and other materials.

In January 2009, the Treasury designated Alex Tsai, Global Interface, and Trans Merits as “proliferators of weapons of mass destruction,” prohibiting anyone in America from dealing with them. It claimed they supplied “goods with weapons production capabilities” throughout the 1990s “to support North Korea’s advanced weapons program.”

But Alex and Gary Tsai, and the co-conspirator continued to conduct business, hiding Alex Tsai’s and Trans Merit’s involvement by using different company names, the affidavit states.

The charges claim Gary Tsai formed Factory Direct Machine Tools in Glenview to import and export machine tools, parts and other items, not disclosing that Alex Tsai and Trans Merits were active partners. The items illegally sold included a precision hole grinder that could be used in weapons production, the complaint states.

“It’s rather old equipment, quite common, and it’s used for drilling. … it really amounts to a rather benign business transaction between a son and a father,” defense attorney Theodore Poulos said after a May hearing.

“He’s not alleged to have done anything dangerous — the government didn’t even seek his detention,” Poulos said.

The charges carry up to 20 years in prison and fines of $1 million or more, according to federal prosecutors.

(Source: Sun-Times Media Wire © Chicago Sun-Times 2013. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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