A California has man admitted to selling the U.S. military $3.5 million in counterfeit or old parts for critical military systems used in a nuclear submarine and an aircraft laser system, Justice Department officials announced.

Steve H.S. Kim, 63, pleaded guilty to wire fraud and trafficking in counterfeit goods for selling the Defense Logistics Agency, or DLA, counterfeit and old fan assemblies from 2016 to May 2023, according to the Justice Department.

As part of the scheme, Kim used a labelmaker to fool Pentagon officials on the origin of the parts according to court records, which Task & Purpose obtained through the Public Access to Court Electronic Records, or PACER system.

“The failure of one or more of the counterfeit fan assemblies Kim sold for use in military systems was likely to cause impairment of combat operations,” court records say.

The counterfeit fans that Kim sold to the DLA were used or meant for use in a nuclear submarine, a laser system on an aircraft, and a surface-to-air-missile submarine, according to the court documents, which did not identify the specific submarine and weapons systems.

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Kim’s attorney Randy Sue Pollock declined to comment when contacted by Task & Purpose on Monday.

During the time when Kim sold the fan assembly systems to the DLA, he was the operating manager of a company in Alameda County, California, that is identified only as “Company A” in court documents.

Kim told the Pentagon that the parts he was selling the DLA came from another company – identified only as “Company B.” Instead, prosecutors say,he took parts from different fan assemblies, put them together, and lied about what company produced them, court records show.

“To further his scheme to defraud, Kim used a label maker to create counterfeit labels that he affixed to fan assemblies that he sold to the DLA. Some of these counterfeit labels used Company B’s registered trademarks, including Trademark A and Trademark B.”

Prosecutors argued that Kim also sold the DLA used surplus fan assemblies and claimed they were new,charging the DLA much more than he paid for them, according to court records. After buying the older parts in bulk, Kim used his label maker to pass them off as new.

To conceal where the fan assemblies came from, Kim gave the DLA fake tracing documents that he often signed using a false identity, court records show.

“This case highlights the efforts of the investigative team to expeditiously shut down such a scheme and prevent possible grievous harm to our ability to conduct effective combat operations,” Special Agent in Charge Greg Gross of the Naval Criminal Investigative Service Economic Crimes Field Office said in a statement.

On March 28, Kim pleaded guilty to charges against him stemming from the fan assembly scheme, a Justice Department news release says. His sentencing hearing has been scheduled for July 17.

Kim faces a maximum penalty of 20 years in prison for wire fraud and 10 years in prison for trafficking in counterfeit goods.

“Swindling our military is a sure way to find oneself in jail,” U.S. Attorney for the Northern District of California Ismail Ramsey said in a statement. “This office is always on the lookout for fraudsters and will prosecute anyone caught cheating our military by providing products that endanger our service people or compromise our readiness.”

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