Operation Shakespeare: The True Story of an Elite International Sting

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9781451655131: Operation Shakespeare: The True Story of an Elite International Sting
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On today’s high-tech battlefields, the most lethal weapons are not the big ones, but rather the ones that are small enough to be smuggled inside a pack of chewing gum. Microchips. Gyroscopes. Radar-cloaking and night-vision technology. Developed and manufactured in the United States at extraordinary cost, these tiny weapons of war—which can guide missiles, see through walls, and trigger anything from a wireless IED to a nuclear weapon—are what currently give the U.S. its military advantage. Unfortunately, they are increasingly being discovered in the hands of our enemies.

In Operation Shakespeare, Pulitzer Prize finalist John Shiffman tells the true story of an elaborate sting operation launched by an elite Homeland Security team that was created to stop Iran, Russia, China, and North Korea from stealing U.S. military technology. The sting, codenamed Operation Shakespeare to disguise its true nature, targets an Iranian arms broker who works on behalf of Tehran. Over the course of three years, the American agents go undercover to outwit not only the Iranian, but U.S. defense contractors and bankers willing to put profit over national security. The chase moves around the world, from Philadelphia to Shiraz, London to Dubai, Beverly Hills to Tbilisi. A mysterious British informant helps the U.S. team lure the Iranian to a former Soviet republic. The Iranian walks into the sting carrying a laptop containing a road map to Tehran’s secret military plans. As the United States tries to bring the Iranian to justice, his own government plots to assassinate him, fearful of what he might reveal.

More than a thrilling cat-and-mouse chase, Operation Shakespeare opens our eyes to a vast secret war the United States is waging across the globe. How does rocket guidance technology that is manufactured in California wind up in the hands of terrorists in Lebanon? How do IED triggers travel from the factories of Arizona to insurgents on the battlefields of Iraq and Afghanistan? In addition to answering questions like these, Operation Shakespeare reveals how many of the world’s biggest banks have systematically helped enemy states conceal trillions of dollars’ worth of wire transactions over the past decades. Shiffman also bares others who put profits over U.S. troops, including a major corporation that hands night vision secrets to China and an American scientist who helps Beijing develop stealth technology.

Tenacious, richly detailed, and boasting unprecedented access to both the Iranian broker and the U.S. agents who caught him, Operation Shakespeare combines the rigor of the best investigative journalism with the drama of Homeland. The result is a fast-paced, masterful account of a little-explored front in the national security wars: the covert struggle to preserve American military supremacy and protect U.S. troops.

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About the Author:

John Shiffman is an investigative reporter for Reuters. He worked as a staff writer at The Philadelphia Inquirer from 2003 to 2011, where he was a finalist for the Pulitzer Prize. He is the author of Operation Shakespeare and with former FBI agent Robert Wittman, he coauthored Priceless, a New York Times bestseller published in nine languages. He is a lawyer and lives near Washington, DC.

Excerpt. Reprinted by permission. All rights reserved.:

Operation Shakespeare CHAPTER 1

The Storefront

YARDLEY, PENNSYLVANIA


On a mild spring morning in April 2004, a black Mercedes S430 sedan pulled into a low-rise office park. The robin’s-egg blue building stood on a narrow suburban road near the New Jersey state line, thirty minutes from Seth Dvorin’s boyhood home. The driver who stepped out of the Mercedes had a shaved head and an affable face. He wore a white dress shirt tucked into tan slacks that bulged a bit at the waist. In his wallet, the man carried a driver’s license and business cards that identified him as Patrick J. Lynch. He carried a briefcase and walked purposefully inside, past the offices of a dentist and a chiropractor, and unlocked Suite 106. A small sign beside the door declared this the offices of Cross International.

Cross rarely received visitors, but anyone who wandered in the front door would have likely found Lynch seated at one of two desks, busy on the telephone or on a desktop computer. At his elbows were strategically strewn invoices, each topped with the company’s globelike logo and motto, “Cross International—Your Dependable Partner, Serving Your Acquisition, Logistics and Transportation Needs.” The walls were lined with posters of jet fighters and aircraft carriers, and a coffee table by the front door held neatly stacked copies of Jane’s Fighting Ships and other encyclopedias of modern warfare.

A quick check of public records or the Internet would reveal just enough about Cross International to assuage any suspicions—Cross had been in business since the mid-1990s and its state, county, and federal tax and incorporation records were in good order. Although Cross was a fairly generic name, a Google search of “Cross International” usually returned reaffirming hits, links to well-established import-export trade directories. Almost all of these links cited Suite 106 in Yardley and the Cross phone number, 215-496-1372.

The Cross website was understated and featured a standard, American-style business mission statement: “Cross International is a worldwide procurer of military and defense-related items and technology facilitating the needs of various customers throughout the world. Cross seeks to solve the difficulties associated with procurement through their many years of experience in the international logistics and acquisition business. Through a network of relationships, Cross has access to various international inventories that can facilitate many of your defense needs. Cross is an authorized broker for many U.S. and Canadian manufacturers. Cross also provides freight forwarding, brokerage and transportation assistance and guidance relative to the movement of sensitive commodities throughout the world.”

The customers Patrick Lynch hoped to attract would instantly understand what Cross really offered. Cross helped foreign corporations—often no more than state-run front companies—buy sophisticated, American-made military-grade equipment and technology. Cross not only promised to help foreigners find the highest-quality items for the best price, it facilitated the hardest part of any global arms deal: navigating, and, if necessary, circumventing the byzantine U.S. regulations that limit export of military products to certain nations. “Freight forwarding . . . sensitive commodities throughout the world” meant that Cross could smuggle contraband military equipment to banned nations by routing it through ports like Vancouver, Dubai, Amsterdam, or Singapore. The practice, known as “transshipping,” was the primary method of sending contraband to China, Iran, Pakistan, and war-torn countries in Africa.

To attract the right kind of customer, Lynch had embedded certain terms and phrases in the company website’s metadata, the invisible keywords that search engines like Google use to link search terms to websites. In the webpage’s metadata header, he had typed: “Laser, tanks, infrared, night vision, night targeting system, tandem warhead, reactive armor, grenade launcher, forward looking infrared, F-14, assault rifle, M4 carbine, M24 sniper rifle, M240 machine gun, unmanned aerial vehicle, sonar, radar, electronic combat systems, military cryptology, kinetic energy weapon systems.”

On an average day, Patrick Lynch received a handful of fresh foreign queries for American-made military equipment and sophisticated electronics. Each query usually contained dozens of RFQs, or requests for price quotes. The RFQs often arrived in the form of an Excel spreadsheet with product or part numbers. Like any arms broker, Lynch would turn to the Internet, Google each product, figure out what it was and who made it, how much it cost, how long it took to manufacture, how it might be shipped, what export regulations applied, and what the profit margin might be. Discreet research could be intense and time-consuming.

With so many sales variables, it was not uncommon for negotiations to stretch across months. One recent successful transaction had lingered for nearly a year. It involved a Japanese client who sought something called an AN/PEQ-2. Lynch looked it up and found that an AN/PEQ-2 is an Infrared Target Pointer/Illuminator/Aiming Laser, and is deployed by U.S. troops in Iraq and Afghanistan. The device, made in New Hampshire, is a waterproof, rifle-mounted spotting laser that can project a red dot on a target miles away. The man who emailed Cross sought five of them, priced at $1,200 each. He asked if the aiming laser could be exported to Japan, and a Cross employee told him that it could not, as this would violate U.S. export law. So the man supplied Cross with an address in California for delivery. Lynch and his Cross colleagues replied that the law still requires them to certify the name of the end user, or final recipient. No problem, the Japanese buyer assured them. He promised to come up with a company name, and made a date to meet Lynch and other Cross executives in Los Angeles.

Only when he was arrested did the Japanese man learn Lynch’s true identity—an undercover agent for Homeland Security Investigations (HSI), a division of U.S. Immigration and Customs Enforcement (ICE). Cross International was an undercover HSI company.



With its technical superiority, the U.S. military has created an unrivaled and formidable military machine, a superpower. With superior night vision and targeting software, the U.S. Army owns the night. With undetectable submarines and massive aircraft carriers, the U.S. Navy dominates every ocean, above and below the surface. With stealth fighters and bombers, the U.S. Air Force rules the skies.

The American advantage is so pronounced that on many battlefields the greatest threat to U.S. soldiers, sailors, and pilots is an enemy firing back with American-made weapons and technology. These tiny weapons of modern war—precision microchips, missile-guiding gyroscopes, night vision scopes, radar-cloaking material—can alter the balance of power. The most valuable military components are often the smallest state-of-the-art devices, most no larger than a stick of chewing gum, but nonetheless lethal, capable of guiding missiles, jamming radar, pinpointing submarines, and triggering countless weapons, from wireless IEDs to nuclear explosions.

To maintain its strategic and tactical advantages, the U.S. government long ago adopted a matrix of laws and regulations restricting the sale of sensitive technology and munitions overseas. But in a global economy fed by the speed and anonymity of Internet communication and cheap international shipping, it is growing increasingly difficult to enforce smuggling laws. Worse, an outdated and needlessly bureaucratic regulatory scheme—one filled with inherent conflicts of interest—has hamstrung law enforcement. As a result, America’s technical advantage is evaporating.

Throughout history, the practice of war has evolved at the pace of technology, from ancient metal body armor to medieval armadas to atomic weapons. The nations with the most advanced technology usually win the wars and enjoy the spoils, political and economic dominance. “Tools, or weapons, if only the right ones can be discovered, form 99 percent of victory,” the British general and military historian J. F. C. Fuller said in 1919. “Strategy, command, leadership, courage, discipline, supply, organization and all the moral and physical paraphernalia of war are nothing to a high superiority of weapons.”

In the fifth century BC, Athens became a superpower in part by developing a fleet of sophisticated and expensive warships, triremes powered by oars. The nimble galley ships, built with pegs and rods, rather than nails and screws, dominated the Mediterranean Sea—so much so that following a victory against the Persians in 480 BC, Themistocles urged his fellow Athenians to preserve this advantage by preemptively burning the enemy’s dockyards. His idea was rejected as immoral, and, sure enough, decades later, the Persians struck back by secretly bankrolling a proxy navy led by the Athenians’ archrivals, the Spartans. “While it lasted, the age of the trireme anticipated issues facing today’s nuclear world,” Bard College classics professor James Romm has written. “Then as now, a single advanced weapon loomed so large that nations tried to strip it away with surgical strikes.”

In the late fifteenth century, the advent of the mobile cannon triggered the rise of a European military machine that would grow to dominate global affairs for nearly five hundred years. Consider that at the outset of the artillery age, Europe controlled just 15 percent of the world’s landmass. “But by the early sixteenth century, Europe would emerge as the richest, most dynamic and most powerful region on the planet,” military historian Max Boot writes in War Made New. “In the years ahead, its explorers, merchants, preachers, settlers, sailors and soldiers would subdue much of the rest of mankind, controlling 35 percent of the earth’s landmass by 1800 and a staggering 84 percent by 1914.”

This technology revolution began in 1494, at the height of the Renaissance, when the French invaded the Italian city-states of Naples, Venice, and Florence. France sent 27,000 traditional soldiers to Italy, primarily a mix of archers and cavalrymen in armor, carrying lances and swords. But France also deployed dozens of newfangled mobile cannons. Though gunpowder had arrived in Europe a few hundred years earlier and some had developed rudimentary cannons, the French improved the technology dramatically. They developed a cannon with significantly more explosive force and crafted iron ordnance that could travel farther and faster than standard stone cannonballs. As important, the French cast the cannon from bronze, a lighter metal, which allowed the artillery to be mounted on raised wooden carriages and, thus, for the first time, be wheeled by horses rather than dragged by oxen. When the French forces invaded, the Italian armies took traditional positions in castles built of stone. The new cannons obliterated the castles. Many years later, a Florentine politician, Francesco Guicciardini, reflected on the profound changes wrought by the new weapon. “[Previously] when war broke out, the sides were so evenly balanced, the military methods so slow and the artillery so primitive, that the capture of a castle took up almost a whole campaign.” The introduction of modern, mobile, powerful artillery turned “everything upside down,” he wrote. “Wars became sudden and violent . . . cities were reduced with great speed, in a matter of days and hours rather than months.”

England soon surpassed France in cannon technology, and beginning with the 1588 battle against the Spanish Armada, grew to dominate the seas, and therefore much of the world. As England built its empire, Britain sought to protect its technological advantage. In 1610, the British made it illegal to export ordnance, gunmetal, and iron ore without a government license. Other European nations adopted similar, rudimentary export controls. Milan forbade the emigration of skilled arms workers. Tuscany banned the export of munitions, powder, and metal to the Barbary Muslims.

In early U.S. history, trade and tariff policy rarely addressed counter-proliferation. Presidents imposed exceptions during war—Lincoln’s blockade of the Confederate states—but until World War I the United States, largely neutral in foreign affairs, promoted free trade. Indeed, for three years preceding America’s entry into the war in 1917, U.S. nonmilitary exports continued to flow to Germany. The Trading with the Enemy Act of 1917 formed the basis for an export-control framework that survives to this day, and the government published a list of thousands of embargoed foreign companies and individuals, a forerunner to the current prohibited entities lists. Under the regime, American shippers were required to obtain a government license before exporting products to a person or business on the list.

Following World War I, a series of Senate hearings fanned suspicions that U.S. munitions manufacturers had helped push the nation into war. The backlash spurred postwar export controls on munitions to certain countries, and by 1935, reflecting the American return toward isolationism, Congress adopted the Neutrality Act, which forbade the United States from trading with any nation at war with another. One provision created a National Munitions Control Board to license exports. United States policy shifted abruptly again at the outbreak of World War II, from neutrality to support for the Allies. In 1940, the United States banned aviation fuel and machine tools to the Japanese, and even before Pearl Harbor, Roosevelt imposed a complete ban on military items to Japan. By 1941, the ban extended to trade with Germany and Italy. This did not, however, prevent several major American corporations from continuing to do business with the Nazis or their proxies, according to documents unearthed decades later by journalist Charles Higham. In his book Trading with the Enemy, he writes that at the height of the war Standard Oil smuggled fuel to the enemy through Switzerland, and, with authorization from Detroit, a Ford factory in France built trucks for the Nazis. But these acts were overshadowed by the tremendous technological advances during the war, from the development of the atomic bomb to radar. The United States won the decisive battle of Midway in part because American ships carried rudimentary radar that could detect incoming enemy planes from miles away, while the Japanese largely relied on scout planes and spotters.

After the war, U.S. policymakers struggled to contain communism, in part by limiting technology exports to the Soviet Union, while at the same time working to rebuild the European economy, for which free trade was critical. Some Americans viewed the Soviet Union as an untapped market; others took a more cautious view. In a 1946 report to President Truman, White House counselor Clark Clifford advised that the surest way to influence the Soviets was to engage them in trade, though he warned, presciently, that “the United States should avoid premature disclosure of scientific and technological information relating to war matériel.” Truman’s inclination after the war was to embrace free trade. His administration shrank the wartime list of controlled goods and abolished the Trading with the Enemy list. Reflecting the prevailing free trade vision, the Commerce Department assigned just one person to enforce export controls.

The era of free trade did not last long. After the communists seized power in Czechoslovakia...

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