updated 5/3/2007 9:24:16 PM ET 2007-05-04T01:24:16

A Chinese-born engineer accused of conspiring to export U.S. defense technology to China acknowledged Thursday that he copied classified documents from his employer, a defense contractor, and illegally kept copies in his office.

Chi Mak, 66, also acknowledged during cross-examination that he lied repeatedly to FBI agents during an hours-long interrogation immediately after his arrest and that he lied on his U.S. immigration form years ago. He said he didn’t realize at the time that making the copies was illegal.

Authorities believe Mak, a naturalized U.S. citizen, took thousands of pages of documents from his employer, Power Paragon of Anaheim, and gave them to his brother, who passed them along to Chinese authorities for years.

Mak was arrested in 2005 in Los Angeles after FBI agents stopped his brother and sister-in-law as they boarded a flight to Hong Kong. Investigators said they found three encrypted CDs in their luggage containing documents on a submarine propulsion system, a solid-state power switch for ships and a PowerPoint presentation on the future of power electronics.

He has pleaded not guilty to charges of conspiracy to export defense material to China, failure to register as a foreign agent, attempted and actual export of defense articles, and making false statements. His wife, brother and other relatives also have been indicted.

Under cross-examination Thursday by Assistant U.S. Attorney Greg Staples, Mak acknowledged that he lied to the FBI about the number of times he had visited China and lied when he said he didn’t have friends or relatives there. He said he felt intimidated during the interrogation.

“This is why I lied,” he said. “They were pushing me that night.”

'I didn't realize it was illegal'
Staples also questioned Mak closely about classified documents that he copied from his employer in 2001 and kept in his desk drawer. Under federal law, the documents should not have been copied and should not have been kept in an unsecured area, Staples said.

“When you copied this document you were standing in front of a sign that said you cannot copy classified documents, isn’t that true?” Staples said, referring to warning signs over Power Paragon’s copy machine.

“I don’t remember so many signs,” Mak said. “Now I realize it’s not right, but at that time I didn’t realize it was illegal.”

Staples suggested that Mak passed the classified documents to his brother, who took them to China several months later — something Mak denied. Staples suggested Mak did the same thing in 2004 with documents on technology related to the DDX destroyer, a new warship, and was trying to do the same thing in 2005 when his brother and sister-in-law were arrested.

In 2004, Staples said, Mak left for Shanghai two weeks after having his brother create an encrypted disk with a copy of the DDX documents on it. Once in China, Staples said, Mak called Pu Pei-Liang, who the government has alleged was Mak’s handler.

Quizzed on code sheet
Mak testified he did not know his brother was going to encrypt the disk.

“The last three times your brother has gone to China have been preceded with you copying classified information or encryption of defense technologies, is that correct?”

“Yes, but (they’re) not related,” Mak said.

Staples also questioned Mak about what he called a code translation sheet that was found during a search of Mak’s brother’s home after his arrest. The sheet, in Mak’s handwriting, indicates that the word “supermarket” means “good material,” while the word “cinema” means “retired.”

Mak testified Wednesday that the code sheet was created by his niece and was to be used to write letters about his sister-in-law’s mother, who was ill and being cared for in China by Pu.

He said he considered the code sheet a joke and did it only to humor his niece.

“The whole thing is ridiculous, that’s what I said,” Mak said.

Closing arguments in the case are scheduled for Monday, and the jury could get the case as early as Tuesday.

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