Flood of fake microchips threaten Georgia troops

by: Jim Strickland Updated:

Channel 2 photographer Richard Guittar records as microchips are inspected.

ATLANTA,None - The Senate Armed Services Committee will hold a hearing next week after a lengthy investigation into counterfeit electronics polluting the military supply chain.

An investigation by Channel 2's Jim Strickland revealed fake chips have been discovered at a Georgia military base and at a Roswell military supplier.

Technicians repairing an F-15 flight computer at Robins Air Force Base in 2008 said they discovered that four replacement microchips were fake just in time.

"Our job is to ensure that those who want to counterfeit parts, that we don't allow them into the supply chain. It's a battle every day," said base commander Maj. Gen. Robert McMahon.

McMahon is battling back-alley operations like ones in Shenzhen, China. Video of laborers there revealed an operation in which workers peel chips off old circuit boards, Strickland reported. Some are reconditioned and relabeled as military grade.

"You look at all of those gaps in the structure there," McMahon said as he showed Strickland the interior of an F-15 nose assembly.

"There'd be a black box in there and each black box has a myriad of circuit cards and each card has a variety of chips," he added. The modules control radar, flight and weapons systems in the jet.


The technology is rugged but dated, military officials said. Much of the military's gear is so old the original manufacturers no longer make a chip that fits, and that's the problem.

"Anyone who has legacy-type products is forced to go into the independent world of electronics distribution, and that world can be a scary place," said Dan Ellsworth, CEO of World Micro in Roswell. His company is a global components dealer.
Ellsworth infiltrated the Shenzhen facility himself.


VIDEO: Sen. Saxby Chambliss wants answers

"It's a made-to-order counterfeit type operation that really is out of control," he told Strickland.

Ellsworth said fake parts may work at first, until they are subjected to the stress of vibration, heat and altitude in a fighter jet. Ellsworth complains the government has not done enough to vet its suppliers.

"The government has taken a position to allow their purchasing people to procure parts on the computer by going on a Google search, typing in a part number and finding someone who's got it," he said.

 Federal agents found photos captioned "Shenzhen hard at work," at Visiontech Components of Clearwater, Fla., Strickland learned during his investigation. Strickland found an archived page of the company's website displaying Visiontech's military supplier number, called a cage code. Records show the Navy bought more than 59,000 fake chips and traced them to Vision Tech owner Shannon Wren. Wren died of a drug overdose in May while awaiting trial for counterfeiting. His office manager, Stephanie McCloskey, pleaded guilty to one felony count and was sentenced last month to more than four years in prison.

Evidence shows Wren made $15 million in sales over several years and that 95 percent of his chips were counterfeit. One document Strickland found lists
Ellsworth's company, World Micro, among Wren's clients.
"You find counterfeit parts here that you get sold from other people?" Strickland asked

Ellsworth said.

Ellsworth allowed Strickland and photographer Richard Guittar into an expansive quality control lab where technicians root out fake chips coming in from other suppliers.

Quality director Gary Beckstedt said exhaustive testing can reveal an aging chip from an old computer dummied up to look like a fresh, a military-grade part. Guittar recorded video of acetone taking off a chip's sprayed-on counterfeit top coating.

"They've been caught red handed. These are slam dunk counterfeits," said Beckstedt, who didn't reveal the source of the chips.

The Government Accountability Office last year criticized the Pentagon for having no comprehensive plan to detect fake chips.

At Robins Air Force Base, McMahon said his engineers test chips from every new supplier to make sure they're legit. Pilot Steve D'Amico told Strickland his life depends on those tests.

"I do trust that by the time it gets to me it's going to be right," said D'Amico, moments before a test flight.

Strickland met earlier at the base with Sen. Saxby Chambliss, a member of the Armed Services Committee who plans to attend next week's hearing.

"Whether it's an F-15 or a tank or a Humvee, we want to make sure the right equipment is on there and that we're not purchasing anything that's substandard," said Chambliss.

Ellsworth is hoping the Senate investigation leads to a new mandate requiring the Pentagon to only deal with legitimate suppliers who test for illegitimate parts.

"If we have situations where we have parts that are going to mission-critical applications, we feel that we got to have the U.S. government to stand behind and help to utilize only certified distributors," Chambliss said.

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