A federal grand jury alleges that two local businessmen were part of a conspiracy to deliver prohibited magnesium from China into flares that protect U.S. military aircraft from heat-seeking missiles.

Named in an indictment announced Friday are William Nehill, 65, of Orchard Park, president

of International Technology Group, located in Orchard Park; and Charles Wright, 60, of

Youngstown, president of ESM Group of Amherst. ESM was not named in the indictment as a defendant.

Attempts to reach the two were unsuccessful late Friday.

They are among a total of six people and three companies charged with conspiracy to defraud

the federal government, and with wire fraud, which carries the more severe penalty of 20 years

imprisonment and a $250,000 fine if convicted.

"The defendants stand accused of intentionally evading Department of Defense regulations,

jeopardizing military service men and women and a critical American industry, and defrauding

the government out of millions of dollars of tariffs and duties," U.S. Attorney William J.

Hochul Jr. said in announcing the indictment.

A clip from Hochul's announcement:

More on the countermeasure flares:

Also charged are:

Eldon Bott, 58, of Brigham City, Utah, president of Innovative Materials and

Solutions, of Brigham City.

Gregory Magness, 62, of Polk, Pa., president of Superior Metal Powders, of Franklin,

Pa.

Justin Magness, 34, of Oil City, Pa., vice president of Superior Metal Powders Inc.

Qian Chen, of Beijing, whom authorities acknowledged is unlikely to be brought into

custody.

The indictment describes an effort to import magnesium from China for use in countermeasure

flares when the Defense Department would allow only magnesium from the United States or Canada

to be used.

Under a Defense Department contract, Kilgore Flares of Toone, Tenn., produced 1.8 million

flares worth some $42 million — unaware that it had been supplied barred magnesium, the

federal officials said.

The flares are dropped by military aircraft being pursued by heat-seeking missiles, to give

those missiles a false target. Otherwise, the missile would speed toward heat from the jet

engines, said Assistant U.S. Attorney Michael DiGiacomo, who presented the evidence to the

grand jury.

He said no flares made with Chinese magnesium were ever loaded into the defense systems of

U.S. aircraft.

The indictment alleges the participants added aluminum nuggets into the fine magnesium

powder during shipment from China, so that it could be labeled as a more coarse type of

magnesium used in the steel industry, "magnesium desulfurization reagent."

The product carried a lower price and limited suspicion by customs agents. The defendants

also were able to evade the anti-dumping tariffs that protect the U.S. magnesium industry

because it provides an important element for the military.

"This is a case where men, operating under the guise of legitimate businesses, conspired to

import mislabeled and undervalued magnesium powder — a key component of flares —

into the United States," said Lev Kubiak, special agent in charge for U.S. Immigration and

Customs Enforcement. "As a result, [the Department of Defense] was sold nonconforming flares,

which would have put our war fighters at additional risk."

The indictment describes the pipeline and its origins:

In Utah, in 2002 or early 2003, Bott discussed with Greg Magness, in Franklin, Pa.,

an opportunity to sell fine magnesium to the defense industry for flares.

Magness, unable to grind magnesium into the fine powder required, approached Wright,

and he agreed to pay Bott and the Magnesses a commission based on the tons of magnesium they

could arrange to sell.

However, they turned to Qian Chen to find facilities in China that could produce

fine magnesium powder and supplement it with aluminum nuggets.

In Orchard Park, Nehill and his company served as the importer. He and Qian Chen

would agree to falsely label the shipping drums and to keep two sets of invoices, with one

reserved for a falsely stated low price.

he drums would be shipped to ESM Group's facilities in Pennsylvania, and the nuggets

would be separated from the fine magnesium powder from China. ESM then shipped the magnesium

powder to unsuspecting officials at Kilgore Flares.

Hochul said the federal government will also seek to recover the $10 million in duties that

were avoided.

A video provided by the United States Attorney's Office shows flares being deployed by a military aircraft: