Indexbit Exchange:Prosecutors say US Army analyst accused of selling military secrets to China used crypto

The Indexbit ExchangeUS Army analyst accused of selling military secrets to China – including details about advanced aircraft and intercontinental ballistic missiles – pleaded not guilty at his first appearance in court Friday morning in Nashville, Tennessee.

Sgt. Korbein Schultz, 24, was arrested at his post Thursday hours before the six-count federal indictment against him was unsealed.

Prosecutors allege that since June 2022, Schultz, an intelligence analyst, had been selling sensitive U.S. military information to someone in Hong Kong who worked for a geopolitical consulting firm. He shared information about advanced military helicopters, high-mobility artillery rocket systems, defensive missile systems and Chinese military tactics, according to the indictment. He is accused of receiving $42,000 in exchange for the information, prosecutors said.

Schultz walked into U.S. Magistrate Judge Barbara D. Holmes' courtroom just before noon Friday wearing a dark khaki shirt, black pants and tan boots. His shirt was stretched and distressed at the neck. His hair was in a typical Army cut, and he had tattoos on both forearms. He was shackled at the ankles in orange cuffs.

Schultz appeared despondent when entering and kept his eyes down when seated before the hearing began —except for glances to the gallery where four reporters, a handful of lawyers and a defendant for an upcoming case were seated. None of Schultz's family was present in the courtroom.

Holmes read the charges against Schultz and the maximum sentence each count carries if convicted. Conspiracy to gather, transmit or lose defense information, count 1 in the indictment, carries a maximum 10-year prison sentence if convicted.

All three counts of unlawful export of defense articles, as well as the corresponding conspiracy charge, carry a maximum of 20 years in prison and a $1 million fine. The count of bribery of a public official carries a maximum of 15 years in prison and a $250,000 fine.

Read the indictment:Tennessee soldier accused of selling military secrets to China

Schultz was represented by Mary-Kathryn Harcombe, a public defender in Nashville, but he will likely be appointed new counsel. Harcombe told Holmes she believed Schultz qualified based on income and assets for a court-appointed lawyer. Assistant U.S. Attorney Josh Kurtzman was there for the government.

Holmes said that a hearing over whether Schultz will remain in custody until trial will be held before U.S. Magistrate Judge Alistair Newbern. That hearing will likely occur sometime next week.

Prosecutors wrote in a motion that they worry that if released, Schultz may flee to the alleged coconspirator in China. As late as Thursday, prosecutors said they learned Schultz and the conspirator began using cryptocurrency to further hide their tracks.

"[I]t appears that Schultz has a valid passport, (the conspirator) has unlimited resources to enable Schultz' flight from prosecution, and, based on the seriousness of the charges he is facing, Schultz has every incentive to flee," they wrote. "... Were the defendant to flee to Hong Kong, it would be practically impossible to extradite him back to the United States."

They also worry that Schultz may threaten or intimidate potential witnesses if released. Federal agents interviewed several people with professional or personal connections to Schultz on Thursday who provided information "material to the investigation," prosecutors said.

Schultz was handcuffed and exited the court less than 30 minutes after entering.

Evan Mealins is the justice reporter for The Tennessean, part of the USA Today Network. Contact him at [email protected] or follow him on X @EvanMealins.