Author: jeremy

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NSD201606

DOJ201606-093A

Valspar Trade Secrets to China

On Dec. 8, 2010, David Yen Lee, a former chemist for Valspar Corporation, a Chicago paint manufacturing company, was sentenced in the Northern District of Illinois to 15 months in prison for stealing trade secrets involving numerous formulas and other proprietary information valued up to $20 million as he prepared to go to work for a competitor in China. Lee, formerly a technical director in Valspar Corp’s architectural coatings group since 2006, pleaded guilty in Sep. 2010 to using his access to Valspar’s secure internal computer network to download approximately 160 original batch tickets, or secret formulas for paints and coatings. Lee also obtained raw materials information, chemical formulas and calculations, sales and cost data, and other internal memoranda, product research, marketing data, and other materials from Valspar. Lee admitted that between Sep. 2008 and Feb. 2009, he had negotiated employment with Nippon Paint, in Shanghai, China and accepted employment with Nippon as vice president of technology and administrator of research and development. Lee was scheduled to fly from Chicago to Shanghai on Mar. 27, 2009. He did not inform Valspar that he had accepted a job at Nippon until he resigned on Mar. 16, 2009. Between Nov. 2008 and Mar. 2009, Lee downloaded technical documents and materials belonging to Valspar, including the paint formula batch tickets. He further copied certain downloaded files to external thumb drives to store the data, knowing that he intended to use the confidential information belong to Valspar for his own benefit. There was no evidence that he actually disclosed any of the stolen trade secrets. This investigation was conducted by the FBI.

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NSD201606

DOJ201606-088

Ford Motor Company Trade Secrets to China

On Apr. 13, 2011, Xiang Dong Yu, aka Mike Yu, was sentenced in the Eastern District of Michigan to 70 months in prison. Previously, on Nov. 17, 2010, Dong, a product engineer with Ford Motor Company pleaded guilty in the Eastern District of Michigan to 2 counts of theft of trade secrets. According to the plea agreement, Yu was a Product Engineer for Ford from 1997 to 2007 and had access to Ford trade secrets, including Ford design documents. In Dec. 2006, Yu accepted a job at the China branch of a U.S. company. On the eve of his departure from Ford and before he told Ford of his new job, Yu copied some 4,000 Ford documents onto an external hard drive, including sensitive Ford design documents. Ford spent millions of dollars and decades on research, development, and testing to develop and improve the design specifications set forth in these documents. On Dec. 20, 2006, Yu traveled to the location of his new employer in Shenzhen, China, taking the Ford trade secrets with him. On Jan. 2, 2007, Yu emailed his Ford supervisor from China and informed him that he was leaving Ford’s employ. In Nov. 2008, Yu began working for Beijing Automotive Company, a direct competitor of Ford. On Oct. 19, 2009, Yu returned to the U.S. Upon his arrival, he was arrested. At that time, Yu had in his possession his Beijing Automotive Company laptop computer. During an examination of that computer, the FBI discovered that 41 Ford system design specifications documents had been copied to the defendant’s Beijing Automotive Company work computer. The FBI also discovered that each of those design documents had been accessed by Yu during the time of his employment with Beijing Automotive Company. This case was investigated by the FBI.

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NSD201606

DOJ201606-080

Trade Secrets to Foreign Government

On Dec. 19, 2011, Elliot Doxer, of Brookline, Mass., was sentenced in the District of Massachusetts to 6 months in prison and 2 years supervised release. Previously, on Aug. 30, 2011, Doxer pleaded guilty to one count of foreign economic espionage for providing trade secrets over an 18-month period to an undercover FBI agent posing as an Israeli intelligence officer. Neither the government of Israel nor anyone acting on its behalf committed any offense under U.S. laws in this case. Doxer was a former employee of Akamai Technologies, Inc., who in Jun. 2006 sent an e-mail to the Israeli consulate in Boston stating that he worked in Akamai’s finance department and was willing to provide information that might help Israel. In Sep. 2007, an undercover FBI agent posing as an Israeli intelligence officer spoke to Doxer and established a “dead drop” where the agent and Doxer could exchange information. From Sep. 2007 through Mar. 2009, Doxer visited the dead drop at least 62 times to leave information, retrieve communications or check for new communications. Doxer provided the undercover agent with Akamai customer lists, employee lists, contract information and other trade secrets. He was arrested on Oct. 6, 2010 on a complaint charging him with wire fraud. That charge was dismissed as part of the plea agreement. The case was investigated by the FBI.

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NSD201606

DOJ201606-079B

Dow and Cargill Trade Secrets to China

On Dec. 21, 2011, in the Southern District of Indiana, Kexue Huang, a Chinese national and former resident of Indiana, was sentenced to 87 months imprisonment and three years’ supervised release stemming from his plea of guilty on Oct. 18, 2011 to charges of economic espionage to benefit a foreign university tied to the People’s Republic of China (PRC) and theft of trade secrets. Huang also pleaded guilty on Sep. 19, 2011 to one count of an indictment filed in the District of Minnesota for stealing a trade secret from a second company, Cargill Inc. Previously, on Jun. 16, 2010, Huang was charged in the Southern District of Indiana with misappropriating and transporting trade secrets to the PRC while working as a research scientist at Dow AgroSciences LLC. On Oct. 18, 2011, a separate indictment in the District of Minnesota charging Huang with stealing a trade secret from company, Cargill Inc., was unsealed. According to court documents, from Jan. 2003 until Feb. 2008, Huang was employed as a research scientist at Dow. In 2005, he became a research leader for Dow in strain development related to unique, proprietary organic insecticides marketed worldwide. Huang admitted that during his employment at Dow, he misappropriated several Dow trade secrets. According to plea documents, from 2007 to 2010, Huang transferred and delivered the stolen Dow trade secrets to individuals in Germany and the PRC. With the assistance of these individuals, Huang used the stolen materials to conduct unauthorized research to benefit foreign universities tied to the PRC. Huang also admitted that he pursued steps to develop and produce the misappropriated Dow trade secrets in the PRC. After Huang left Dow, he was hired in Mar. 2008 by Cargill, an international producer and marketer of food, agricultural, financial and industrial products and services. Huang worked as a biotechnologist for Cargill until Jul. 2009. Huang admitted that during his employment with Cargill, he stole one of the company’s trade secrets – a key component in the manufacture of a new food product, which he later disseminated to another person, specifically a student at Hunan Normal University in the PRC. According to the plea agreement, the aggregated loss from Huang’s conduct exceeds $7 million but is less than $20 million. On Dec. 27, 2011, Huang received a sentence in the District of Minnesota case of 87 months imprisonment and three years, to be served concurrently with the term imposed in the defendant’s case in the Southern District of Indiana. This investigation was conducted by the FBI.

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NSD201606

DOJ201606-079A

Wire Fraud in Trade Secrets Case Involving China

On Jan. 5, 2012, Yan Zhu, a Chinese citizen in the U.S. on a work visa, was sentenced in the District of New Jersey to 3 years of probation and a special assessment of $700. Previously, on Apr. 6, 2011, Zhu was convicted in the District of New Jersey on 7 counts of wire fraud in connection with his scheme to steal confidential and proprietary business information relating to computer systems and software with environmental applications from his New Jersey employer. He was acquitted on the charge of conspiracy to steal trade secrets and two counts of unauthorized transmission of trade secrets in interstate or foreign commerce. On Apr. 10, 2009, Zhu was arrested on charges of theft of trade secrets, conspiracy, wire fraud, and theft of honest services fraud in connection with a plot to steal software from his former U.S. employer and sell a modified version to the Chinese government after he was fired. Zhu was employed as a senior environmental engineer from May of 2006 until his termination in Jul. of 2008. Zhu worked for a comprehensive multi-media environmental information management portal that developed a proprietary software program for the Chinese market which allows users to manage air emissions, ambient water quality, and ground water quality. This investigation was conducted by the FBI

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NSD201606

DOJ201606-078

Dow Trade Secrets to China

On Jan. 12, 2012, Wen Chyu Liu, aka David W. Liou, a former research scientist at Dow Chemical Company in Louisiana, was sentenced in the Middle District of Louisiana to 60 months in prison, two years supervised release, a $25,000 fine and was ordered to pay $600,000 in restitution. Liu was convicted on Feb. 7, 2011 of one count of conspiracy to commit trade secret theft for stealing trade secrets from Dow and selling them to companies in China, and he was also convicted of one count of perjury. According to the evidence presented in court, Liu came to the United States from China for graduate work. He began working for Dow in 1965 and retired in 1992. Dow is a leading producer of the elastomeric polymer, chlorinated polyethylene (CPE). Dow’s Tyrin CPE is used in a number of applications worldwide, such as automotive and industrial hoses, electrical cable jackets and vinyl siding. While employed at Dow, Liu worked as a research scientist on various aspects of the development and manufacture of Dow elastomers, including Tyrin CPE. The evidence at trial established that Liu conspired with at least four current and former employees of Dow’s facilities in Plaquemine, Louisiana, and in Stade, Germany, who had worked in Tyrin CPE production, to misappropriate those trade secrets in an effort to develop and market CPE process design packages to Chinese companies. Liou traveled throughout China to market the stolen information, and he paid current and former Dow employees for Dow’s CPE-related material and information. In one instance, Liou bribed a then-employee at the Plaquemine facility with $50,000 in cash to provide Dow’s process manual and other CPE-related information. The investigation was conducted by the FBI.

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NSD201606

DOJ201606-074

Trade Secrets to U.S. Subsidiary of Chinese Company

On May 7, 2012, Yuan Li, a former research chemist with the global pharmaceutical company Sanofi-Aventis, was sentenced in the District of New Jersey to 18 months imprisonment, 2 years of supervised release, $100 special assessment and restitution in the amount of $131,000. Previously, on Jan. 17, 2012, Li pleaded guilty to stealing Sanofi’s trade secrets and making them available for sale through Abby Pharmatech, Inc., the U.S. subsidiary of a Chinese chemicals company. According to court documents, Li worked at Sanofi headquarters in Bridgewater, N.J., from Aug. 2006 through Jun. 2011, where she assisted in the development of several compounds (trade secrets) that Sanofi viewed as potential building blocks for future drugs. While employed at Sanofi, Li was a 50 percent partner in Abby, which sells and distributes pharmaceuticals. Li admitted that between Oct. 2008 and Jun. 2011, she accessed internal Sanofi databases and downloaded information on Sanofi compounds and transferred this information to her personal home computer. She also admitted that she made the stolen compounds available for sale on Abby’s website. This investigation was conducted by the FBI.

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NSD201606

DOJ201606-070

Motorola Trade Secrets to China

On Aug. 29, 2012, Hanjuan Jin, a former software engineer for Motorola, was sentenced in the Northern District of Illinois to four years in prison for stealing trade secrets from Motorola, specifically Motorola’s proprietary iDEN telecommunications technology, for herself and for Sun Kaisens, a company that developed products for the Chinese military. According to court documents filed in the case, Motorola spent more than $400 million researching and developing iDEN technology in just a matter of years. On Feb. 8, 2012, Jin was found guilty of three counts of stealing trade secrets. Jin, a naturalized U.S. citizen born in China, possessed more than 1,000 electronic and paper Motorola proprietary documents when she was stopped by U.S. authorities at Chicago’s O’Hare International Airport as she attempted to travel to China on Feb. 28, 2007. The judge presiding over the case found her not guilty of three counts of economic espionage for the benefit of the government of China and its military. According to the evidence at trial, Jin began working for Motorola in 1998, and took medical leave in Feb. 2006. Between Jun. and Nov. 2006, while still on sick leave, Jin pursued employment in China with Sun Kaisens, a Chinese telecommunications firm that developed products for the Chinese military. Between Nov. 2006 and Feb. 2007, Jin returned to China and did work for Sun Kaisens on projects for the Chinese military. On Feb. 15, 2007, Jin returned to the United States from China and reserved a flight to China scheduled to depart on Feb. 28, 2007. Jin advised Motorola that she was ready to return to work at Motorola, without informing Motorola that she planned to return to China to work for Sun Kaisens. On Feb. 26, 2007, she returned to Motorola, and accessed hundreds of technical documents belonging to Motorola on its secure internal computer network. As she attempted to depart from Chicago to China, authorities seized numerous materials, some of which provided a description of communication feature that Motorola incorporates into its telecommunications products. Authorities also recovered classified Chinese documents describing telecommunication projects for the Chinese military. Jin was charged with theft of trade secrets in an Apr. 1, 2008 indictment. A superseding indictment returned on Dec. 9, 2008 charged her with economic espionage. The investigation was conducted by the FBI, with assistance from U.S Customs and Border Protection.

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NSD201606

DOJ201606-069

Theft of Trade Secrets for Potential Use in China

On Sep. 19, 2012, Chunlai Yang, a former senior software engineer for Chicago-based CME Group, Inc., pleaded guilty in the Northern District of Illinois to two counts of theft of trade secrets for stealing source code and other proprietary information while at the same time pursuing plans to improve an electronic trading exchange in China. Yang admitted that he downloaded more than 10,000 files containing CME computer source code that made up a substantial part of the operating systems for the Globex electronic trading platform. The government maintains that the potential loss was between $50 million and $100 million. Yang began working for CME Group in 2000 and was a senior software engineer at the time of his arrest. Between late 2010, and Jun. 30, 2011, Yang downloaded more than 10,000 computer files containing CME computer source code from CME’s secure internal computer system to his CME-issued work computer. He then transferred many of these files from his work computer to his personal USB flash drives, and then transferred many of these files from his flash drives to his personal computers and hard drives at his home. Yang also admitted that he downloaded thousands of others CME files. Yang admitted that he and two unnamed business partners developed plans to form a business referred to as the Tongmei (Gateway to America) Futures Exchange Software Technology Company (Gateway), whose purpose was to increase the trading volume at the Zhangjiagang, China, chemical electronic trading exchange (the Zhangjiagang Exchange.) The Zhangjiagang Exchange was to become a transfer station to China for advanced technologies companies around the world. Yang expected that Gateway would provide the exchange with technology through written source code to allow for high trading volume, high trading speeds, and multiple trading functions. Yang was indicted on Sep. 28, 2011. This investigation was conducted by the FBI.

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NSD201606

DOJ201606-062

Trade Secrets to China

On Jan. 25, 2013, Ji Li Huang, a Chinese business owner and his employee, Xiao Guang Qi, pleaded guilty and were sentenced in the Western District of Missouri for conspiring to steal trade secrets from Pittsburgh Corning Corporation, that produces FOAMGLAS® insulation. Huang is the CEO of Ningbo Oriental Crafts Ltd., which employs 200 factory workers to manufacture promotional products for export to the United States and Europe. Qi was his employee. Huang was sentenced to 18 months in prison and ordered to pay a fine of $250,000. Qi was sentenced to time served and ordered to pay a fine of $20,000. Pittsburgh Corning, headquartered in Pittsburgh, Penn., manufactures various grades or densities of cellular glass insulation sold under the trade name FOAMGLAS®. That material is used to insulate buildings, industrial piping systems and liquefied natural gas storage tank bases. Pittsburgh Corning considers the product formula and manufacturing process for FOAMGLAS® proprietary and trade secrets. By pleading guilty, Huang and Qi admitted that they attempted to illegally purchase trade secrets of Pittsburgh Corning for the purpose of opening a plant in China to compete with Pittsburgh Corning. The court ruled that the intended loss to Pittsburgh Corning exceeded $7 million, based on the company’s investment of time and resources to research, develop and protect the proprietary information the defendants attempted to steal. Huang and Qi were arrested when they met with an individual they believed to be an employee of Pittsburgh Corning who had stolen documents that contained trade secret information and was willing to sell it to them for $100,000. That employee, however, was cooperating with law enforcement and the meetings in Kansas City were a sting operation that led to their arrests on Sep. 2, 2012. The case was investigated by the FBI.

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NSD201606

DOJ201606-061

Military Technical Data and Trade Secrets to China

On Mar. 25, 2013, Sixing Liu, aka “Steve Liu,” a native of China with a PhD in electrical engineering who worked as a senior staff engineer for Space & Navigation, a New Jersey-based division of L-3 Communications, was sentenced in the District of New Jersey to 70 months in prison for exporting sensitive U.S. military technology to China, stealing trade secrets and lying to federal agents. On Sep. 26, 2012, Liu was convicted of nine of 11 counts of an Apr. 5, 2012 second superseding indictment, specifically six counts of violating the Arms Export Control Act, one count of possessing stolen trade secrets in violation of the Economic Espionage Act, one count of transporting stolen property, and one count of lying to federal agents. The jury acquitted Liu on two counts of lying to federal agents. According to documents filed in the case and evidence presented at trial, in 2010, Liu stole thousands of electronic files from his employer, L-3 Communications, Space and Navigation Division. The stolen files detailed the performance and design of guidance systems for missiles, rockets, target locators, and unmanned aerial vehicles. Liu stole the files to position and prepare himself for future employment in China. As part of that plan, Liu delivered presentations about the technology at several Chinese universities, the Chinese Academy of Sciences, and conferences organized by Chinese government entities. However, Liu was not charged with any crimes related to those presentations. On Nov. 12, 2010, Liu boarded a flight from Newark to China. Upon his return to the United States on Nov. 29, 2010, agents found Liu in possession of a non-work-issued computer found to contain the stolen material. The following day, Liu lied to ICE agents about the extent of his work on U.S. defense technology. The State Department later verified that several of the stolen files on Liu’s computer contained technical data that relates to defense items listed on the United States Munitions List. The jury also heard testimony that Liu’s company trained him about the United States’ export control laws and told him that most of the company’s products were covered by those laws. Liu was first arrested on Mar. 8, 201, in Chicago on a complaint in the District of New Jersey charging him with one count of exporting defense-related technical data without a license. The investigation was conducted by the FBI, ICE and CBP.

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NSD201606

DOJ201606-060

GM Trade Secrets to China

On Apr. 20, 2013, in the Eastern District of Michigan, a former General Motors engineer, Shanshan Du, was sentenced to 12 months and one day along with a $12,500 fine. Her husband, Yu Qin, was sentenced to 36 months on each count to be served concurrently along with a $25,000 fine. Both defendants were found guilty by a federal jury on Nov. 30, 2012, for conspiring to steal hybrid technology trade secrets from GM with the intent to use them in a joint venture with an automotive competitor in China. Du and Qin were also convicted of unlawful possession of trade secrets after a month-long trial Nov. 2012. Qin was also convicted of wire fraud and obstruction of justice. The evidence at trial showed that from Dec. 2003 through May 2006, the defendants conspired to steal GM’s trade secret information. Du, while employed with GM’s hybrid vehicle technology group, provided GM trade secret information relating to hybrid vehicles to her husband, Qin, for the benefit of their private company, Millennium Technology International Inc. (MTI), which the defendants jointly owned and operated. Approximately five days after Du was offered a severance agreement by GM in Jan. 2005, she copied more than 16,000 GM files, including trade secret documents, to an external computer hard drive used for MTI business. A few months later, Qin moved forward on a business venture to provide hybrid vehicle technology to Chery Automobile, an automotive manufacturer based in China and a competitor of GM. In May 2006, during the execution of a search warrant, the FBI recovered multiple computer devices containing GM trade secret information on several computer and electronic devices located in the defendants’ residence. Shortly after the FBI search team left the defendants’ residence, the defendants drove to a dumpster behind a grocery store, where defendant Qin discarded plastic bags containing shredded documents, including GM trade secret information, that were responsive to federal grand jury subpoenas seeking information relating to MTI and hybrid vehicles. Based on preliminary calculations, GM estimates that the value of the stolen GM documents is more than $40 million. This case was investigated by the FBI.