Trade Secrets for Company in China

On May 24, 2017, in the District of Columbia, a criminal complaint was unsealed charging seven individuals with conspiring to steal trade secrets from a business in the United States on behalf of a company in China that was engaged in manufacturing a highperformance, naval-grade product for military and civilian uses. On May 23, 2017, two defendants were arrested in Washington, D.C., three in the Southern District of Texas, and one in the District of Massachusetts. All are charged in the U.S. District Court for the District of Columbia with conspiracy to commit theft of trade secrets. The government also filed a related civil forfeiture complaint in the District of Columbia for two pieces of real property which were involved in, and are traceable to, the alleged illegal conduct. Those arrested and charged include four U.S. citizens: Shan Shi, 52, of Houston, Texas; Uka Kalu Uche, 35, of Spring, Texas; Samuel Abotar Ogoe, 74, of Missouri City, Texas; and Johnny Wade Randall, 48, of Conroe, Texas. Also charged were Kui Bo, 40, a Canadian citizen who has been residing in Houston, and Gang Liu, 31, a Chinese national who has been residing in Houston as a permanent resident. Additionally, charges were filed against one Chinese national living in China, Hui Huang, 32, an employee of the Chinese manufacturing firm allegedly involved in tasking employees of the Houston company. According to an affidavit filed in support of the criminal complaint, the trade secrets were stolen in order to benefit a manufacturer located in China; this manufacturer was the only shareholder for a company that had been incorporated in Houston. Between in or about 2012 and the present, the affidavit alleges that the Chinese manufacturer and employees of its Houston-based company engaged in a systematic campaign to steal the trade secrets of a global engineering firm, referred to in the affidavit as “Company A,” that was a leader in marine technology. The case involves the development of a technical product called syntactic foam, a strong, light material that can be tailored for commercial and military uses, such as oil exploration; aerospace; underwater vehicles, such as submarines; and stealth technology. According to the affidavit, the Chinese manufacturer intended to sell syntactic foam to both military and civilian, state-owned enterprises in China – part of a push toward meeting China’s national goals of developing its marine engineering industry. The affidavit alleges that the conspirators took part in the theft of trade secrets from Company A, a multi-national company with a subsidiary in Houston that is among the major producers of syntactic foam. The affidavit identifies a number of trade secrets allegedly taken from the company between January and June of 2015, including secrets that allegedly were passed to people associated with the Chinese manufacturer and Houston-based company. The maximum penalty for a person convicted of conspiring to commit theft of trade secrets is 10 years in prison and potential financial penalties. This case is being investigated by the FBI’s Houston Field Office; the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), Office of Export Enforcement; and the IRS-Criminal Investigation (IRS-CI).