An indictment unsealed
today charges Xiaoqing Zheng, 56, of Niskayuna, New York, and Zhaoxi Zhang, 47,
of Liaoning Province, China, with economic espionage and conspiring to steal
General Electric’s (GE’s) trade secrets surrounding turbine technologies, knowing
and intending that those stolen trade secrets would be used to benefit the
People’s Republic of China. Assistant Attorney General for National
Security John C. Demers, U.S. Attorney Grant C. Jaquith for the Northern
District of New York, Assistant Director John Brown of the FBI’s
Counterintelligence Division and Special Agent in Charge James N. Hendricks of
the FBI’s Albany Field Office made the announcement.
According to the
14-count indictment, Zheng, while employed at GE Power & Water in Schenectady,
New York as an engineer specializing in sealing technology, exploited his
access to GE’s files by stealing multiple electronic files, including
proprietary files involving design models, engineering drawings, configuration
files, and material specifications having to do with various components and
testing systems associated with GE gas and steam turbines. Zheng e-mailed
and transferred many of the stolen GE files to his business partner, Chinese
businessman Zhaoxi Zhang, who was located in China. Zheng and Zhang used
the stolen GE trade secrets to advance their own business interests in two
Chinese companies - Liaoning Tianyi Aviation Technology Co., Ltd. (LTAT) and
Nanjing Tianyi Avi Tech Co. Ltd. (NTAT), companies which research, develop, and
manufacture parts for turbines.
The indictment also
alleges that Zheng and Zhang conspired to commit economic espionage, as the
thefts of GE’s trade secrets surrounding various turbine technologies were done
knowing and intending that the thefts would benefit the People’s Republic of
China and one or more foreign instrumentalities, including LTAT, NTAT, Shenyang
Aerospace University, Shenyang Aeroengine Research Institute, and Huaihai
Institute of Technology. The defendants, through LTAT and NTAT, received
financial and other support from the Chinese government and coordinated with
Chinese government officials to enter into research agreements with Chinese
state-owned institutions to develop turbine technologies.
“The indictment
alleges a textbook example of the Chinese government’s strategy to rob American
companies of their intellectual property and to replicate their products in
Chinese factories, enabling Chinese companies to replace the American company
first in the Chinese market and later worldwide,” said Assistant Attorney
General Demers. “We will not stand idly by while the world’s
second-largest economy engages in state-sponsored theft. As part of the
Attorney General’s China Initiative, we will partner with the private sector to
hold responsible those who violate our laws, and we urge China’s leaders to
join responsible nations and to act with honesty and integrity when competing
in the global marketplace.”
“As alleged, the
thefts of trade secrets to benefit the People’s Republic of China are serious
crimes against the victimized company and our country,” said U.S. Attorney
Jaquith. “Both fair competition and incentivized innovation require that
American companies be able to rely on the secrecy of technological advances
forged through their talent and tenacity. When technology is taken
through treachery, we will continue to work with the National Security Division
and the FBI to prosecute the perpetrators.”
“American businesses
spend many hours and large amounts of money developing unique technology.
When such technology is stolen it can be devastating to U.S. businesses and can
result in American workers losing jobs,” said FBI Assistant Director Brown.
“China continues to support behavior that violates the rule of law.
This case demonstrates the FBI will continue to pursue China's efforts to
steal American technology.”
“Economic espionage
and the theft of trade secrets have a profound impact on our companies and
communities,” said FBI Special Agent in Charge Hendricks. “We view this
as a grave threat to our economic and national security and the FBI will work
tirelessly to prevent the loss of American technology and American jobs.”
Zheng was arraigned
today in Albany, New York, before United States Magistrate Judge Christian F.
Hummel, and released with conditions pending a trial before United States
District Judge Mae A. D’Agostino.
The economic espionage
counts (Counts One, Three, Four, Seven, Eight and Eleven) carry a maximum
sentence of 15 years in prison, a fine of up to $5,000,000, and a term of supervised
release of up to three years. The trade secrets theft counts (Counts Two,
Five, Six, Nine, Ten, Twelve and Thirteen) carry a maximum sentence of 10 years
in prison, a fine of up to $250,000, and a term of supervised release of up to
three years. Count Fourteen of the indictment, which charges Zheng with
making false statements to the FBI during a voluntary interview, carries a
maximum sentence of 5 years in prison, a fine of up to $250,000, and a term of
supervised release of up to three years.
The charges in the
indictment are merely accusations. The defendants are presumed innocent
unless and until proven guilty.
This case is being
investigated by the Federal Bureau of Investigation, and is being prosecuted by
Assistant U.S. Attorney Rick Belliss, and National Security Division Trial
Attorneys Jason McCullough and Matthew Chang.
