Fiber Laser Expert Convicted By Federal Jury Of Economic Espionage And Theft Of Trade Secrets

The U.S. Justice Department released the below information:

A federal jury has convicted Ji Wang, 63, of Painted Post, N.Y., of two counts of economic espionage, one count of theft of trade secrets, one count of attempted economic espionage, and one count of attempted theft of trade secrets.  Assistant Attorney General for National Security John A. Eisenberg, together with U.S. Attorney Michael DiGiacomo for the Western District of New York, announced the verdict.

“Yesterday, a federal jury found Wang guilty of stealing sensitive defense research from his employer and attempting to use it to pursue personal profit at the expense our national security,” said Assistant Attorney General for National Security John A. Eisenberg. “We are committed to combating economic espionage and holding accountable those who disregard our export-control laws and the security of U.S. technology. This verdict reaffirms that such betrayals of trust will not go unpunished.”

“This conviction demonstrates the importance of protecting trade secrets developed in the United States, especially those with military applications,” said U.S. Attorney DiGiacomo. “My office will continue pursue and prosecute those that steal such information.”

Wang was born in China and immigrated to the United States in 1998 to work for Corning Incorporated.  Between 2002 and 2007, Wang was assigned to work on a joint research and development project funded by the Defense Advanced Research Projects Agency (“DARPA”) and Corning.  The goal of the 5-year, $11.4 million project was to develop optical fibers for high-powered lasers with military and commercial applications.  DARPA and Corning aimed to increase the power of fiber lasers by more than a factor of 1000.  DARPA sought to develop this technology to create laser weapons capable of shooting down drones and missiles.

On or about July 1, 2016, Wang stole hundreds of files that contained non-public data generated during the DARPA project, including trade-secret manufacturing technology that would have enabled him to fabricate all manner of specialty optical fibers, including for fiber lasers.

Ten days before Wang stole the trade secret files, he had applied for China’s Thousand Talents Plan Award.  The Thousand Talents Plan Award was an initiative by the Chinese government aimed at people who were born in China and immigrated to the United States, to study or work in science and technology fields.  The Thousand Talents Plan Award incentivized these people to return to China by promising millions of dollars of investment to award recipients who returned to China.  Two months after Wang stole the trade secret files, he was selected to receive a Thousand Talents Plan Award.

Wang was negotiating with Chinese government entities to start a specialty fiber business in China from at least 2014 through 2017.  Wang was negotiating to receive tens of millions of dollars in investment from Chinese government entities, who would have been shareholders in his new venture.  Wang’s business plans showed that he was planning to use the stolen trade-secret files to start this business in China. Wang’s business plans also touted the military applications of the technology.  In one such business plan, which Wang submitted to a Chinese government entity, he advertised that specialty fibers “can also be installed on military vehicles,” including “tanks.”  Wang claimed that such use of the technology on military vehicles could “be key to deciding victory or defeat.”  Ultimately, law enforcement disrupted Wang’s efforts before he was able to start a new business and exploit the technology he stole.

“Mr. Wang stole sensitive technology that Corning, Inc. and DARPA spent millions of dollars developing so he could line his own pockets and help our adversaries undermine U.S. national security,” said Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence Division. “For years, China’s government has waged a vast economic espionage campaign designed to put our nation at risk and American companies out of business. This conviction makes clear that the FBI and our partners will continue to hold accountable anyone looking to steal U.S. innovation for our enemies.” 

“The Bureau of Industry and Security remains committed to working alongside our law enforcement and industry partners to prevent the unlawful transfer of sensitive technologies,” said Jonathan Carson, Special Agent-in-Charge of the New York Field Office of the Department of Commerce Bureau of Industry and Security, Office of Export Enforcement.

The verdict is the result of an investigation by Special Agents of the Federal Bureau of Investigation, acting under the direction of Special Agent In-Charge Philip Tejera, and Special Agents of the Department of Commerce, Office of Export Enforcement, New York Field Office acting under the direction of Special Agent-in-Charge Jonathan Carson. Additional assistance was provided by Homeland Security Investigations in Detroit, Michigan.  The case was prosecuted by Assistant United States Attorney Meghan K. McGuire of the Western District of New York and Trial Attorneys Nicholas Hunter and Brendan Geary of the Counterintelligence and Export Control Section of the National Security Division.

Economic espionage carries a maximum penalty of 15 years in prison and theft of trade secrets carries a maximum sentence of 10 years in prison.  Sentencing is scheduled for April 15, 2026, at 2:00 p.m. before U.S. District Judge Frank P. Geraci, Jr., who presided over the trial. 

Chinese Citizen Convicted Of Economic Espionage, Theft Of Trade Secrets, and Conspiracy: Defendant Stole From U.S. Companies To Benefit Instrumentality Of The Chinese Government

The U.S. Justice Department released the below information:

Hao Zhang, 41, of China, was found guilty of economic espionage, theft of trade secrets, and conspiring to commit both offenses today, announced the Department of Justice.  The ruling was handed down by the Honorable Edward J. Davila, U.S. District Judge, following a four-day bench trial.

Evidence submitted during the course of the trial demonstrated that from 2010 to 2015, Zhang conspired to and did steal trade secrets from two companies: Avago, a designer, developer, and global supplier of a broad range of analog, digital, mixed signal and optoelectronics components and subsystems with a focus in semiconductor design and processing, headquartered in San Jose, California, and Singapore; and Skyworks, an innovator of high performance analog semiconductors headquartered in Woburn, Massachusetts.  Judge Davila found that Zhang intended to steal the trade secrets for the benefit of the People’s Republic of China.

“The defendant plotted with Tianjin University to take trade secrets from two U.S. companies, including his own employer, to China for the benefit of the Chinese Government,” said Assistant Attorney General for National Security John C. Demers.  “Today’s guilty verdict on all counts is an important step in holding accountable an individual who robbed his U.S. employer of trade secrets and sought to replicate the company’s technology and replace its market share.  The Department of Justice’s commitment to prosecuting these cases should serve as a cautionary tale to anyone considering doing the same.”      

“A free nation is naturally innovative.  No nation is more innovative than the United States.  Countries without freedom cannot match our innovation, and inevitably must resort to theft.  Theft is not innovation.  By combatting theft, we protect innovation and freedom,” said U.S. Attorney David L. Anderson for the Northern District of California.

“Economic Espionage is a pervasive threat throughout the United States, particularly to the San Francisco Bay Area and Silicon Valley which is the center of innovation and technology,” said FBI Special Agent in Charge John F. Bennett.  “While this case exemplifies how easily a few motivated employees can conspire to misappropriate intellectual property for the benefit of the People’s Republic of China, Zhang’s conviction should serve as a warning to our adversaries that the FBI and our partners remain committed to aggressively investigating and prosecuting these crimes.”

According evidence presented during the bench trial, Zhang stole trade secrets relating the performance of wireless devices.  Specifically, Surface Acoustic Wave (SAW) and Bulk Acoustic Wave (BAW) filters are used in wireless devices to eliminate interference and improve other aspects of device performance.  Film Bulk Acoustic Resonators (FBAR) are one type of BAW filter.  The most common and most profitable application of FBAR technology is as a radio frequency (RF) filter for mobile phones and other wireless devices.  Technological advances in FBARs have played a substantial role in creating smaller, more efficient wireless devices for both consumer and military applications.  Avago, one of the victims of Zhang’s theft, was the leading company in the United States manufacturing and selling FBARs.  Zhang’s other victim, Skyworks, was developing its own BAW technology.

Evidence at trial further showed that in October 2006, Zhang and his co-conspirators started a business in China to compete with Avago and Skyworks.  One of Zhang’s co-conspirators, Wei Pang, started working at Avago at the same time.  Zhang and Pang illicitly shared trade secrets with each other and with co-conspirators in China while they worked for the U.S. companies.  Zhang and Pang then connected their venture to Tianjin University (TJU) in China, an instrumentality of the Chinese government.  By 2009, they left their work in the United States to relocate to China, following a plan laid out by TJU officials to form another company, Novana, in the Cayman Islands.  Along the way, Zhang obtained patents in his own name using trade secret information he knew was stolen from Avago.  Zhang also worked with stolen trade secrets in a lab he founded at TJU while developing his new FBAR business. The FBAR processes that Zhang and his co-conspirators stole took Avago over twenty years of research and development to build.  Additional evidence during the bench trial demonstrated that Zhang engaged in economic espionage to help TJU and Zhang’s Chinese company unfairly compete in the multi-billion dollar global market for cell phone RF filters. 

Zhang was charged in a superseding indictment returned by a federal grand jury on April 1, 2015.

Zhang is currently released on a $500,000 secured bond. 

Zhang’s sentencing hearing is scheduled for Aug. 31, 2020, before Judge Davila in San San Jose.  The maximum statutory penalty for each count in violation of 18 U.S.C. § 1831 is 15 years in custody and a fine of $250,000, plus restitution if appropriate.  The maximum statutory penalty for each count in violation of 18 U.S.C. § 1832 is 10 years in custody and a fine of $250,000, plus restitution if appropriate.  However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Michelle J. Kane and Susan Knight are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rebecca Shelton, Susan Kreider, and Laurie Worthen.  The prosecution is the result of an investigation by the FBI.

FBI: Billion-Dollar Secrets Stolen - Scientist Sentenced For Theft of Trade Secrets

The FBI released the below information:

When scientist Hongjin Tan resigned from the Oklahoma petroleum company he’d worked at for 18 months, he told his superiors that he planned to return to China to care for his aging parents. He also reported that he hadn’t arranged his next job, so the company agreed to let him to stay in his role until his departure date in December 2018.

But Tan told a colleague a different story over dinner.

That conversation prompted Tan’s employer to ask him to leave the firm immediately—and then his employer made a call to the FBI tip line to report a possible crime. The resulting investigation led to Tan’s guilty plea and 24-month prison sentence for stealing proprietary information that belonged to his company.

Tan’s theft of a trade secret—one worth an estimated $1 billion—is an example of what the FBI says is a systematic campaign by the Chinese government to gain economic advantage by stealing the innovative work of U.S. companies and facilities.

Tan had lived in the United States since 2012 and was a legal permanent resident. He earned his Ph.D. at an American university and had worked for a number of firms in California before making his way to the energy company in Oklahoma.

One of that firm’s most innovative products was a battery technology that employees had spent decades researching and developing. The technology also has a secondary, and perhaps even more valuable, use in melting metal.

When Tan revealed to his colleague that he actually did have a job waiting for him in China with Xiamen Tungsten, Tan’s dinner companion reported the conversation to his supervisor—who grew alarmed after researching the company. Xiamen Tungsten is a Chinese firm that smelts, processes, and distributes metal products and also supplies battery materials.

With this new information, the company immediately dismissed Tan from his responsibilities. Because they were now concerned about his motives, the company also began to look back at the documents and systems he had accessed while employed there.

While this review was going on, Tan called his supervisor to tell them he had a thumb drive with company documents on it. “He said he was hoping to read them to continue his research work,” said FBI Special Agent Jeremy Sykes, who worked on the case out of our Oklahoma City Field Office. “The company told him he needed to return the thumb drive.”

The company had already found Tan had been accessing sensitive documents that dealt with this innovative technology but did not directly relate to Tan’s work for the firm.

FBI agents said he began accessing these sensitive files around the time he applied to China’s Thousand Talents Program. U.S. intelligence agencies have found that, through this program, China provides financial incentives and other privileges to participants who are willing to send back the research and technology knowledge they can access while working in the United States. Tan also called up the documents around the times he made trips to China, and he accessed them for a final time on the day before he resigned.

“When he brought back the thumb drive, the firm looked at the slack space on the drive and found several files had been erased,” said Sykes. “The deleted files were the files the company was most concerned about.” 

The company worked closely with the FBI to help them investigate the case and identify the company files Tan had stored at his home. Gaining this information allowed agents to get an arrest warrant for Tan.

“If you got your hands on this information, you would be decades ahead of where you would have started out on this technology,” said Special Agent Rebecca Day of FBI Oklahoma City’s Tulsa Resident Agency. “We won’t tolerate people who come into the United States to steal for the betterment of a foreign government or foreign company.”

At a recent conference in Boston, FBI Director Christopher Wray addressed this disquieting threat: “We see Chinese companies stealing American intellectual property to avoid the hard slog of innovation and then using it to compete against the very American companies they victimized—in effect, cheating twice over.”

FBI Oklahoma City Special Agent Quincy Barnett said that there are a number of things companies can do to protect their products, research, and innovations, and that the FBI is eager to develop relationships with firms. “If we reach out,” he said, “it’s not a negative. We may have identified opportunities to engage.”

The Bureau can provide briefings to executives and employees on insider threats, share precautions workers should take when they travel to certain countries, help IT staff assess how to compartmentalize system and file access, and remind firms to put nondisclosure agreements in place to ensure employees agree not to share certain information.

In this case, the firm’s willingness to report the suspected crime so quickly made the difference in being able to hold Tan accountable. “We were on the phone with the company on December 13,” Sykes said. “We knew Tan was flying out of the country on December 29.”

Barnett said the FBI has seen that some companies resist reporting because they fear it will harm their stock price or be seen as a negative among shareholders.

“Companies can bring this information to the FBI, and we can work through those fears and hesitations,” said Barnett. “We are trying to send a message that this won’t be tolerated, but we have to find out about it first.”

The case against Tan not only resulted in two years of prison time but also, with support from Homeland Security Investigations, the loss of his residency status. Tan will be deported when he is released, which is a strong indicator of just how seriously the U.S. is taking these types of criminal violations.

Chinese Telecommunications Conglomerate Huawei And Subsidiaries Charged In Racketeering Conspiracy And Conspiracy To Steal Trade Secrets: Charges Also Reveal Huawei’s Business In North Korea And Assistance To The Government Of Iran In Performing Domestic Surveillance

The U.S. Justice Department released the below information:

A superseding indictment was returned yesterday in federal court in Brooklyn, New York, charging Huawei Technologies Co. Ltd. (Huawei), the world’s largest telecommunications equipment manufacturer, and two U.S. subsidiaries with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO).

Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division; John C. Demers, Assistant Attorney General of the Justice Department’s National Security Division; Richard P. Donoghue, U.S. Attorney for the Eastern District of New York and Christopher A. Wray, Director, FBI, announced the charges.

The 16-count superseding indictment also adds a charge of conspiracy to steal trade secrets stemming from the China-based company’s alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts.

The indicted defendants include Huawei and four official and unofficial subsidiaries — Huawei Device Co. Ltd. (Huawei Device), Huawei Device USA Inc. (Huawei USA), Futurewei Technologies Inc. (Futurewei) and Skycom Tech Co. Ltd. (Skycom) — as well as Huawei’s Chief Financial Officer (CFO) Wanzhou Meng (Meng).  The new superseding indictment also contains the charges from the prior superseding indictment, which was unsealed in January 2019.

As revealed by the government’s independent investigation and review of court filings, the new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei’s business.  The misappropriated intellectual property included trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology.  Huawei, Huawei USA and Futurewei agreed to reinvest the proceeds of this alleged racketeering activity in Huawei’s worldwide business, including in the United States.

The means and methods of the alleged misappropriation included entering into confidentiality agreements with the owners of the intellectual property and then violating the terms of the agreements by misappropriating the intellectual property for the defendants’ own commercial use, recruiting employees of other companies and directing them to misappropriate their former employers’ intellectual property, and using proxies such as professors working at research institutions to obtain and provide the technology to the defendants.  As part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors.  The policy made clear that employees who provided valuable information were to be financially rewarded.

Huawei’s efforts to steal trade secrets and other sophisticated U.S. technology were successful.  Through the methods of deception described above, the defendants obtained nonpublic intellectual property relating to internet router source code, cellular antenna technology and robotics.  As a consequence of its campaign to steal this technology and intellectual property, Huawei was able to drastically cut its research and development costs and associated delays, giving the company a significant and unfair competitive advantage.  

When confronted with evidence of wrongdoing, the defendants allegedly made repeated misstatements to U.S. officials, including FBI agents and representatives from the U.S. House Permanent Select Committee on Intelligence, regarding their efforts to misappropriate trade secrets.  Similarly, the defendants engaged in obstructive conduct to minimize litigation risk and the potential for criminal investigations, including the very investigation that led to this prosecution.

The superseding indictment also includes new allegations about Huawei and its subsidiaries’ involvement in business and technology projects in countries subject to U.S., E.U. and/or U.N. sanctions, such as Iran and North Korea – as well as the company’s efforts to conceal the full scope of that involvement.  The defendants’ activities, which included arranging for shipment of Huawei goods and services to end users in sanctioned countries, were typically conducted through local affiliates in the sanctioned countries.  Reflecting the inherent sensitivity of conducting business in jurisdictions subject to sanctions, internal Huawei documents allegedly referred to such jurisdictions with code names.  For example, the code “A2” referred to Iran, and “A9” referred to North Korea. 

Huawei employees also allegedly lied about Huawei’s relationship to Skycom, falsely asserting it was not a subsidiary of Huawei.  The company further claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations related to Iran.  In fact, the indictment alleges Skycom was Huawei’s unofficial subsidiary that, among other services, assisted the Government of Iran in performing domestic surveillance, including during the demonstrations in Tehran in 2009.

The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The government’s investigation is ongoing.  Individuals with knowledge of misconduct by Huawei, its subsidiaries, employees or agents should contact the FBI’s New York Field Office at 1-800-CALL-FBI.

The FBI’s New York Field Office, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (HSI) New York Field Office, U.S. Department of Commerce Office of Export Enforcement’s (OEE) New York Field Office and the Defense Criminal Investigative Service’s (DCIS) Southwest and Northeast Field Offices are jointly conducting the investigation.  Agents from the FBI, HSI and OEE offices in Dallas provided significant support and assistance.  The government’s case is being handled by the U.S. Attorney’s Office for the Eastern District of New York, the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and the National Security Division’s Counterintelligence and Export Control Section (CES). 

Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor, David K. Kessler and Sarah Evans, MLARS Trial Attorneys Laura Billings and Christian Nauvel and CES Trial Attorneys Thea D. R. Kendler and David Lim are in charge of the prosecution, with assistance provided by Assistant U.S. Attorney Brendan G. King of the Civil Division of the U.S. Attorney’s Office for the Eastern District of New York and Trial Attorneys Margaret O’Malley and John Riesenberg of the Criminal Division’s Office of International Affairs.  Additional Criminal Division and National Security Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Northern District of Texas, the Northern District of Illinois, the Eastern District of Texas, the Western District of Washington and the Northern District of California have provided valuable assistance with various aspects of this investigation.

One American And One Chinese National Indicted In Tennessee For Conspiracy To Commit Theft Of Trade Secrets And Wire Fraud

The Justice Department released the below information:

A grand jury sitting in Greeneville, Tennessee has returned an indictment against Xiaorong You, a/k/a Shannon You, 56, of Lansing, Michigan, and Liu Xiangchen, 61, of Shandong Province, China for conspiracy to steal trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings.  You was also indicted on seven counts of theft of trade secrets and one count of wire fraud.

Assistant Attorney General National Security John C. Demers, U.S. Attorney J. Douglas Overbey of the Eastern District of Tennessee, FBI Executive Assistant Director for the National Security Branch Jay Tabb, and Special Agent in Charge Troy Sowers of the FBI’s Knoxville Field Office made the announcement.

“The conduct alleged in today’s indictment exemplifies the rob, replicate and replace approach to technological development,” said Assistant Attorney General Demers.  “Xiaorong You is accused of an egregious, premediated theft and transfer of trade secrets worth more than $100 million for the purpose of setting up a Chinese company that would compete with the American companies from which the trade secrets were stolen.  Unfortunately, China continues to use its national programs, like the ‘Thousand Talents,’ to solicit and reward the theft of our nation’s trade secrets and intellectual property, but the Justice Department will continue to prioritize investigations like these, to ensure that China understands that this criminal conduct is not an acceptable business or economic development practice.” 

“Our office is committed to working closely with our federal, state and local partners to identify and prosecute those who engage in illegal and deceptive practices to steal trade secret and protected information from companies who spend millions of dollars to develop it,” said U.S. Attorney Overbey.  “Not only can theft of this information be potentially devastating to our American companies, it could also pose a threat to our overall national and economic security.”

“The facts laid out in this indictment show the conspirators engaged in blatant criminal activity,” said Executive Assistant Director Tabb.  “They didn't stop at going after technical secrets belonging to just one company.  They allegedly targeted multiple companies and made off with trade secrets at an estimated value of almost 120 million dollars.  As this case demonstrates, the FBI is determined to do everything possible to bring to justice those who try to steal secrets belonging to American companies.”

"As this indictment highlights, theft of trade secrets from American companies is an emerging economic threat, even here in East Tennessee," said Special Agent in Charge Sowers.  "The tireless work of our agents and prosecutors in this case underscores the FBI's commitment to protecting American ingenuity."

The BPA-free trade secrets allegedly stolen by these individuals belonged to multiple owners and cost an estimated total of at least $119,600,000 to develop.  Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss, and prevent the container from corroding or reacting with the food or beverage contained therein.  However, due to the discovered potential harmful effects of BPA, companies began searching for BPA-free alternatives. These alternatives are difficult and expensive to develop.

From December 2012 through Aug. 31, 2017, You was employed as Principal Engineer for Global Research by a company in Atlanta, which had agreements with numerous companies to conduct research and development, testing, analysis and review of various BPA-free technologies.  Due to her extensive education and experience with BPA and BPA-free coating technologies, she was one of a limited number of employees with access to trade secrets belonging to the various owners.  From approximately September 2017 through June 2018, You was employed as a packaging application development manager for a company in Kingsport, Tennessee, where she was one of a limited number of employees with access to trade secrets belonging to that company.

Details of the conspiracy are included in the indictment on file with the U.S. District Court.  The indictment alleges that You, Liu, and a third co-conspirator formulated a plan in which You would exploit her employment with the two American employers to steal trade secrets and provide the information for the economic benefit of trade secrets the Chinese company that Liu managed, which would manufacture and profit from products developed using the stolen trade secrets.  In exchange, Liu would cause the Chinese company to reward You for her theft, by helping her receive the Thousand Talent and another financial award, based on the trade secrets she stole, and by giving You an ownership share of a new company that would “own” the stolen trade secrets in China.  The conspirators also agreed to compete with U.S. and foreign companies, including some of the owners of the stolen stolen trade secrets, in China and elsewhere, by selling products designed, developed and manufactured using the stolen trade secrets.

The charges contained in this indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

The case is being investigated by the FBI’s Knoxville Field Office.

The government’s case is being prosecuted by the Eastern District of Tennessee and the National Security Division’s Counterintelligence and Export Control Section.

U.S. Charges Three Chinese Hackers Who Work At Internet Security Firm For Hacking Three Corporations For Commercial Advantage

The U.S. Justice Department released the below information:

An indictment was unsealed today against Wu Yingzhuo, Dong Hao and Xia Lei, all of whom are Chinese nationals and residents of China, for computer hacking, theft of trade secrets, conspiracy and identity theft directed at U.S. and foreign employees and computers of three corporate victims in the financial, engineering and technology industries between 2011 and May 2017.  The three Chinese hackers work for the purported China-based Internet security firm Guangzhou Bo Yu Information Technology Company Limited (a/k/a “Boyusec”).

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Soo C. Song for the Western District of Pennsylvania and Special Agent in Charge Robert Johnson of the FBI’s Pittsburgh Division announced the charges.

The indictment alleges that the defendants conspired to hack into private corporate entities in order to maintain unauthorized access to, and steal sensitive internal documents and communications from, those entities’ computers.  For one victim, information that the defendants targeted and stole between December 2015 and March 2016 contained trade secrets.

“Once again, the Justice Department and the FBI have demonstrated that hackers around the world who are seeking to steal our companies’ most sensitive and valuable information can and will be exposed and held accountable,” said Acting Assistant Attorney General Boente.  “The Justice Department is committed to pursuing the arrest and prosecution of these hackers, no matter how long it takes, and we have a long memory.”

“Defendants Wu, Dong and Xia launched coordinated and targeted cyber intrusions against businesses operating in the United States, including here in the Western District of Pennsylvania, in order to steal confidential business information,” said Acting U.S. Attorney Song.  “These conspirators masked their criminal conspiracy by exploiting unwitting computers, called ‘hop points,’ conducting ‘spearphish’ email campaigns to gain unauthorized access to corporate computers, and deploying malicious code to infiltrate the victim computer networks.”

“In order to effectively address the cyber threat, a threat that respects no boundaries and continues to grow in both its scope and complexity, law enforcement must come together and transcend borders to target criminal actors no matter where they are in the world,” said Special Agent in Charge Johnson.

Summary of the Allegations

According to the allegations of the Indictment:

Defendants Wu, Dong, Xia, and others known and unknown to the grand jury (collectively, “the co-conspirators”) coordinated computer intrusions against businesses and entities, operating in the United States and elsewhere. To accomplish their intrusions, the co-conspirators would, for example, send spearphishing e-mails to employees of the targeted entities, which included malicious attachments or links to malware.  If a recipient opened the attachment or clicked on the link, such action would facilitate unauthorized, persistent access to the recipient’s computer.  With such access, the co-conspirators would typically install other tools on victim computers, including malware the co-conspirators referred to as “ups” and “exeproxy.”  In many instances, the co-conspirators sought to conceal their activities, location and Boyusec affiliation by using aliases in registering online accounts, intermediary computer servers known as “hop points” and valid credentials stolen from victim systems.

The primary goal of the co-conspirators’ unauthorized access to victim computers was to search for, identify, copy, package, and steal data from those computers, including confidential business and commercial information, work product, and sensitive victim employee information, such as usernames and passwords that could be used to extend unauthorized access within the victim systems.  For the three victim entities listed in the Indictment, such information included hundreds of gigabytes of data regarding the housing finance, energy, technology, transportation, construction, land survey, and agricultural sectors.

Defendants:  At all times relevant to the charges, the Indictment alleges as follows

Wu Yingzhuo, aka “mxmtmw,” “Christ Wu” and “wyz,” was a Chinese national and resident of Guangzhou.  Wu was a founding member and equity shareholder of Boyusec.

Dong Hao, aka “Bu Yi,” “Dong Shi Ye” and “Tianyu,” was a Chinese national and resident of Guangzhou.  Dong was a founding member and equity shareholder of Boyusec, who held the title of “Executive Director and Manager.”

Xia Lei, aka “Sui Feng Yan Mie,” was a Chinese national and resident of Guangzhou.  Xia was, at certain times relevant to the charges, an employee of Boyusec.

Victims: Moody’s Analytics, Siemens AG (“Siemens”) and Trimble, Inc. (“Trimble”).

Time period: As alleged in the Indictment, the conspiracy began at least as early as 2011 and continued to May 2017.

Crimes: Eight counts as follows (all defendants are charged in all counts).

Count(s)

Charge

Statute

Maximum Penalty

1

Conspiring to commit computer fraud and abuse

18 U.S.C. § 1030(b)

10 years

2

Conspiring to commit trade secret theft

18 U.S.C. §§ 1832(a)(5)

10 years

3

Wire fraud

18 U.S.C. § 1343

20 years

4-8

Aggravated identity theft

18 U.S.C. §§ 1028A(a)(1), (b), (c)(4), and 2

2 years (mandatory consecutive)

Any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Summary of Defendants’ Conduct Alleged in the Indictment

Defendant

Victim

Criminal Conduct

Wu

Trimble

In 2015 and 2016, Trimble was developing a Global Navigation Satellite Systems technology designed to improve the accuracy of location data on mobile devices.  In January 2016, while this project was in development, Wu accessed Trimble’s network and stole files containing commercial business documents and data pertaining to the technology, including Trimble trade secrets.  In total, between December 2015 and March 2016, Wu and the other co-conspirators stole at least 275 megabytes of data, including compressed data, which included hundreds of files that would have assisted a Trimble competitor in developing, providing and marketing a similar product without incurring millions of dollars in research and development costs.

Dong

Siemens

In 2014, Dong accessed Siemens’s computer networks for the purpose of obtaining and using employees’ usernames and passwords in order to access Siemens’ network. In 2015, the co-conspirators stole approximately 407 gigabytes of proprietary commercial data pertaining to Siemens’s energy, technology and transportation businesses.

Xia

Moody’s Analytics

In or around 2011, the co-conspirators accessed the internal email server of Moody’s Analytics and placed a forwarding rule in the email account of a prominent employee.  The rule directed all emails to and from the employee’s account to be forwarded to web-based email accounts controlled by the conspirators.  In 2013 and 2014, defendant Xia regularly accessed those web-based email accounts to access the employee’s stolen emails, which contained proprietary and confidential economic analyses, findings and opinions.

An indictment is merely an accusation and a defendant is presumed innocent unless proven guilty in a court of law.

The FBI, Naval Criminal Investigative Service and Air Force Office of Special Investigations conducted the investigation that led to the charges in the indictment.

The government’s case is being prosecuted by Assistant U.S. Attorney James T. Kitchen of the Western District of Pennsylvania, and Cyber Counsel Jessica Romero and Trial Attorney Jennifer Kennedy Gellie of the National Security Division’s Counterintelligence and Export Control Section.

Chinese National Admits To Stealing Sensitive Military Program Documents From United Technologies

The U.S. Justice Department released the below information:

Yu Long, 38, a citizen of China and lawful permanent resident of the U.S., waived his right to be indicted and pleaded guilty today in New Haven federal court in Connecticut, to charges related to his theft of numerous sensitive military program documents from United Technologies and transporting them to China.

Long pleaded guilty to one count of conspiracy to engage in the theft of trade secrets knowing that the offense would benefit a foreign government, foreign instrumentality or foreign agent, an offense that carries a maximum term of imprisonment of 15 years. He also pleaded guilty to one count of unlawful export and attempted export of defense articles from the U.S. in violation of the Arms Export Control Act, an offense that carries a maximum term of imprisonment of 20 years. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

The announcement was made by Acting Assistant Attorney General for National Security Mary B. McCord, U.S. Attorney Deirdre M. Daly for the District of Connecticut, Special Agent in Charge Matthew Etre of the FBI's Homeland Security Investigations (HSI) in Boston, Massachusetts, Special Agent in Charge Craig W. Rupert of the Defense Criminal Investigative Service (DCIS) Northeast Field Office, Special Agent in Charge Patricia M. Ferrick of the FBI’s New Haven Division and Special Agent in Charge Danielle Angley with the Air Force Office of Special Investigations (AFOSI).

“Long admitted to stealing and exploiting highly sensitive military technology and documents, knowing his theft would benefit China’s defense industry and deliberately contravene the embargo on U.S. Munitions List technology the United States has imposed on China,” said Acting Assistant Attorney General McCord. “Export laws exist as an important part of our national security framework and disrupting and prosecuting this kind of economic espionage is one of the National Security Division’s highest priorities.”

“In an effort to further his own career, this defendant stole an extraordinary amount of proprietary military program information from United Technologies and transported much of that stolen information to China,” said U.S. Attorney Daly. “His actions, which he knew would benefit China, not only violated his employment agreement and damaged the company, but have threatened our country's national security interests. U.S. companies continue to be targeted by those who seek to steal intellectual property, trade secrets and advanced defense technology – whether through a computer hack or cyber intrusion, or through a rogue employee. Working closely with our nation’s defense contractors, we will relentlessly investigate and prosecute those who steal, or attempt to steal, trade secrets and sensitive military information, whether for their own personal gain or for the benefit of foreign actors.”

“These sophisticated technologies are highly sought after by our adversaries,” said Special Agent in Charge Etre. “They were developed to give the United States and its allies a distinct military advantage, which is why HSI and our law enforcement partners will continue to aggressively target the individuals who steal the ideas of others and sell these items.”

"Today's plea demonstrates the commitment of the Defense Criminal Investigative Service and our federal law enforcement partners to identifying those who illegally export sensitive defense information to adversarial Foreign governments," said Special Agent in Charge Rupert. "DCIS will continue to safeguard sensitive technology and to shield America's investment in national defense by disrupting efforts of groups and individuals who try to illegally acquire our national security assets."

“This case highlights the complexity in which the FBI and law enforcement are being challenged to keep the integrity of our industry intellectual property intact,” said Special Agent in Charge Ferrick. “Investigating criminal activity of this nature will continue to be a priority.”

“This case was enabled by the outstanding teamwork of the FBI, DCIS, HSI, AFOSI and the U.S. Attorney's office,” said, Special Agent in Charge Angley. “In addition, it demonstrates the focus of law enforcement agencies to protect our nation's critical resources.”

According to court documents and statements made in court, from approximately May 2008 to May 2014, Long worked as a Senior Engineer/Scientist at United Technologies Research Center (UTRC) in Connecticut. Long’s employment at UTRC included work on F119 and F135 engines. The F119 engine is employed by the U.S. Air Force F-22 Raptor fighter aircraft, and the F135 engine is employed by the U.S. Air Force F-35 Lightning II fighter aircraft.

Beginning in 2013, Long expressed his intent to individuals outside UTRC to return to China to work on research projects at certain state-run universities in China using knowledge and materials he had acquired while employed at the UTRC. To that end, Long interacted with several state-run institutions in China, including the Chinese Academy of Science (CAS) and the Shenyang Institute of Automation (SIA), a state-run university in China affiliated with CAS.

During 2013 and 2014, Long was recruited by SIA and other state-run universities, during which he leveraged information that he had obtained while working at UTRC to seek employment in China, culminating in his travel to China in the possession of voluminous documents and data containing highly sensitive intellectual property, trade secrets and export controlled technology, which he had unlawfully stolen from UTRC.

In December 2013, after Long agreed in principle to join SIA, an SIA-CAS Director and an SIA-CAS Recruiter asked Long to provide documents from his work at UTRC and examples of projects on which he had worked to substantiate the claims Long made in his application, and interview with SIA. Long agreed.

On Dec. 24, 2013, Long emailed several documents to the SIA-CAS Director, including a document that contained the cover page of an export controlled UTRC presentation on Distortion Modeling dated Sept. 30, 2011.

While negotiating with SIA, Long also continued to explore other opportunities at other state-run institutions in China. In one email, Long stated: “I have made my mind to return to China, so have prepared a research plan based on my industry experience and current projects.” In the research plan, Long stated: “In the past five years, I have been working with Pratt Whitney, also other UTC business units, like UTAS (including Hamilton Sundstrand and Goodrich), Sikorsky, CCS (including Carrier and Fire & Security), and Otis. These unique working experiences have provided me a great starting point to perform R&D and further spin off business in China. I believe my efforts will help China to mature its own aircraft engines.”

On May 30, 2014, Long left UTRC. In June 2014, Long traveled to China and began working for SIA. Beginning in July 2014, digital evidence and forensic analysis indicated that Long brought with him and accessed in China a UTRC external hard drive that had been issued to him and that he unlawfully retained.

In July 2014, Long was listed as the project leader on a lengthy research plan for CAS involving fourteen other individuals. The plan was replete with references to how the proposed research and development would benefit China. The plan stated: “The three major engine companies in the world, i.e. GE, Pratt & Whitney in the US and Rolls-Royce in the UK, are all using this technology. . . Our nation lacks the ability to process high performance components, such as airplane wings, tail hooks on carrier aircrafts, and blisks . . . Because of the technology embargo imposed by western developed countries, it is very difficult for us to obtain more advanced design and manufacturing technology . . . This research project will increase our independent ability, efficient and quality in key component manufacturing.”

On or about Aug. 12, 2014, the document on Distortion Modeling – the same document from which Long had sent the cover page to the SIA-CAS Director on Dec. 24, 2013 – was accessed on the external hard drive. Travel records and forensic analysis confirmed that both Long and the external hard drive were in China when this file was accessed.

On Aug. 19, 2014, Long returned to the U.S. from China through John F. Kennedy International Airport in New York. During a secondary inspection screening by U.S. Customs and Border Protection (CBP) officers, Long was found in the possession of a largely completed application for work with a state-controlled aviation and aerospace research center in China. The application highlighted certain parts of Long’s work related to the F119 and F135 engines while at UTRC.

On or about Aug. 20, 2014, Long emailed an individual at a university in China, attaching an updated “achievement and future plan.” In the plan, Long discussed his work related to the F119 and F135 U.S. military fighter jet engines and stated that he also had knowledge of unpublished UTRC projects in which the U.S. Air Force had shown interest.

On Nov. 5, 2014, Long boarded a flight from Ithaca, New York to Newark Liberty International Airport in Newark, New Jersey, with a final destination of China. During Long’s layover in Newark, CBP officers inspected Long’s checked baggage and discovered that it contained sensitive, proprietary and export controlled documents from another defense contractor, Rolls Royce.

Further investigation determined that the U.S. Air Force had convened a consortium of major defense contractors, including Pratt and Rolls Royce, to work together to see whether they could collectively lower the costs of certain metals used. As part of those efforts, members of the consortium shared technical data, subject to restrictions on further dissemination. Rolls Royce reviewed the documents found in Long’s possession at Newark Liberty Airport and confirmed that it provided the documents to members of the consortium, which included Pratt. Rolls Royce further confirmed that Long was never an employee of Rolls Royce. A review of UTRC computer records indicated that Long had printed the documents while employed at UTRC. 

Long was arrested on a federal criminal complaint on Nov. 7, 2014. A review of Long’s digital media seized at the time of his arrest revealed voluminous files protected by the International Traffic in Arms Regulations and Export Administration Regulations, and voluminous files proprietary to various U.S. companies. In short, the investigation revealed that Long took his laptop and the UTRC external hard drive with him to China in 2014, at which time there was a substantial body of highly sensitive, proprietary and export controlled materials present on that digital media. UTRC has confirmed that the hard drive that Long unlawfully retained and accessed in China contained not only documents and data from projects on which Long worked while employed at the company but also from projects on which he did not work to which he would have had access. 

A sentencing date has not been set. Long has been detained since his arrest.

This investigation is being led by the FBI in New Haven in coordination with Homeland Security Investigations in New Haven and Newark; the Defense Criminal Investigative Service in New Haven; the U.S. Air Force’s Office of Special Investigations in Boston, Massachusetts; and, the Department of Commerce’s Boston Office of Export Enforcement. U.S. Attorney Daly and Acting Assistant Attorney General McCord also thanked the FBI in Newark, Ithaca and Syracuse, New York, the U.S. Customs and Border Protection Service in New York and Newark, and the U.S. Attorney’s Offices for the Northern District of New York and the District of New Jersey, for their efforts and assistance in this matter.
           
This case is being prosecuted by Assistant U.S. Attorneys Tracy Lee Dayton and Stephen B. Reynolds of the District of Connecticut, and Trial Attorneys Brian Fleming and Julie Edelstein of the National Security Division’s Counterintelligence and Export Control Section. 

Chinese National Charged For Stealing Source Code From Former Employer With Intent To Benefit Chinese Government

The U.S. Justice Department released the below link:

Xu Jiaqiang, 30, was charged in a six-count superseding indictment with economic espionage and theft of trade secrets, in connection with Xu’s theft of proprietary source code from his former employer, with the intent to benefit the National Health and Family Planning Commission of the People’s Republic of China.

The superseding indictment was announced by Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Preet Bharara of the Southern District of New York.

Xu was initially arrested by the FBI on Dec. 7, 2015, and was previously charged with one count of theft of trade secrets.  Xu is scheduled to be arraigned on the superseding indictment at 12 p.m. EDT on June 16, 2016, before U.S. District Judge Kenneth M. Karas of the Southern District of New York.

“Xu allegedly stole proprietary information from his former employer for his own profit and the benefit of the Chinese government,” said Assistant Attorney General Carlin.  “Those who steal America’s trade secrets for the benefit of foreign nations pose a threat to our economic and national security interests.  The National Security Division will continue to work tirelessly to identify, pursue and prosecute any individual who attempts to harm American businesses by robbing them of their valuable intellectual property.”

“As alleged, Xu Jiaqiang is charged with stealing valuable, proprietary software from his former employer, an American company, that he intended to share with an agency within the Chinese government,” said U.S. Attorney Bharara.  “Economic espionage not only harms victim companies that have years or even decades of work stolen, but it also crushes the spirit of innovation and fair play in the global economy.  Economic espionage is a serious federal crime, for which my office, the Department of Justice’s National Security Division, and the FBI will show no tolerance.”

According to the allegations contained in the criminal complaint on which Xu was initially arrested, the original indictment and the superseding indictment:

From November 2010 to May 2014, Xu worked as a developer for a particular U.S. company (victim company).  As a developer, Xu had access to certain proprietary software, as well as that software’s underlying source code.  The proprietary software is a clustered file system developed and marketed by the victim company in the United States and other countries.  A clustered file system facilitates faster computer performance by coordinating work among multiple servers.  The victim company takes significant precautions to protect the proprietary source code as a trade secret because the value of the proprietary source code depends in part on its secrecy.  Among other things, the proprietary source code is stored behind a company firewall and can be accessed by only a small subset of the victim company’s employees.  Before receiving proprietary source code access, victim company employees must first request and receive approval from a particular victim company official.  Victim company employees must also agree in writing at both the outset and the conclusion of their employment that they will maintain the confidentiality of any proprietary information.     

In May 2014, Xu voluntarily resigned from the victim company.  Xu subsequently communicated with one undercover law enforcement officer (UC-1), who posed as a financial investor aiming to start a large-data storage technology company, and another undercover law enforcement officer (UC-2), who posed as a project manager working for UC-1.  In these communications, Xu discussed his past work with the victim company and indicated that he had experience with the proprietary software and the proprietary source code.  On March 6, 2015, Xu sent UC-1 and UC-2 a code, which Xu stated was a sample of Xu’s prior work with the victim company.  A victim company employee (employee-1) later confirmed that the code sent by Xu included proprietary victim company material that related to the proprietary source code. 

Xu subsequently informed UC-2 that he was willing to consider providing UC-2’s company with the proprietary source code as a platform for UC-2’s company to facilitate the development of UC-2’s company’s own data storage system.  Xu informed UC-2 that if UC-2 set up several computers as a small network, then Xu would remotely install the proprietary software so that UC-1 and UC-2 could test it and confirm its functionality.

In or around early August 2015, the FBI arranged for a computer network to be set up, consistent with Xu’s specifications (UC network).  Files were then remotely uploaded to the FBI-arranged computer network.  Thereafter, on or about Aug. 26, 2015, Xu and UC-2 confirmed that UC-2 had received the upload.  In September 2015, the FBI made Xu’s upload available to a victim company employee who has expertise regarding the proprietary software and the proprietary source code (employee-2).  Based on employee-2’s analysis of technical features of Xu’s upload, it appeared to employee-2 that the upload contained a functioning copy of the proprietary software.  It further appeared to employee-2 that Xu’s upload had been built by someone with access to the proprietary source code that was not working within the victim company or otherwise at the victim company’s direction.

On Dec. 7, 2015, Xu met with UC-2 at a hotel in White Plains, New York.  Xu stated, in sum and substance, that he had used the proprietary source code to make software to sell to customers, that he knew the proprietary source code was the product of decades of work on the part of the victim company and that he had used the proprietary source code to build a copy of the proprietary software, which he had uploaded and installed on the UC network.  Xu also indicated that he knew that the copy of the proprietary software he had installed on the UC network contained information identifying the proprietary software as the victim company’s property, which could reveal the fact that the proprietary software had been built with the proprietary source code without the victim company’s authorization.  Xu told UC-2 that he could take steps to prevent detection of the proprietary software’s origins, including writing computer scripts that would modify the proprietary source code to conceal its origins.

Later on Dec. 7, 2015, Xu met with UC-1 and UC-2 at the hotel.  During that meeting, Xu showed UC-2 a copy of what he represented to be the proprietary source code on his laptop.  Xu noted to UC-2 a portion of the code that indicated it originated with the victim company as well as the date on which it had been copyrighted.  Xu also stated that he had previously modified the proprietary source code’s command interface to conceal the fact that the proprietary source code originated with the victim company and identified multiple specific customers to whom he had previously provided the proprietary software using his stolen copy of the proprietary source code.

In connection with the economic espionage counts charged in the superseding indictment, Xu stole, duplicated and possessed the proprietary source code with the intent to benefit the National Health and Planning Commission of the People’s Republic of China.

The superseding indictment charges Xu with three counts of economic espionage, which each carry a maximum sentence of 15 years in prison.  He was also charged with three counts of theft of a trade secret, which each carry a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

A superseding indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed to be innocent until and unless proven guilty.

The case is being investigated by the FBI, and is being prosecuted by Assistant U.S. Attorneys Benjamin Allee and Ilan Graff of the Southern District of New York, with assistance from Trial Attorney David Aaron of the National Security Division’s Counterintelligence and Export Control Section.

FBI: Former DuPont Employee Sentenced In Foreign Conspiracy To Steal Trade Secrets

The FBI website released the above photo and a report on an industrial espionage case:

A second former DuPont employee—Edward Schulz—was recently sentenced for his role in a conspiracy led by a South Korean company to steal trade secrets related to Kevlar, a trademarked product developed and sold by DuPont.

Kevlar, an incredibly strong synthetic fiber developed by the U.S.-based DuPont 50 years ago, is used around the world in body armor, fiber optic cables, automotive and industrial products, and a variety of other applications. Soon after its development, DuPont trademarked Kevlar, mass-produced it, and put it on the market. But none of this was easy—the company had expended untold resources on Kevlar’s research and development, ground-breaking manufacturing processes, and innovative business plans (collectively known as “trade secrets”) before the product became a success.

DuPont’s hard work and ingenuity paid off. But there are companies who believe that their road to success can be paved with someone else’s hard work and ingenuity. That was the case with executives from a South Korean company called Kolon Industries who, interested in developing their own Kevlar-like product to compete with DuPont, put a plan in motion to steal proprietary information related to Kevlar—primarily by going after former DuPont employees who might be in a position to have such information.

Stealing another company’s trade secrets is a federal crime, and, after an FBI investigation by our Richmond Field Office (DuPont has a large plant within FBI Richmond’s jurisdiction), Kolon Industries and five of its executives were indicted on theft of trade secrets charges. The company pled guilty to the charges in April of this year and was ordered to pay $85 million in criminal fines and $275 million in restitution. And we made extradition requests for the five indicted executives, who no longer work for Kolon.

Edward Schulz—who worked for DuPont for just over 30 years before he left around 2000—was responsible for technical research and development relating to Kevlar. Despite a signed agreement barring him from disclosing DuPont’s secret or confidential information during or after employment, he held on to numerous DuPont documents when he left the company. So when Kolon came calling and Schulz accepted their offer of a consulting job, they soon began questioning him about Kevlar, and he willingly turned over some of the proprietary information he had in his possession.

Another long-time former DuPont employee—engineer and salesman Michael David Mitchell—was also caught up in the conspiracy and was charged with and pled guilty to theft of trade secrets several years ago. Mitchell, fired by DuPont for performance reasons in 2007, had signed the same non-disclosure agreement as Schulz, but he also held on to some proprietary information when he left. While looking for another job, he met with Kolon representatives and eventually was hired by them as a consultant.

Mitchell shared with Kolon some of the proprietary information he had, but when Kolon representatives began asking him extremely technical questions on Kevlar, he reached out to former and current DuPont employees for answers. Word of his activities, however, got back to DuPont management, who reached out to the FBI with their concerns.

Eventually, Mitchell agreed to cooperate with law enforcement and made numerous recorded phone calls and exchanged e-mails with Kolon representatives. He also hosted a face-to-face meeting with representatives in a Richmond hotel, which was audiotaped and videotaped by the Bureau.

This case would have been nearly impossible to make without the assistance of DuPont. In addition to the company coming to us initially about the attempts to steal their trade secrets, DuPont worked with us to understand and organize more than a million pages of Kevlar-related documents and hundreds of hours of audio recordings, which enabled the case to move forward quickly. And the FBI and the Department of Justice worked to ensure that DuPont’s proprietary information—much of which was used as evidence—wasn’t disclosed publicly.

As a result of its experience, DuPont enhanced efforts to protect its proprietary information. Other American companies, if they haven’t already done so, need to follow suit—the desire to steal U.S. business trade secrets continues unabated.

Chinese Professors Among Six Defendants Charged With Economic Espionage And Theft Of Trade Secrets For Benefit Of Communist China

The U.S. Justice Department released the below link:

On May 16, 2015, Tianjin University Professor Hao Zhang was arrested upon entry into the United States from the People’s Republic of China (PRC) in connection with a recent superseding indictment in the Northern District of California, announced Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Melinda Haag of the Northern District of California and Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division.

The 32-count indictment, which had previously been sealed, charges a total of six individuals with economic espionage and theft of trade secrets for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of universities and companies controlled by the PRC government.

“According to the charges in the indictment, the defendants leveraged their access to and knowledge of sensitive U.S. technologies to illegally obtain and share U.S. trade secrets with the PRC for economic advantage,” said Assistant Attorney General Carlin.  “Economic espionage imposes great costs on American businesses, weakens the global marketplace and ultimately harms U.S. interests worldwide.  The National Security Division will continue to relentlessly identify, pursue and prosecute offenders wherever the evidence leads.  I would like to thank all the agents, analysts and prosecutors who are responsible for this indictment.”

“As today’s case demonstrates, sensitive technology developed by U.S. companies in Silicon Valley and throughout California continues to be vulnerable to coordinated and complex efforts sponsored by foreign governments to steal that technology,” said U.S. Attorney Haag.  “Combating economic espionage and trade secret theft remains one of the top priorities of this Office.”

“The conduct alleged in this superseding indictment reveals a methodical and relentless effort by foreign interests to obtain and exploit sensitive and valuable U.S. technology through the use of individuals operating within the United States,” said Special Agent in Charge Johnson.  “Complex foreign-government sponsored schemes, such as the activity identified here, inflict irreversible damage to the economy of the United States and undercut our national security.  The FBI is committed to rooting out industrial espionage that puts U.S. companies at a disadvantage in the global market.”

According to the indictment, PRC nationals Wei Pang and Hao Zhang met at a U.S. university in Southern California during their doctoral studies in electrical engineering.  While there, Pang and Zhang conducted research and development on thin-film bulk acoustic resonator (FBAR) technology under funding from U.S. Defense Advanced Research Projects Agency (DARPA).  After earning their doctorate in approximately 2005, Pang accepted employment as an FBAR engineer with Avago Technologies (Avago) in Colorado and Zhang accepted employment as an FBAR engineer with Skyworks Solutions Inc. (Skyworks) in Massachusetts.  The stolen trade secrets alleged in the indictment belong to Avago or Skyworks.

Avago is a designer, developer and global supplier of FBAR technology, which is a specific type of radio frequency (RF) filter.  Throughout Zhang’s employment, Skyworks was also a designer and developer of FBAR technology.  FBAR technology is primarily used in mobile devices like cellular telephones, tablets and GPS devices.  FBAR technology filters incoming and outgoing wireless signals so that a user only receives and transmits the specific communications intended by the user.  Apart from consumer applications, FBAR technology has numerous applications for a variety of military and defense communications technologies.

According to the indictment, in 2006 and 2007, Pang, Zhang and other co-conspirators prepared a business plan and began soliciting PRC universities and others, seeking opportunities to start manufacturing FBAR technology in China.  Through efforts outlined in the superseding indictment, Pang, Zhang and others established relationships with officials from Tianjin University.  Tianjin University is a leading PRC Ministry of Education University located in the PRC and one of the oldest universities in China.

As set forth in the indictment, in 2008, officials from Tianjin University flew to San Jose, California, to meet with Pang, Zhang and other co-conspirators.  Shortly thereafter, Tianjin University agreed to support Pang, Zhang and others in establishing an FBAR fabrication facility in the PRC.  Pang and Zhang continued to work for Avago and Skyworks in close coordination with Tianjin University.  In mid-2009, both Pang and Zhang simultaneously resigned from the U.S. companies and accepted positions as full professors at Tianjin University.  Tianjin University later formed a joint venture with Pang, Zhang and others under the company name ROFS Microsystem intending to mass produce FBARs.

The indictment alleges that Pang, Zhang and other co-conspirators stole recipes, source code, specifications, presentations, design layouts and other documents marked as confidential and proprietary from the victim companies and shared the information with one another and with individuals working for Tianjin University.

According to the indictment, the stolen trade secrets enabled Tianjin University to construct and equip a state-of-the-art FBAR fabrication facility, to open ROFS Microsystems, a joint venture located in PRC state-sponsored Tianjin Economic Development Area (TEDA), and to obtain contracts for providing FBARs to commercial and military entities.
The six indicted defendants include:

• Hao Zhang, 36, a citizen of the PRC, is a former Skyworks employee and a full professor at Tianjin University.  Zhang is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.  Zhang was arrested upon entry into the United States on May 16, 2015.
• Wei Pang, 35, a citizen of the PRC, is a former Avago employee and a full professor at Tianjin University.  Pang is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.
• Jinping Chen, 41, a citizen of the PRC, is a professor at Tianjin University and a member of the board of directors for ROFS Microsystems.  Chen is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.
• Huisui Zhang (Huisui), 34, a citizen of the PRC, studied with Pang and Zhang at a U.S. university in Southern California and received a Master’s Degree in Electrical Engineering in 2006.  Huisui is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.
• Chong Zhou, 26, a citizen of the PRC, is a Tianjin University graduate student and a design engineer at ROFS Microsystem.  Zhou studied under Pang and Zhang, and is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.
• Zhao Gang, 39, a citizen of the PRC, is the General Manager of ROFS Microsystems.  Gang is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.

The maximum statutory penalty for each of the charges alleged in the superseding indictment is as follows:

• Count One: conspiracy to commit economic espionage: 15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 
• Count Two: conspiracy to commit theft of trade secrets: 10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 
• Counts Three Through Seventeen: economic espionage; aiding and abetting: 15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 
• Counts Eighteen Through Thirty-Two: theft of trade secrets; aiding and abetting: 10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 

Zhang was arrested on May 16, 2015, upon landing at the Los Angeles International Airport on a flight from the PRC.  He made his initial appearance yesterday afternoon in Los Angeles before the U.S. Magistrate Judge Alicia G. Rosenberg of the Central District of California, who ordered the defendant transported in custody to San Jose for further proceedings.  His next scheduled appearance will be before the U.S. District Judge Edward J. Davila of the Northern District of California, at a date to be determined.

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

The investigation is being conducted by the FBI’s Palo Alto Resident Agency/San Francisco Division.  The case is being prosecuted by Assistant U.S. Attorneys Matt Parrella and Dave Callaway of the Northern District of California, and the National Security Division’s Counterespionage Section.