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Researcher at University Arrested for Wire Fraud and Making False Statements About Affiliation with a Chinese University


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Thursday, February 27, 2020

Researcher at University Arrested for Wire Fraud and Making False Statements About Affiliation with a Chinese University

Anming Hu, a  an Associate Professor in the Department of Mechanical, Aerospace and Biomedical Engineering at the University of Tennessee, Knoxville (UTK) was arrested today on a federal indictment and charged with three counts of wire fraud and three counts of making false statements.

“Hu allegedly committed fraud by hiding his relationship with a Chinese university while receiving funding from NASA,” said Assistant Attorney General for National Security John C. Demers.   “This is just the latest case involving professors or researchers concealing their affiliations with China from their American employers and the U.S. government.   We will not tolerate it.”

“The United States Attorney’s Office takes seriously fraudulent conduct that is devised to undermine federally-mandated funding restrictions related to China and Chinese universities,” said U.S. Attorney J. Douglas Overbey for the Eastern District of Tennessee.  “The University of Tennessee has cooperated with the investigation, and the U.S. Attorney’s Office values the university’s assistance in this matter.”

The indictment alleges that beginning in 2016, Hu engaged in a scheme to defraud the National Aeronautics and Space Administration (NASA) by concealing his affiliation with Beijing University of Technology (BJUT), a university in China.  Federal law prohibits NASA from using appropriated funds on projects in collaboration with China or Chinese universities.  As alleged in the indictment, Hu’s false representations and omissions to UTK about his affiliation with BJUT caused UTK to falsely certify to NASA that UTK was in compliance with this federal law. 

If convicted, Hu faces up to 20 years in federal prison and a fine up to $250,000 on each of the wire fraud counts, and up to five years in prison on each of the false statement counts.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the assigned judge. In all cases, defendants are presumed innocent until and unless proven guilty; indictments merely contain allegations supported by probable cause.

The case is being investigated by the FBI, the Offices of the Inspectors General for NASA and the Department of Energy.  The case is being prosecuted by Assistant U.S. Attorneys Casey Arrowood and Frank Dale of the Eastern District of Tennessee, and Trial Attorney Nathan Charles of the National Security Division’s Counterintelligence and Export Control Section. 



Department of Justice
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Tuesday, January 28, 2020

Harvard University Professor and Two Chinese Nationals Charged in Three Separate China Related Cases

The Department of Justice announced today that the Chair of Harvard University’s Chemistry and Chemical Biology Department and two Chinese nationals have been charged in connection with aiding the People’s Republic of China.  

Dr. Charles Lieber, 60, Chair of the Department of Chemistry and Chemical Biology at Harvard University, was arrested this morning and charged by criminal complaint with one count of making a materially false, fictitious and fraudulent statement.  Lieber will appear this afternoon before Magistrate Judge Marianne B. Bowler in federal court in Boston, Massachusetts.

Yanqing Ye, 29, a Chinese national, was charged in an indictment today with one count each of visa fraud, making false statements, acting as an agent of a foreign government and conspiracy. Ye is currently in China. 

Zaosong Zheng, 30, a Chinese national, was arrested on Dec. 10, 2019, at Boston’s Logan International Airport and charged by criminal complaint with attempting to smuggle 21 vials of biological research to China.  On Jan. 21, 2020, Zheng was indicted on one count of smuggling goods from the United States and one count of making false, fictitious or fraudulent statements.  He has been detained since Dec. 30, 2019.

Dr. Charles Lieber

According to court documents, since 2008, Dr. Lieber who has served as the Principal Investigator of the Lieber Research Group at Harvard University, which specialized in the area of nanoscience, has received more than $15,000,000 in grant funding from the National Institutes of Health (NIH) and Department of Defense (DOD).  These grants require the disclosure of significant foreign financial conflicts of interest, including financial support from foreign governments or foreign entities. Unbeknownst to Harvard University beginning in 2011, Lieber became a “Strategic Scientist” at Wuhan University of Technology (WUT) in China and was a contractual participant in China’s Thousand Talents Plan from in or about 2012 to 2017.  China’s Thousand Talents Plan is one of the most prominent Chinese Talent recruit plans that are designed to attract, recruit, and cultivate high-level scientific talent in furtherance of China’s scientific development, economic prosperity and national security.  These talent programs seek to lure Chinese overseas talent and foreign experts to bring their knowledge and experience to China and reward individuals for stealing proprietary information.  Under the terms of Lieber’s three-year Thousand Talents contract, WUT paid Lieber $50,000 USD per month, living expenses of up to 1,000,000 Chinese Yuan (approximately $158,000 USD at the time) and awarded him more than $1.5 million to establish a research lab at WUT.  In return, Lieber was obligated to work for WUT “not less than nine months a year” by “declaring international cooperation projects, cultivating young teachers and Ph.D. students, organizing international conference[s], applying for patents and publishing articles in the name of” WUT.

The complaint alleges that in 2018 and 2019, Lieber lied about his involvement in the Thousand Talents Plan and affiliation with WUT.  On or about, April 24, 2018, during an interview with investigators, Lieber stated that he was never asked to participate in the Thousand Talents Program, but he “wasn’t sure” how China categorized him.  In November 2018, NIH inquired of Harvard whether Lieber had failed to disclose his then-suspected relationship with WUT and China’s Thousand Talents Plan.  Lieber caused Harvard to falsely tell NIH that Lieber “had no formal association with WUT” after 2012, that “WUT continued to falsely exaggerate” his involvement with WUT in subsequent years, and that Lieber “is not and has never been a participant in” China’s Thousand Talents Plan. 

Yanqing Ye

According to the indictment, Ye is a Lieutenant of the People’s Liberation Army (PLA), the armed forces of the People’s Republic of China and member of the Chinese Communist Party (CCP).  On her J-1 visa application, Ye falsely identified herself as a “student” and lied about her ongoing military service at the National University of Defense Technology (NUDT), a top military academy directed by the CCP.  It is further alleged that while studying at Boston University’s (BU) Department of Physics, Chemistry and Biomedical Engineering from October 2017 to April 2019, Ye continued to work as a PLA Lieutenant completing numerous assignments from PLA officers such as conducting research, assessing U.S. military websites and sending U.S. documents and information to China.

According to court documents, on April 20, 2019, federal officers interviewed Ye at Boston’s Logan International Airport. During the interview, it is alleged that Ye falsely claimed that she had minimal contact with two NUDT professors who were high-ranking PLA officers.  However, a search of Ye’s electronic devices demonstrated that at the direction of one NUDT professor, who was a PLA Colonel, Ye had accessed U.S. military websites, researched U.S. military projects and compiled information for the PLA on two U.S. scientists with expertise in robotics and computer science.  Furthermore, a review of a WeChat conversation revealed that Ye and the other PLA official from NUDT were collaborating on a research paper about a risk assessment model designed to decipher data for military applications.  During the interview, Ye admitted that she held the rank of Lieutenant in the PLA and admitted she was a member of the CCP.

Zaosong Zheng

In August 2018, Zheng entered the United States on a J-1 visa and conducted cancer-cell research at Beth Israel Deaconess Medical Center in Boston from Sept. 4, 2018, to Dec. 9, 2019. It is alleged that on Dec. 9, 2019, Zheng stole 21 vials of biological research and attempted to smuggle them out of the United States aboard a flight destined for China.  Federal officers at Logan Airport discovered the vials hidden in a sock inside one of Zheng’s bags, and not properly packaged.  It is alleged that initially, Zheng lied to officers about the contents of his luggage, but later admitted he had stolen the vials from a lab at Beth Israel.  Zheng stated that he intended to bring the vials to China to use them to conduct research in his own laboratory and publish the results under his own name.

The charge of making false, fictitious and fraudulent statements provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000.  The charge of visa fraud provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of $250,000.  The charge of acting as an agent of a foreign government provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of $250,000. The charge of conspiracy provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000.  The charge of smuggling goods from the United States provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of $250,000.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General for National Security John C. Demers, United States Attorney Andrew E. Lelling; Special Agent in Charge of the FBI Boston Field Division Joseph R. Bonavolonta; Michael Denning, Director of Field Operations, U.S. Customs and Border Protection, Boston Field Office; Leigh-Alistair Barzey, Special Agent in Charge of the Defense Criminal Investigative Service, Northeast Field Office; Philip Coyne, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General; and William Higgins, Special Agent in Charge of the U.S. Department of Commerce, Office of Export Enforcement, Boston Field Office made the announcement. Assistant U.S. Attorneys B. Stephanie Siegmann, Jason Casey and Benjamin Tolkoff of Lelling’s National Security Unit are prosecuting these cases with the assistance of trial attorneys William Mackie and David Aaron at the National Security Division’s Counterintelligence and Export Control Section.

The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

These case are part of the Department of Justice’s China Initiative, which reflects the strategic priority of countering Chinese national security threats and reinforces the President’s overall national security strategy. In addition to identifying and prosecuting those engaged in trade secret theft, hacking and economic espionage, the initiative will increase efforts to protect our critical infrastructure against external threats including foreign direct investment, supply chain threats and the foreign agents seeking to influence the American public and policymakers without proper registration.





Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Thursday, July 11, 2019

Newly Unsealed Federal Indictment Charges Software Engineer with Taking Stolen Trade Secrets to China

A software engineer at a suburban Chicago locomotive manufacturer stole proprietary information from the company and took it to China, according to an indictment unsealed this week in federal court in Chicago.

Xudong Yao, also known as “William Yao,” 57, is charged with nine counts of theft of trade secrets.  Yao is currently at large and believed to be residing in China.

The indictment was announced by Assistant Attorney General for National Security John C. Demers, U.S. Attorney John R. Lausch Jr. for the Northern District of Illinois and Special Agent-in-Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office.  The government is represented by Assistant U.S. Attorney Peter M. Flanagan of the Northern District of Illinois.

According to the indictment, Yao began working for the suburban Chicago manufacturer in August 2014.  Within two weeks of being hired, Yao downloaded more than 3,000 unique electronic files containing proprietary and trade secret information relating to the system that operates the manufacturer’s locomotives, the indictment states.  During the next six months, Yao downloaded numerous other electronic files containing proprietary and trade secret information, including technical documents and software source code, the indictment states.  During the time of this illicit downloading of trade secrets, Yao allegedly simultaneously sought, negotiated, and accepted employment with a business in China that provided automotive telematics service systems.



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The suburban Chicago manufacturer terminated Yao in February 2015 for reasons unrelated to the alleged theft, which at that time had not been discovered.  Shortly thereafter, according to the indictment, Yao made copies of the stolen trade secret information and then traveled to China in July 2015 and began working for the Chinese company.

On Nov. 18, 2015, Yao traveled from China to O’Hare International Airport in Chicago, according to the indictment.  At the time, he had in his possession the stolen trade secret information, including nine complete copies of the suburban Chicago company’s control system source code and the systems specifications that explained how the code worked, the indictment states.  Yao returned to China at some point thereafter.

The indictment was returned in December 2017 and ordered unsealed Wednesday. 

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Theft of trade secrets is punishable by a maximum sentence of 10 years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines. 




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Department of Justice
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Thursday, February 14, 2019

One American and One Chinese National Indicted in Tennessee for Conspiracy to Commit Theft of Trade Secrets and Wire Fraud

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.”



    
   
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“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."


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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.


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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.












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