California man charged in theft of military secrets

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A former Chinese national has been charged in a 36-count indictment in the theft of military trade secrets that authorities said he sought to sell to China, Malaysia and Thailand.

U.S. Attorney Kevin V. Ryan in California said Xiaodong Sheldon Meng, 42, of Cupertino, Calif., is charged with stealing military combat and commercial simulation software and other materials from his San Jose, Calif.-based former employer, Quantum3D Inc.

"This case highlights the vital importance of protecting the intellectual property and trade secrets not only in Silicon Valley but also for our country's businesses," Mr. Ryan said in announcing the indictment, which was handed up Wednesday.

"The alleged economic espionage and theft and export of trade secrets such as these -- visual simulation training software that has military application, no less -- has real consequences that could jeopardize our country's military advantages in the world, in addition to creating substantial financial losses for our businesses, which legitimately developed and owned this information," he said.

Mr. Ryan said the economic espionage charges accuse Mr. Meng, a former resident of Beijing of stealing trade secrets from Quantum3D with the intent they would be used to benefit the governments of China, Thailand and Malaysia.

The indictment said Mr. Meng stole numerous Quantum3D products, including "viXsen" and "nVSensor," which were used exclusively in military applications, and designed for precision training of military fighter pilots in night-vision scenarios among other applications. Both products are classified as defense articles on the U.S. Munitions List and cannot be sent outside the United States without an export license.

Many of Quantum3D's products were designed primarily for military purposes, including combat training in simulated real-time conditions and the use of advanced infrared, electro-optical and night-vision goggles.

According to the indictment, Mr. Meng took up employment with a competing company, Orad, to "pursue other career development opportunities in China." At one point, it said, Mr. Meng altered the Quantum3D's Mantis program to reflect the name of a program, which belonged to Orad, and used that program as part of a demonstration project in China.

The indictment includes three conspiracy counts, three counts of economic espionage and attempted economic espionage, two counts of violations of the Arms Export Control Act, 12 counts of theft of trade secrets and attempted theft of trade secrets, 15 counts of foreign and interstate transportation of stolen property, and three counts of making false statements to a government agency.

"The FBI is committed to aggressively pursue those attempting to illegally obtain and export trade secrets vital to maintaining the United States' position as a world leader in innovation," said FBI Special Agent in Charge Charlene B. Thornton, who heads the bureau's San Francisco field office.

"Today's indictment highlights the value of cooperation between law enforcement and private industry in effectively conducting these investigations," she said.

Mr. Ryan said Quantum3D cooperated fully in the government's investigation.

Mr. Meng is scheduled to be appear before U.S. Magistrate Judge Howard R. Lloyd in San Jose on Monday. He initially was charged by criminal complaint on Dec. 9, 2004, and the original indictment remains under seal. He currently is free on $500,000 bond. If convicted, he faces 55 years in prison and fines totaling $2.5 million.