- The Washington Times - Tuesday, May 19, 2015

A ring of Chinese intellectual property thieves faces charges of economic espionage and theft of trade secrets and are accused of participating in a wide-scale conspiracy to deliver sensitive information about U.S. wireless technologies to the Chinese government.

The U.S. bust is one of the largest intellectual theft cases since Congress passed the Economic Espionage Act in 1996, according to former Department of Justice prosecutors and experts on Chinese technology. The 32-count indictment was filed against six Chinese nationals: Hao Zhang, 36; Wei Pang, 35; Jinping Chen, 41; Huisui Zhang; 34, Chong Zhou, 26; and Zhao Gang, 39.

About 130 economic espionage cases have filtered through the U.S. court system over the past 19 years, but few have been filed under U.S. Code § 1831, mostly because it is difficult for federal prosecutors to prove a crime was committed with the intent of benefiting a foreign government, said Peter Toren, a former prosecutor for the Department of Justice’s Computer Crimes and Intellectual Property division.

“Because it connects back to the Chinese government, or to an entity under control of the Chinese government, it’s a pretty big deal,” said Mr. Toren, who is now an attorney with Weisbrod Matteis & Copley in Washington, D.C.

Of the six Chinese nationals charged with technology theft, two of them — Mr. Pang and Mr. Zhang — were professors at Tianjin University, one of the oldest universities belonging to the People’s Republic of China Ministry of Education. A grand jury has accused them of stealing presentations, design layouts and other documents marked as confidential and proprietary from California-based Avago Technologies and Massachusetts-based Skyworks Solutions.

According to the indictment, Mr. Pang and Mr. Zhang met at a U.S. university in Southern California during their doctoral studies in electrical engineering. After earning their doctorates approximately in 2005, Mr. Pang accepted employment as an engineer with Avago, and Mr. Zhang accepted employment as an engineer with Skyworks.

Avago Technologies is a leading designer of optoelectronics components and subsystems, while Skyworks Solutions is an innovator of high-performance analog semiconductors — technology typically used in cellphones, GPS devices and in a variety of military and defense communications technologies, according to the Justice Department. The trade secrets cited in the indictment belong to Avago or Skyworks.

Mr. Pang, Mr. Zhang and others under indictment started a business plan in 2006 and 2007 and tried to sell Chinese companies and universities on the stolen secrets. In 2008, according to the indictment, Tianjin University officials traveled to San Jose to meet with the Chinese co-conspirators and agreed to support them and set up a manufacturing plant in China. The two professors continued on with their high-tech jobs in the States, all the while sending back secrets and coordinating with the Chinese university.

China has always been “fairly aggressive” about industrial espionage, said Adam Segal, a scholar on China studies and director of the Council on Foreign Relations’ Digital and Cyberspace Policy program.

But the espionage actions of the country have not attracted such high-profile federal attention since March 2014, when five members of the People’s Liberation Army were indicted on charges of computer hacking, economic espionage and other offenses that targeted U.S. nuclear power, metals and solar products industries.

Before that, the federal government accused Chinese-born engineer Dongfan “Greg” Chung of committing economic espionage after he was caught hoarding about 300,000 sensitive papers related to the U.S. space shuttle program in his home. He was later convicted and sentenced to more than a decade in prison.

“The theft of trade secrets is on the increase,” Mr. Toren said. “China has become more and more involved in it because, as they try to modernize and become more industrial, they’re looking for shortcuts rather than investing current resources and capital. It’s a lot easier, perhaps, to steal the information from American companies.”

Some of those cases are prosecuted, while others are kept quiet by companies who would prefer not to discuss openly their theft problems, said Susan Ross, a partner in law firm Mitchell Silberberg & Knupp.

“These are not easy issues for any company, and we have an appetite in the U.S. to try to treat people fairly and honestly and, unfortunately, there are people in the world who are out to steal anything that they can get their hands on,” she said.

It remains unclear whether the six latest Chinese nationals were ordered by their government to steal U.S. technology secrets, Mr. Segal said.

“While there is often the kind of assumption that the Chinese state has directed the espionage, we’re not always 100 percent clear if they were directed by the government,” he said.

Federal authorities say they arrested Mr. Zhang at Los Angeles International Airport on Saturday. The remaining five remain outside the U.S. Each person could get up to 15 years in prison if convicted in the U.S.

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