US convicts two of selling DuPont trade secrets to Chinese state-owned firms

US court convicts two men of industrial espionage for stealing trade secrets from DuPont and selling them to Chinese state-owned companies

PUBLISHED : Thursday, 06 March, 2014, 2:39pm
UPDATED : Thursday, 06 March, 2014, 3:26pm

A US jury convicted a California businessman on Wednesday of selling stolen trade secrets to Chinese firms so they could develop a pigment used to whiten a wide range of products.

US officials said the conviction of Walter Liew Lian-heen, also known as Liu Yuanxuan, marked the first federal jury conviction on charges brought under the Economic Espionage Act of 1996.

Foreign governments threaten our economic and national security by engaging in aggressive and determined efforts to steal US intellectual property
US Attorney Melinda Haag

Prosecutors said Liew paid former DuPont engineer Robert Maegerle to provide trade secrets to help China’s state-owned Pangang Group companies develop a substance known as chloride-route titanium dioxide, or TiO2. The white pigment helps produce white-tinted materials such as paper and plastic.

Maegerle and Liew’s company USA Performance Technology Inc, or USAPTI, were also convicted of stealing trade secrets from EI du Pont de Nemours and Company, among other charges.

After a seven-week trial, the men and the company were also found guilty of economic espionage, bankruptcy fraud, tax evasion and obstruction of justice.

DuPont welcomed the verdict, vowing to “continue to take aggressive steps to preserve our technological edge, including co-operating with governments and law enforcement agencies around the world.”

Prosecutors said Liew sold the information for more than US$20 million to Pangang Group so its companies could develop large-scale production capability using the process in China, including a planned 100,000-tonne TiO2 factory in the industrial hub of Chongqing.

“Fighting economic espionage and trade secret theft is one of the top priorities of this office, and we will aggressively pursue anyone, anywhere, who attempts to steal valuable information from the United States,” US Attorney Melinda Haag said in a statement.

“Foreign governments threaten our economic and national security by engaging in aggressive and determined efforts to steal US intellectual property.”

Sentencing hearings are set for June 10 before US District Judge Jeffery White in Oakland, California.

Liew, 56, and Maegerle, 78, face a minimum of 25 years in prison for the two most serious charges.

Maegerle developed detailed knowledge of DuPont’s TiO2 technology and trade secrets while he worked there as an engineer for 35 years. He then provided the trade secrets to Liew and USAPTI to fulfil their contracts with state-owned Chinese companies.

In a separate indictment, Liew’s wife Christina was charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted theft of trade secrets, possession of trade secrets, witness tampering, conspiracy to tamper with evidence and false statements.

She is due in court on Thursday to set the date for her trial.

Former DuPont employee Tze Chao (also known as Zhao Zhi) was charged and pleaded guilty to conspiracy to commit economic espionage on March 1, 2012.

Pangang Group vice director Hou Shengdong was also charged in the same indictment as Liew’s wife and Chao, but remains on the run.

The indictment charged four Chinese state-owned companies.