US sentences ‘greedy’ chemical engineer to 15 years in prison for selling trade secrets to China

Naturalised US citizen Walter Liew also fined US$28 million after stealing DuPont’s pigment technology in rare conviction for economic espionage

PUBLISHED : Friday, 11 July, 2014, 11:19am
UPDATED : Friday, 11 July, 2014, 1:08pm

A US federal judge on Thursday sentenced a California chemical engineer to 15 years in prison and fined him US$28.3 million for selling China a secret recipe to a widely used white pigment.

US District Court Judge Jeffrey White in Oakland said Walter Liew, a naturalised US citizen, had “turned against his adopted country over greed.”

A jury previously convicted Liew, 56, of receiving US$28 million from companies controlled by the Chinese government in exchange for DuPont’s pigment technology for making cars, paper and a long list of everyday items whiter.

Along with the US$28.3 million Liew was ordered to forfeit and pay to DuPont, the engineering company launched by him and his wife was fined US$18.9 million.

White expressed doubt that Liew would pay back much of his debt.

White noted that US authorities had managed to trace US$22 million of the US$28 million received by Liew to various Singapore and Chinese companies controlled by Liew’s in-laws before losing the trail.

“We’ll never get it,” White said. “It has been spirited out of the country.”

Liew and his wife, Christina Liew, launched a small California company in the 1990s aimed at exploiting China’s desire to build a DuPont-like factory to manufacture the white pigment known as titanium dioxide.

The Liews hired retired DuPont engineers and, according to the FBI, paid them thousands of dollars for sensitive company documents laying out a process to make the pigment.

Two former DuPont engineers have also been convicted of economic espionage. Another engineer committed suicide in early 2012 on the day he was to sign a plea bargain acknowledging his role in the conspiracy.

Except for a few months of release on bail, Liew has been in jail since his arrest in 2011. Liew apologised for his actions.

“There are many things I would have liked to have done differently,” Liew told the judge. “I regret my actions.”

Liew was born on a farm in Malaysia to Chinese parents and went on to earn advanced degrees in chemical engineering.

“He’s an ambitious man who made huge mistakes trying to make it into the big time,” said Stuart Gasner, Liew’s attorney.

Liew’s wife has pleaded not guilty to obstruction of justice and other charges.

In 2009, the Chinese government-controlled Pangang Group awarded the Liews’ company a US$17 million contract to build a factory that could produce 100,000 metric tons of the pigment a year. The same company had earlier awarded the Liews’ company millions more in similar contracts for smaller projects.

Prosecutors allege that the Chinese factory was built with a detailed DuPont instruction manual stamped “confidential” that was previously used to build DuPont’s newest plant in Taiwan.

Robert Maegerle, a retired DuPont engineer, was convicted of economic-espionage charges along with Walter Liew in March. They are the first people to be convicted of economic espionage by a jury since Congress passed the Economic Espionage Act in 1996, according to the US Department of Justice. About 20 other defendants have pleaded guilty to economic espionage charges before trial.

Federal officials say foreign governments’ theft of US technology is one of the biggest threats to the country’s economy and national security.

“The battle against economic espionage has become one of the FBI’s main fronts in its efforts to protect US national security in the 21st century,” said David Johnson, the FBI’s special agent in charge of the San Francisco office.

Maegerle, 78, is to be sentenced later and remains free on bail.