Chinese National Pleads Guilty to Stealing Ford Trade Secrets

The United States Attorney’s Office Eastern District of Michigan announced today that former Ford employee Xiang Dong Yu, aka Mike Yu, 49, of Beijing, China, pleaded guilty today in federal court to two counts of theft of trade secrets.

According to the plea agreement in the case, Yu was a product engineer for the Ford Motor Company from 1997 to 2007 and had access to Ford trade secrets, including Ford design documents. In December 2006, Yu accepted a job at the China branch of a U.S. company. On the eve of his departure from Ford and before he told Ford of his new job, Yu copied some 4,000 Ford documents onto an external hard drive, including sensitive system design specifications for the engine/transmission mounting subsystem, electrical distribution system, electric power supply, electrical subsystem and generic body module, among others.

According to a recent report, theft of information or assets was reported by 27.3% of companies over the past 12 months, up from 18% in 2009. In contrast, reported incidences of theft of physical assets or stock declined slightly from 28% in 2009 to 27.2% in 2010.

The majority of the design documents copied by the defendant did not relate to his work at Ford. On December 20, 2006, the defendant traveled to the location of his new employer in Shenzhen, China, taking the Ford trade secrets with him. On January 2, 2007, Yu e-mailed his Ford supervisor from China and informed him that he was leaving Ford.

According to the Attorney’s Office Eastern District of Michigan, the plea agreement states that in November 2008, the defendant began working for Beijing Automotive Company, a direct competitor of Ford. On October 19, 2009, the defendant returned to the United States, flying into Chicago from China. Upon his arrival, the defendant was arrested on a warrant issued upon the indictment in this case. At that time, the defendant had in his possession his Beijing Automotive Company laptop computer. Upon examination of that computer, the FBI discovered that 41 Ford system design specifications documents had been copied to the defendant’s Beijing Automotive Company work computer. The FBI also discovered that each of those design documents had been accessed by the defendant during the time of his employment with Beijing Automotive Company.

Under the plea agreement, Yu faces a sentence of between 63-78 months’ imprisonment based on an agreed loss amount of more than $50 million and less than $100 million and a fine of up to $150,000. The agreement also provides that Yu will be deported from the United States after completing any term of incarceration. “We will vigilantly protect the intellectual property of our U.S. automakers, who invest millions of dollars and decades of time in research and development to compete in a global economy,” McQuade said. “Those who do not play by the rules will be brought to justice.”

Yu remains in federal custody and is scheduled to be sentenced on February 23, 2011 at 10:00 a.m.

Just last week, a former technical operations associate in Bristol-Myers Squibb’s management training program entered a entered a guilty plea last week to a one-count information charging him with theft of trade secrets from the company. Shalin Jhaveri, 30, stole trade secrets from Bristol-Myers Squibb and devised a plan to convert them to his own use. At the time of his arrest, Jhaveri was meeting in a Syracuse, New York hotel room with an individual he believed was an investor willing to finance a business venture Jhaveri planned to start in his native India.

This case is yet another example how how corporate information is increasingly under threat and clearly shows the need for improved separation and isolation of information.