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Chinese Research Scientist Pleads Guilty to Economic Espionage and Theft of Trade Secrets

A Chinese national pleaded guilty today to one count of economic espionage to benefit a university tied to the People’s Republic of China and one count of theft of trade secrets.

Kexue Huang, 48, pleaded guilty to the charges before U.S. District in the Southern District of Indiana. According to the FBI, in July 2010, Huang was charged in an indictment for misappropriating and transporting trade secrets to China while working as a research scientist at Dow AgroSciences, a wholly owned subsidiary of The Dow Chemical Company.

Today, a separate indictment filed in Minnesota was unsealed, charging Huang with stealing a trade secret from Cargill, a large producer and marketer of food, agricultural and industrial products and services, and one of the largest private companies in the world.

Kexue Huang Pleads GuiltyCourt documents show that from January 2003 until February 2008, Huang was employed as a research scientist at Dow, an international agricultural company based in Indianapolis that provides agrochemical and biotechnology products. In 2005, Huang became a research leader for Dow in strain development related to unique, proprietary organic insecticides marketed worldwide.

As a Dow employee, Huang signed an agreement that prohibited him from disclosing any confidential information without Dow’s consent.

Huang admitted that during his employment at Dow, he misappropriated several Dow trade secrets. According to plea documents, from 2007 to 2010, Huang transferred and delivered the stolen Dow trade secrets to individuals in Germany and China. With the help of these individuals, Huang used the stolen materials to conduct unauthorized research with the intent to benefit foreign universities tied to China. Huang also admitted that he attempted to develop and produce the misappropriated Dow trade secrets in China, including identifying manufacturing facilities in the China that would allow him to compete with Dow in the established organic pesticide market.

According to court documents, after Huang left Dow, he was hired in March 2008 by Cargill. Huang worked as a biotechnologist for Cargill until July 2009 and signed a confidentiality agreement promising never to disclose any trade secrets or other confidential information belonging to Cargill. Huang admitted that during his employment with Cargill, he stole one of the company’s trade secrets—a key component in the manufacture of a new food product, which he later disseminated to another person, specifically a student at Hunan Normal University in China.

According to the plea agreement, the aggregated loss from Huang’s criminal conduct exceeds $7 million but is less than $20 million.

“Mr. Huang used his insider status at two of America’s largest agricultural companies to steal valuable trade secrets for use in his native China,” said Assistant Attorney General Breuer. “We cannot allow U.S. citizens or foreign nationals to hand sensitive business information over to competitors in other countries, and we will continue our vigorous criminal enforcement of economic espionage and trade secret laws. These crimes present a danger to the U.S. economy and jeopardize our nation’s leadership in innovation.”

“This type of threat, which the FBI refers to as the insider threat, often causes the most damage. In order to maintain our competitive advantage in these sectors, industry must identify their most important equities, realize that they are a target, implement internal protection mechanisms to protect their intellectual property, and communicate issues of concern immediately to the FBI,” said FBI Special Agent in Charge, Robert Holley.

“Today’s plea underscores the continuing threat posed by the theft of business secrets for the benefit of China and other nations,” said Lisa Monaco, Assistant Attorney General for National Security.

Huang faces a maximum prison sentence of 15 years on the economic espionage charge and 10 years on the theft of trade secrets charge. The Economic Espionage Act prohibits trade secret theft intended to benefit a component of a foreign government. Since its enactment in 1996, there have been a total of eight such cases charged nationwide under the Economic Espionage Act.

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