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5 charged in California with economic espionage for China

A San Francisco federal grand jury charged five individuals as well as five companies for economic espionage and trade secret theft. Federal authorities contend that the individuals stole numerous U.S. trade secrets for companies controlled by the People’s Republic of China (PRC).

The multi-agency task force included U.S. Attorney Melinda Haag; Lisa Monaco, Assistant Attorney General for National Security at the Department of Justice; and Stephanie Douglas, Special Agent in Charge of the FBI San Francisco Division, who unveiled their economic espionage case in a San Francisco courtroom.

According to a superseding indictment, the Chinese government identified chloride-route titanium dioxide (TiO2) as a top priority and wanted to steal the development and production capabilities from U.S. companies. TiO2 is a commercially valuable white pigment chemical with numerous uses, including coloring paint, plastics, and paper.

DuPont invented the chloride-route process for manufacturing TiO2 in the late-1940s and has invested a significant amount of research and development to streamline the production process. Officials said the global titanium dioxide market is valued at $12 billion.

Government attorneys warned that other American corporations will continue to lose valuable research. Intellectual property theft is another example of the Chinese government targeting high-tech manufacturing companies to build their own commerical plants at a fraction of the cost.
The five defendants charged in the indictment were Walter Liew, Christina Liew, Robert Maegerle, Hou Shengdong and Tze Chao, all allegedly obtained and illegally possessed TiO2 trade secrets belonging to DuPont. It’s also alleged that they sold the high-tech trade secrets to the Pangang Group so they could develop a streamlined TiO2 production capability in China.

Included in the grand jury indictment were copies of contracts worth in excess of $20 million for individuals who provided DuPont’s lucrative chemical trade secrets to the PRC.

“The Liews allegedly received millions of dollars of proceeds from these contracts,” the U.S. attorney said. “The proceeds were wired through the United States, Singapore and ultimately back into several bank accounts in the PRC in the names of relatives of Christina Liew.”

The Pangang Group had the assistance of U.S. individuals who obtained the TiO2 trade secrets and wanted to sell those secrets for significant sums of money, according to the government’s indictment.

“As this case demonstrates, technology developed by U.S. companies is vulnerable to concerted efforts by competitors—both at home and abroad—to steal that technology,” said U.S. Attorney Haag. “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.”

The superseding indictment also named five companies as defendants; Pangang Group Company a Chinese state-owned enterprise, Pangang Group Steel Vanadium & Titanium Company, Pangang Group Titanium Industry Company, Pangang Group International Economic & Trading Company and USA Performance Technology.

Assistant Attorney General Monaco echoed the importance of stopping intellectual property theft. “The theft of America’s trade secrets for the benefit of China and other nations poses a substantial and continuing threat to our economic and national security, and we are committed to holding accountable anyone who robs American businesses of their hard-earned research.”

DuPont reportedly gave information to the FBI that its TiO2 trade secrets had been misappropriated. Once the FBI opened an investigation in March 2011, it didn’t take long for agents to discover who the perpetrators were. All of the defendants involved were charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets and attempted economic espionage.

FBI agents working this case also pointed out a myriad of issues that harm American enterprises. “The goal of this scheme was to obtain the benefit of research and development investments by U.S. companies, without making the same investment of time and money. This is not only unfair, but it does great damage to the U.S. economy and, as a result, undercuts on national security.”

The maximum statutory penalties for each of the alleged charges range from 10- 20 years in prison as well as fines ranging from $250,000 to $10 million.

These indictments contain only allegations and, as in all cases, the defendants are presumed innocent until proven guilty in a court of law.

For more detailed information read the FBI report here.

For other stories concerning China’s stealth war against America and why it’s working click here.

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© Copyright 2012 Kimberly Dvorak All Rights Reserved.

Continue reading on 5 charged in California with economic espionage for China – San Diego County Political Buzz |

China’s stealth war strategy; why it’s working (part one)

While many western nations naively embrace the Middle Kingdom as the economic savior of their reckless spending, the Chinese have engaged in stealth warfare for world domination against the U.S. and the West.

Like the Russian strategy against Napoleon and Hitler, the Chinese continue to draw the vulnerable West into their web of deception, draining its once bountiful resources, and lulling the zombie-like masses into China’s lair. In other words, they are successfully superseding America’s current sole super-power status, without firing a shot.

China’s stealth war against the West has taken every form available to it in a true adherence to Sun Tu’s mantra of first knowing the enemy to defeat him.

America demonstrates weakness in the following areas;

* National Defense -Vulnerability to Cyber and Electro-Magnetic Pulse (EMP) Attacks

* National Debt $16 Trillion and Climbing – Currency Manipulation

* Energy Resource Allocation- Precious and Rare Earth Metals

* Weak Border Enforcement –Illegal Drugs and Immigration

* Addiction to Cheap Technology and Labor


Click here to find out more!

Knowing the first principle of capitalism that money and investment seek the highest return, China has fed the West’s insatiable appetite for cheap labor and seemingly limitless markets, while they manipulate their currency. However, this spending addiction has come with a price tag for the U.S.

America continues to rack up trillion dollar deficits while the industrious Chinese have amassed large currency reserves of at least $2.5 trillion.

While the West purchases Chinese flat screen TVs, the People’s Republic of China has acquired 98 percent of the world’s rare earth minerals, has become the largest creditor nation on earth and owns at least 1,054.1 tons of gold (However the Business Insider claims China is secretly stockpiling gold without reporting it to the IMF).

The Chinese government continues to steal technology that costs the West billions in the development of intellectual property, openly participates in the piracy and counterfeiting of Western technology and goods, as well as employs legions of spies and agents to acquire the most secret, sophisticated weaponry the West is developing.

An example of this comes from Pakistan. During the recent clandestine raid that killed the world’s most wanted terrorist, Osama bin Laden, military personnel crashed a never-seen-before, top-secret stealth helicopter. During their hasty exit, the Navy SEALs tried to destroy the helicopter, unfortunately, much of the tail section remained intact.

According to a Financial Times news report over the weekend, Pakistan allowed Chinese military experts take samples of the “stealth skin” and photograph the never-seen-before technology left by American Special Forces. Once again the Chinese have now gained first-hand knowledge of billion dollar military technology for virtually no investment. (Read complete story here).

But the Chinese are not simply collecting classified information; they have developed an anti-satellite missile, launched its first aircraft carrier, acquired supersonic stealth aircraft, built (20) nuclear armed intercontinental missiles and maintains a three million strong army.

To further complicate matters, the U.S. has confirmed that China is providing Iran, Syria and Pakistan with sophisticated missile technology to further destabilize the Middle East ensuring our distraction from its agenda.

Another Chinese danger lurking in the sky is Electronic Magnetic Pulse (EMP) technology. This high-tech weaponry is detonated by a nuclear weapon at a high altitude and devastates electrical grids. “Communications would collapse, transportation would halt and electrical power would simply be nonexistent,” Heritage Foundation’s James Carafano explains. “Not even a global humanitarian effort would be enough to keep hundreds of millions of Americans from death by starvation, exposure, or lack of medicine. Most of Canada would be devastated, too, as its infrastructure is integrated with the U.S. power grid.”

Carafano describes the calamity has the potential to collapse the world economy and send the planet into a “new” Dark Age.

It’s probably not coincidental that the Pentagon reports more than one million cyber-intrusions each day to classified government data bases within its 15,000 computer networks and 7 million Department of Defense computers. These classified cyber-and-virus attacks by foreign nations, namely China, have led to the establishment of a U.S. military anti-cyber theft unit which comes with significant overheads.

“Our strategy’s overriding emphasis is on denying the benefit of an attack,” explained William Lynn, deputy defense secretary for the Pentagon. “There will eventually be a marriage of capability and intent, where those who mean us harm will gain the ability to launch damaging cyber attacks. We need to develop stronger defenses before this occurs.”

China’s campaign against “soft” targets also includes supplying Mexican drug cartels with hundreds of tons in chemicals used to produce crystal methamphetamine. This effort ensures a significant portion of Americans remain oblivious. Yet, if non-Chinese citizens are caught trying to obtain the same chemicals in China, they pay with their lives.

Also the U.S. recently arrested Chinese/Mexican businessman Zhenli Ye Gon, who works closely with the Sinaloa cartel, for illicit drug collusion. According to reports and federal agents, the U.S. government filed an indictment charging Zhenli Ye Gon with conspiracy to aid and abet the importation of chemicals used in methamphetamine. After two years of legal wrangling, the United States District Court for the District of Columbia dismissed the case with prejudice in August 2009.

As Butch Cassidy famously said, “who are these guys?”

And for that matter how long can America remain in denial and claim China, our economic savior, is not waging an anti-West campaign that seeks world domination and the demise of America?

This is part one of a series on the stealth threat China poses to America.

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© Copyright 2011 Kimberly Dvorak All Rights Reserved.

Continue reading on China’s stealth war strategy; why it’s working (part one) – National Homeland Security |

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