A Chinese business owner and one of his employees have pleaded guilty in Missouri to conspiring to steal trade secrets from a U.S. company, in what one expert called a rare example of foreign business people being successfully prosecuted for corporate spying.
Ji Li Huang, 45, and Xiao Guang Qi, 32, admitted Friday in federal court that they tried to buy Pittsburgh Corning Corp.’s proprietary formula for cellular glass insulation by bribing an employee of the company’s Sedalia plant.
U.S. District Judge Brian Wimes sentenced Huang to 18 months in federal prison and fined him $250,000. Qi _ Huang’s employee at a plastic novelties manufacturer called Ningbo Oriental Crafts Ltd. _ was sentenced to time served and fined $20,000, with the understanding that he would leave the U.S. immediately.
Both men paid their fines Friday, The Kansas City Star reported ( http://bit.ly/SOrPdc).
Peter Toren, a former Justice Department prosecutor and expert on economic espionage, told The Star that Huang’s sentence showed that the judge took the crime seriously.
“Eighteen months is not insignificant time, particularly for a white-collar crime,” Toren said.
Toren said only a small number of foreign businessmen have been successfully prosecuted for trying to steal U.S. trade secrets under the Economic Espionage Act. Most defendants in the 125 or so cases prosecuted since 1996 have been employees of the victim company who planned to use the information to benefit themselves, to start a new company or to sell to another firm, most often in China, Toren said.
Huang, who speaks no English, appeared anguished after a translator whispered the sentence.
“When I go back to China I will tell my family and my friends that you have to understand American laws and obey American laws,” Huang told the judge through the translator before being sentenced.
Huang and Qi were arrested in Kansas City last fall, about six weeks after Huang placed an ad in a Sedalia newspaper seeking “technical talent” with experience at Corning Pittsburgh to lead a project to build a foam glass factory in the Asian market.
Prosecutors said a confidential source working with the FBI responded to the July 22 ad and arranged to meet the two men Sept. 1 at a Kansas City restaurant. With Qi acting as Huang’s translator, prosecutors said, the parties agreed the source would be paid $100,000 for documents showing Pittsburgh Corning’s processes and formula for Foamglas, a cellular glass insulation the Pennsylvania-based company sells mainly to energy companies.
The confidential source told Huang and Qi that he had to drive back to Pittsburgh Corning in Sedalia and break into the engineering department to steal documents and drawings. Huang and Qi met the source again on Sept. 2 with a bag of money and were shown documents purportedly containing the trade secret information. FBI agents arrested Huang and Qi that day.
Huang’s plea agreement called for a maximum sentence of 18 months, but defense lawyer J.R. Hobbs argued for 11 months or less of supervised probation. Hobbes also said few prisons have staff members who speak Mandarin Chinese.
“It’s almost a `cruel and unusual punishment’ type of situation,” Hobbs said.
Assistant U.S. Attorney Brian Casey responded that deterrence demanded a substantial sentence.
“The United States understands that time in prison for Mr. Huang will be hard time,” Casey said. “But difficult is not inappropriate.”