Economic Espionage to Benefit a Foreign Government

A new case in my coverage of espionage stories, the Houston Chronicle is reporting this time a Chinese engineer working in Silicon Valley is indicted on 36 felony counts, including economic espionage to benefit a foreign government and various military export control regulations.

Xiaodong Sheldon Meng, 42, a Chinese national with Canadian citizenship... Prosecutors say Meng stole the code for software made by his former employer, Quantum3D Inc., that's used to train military fighter pilots, and tried to sell it to the Royal Thai Air Force, the Royal Malaysian Air Force and a company with ties to China's military.

Under U.S. law, anyone attempting to sell such information overseas must first obtain a license from the State Department and is subject to strict regulations. Meng never applied for such a license.

Meng's case marks only the third time in a decade prosecutors have charged someone with economic espionage to benefit a foreign government, the most serious crime under the Economic Espionage Act of 1996. A conviction carries a maximum penalty of 15 years in prison.

In another, unrelated case, two other engineers pleaded guilty Thursday to stealing proprietary computer chip designs from four technology companies and attempting to smuggle them to China.

Fei Ye, 40, a U.S. citizen from China, and Ming Zhong, 39, a permanent resident of the U.S. from China, pleaded guilty in San Jose federal court to two counts each of economic espionage to benefit a foreign government as part of a deal with prosecutors. Ye and Zhong initially faced 10 counts each, and had been scheduled to go to trial in January.

Ye and Zhong were arrested in 2001 at San Francisco International Airport, attempting to board a flight to China. Their luggage was allegedly crammed with thousands of pages of trade secrets stolen from four Silicon Valley companies _ NEC Electronics Corp., Sun Microsystems Inc., Transmeta Corp. and Trident Microsystems Inc.

Both said little during Thursday's 40-minute hearing, and afterward declined to comment through their defense lawyers.

Ye and Zhong, who remain free on bail following their pleas, are scheduled to be sentenced April 23. Each face a maximum of 30 years in prison.

Posted by Marcin on Friday, December 15, 2006 in Intelligence and News.