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Friday
Mar072014

Two convicted in plot to sell industrial secrets to China companies

A federal jury in San Francisco found two people and one company guilty of economic espionage, theft of trade secrets, tax evasion and other crimes for their roles in stealing trade secrets from DuPont and sending them to state-owned Chinese companies.

The jury's verdict on Wednesday was that Walter Lian-Heen Liew, Robert Maegerle and Liew's company, USA Performance Technology Inc. (USAPTI), conspired to to steal trade secrets from E.I. du Pont de Nemours & Company.

The secrets pertained to the company's production technology of a type of titanium dioxide -- a white pigment used in a large range of products.

The defendants also conspired to send the secrets to state-owned companies in China, including a planned titanium-dioxide factory in Chongqing.

In addition, the jury found that Liew and Maegerle (who used to work at DuPont) obstructed justice by filing false tax returns for USAPTI and making false statements in bankruptcy court proceedings concerning USAPTI's predecessor company.

The criminal case started after DuPont filed a civil lawsuit against Liew in 2011 and alerted the FBI to the theft.

A letter seized from Liew's safety deposit box was read to the jury. It referred to a banquet that Liew and several high-ranking Chinese officials had attended in 1991.

It said: "The purpose of the banquet is to thank me for being a patriotic overseas Chinese who has made contributions to China and who has provided key technologies with national defense applications in paint/coating and microwave communications."

This case marks the first federal jury conviction on charges brought under the Economic Espionage Act of 1996.

A copy of the indictments and penalty sheets in United States of America v. Walter Liew et al., U.S. Distrct Court for the Northern District of California, no. 11-cr-573, can be found here (courtesy of Hahn Loeser & Parks LLP).

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.