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Thursday
Jan212016

DOJ indicts China scientists for alleged GSK trade secrets ripoff

The U.S. Attorney’s Office for the Eastern District of Pennsylvania filed an indictment Wednesday charging five people in an alleged scheme to steal trade secrets from pharma giant GlaxoSmithKline. 

The defendants are:

Yu Xue, 45, of Wayne, Pennsylvania

Tao Li, 42, of Nanjing, China

Yan Mei, 36, of Nanjing, China

Tian Xue, 45, of Charlotte, North Carolina, and

Lucy Xi, 38, of West Lake Village, California. 

The indictment includes charges of conspiracy to steal trade secrets, conspiracy to commit wire fraud, conspiracy to commit money laundering, theft of trade secrets, and wire fraud.

Yu Xue and Lucy Xi were scientists working at GSK’s research facility in Upper Merion, Pennsylvania. The pharma is based in the UK.

According to the indictment, the defendants engaged in a scheme to steal trade secrets related to GSK research data, procedures, and manufacturing processes for biopharmaceutical products. 

Many of the biopharmaceutical products targeted were designed to treat cancer or other serious diseases, the DOJ said

Yu Xue, Tao Li, and Yan Mei formed a corporation in China called Renopharma allegedly to market and sell the stolen trade secret information. 

To hide the crime, Yu Xue, Tao Li, and Yan Mei agreed to put money earned from the stolen trade secrets in the name of Yu Xue’s sister, Tian Xue, and other family members, according to the indictment.

The defendants face up to ten years in prison for the trade secrets-related offenses, and up to twenty years in prison for the money laundering and wire fraud-related counts. Individuals convicted of conspiracy or substantive money laundering counts can also be fined $500,000 or the value of the property involved, whichever is more.

*     *     *

In September 2014, a court in Changsha, China fined GSK $490 million following a conviction for bribery.

GSK's former head of China operations, Mark Reilly, was given a three-year prison sentence that was suspended. Reilly was deported.

Other China nationals working as GSK executives were sentenced to between two and four years in prison.

China authorities in July 2013 accused GSK of paying $482 million in bribes to health officials and doctors to boost sales. China's Ministry of Public Security said GSK had used 700 travel agents to deliver the illegal payments since 2007.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.