Los Angeles Federal Grand Jury Indicts Chinese National, Su Bin, in Computer Hacking Scheme Allegedly Involving Theft of Trade Secrets

August 18, 2014

The Federal Bureau of Investigation (FBI) on August 15, 2014 released the following:

“LOS ANGELES— A federal grand jury has indicted a Chinese national on five felony offenses stemming from a computer hacking scheme that involved the theft of trade secrets from American defense contractors, including The Boeing Company, which manufactures the C-17 military transport aircraft.

Su Bin—who also used the names “Stephen Su,” “Stephen Subin” and “Steven Subin”—was named in a five-count indictment returned Thursday afternoon and filed in United States District Court.

Su is currently in custody in British Columbia, Canada, where he is being held pursuant to a provisional arrest warrant submitted by the United States. Su was previously charged in a criminal complaint filed in Los Angeles, but the indictment is now the operative charging document.

The indictment alleges that Su, a 49-year-old businessman, worked with two unindicted co-conspirators based in China to infiltrate computer systems and obtain confidential information about military programs, including the C-17 transport aircraft, the F-22 fighter jet, and the F-35 fighter jet.

The indictment specifically alleges three charges related to unauthorized computer access, a conspiracy to illegally export defense articles and a conspiracy to steal trade secrets. The charges carry a total maximum statutory penalty of 30 years in prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.

The investigation in this case was conducted by the Federal Bureau of Investigation and the Air Force Office of Special Investigations.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


DuPont vs. Kolon fight results in indictments of top executives

October 19, 2012

Examiner.com on October 19, 2012 released the following:

“BY: JOEL HENDON

An FBI news release on Oct. 18, 2012 contains the latest developments in an ongoing legal fight over a suit filed by Dupont.

On Feb. 3, 2009, DuPont filed suit against Kolon for “for theft of trade secrets and confidential information” relating to its product, Heracron. After considerable legal moves and actions, on Sep. 14, 2011, a jury in the U.S. District Court for the Eastern District of Virginia found in favor of DuPont who was awarded damages of $919.9 million. Kolon appealed, which now appears to have been a grave mistake.

The FBI press release explains the results of their investigation since that decision was made. They report that Kolon Industries Inc. and several of its executives and employees have been indicted for allegedly engaging in a multi-year campaign to steal trade secrets related to DuPont’s Kevlar para-aramid fiber and Teijin Limited’s Twaron para-aramid fiber. The indictment seeks forfeiture of at least $225 million in proceeds from the alleged theft of trade secrets from Kolon’s competitors.

Headquartered in Seoul, South Korea, Kolon was indicted by a grand jury in Richmond, Virginia. The indictment charges Kolon with one count of conspiring to convert trade secrets, four counts of theft of trade secrets, and one count of obstruction of justice.

“Kolon is accused of engaging in a massive industrial espionage campaign that allowed it to bring Heracron quickly to the market and compete directly with Kevlar,” said U.S. Attorney MacBride. “This country’s greatest asset is the innovation and the ingenuity and creativity of the American people. The genius of free enterprise is that companies compete on the excellence of their ideas, products, and services—not on theft. This indictment should send a strong message to companies located in the United States and around the world that industrial espionage is not a business strategy.” (FBI press release)

“By allegedly conspiring to steal DuPont’s and Teijin’s intellectual property, Kolon threatened to undermine an economic engine at both companies,” said Assistant Attorney General Breuer. “Developing Kevlar and Twaron was resource-intensive work and required strategic investment and ingenuity. Kolon, through its executives and employees, allegedly acted brazenly to profit off the backs of others. The Justice Department has made fighting intellectual property crime a top priority, and we will continue to aggressively prosecute IP crimes all over the country.” (Ibid)

“It’s critical that law enforcement aggressively investigate crimes of intellectual property theft, such as this one,” said FBI Special Agent in Charge Mazanec. “If not, intellectual creativity and our economy will be compromised. As a member of the Department of Justice Task Force on Intellectual Property, our office will investigate any company, domestic or international, that steals confidential proprietary information for their own benefit. We will pursue those that prey on the originality and vision of hardworking businesses who conduct their own research, obtain patents, and market a successful product.” (Ibid)

Kolon makes a product called Heracron, which is a recent entrant into the para-aramid fiber market as a competitor to products called Kevlar and Twaron. Para-aramid fibers are used to make, for example, body armor, fiberoptic cables, and automotive and industrial products. Kevlar is produced by E.I. du Pont de Nemours and Company (DuPont), one of the largest chemical companies in the United States. For decades, Kevlar has competed against Twaron, a para-aramid fiber product produced by Teijin Limited, one of the largest chemical companies in Japan.

According to the indictment, from July 2002 through February 2009, Kolon allegedly sought to improve its Heracron product by targeting current and former employees at DuPont and Teijin and hiring them to serve as consultants, then asking these consultants to reveal information that was confidential and proprietary.

The indictment alleges that in July 2002, Kolon obtained confidential information related to an aspect of DuPont’s manufacturing process for Kevlar, and within three years, Kolon had replicated it. This successful misappropriation of DuPont’s confidential information, the indictment alleges, spurred Kolon leadership to develop a multi-phase plan in November 2005 to secure additional trade secret information from its competitors by targeting people with knowledge of both pre-1990 para-aramid technology and post-1990 technologies.

Kolon is alleged to have retained at least five former DuPont employees as consultants. Kolon allegedly met with these people individually on multiple occasions from 2006 through 2008 to solicit and obtain sensitive, proprietary information that included details about DuPont’s manufacturing processes for Kevlar, experiment results, blueprints and designs, prices paid to suppliers, and new fiber technology. In cases where the consultants could not answer Kolon’s specific and detailed questions, Kolon allegedly requested the consultants to obtain the information from current employees at DuPont.

In addition to the corporation itself, the following Kolon executives and employees from Seoul were charged with conspiring together to steal trade secrets and obstruction of justice for deleting information from their computers:

Jong-Hyun Choi, 56, was a senior executive overseeing the Heracron Business Team. He allegedly met with other top executives at Kolon to develop the directives to secure consultants and directly participated in carrying out the directives.

In-Sik Han, 50, managed Kolon’s research and development related to Heracron and was allegedly responsible for overseeing the “consulting” sessions with ex-DuPont employees.

Kyeong-Hwan Rho, 47, worked for Kolon for more than 25 years and served as the head of the Heracron Technical Team beginning in January 2008. He allegedly participated in the consulting sessions.

Young-Soo Seo, 48, reported to Choi and served as the general manager for the Heracron Business Team beginning in November 2006. He allegedly participated in the consulting sessions.

Ju-Wan Kim, 40, was a manager on the Heracron Business Team from September 2007 through February 2009 and reported to Seo. He was the main point of contact at Kolon for at least one of the ex-DuPont employees. He also participated in the consulting sessions.

The conspiracy and theft of trade secrets counts each carry a maximum penalty of 10 years in prison and a fine of $250,000 or twice the gross gain or loss for individual defendants and a fine of $5 million or twice the gross gain or loss for the corporate defendant. The obstruction of justice count carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss for individual defendants and a fine of $500,000 or twice the gross gain or loss for the corporate defendant.

The indictment seeks at least $225 million in forfeiture, which represents the approximate gross proceeds of the sale of Heracron from January 2006 through June 2012, along with $341,000 in payments made to former DuPont employees in exchange for trade secret information.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Chunlai Yang Charged in Chicago by a Criminal Complaint with Theft of Trade Secrets

July 5, 2011

The Federal Bureau of Investigation (FBI) Chicago on July 2, 2011 released the following:

“A 49-year-old Libertyville resident, who was employed as a senior software engineer with the Chicago based CME Group, was arrested yesterday after being charged with theft of trade secrets. The arrest was announced today by Robert D. Grant, Special Agent in Charge of the Chicago Field Office of the Federal Bureau of Investigation (FBI).

CHUNLAI YANG, who is a naturalized United States citizen, was taken into custody yesterday morning at his CME office, located at 550 West Washington Street in Chicago, without incident, by FBI special agents. YANG was charged in a criminal complaint filed yesterday in U.S. District Court in Chicago with one count of theft of trade secrets, which is a felony offense.

According to the complaint, YANG has been employed at the CME since 2000, and is responsible for writing computer code. Beginning in May of this year, CME security personnel began monitoring YANG’s computer activity. They discovered that thousands of files had been downloaded to his computer, and some were then copied to removable storage devices, such as thumb drives. Many of the downloaded files were critical to the operation of the CME group and are considered proprietary in nature and contain protected source code.

Subsequent investigation by the FBI determined that YANG had also been in e-mail contact with the assistant director of the Logistics and Trade Bureau for the Zhangiagang Free Trade Zone. One of the e-mails sent by YANG contained an attachment, which was a CME document containing protected source code and proprietary information.

It was also determined that YANG had booked travel to China on a commercial airline flight, scheduled to depart from O’Hare International Airport on July 7th.

YANG appeared before Magistrate Judge Michael T. Mason in Chicago, late yesterday, at which time he was formally charged. YANG was ordered held without bond, pending his next court appearance, which is scheduled for Wednesday, July 6th. Until then, YANG will be housed at the Metropolitan Correctional Center in Chicago. If convicted of the charge pending against him, YANG faces a possible sentence of up to 10 years’ incarceration, a $250,000 fine, and three years of supervised release.

The public is reminded that a complaint is not evidence of guilt and that all defendants in a criminal case are presumed innocent until proven guilty in a court of law.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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