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Federal Charges Filed In Case Involving Alleged Theft Of Trade Secrets From Utah Company

FOR IMMEDIATE RELEASE
May 7, 2012

SALT LAKE CITY – Two individuals and two companies are charged with theft of trade secrets, wire fraud, and conspiracy to commit wire fraud in connection with the alleged theft of trade secrets from Orbit Irrigation Products, Inc., a sprinkler and irrigation company headquartered in Utah, in an indictment unsealed Monday.

Charged in the indictment are Janice Kuang Capener, age 32, and Luo Jun, age 36, citizens of the People’s Republic of China; Sunhills International, LLC, a California company established by Capener; and Zhejiang Hongchen Irrigation Equipment Co., LTD, a Chinese manufacturer of irrigation equipment that had a contractual relationship with Orbit to manufacture some of its products. The indictment was returned by a federal grand jury in Salt Lake City in late April.

Capener, who is a lawful permanent resident of the United States, was employed by Orbit Irrigation Products from about June 16, 2003, until about November 1, 2009. From about March 14, 2005, until about May 13, 2009, Capener was in charge of operations at an Orbit manufacturing plant in Ningbo, Zhejiang Province, China. She was notified of her termination in May 2009 and worked as a paid consultant for the company until her termination was finalized in November of that year.

Luo Jun was the chief executive officer and owner of Zhejiang Hongchen Irrigation Equipment Co., LTD.
The first five counts of the indictment charge Capener with theft of trade secrets. The indictment alleges that she took information related to customers and the pricing and sales of sprinkler and irrigation products without authorization from secure Orbit databases and used that information for herself and others to the economic detriment of Orbit.

The sixth count of the indictment charges Capener, Luo Jun, Sunhills International and Zhejiang Hongchen Irrigation Equipment with conspiracy to commit wire fraud. The indictment alleges the defendants devised a scheme to begin undermining Orbit’s position in the marketplace using illegally obtained proprietary pricing information.

As a part of the alleged scheme, the defendants used Sunhills International to market and distribute products. Luo Jun’s company, Hongchen, would “float” or provide upfront free irrigation and sprinkler products to Sunhills to market to U.S. retailers, the indictment alleges. The defendants also, according to the indictment, took other steps to begin undermining Orbit’s position in the marketplace, including an anonymous complaint to Wal-Mart about conditions at Orbit’s factory in Ningbo, and, despite their agreements to the contrary, Hongchen increased the manufacturing costs for the products it was manufacturing for Orbit.

The indictment alleges the defendants used manufacturing, cost, customer, and pricing information in contravention of confidentiality agreements with Orbit to begin pricing Orbit out of the market. The indictment references e-mails between defendants and others establishing business relationships in furtherance of the scheme; sharing proprietary cost, customer, and pricing information of Orbit; and arranging to undercut Orbit’s prices by marketing products to Orbit customers at lower prices than Orbit’s.

The final 12 counts of the indictment charge Capener, Luo Jun and the two companies with wire fraud in connection with the scheme.

The case is being investigated by the FBI Salt Lake Field Office and prosecuted by Assistant U.S. Attorneys in Salt Lake City. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance.

Capener and Luo Jun were arrested in Las Vegas Friday morning. They had initial appearances Friday in federal court in Las Vegas. Luo Jun was detained and is scheduled for an identity hearing late Monday afternoon in Las Vegas. Capener was released following her appearance in Las Vegas. She appeared for an arraignment Monday afternoon in Salt Lake City. She entered a plea of not guilty to the charges. She will continue on her pre-trial release status which includes GPS monitoring and a curfew.

Each charge of theft of trade secrets carries a maximum sentence of 10 years and a fine of $250,000. The conspiracy to commit wire fraud count and each count of wire fraud carry maximum sentences of 30 years and fines of $1 million.

Indictments are allegations and are not findings of guilt. Individuals and businesses charged in indictments are presumed innocent unless or until proven guilty in court.

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