One Chinese National and One American Indicted in East Tennessee for Conspiracy to Commit Theft of Trade Secrets and Wire Fraud
GREENEVILLE, Tenn. – On February 12, 2019, a grand jury sitting in Greeneville, Tennessee, returned an nine-count indictment against Xiaorong You, a/k/a Shannon You, 56, of Lansing, Michigan, and Liu Xiangchen, 61, of Shandong Province, China, for conspiracy to commit theft of trade secret information (TSI) related to formulations for bisphenol-A-free (BPA-free) coatings. You was also indicted on seven counts of theft of trade secrets and one count of wire fraud.
The BPA-free TSI allegedly stolen by these individuals belonged to multiple owners and cost an estimated total of $119,600,000 to develop. Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss and prevent the container from corroding or reacting with the food or beverage contained therein. However, due to the potential for BPA to be harmful to human health, companies began searching for BPA-free alternatives. These alternatives are difficult and expensive to develop.
From December 2012 through August 31, 2017, You was employed as Principal Engineer for Global Research by a company in Atlanta, Georgia, which had agreements with numerous companies to conduct research and development, testing, analysis, and review of various BPA-free technologies. Due to her extensive education and experience with BPA and BPA-free coating technologies, she was one of a limited number of employees with access to TSI belonging to the various owners. From approximately September 2017 through June 2018, You was employed as a packaging application development manager for a company in Kingsport, Tennessee, where she was one of a limited number of employees with access to TSI belonging to that company.
Details of the conspiracy are included in the indictment on file with the U.S. District Court. The indictment alleges that You, Xiangchen, and a third co-conspirator formulated a plan in which You would exploit her employment with the two American employers to steal TSI and provide the information for the economic benefit of persons other than the TSI owners, including a Chinese company that would manufacture and profit from products developed using the stolen TSI.
“Our office is committed to working closely with our federal, state and local partners to identify and prosecute those who engage in illegal and deceptive practices to steal trade secret and protected information from companies who spend millions of dollars to develop it. Not only can theft of this information be potentially devastating to our American companies, it could also pose a threat to our overall national and economic security,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee.
"As this indictment highlights, theft of trade secrets from American companies is an emerging economic threat, even here in East Tennessee," said Special Agent in Charge Troy Sowers, FBI Knoxville Field Division. "The tireless work of our agents and prosecutors in this case underscores the FBI's commitment to protecting American ingenuity."
“The conduct alleged in today’s indictment exemplifies the rob, replicate and replace approach to technological development,” said Assistant Attorney General John C. Demers, National Security Division. “Xiaorong You is accused of an egregious, premediated theft and transfer of trade secrets worth more than $100 million for the purpose of setting up a Chinese company that would compete with the American companies from which the trade secrets were stolen. Unfortunately, China continues to use its national programs, like the ‘Thousand Talents,’ to solicit and reward the theft of our nation’s trade secrets and intellectual property, but the Justice Department will continue to prioritize investigations like these, to ensure that China understands that this criminal conduct is not an acceptable business or economic development practice.”
“The facts laid out in this indictment show the conspirators engaged in blatant criminal activity,” said FBI Executive Assistant Director Jay S. Tabb, Jr. “They didn't stop at going after technical secrets belonging to just one company. They allegedly targeted multiple companies and made off with trade secrets at an estimated value of almost 120 million dollars. As this case demonstrates, the FBI is determined to do everything possible to bring to justice those who try to steal secrets belonging to American companies.”
Assistant U.S. Attorney TJ Harker and National Security Division Trial Attorney Matthew Walczewski will prosecute the case for the U.S. Attorney's Office for the Eastern District of Tennessee. The investigation was conducted by the FBI.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until his or her guilt has been proven beyond a reasonable doubt in a court of law.