PH.D. Chemist Sentenced To 168 Months For Conspiracy To Steal Traded Secrets, Economic Espionage, Theft Of Trade Secrets, And Wire Fraud
GREENEVILLE, Tenn. – On May 9, 2022, Dr. Xiaorong You, aka Shannon You, 59, of Lansing, Michigan was sentenced to serve 168 months in prison by the Honorable J. Ronnie Greer, U.S. District Judge in the United States District Court for the Eastern District of Tennessee. Following her imprisonment, the defendant was also ordered to serve three years of supervised release and pay a $200,000 fine.
In April 2021, following a thirteen-day trial, a federal jury convicted You of conspiracy to commit trade secret theft in violation of 18 U.S.C. § 1832(a)(5), conspiracy to commit economic espionage in violation of 18 U.S.C. § 1831(a)(5), possession of stolen trade secrets in violation of 18 U.S.C. § 1832(a)(3), economic espionage 18 U.S.C. § 1831(a)(3), and wire fraud in violation of 18 U.S.C. § 1343.
According to court documents and evidence presented at trial, You stole valuable trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings for the inside of beverage cans. You was granted access to the trade secrets while working at The Coca-Cola Company in Atlanta, Georgia, and Eastman Chemical Company in Kingsport, Tennessee. The stolen trade secrets belonged to major chemical and coating companies, including Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, Sherwin Williams, and Eastman Chemical Company, and cost nearly $120,000,000 to develop.
You stole the trade secrets to set up a new BPA-free coating company in China. You and her Chinese corporate partner, Weihai Jinhong Group received millions of dollars in Chinese government grants to support the new company. Documents and other evidence presented at trial, showed You’s intent to benefit not only Weihai Jinhong Group, but also the governments of China, the Chinese province of Shandong, and the Chinese city of Weihai, as well as her intent to benefit the Chinese Communist Party.
Until recently, BPA was used universally 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 BPA’s potential health risks, companies began searching for BPA-free alternatives. As witnesses from the chemical and coating companies testified at trial, developing these BPA-free alternatives was a very complex, expensive and time-consuming process.
Evidence presented at trial showed that from December 2012 through Aug. 31, 2017, You was employed as Principal Engineer for Global Research at Coca-Cola, which had agreements with numerous companies to conduct research and development, testing, analysis, and review of various BPA-free technologies. Because of You’s extensive education and experience with BPA and BPA-free coating technologies, she was one of a limited number of Coca-Cola employees with access to BPA-free trade secrets belonging to Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, and Sherwin Williams. From approximately September 2017 through June 2018, You was employed as a packaging application development manager for Eastman Chemical Company in Kingsport, Tennessee, where she was one of a limited number of employees with access to trade secrets belonging to Eastman.
“As the evidence at trial showed, the defendant stole valuable trade secrets and intended to use them to benefit not only a foreign company, but also the government of China,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Today’s sentence reflects the seriousness of this offense, as well as the Department of Justice’s commitment to protect our nation’s security by investigating and prosecuting those who steal U.S. companies’ intellectual property.”
“When companies invest huge amounts of time and money to develop world-class technologies, only to have those technologies stolen, the results are devastating,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “Here, the defendant intended not only to enrich herself and her China-based partners, but also the government of China. Crimes like the defendant’s threaten both victim companies and the economic security of the nation as a whole. This case should serve as a warning to those entrusted with valuable trade secrets: if you break the law, you will be punished.”
“Stealing trade secrets of U.S. companies for the benefit of the Chinese government will be vigorously prosecuted in the Eastern District of Tennessee, and today’s 14-year sentence reflects the seriousness of this defendant’s crimes,” said U.S. Attorney for the Eastern District of Tennessee Francis M. Hamilton III. “The corporate vigilance and subsequent cooperation with federal law enforcement that brought this defendant to justice is to be commended; our national security depends on it.”
“Stealing technology isn’t just a crime against a company,” said Acting Assistant Director Bradley S. Benavides of the FBI’s Counterintelligence Division. “It’s a crime against American workers whose jobs and livelihoods are impacted. Today’s sentencing is a reminder that the FBI and its partners will hold accountable those who break our laws and threaten our economic and national security.”
“Ingenuity, innovation, and perseverance are the time-honored trademarks of American business and entrepreneurship. In the current global state of commerce, corporations are forced to place an increased emphasis on the protection of trade secrets and intellectual property. The FBI will not sit by while any nation-state attempts to steal or incentivizes the theft of trade secrets from successful corporations. The FBI is committed to working with industry to hold those accountable who would attempt to steal technology or trade secrets at the cost of American businesses, their employees, and their livelihood,” said Joseph E. Carrico, Special Agent-in-Charge of the Knoxville office of the Federal Bureau of Investigation.
Assistant Attorney General Matthew G. Olsen of the National Security Division; Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; and U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee made the announcement.
The FBI’s Knoxville Field Office and Department of Homeland Security’s Homeland Security Investigation (HSI) investigated the case.
Former Assistant U.S. Attorney T.J. Harker of the Eastern District of Tennessee; Senior Counsel Matt Walczewski of the U.S. Department of Justice’s Criminal Division’s Computer Crime and Intellectual Property Section; and Trial Attorney Nic Hunter of the U.S. Department of Justice’s National Security Division’s Counterintelligence and Export Control Section prosecuted the case.