Chinese Professors Among Six Defendants Charged with Economic Espionage and Theft of Trade Secrets for Benefit of People’s Republic of China

SAN FRANCISCO – United States Attorney Melinda Haag, Assistant Attorney General for National Security John Carlin, and FBI Special Agent-in-Charge David Johnson announced today that on May 16, 2015, Tianjin University Professor Hao Zhang was arrested upon entry into the United States from the People’s Republic of China (PRC) in connection with a recent superseding indictment in the Northern District of California.  The thirty-two count indictment, which had previously been sealed, charged a total of six individuals with Economic Espionage and Theft of Trade Secrets for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of universities and companies controlled by the PRC government.

According to the indictment, PRC nationals Wei Pang and Hao Zhang met at a university in Southern California during their doctoral studies in electrical engineering.  While there, Pang and Zhang conducted research and development on thin-film bulk acoustic resonator (FBAR) technology under funding from United States Defense Advanced Research Projects Agency (DARPA).  After earning their doctorates in approximately 2005, Pang accepted employment as an FBAR engineer with Avago Technologies (Avago) in Colorado, and Zhang accepted employment as an FBAR engineer with Skyworks Solutions, Inc. (Skyworks) in Massachusetts.  The stolen trade secrets alleged in the indictment belong to Avago and Skyworks.

Avago is a designer, developer and global supplier of FBAR technology, which is a specific type of radio frequency (RF) filter.  While Zhang was employed there, Skyworks also designed and developed FBAR technology.  FBAR technology is primarily used in mobile devices like cellular telephones, tablets, and GPS devices.  FBAR technology filters incoming and outgoing wireless signals so that a user only receives and transmits the specific communications intended by the user.  Apart from consumer applications, FBAR technology has numerous applications for a variety of military and defense communications technologies.

According to the indictment, in 2006 and 2007, Pang, Zhang, and other co-conspirators prepared a business plan and began soliciting PRC universities and others, seeking opportunities to start manufacturing FBAR technology in China.  Through efforts outlined in the indictment, Pang, Zhang, and others established relationships with officials from Tianjin University.  Tianjin University is a leading PRC Ministry of Education University located in Tianjin, PRC, and one of the oldest universities in China.

As set forth in the indictment, in 2008, officials from the Tianjin University flew to San Jose, California, to meet with Pang, Zhang, and other co-conspirators.  Shortly thereafter, Tianjin University agreed to support  Pang, Zhang, and others in establishing an FBAR fabrication facility in China.  Pang and Zhang continued to work for Avago and Skyworks in close coordination with Tianjin University.  In mid-2009, both Pang and Zhang simultaneously resigned from the U.S. companies and accepted positions as full professors at Tianjin University.  Tianjin University later formed a joint venture with Pang, Zhang, and others under the company name ROFS Microsystem, intending to mass produce FBARs.

The indictment alleges that Pang, Zhang, and other co-conspirators stole recipes, source code, specifications, presentations, design layouts, and other documents marked as confidential and proprietary from the victim companies and shared the information with one another and with individuals working for Tianjin University.

According to the indictment, the stolen trade secrets enabled Tianjin University to construct and equip a state-of-the-art FBAR fabrication facility, to open ROFS Microsystems, a joint venture located in PRC state-sponsored Tianjin Economic Development Area (TEDA), and to obtain contracts for providing FBARs to commercial and military entities.

United States Attorney Melinda Haag stated, “As this case demonstrates, sensitive technology developed by U.S. companies in Silicon Valley and throughout California continues to be vulnerable to coordinated and complex efforts sponsored by foreign governments to steal that technology. Combating economic espionage and trade secret theft remains one of the top priorities of this Office.”

FBI San Francisco Special Agent-in-Charge David Johnson stated, “The conduct alleged in this superseding indictment reveals a methodical and relentless effort by foreign interests to obtain and exploit sensitive and valuable U.S. technology through the use of individuals operating within the United States.  Complex foreign-government sponsored schemes, such as the activity identified here, inflict irreversible damage to the economy of the United States and undercut our national security.  The FBI is committed to rooting out industrial espionage that puts U.S. companies at a disadvantage in the global market.”

“According to the charges in the indictment, the defendants leveraged their access to and knowledge of sensitive U.S. technologies to illegally obtain and share U.S. trade secrets with the PRC for economic advantage,” said Assistant Attorney General Carlin.  “Economic espionage imposes great costs on American businesses, weakens the global marketplace and ultimately harms U.S. interests worldwide.  The National Security Division will continue to relentlessly identify, pursue and prosecute offenders wherever the evidence leads.  I would like to thank all the agents, analysts and prosecutors who are responsible for this indictment.”

The six indicted defendants include:

• Hao Zhang, 36, a citizen of the PRC.  Zhang is a former Skyworks employee and a full professor at Tianjin University.  Zhang is charged with Conspiracy to Commit Economic Espionage, Conspiracy to Commit Theft of Trade Secrets, Economic Espionage, and Theft of Trade Secrets.  Zhang was arrested upon entry into the United States on May 16, 2015.
• Wei Pang, 35, a citizen of the PRC.  Pang is a former Avago employee and a full professor at Tianjin University.  Pang is charged with Conspiracy to Commit Economic Espionage, Conspiracy to Commit Theft of Trade Secrets, Economic Espionage, and Theft of Trade Secrets.
• Jinping Chen, 41, a citizen of the PRC.  Chen is a professor at Tianjin University and a member of the board of directors for ROFS Microsystems.  Chen is charged with Conspiracy to Commit Economic Espionage and Conspiracy to Commit Theft of Trade Secrets.
• Huisui Zhang (Huisui), 34, a citizen of the PRC.  Huisui studied with Pang and Zhang at a U.S. university and received a master’s degree in electrical engineering in 2006.  Huisui is charged with Conspiracy to Commit Economic Espionage and Conspiracy to Commit Theft of Trade Secrets.
• Chong Zhou, 26, a citizen of the PRC.  A Tianjin University graduate student and a design engineer at ROFS Microsystem, Zhou studied under Pang and Zhang.  Zhou is charged with Conspiracy to Commit Economic Espionage, Conspiracy to Commit Theft of Trade Secrets, Economic Espionage, and Theft of Trade Secrets.
• Zhao Gang, 39, a citizen of the PRC.  Gang is the General Manager of ROFS Microsystems.  Gang is charged with Conspiracy to Commit Economic Espionage and Conspiracy to Commit Theft of Trade Secrets.

The maximum statutory penalty for each of the charges alleged in the Superseding Indictment is as follows:

• Count One: Conspiracy to Commit Economic Espionage, in violation of 18 U.S.C. § 1831(a)(5):  15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.
• Count Two: Conspiracy to Commit Theft of Trade Secrets, in violation of 18 U.S.C. § 1832(a)(5):  10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.
• Counts Three Through Seventeen: Economic Espionage; Aiding and Abetting, in violation of 18 U.S.C. § 1831(a)(1),(2),(3), & 2:  15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.
• Counts Eighteen Through Thirty-Two: Theft of Trade Secrets; Aiding and Abetting, in violation of 18 U.S.C. § 1832(a)(1),(2),(3), & 2:  10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.

The defendant was arrested on May 16, 2015, upon landing at the Los Angeles International Airport on a flight from the PRC. He made his initial appearance yesterday afternoon in Los Angeles before The Honorable Alicia G. Rosenberg, United States Magistrate Judge, who ordered the defendant transported in custody to San Jose for further proceedings. His next scheduled appearance will be before The Honorable Edward J. Davila, United States District Judge, at a date to be determined.

The case is being prosecuted by Assistant United States Attorneys Matthew Parrella and David Callaway of the Computer Hacking and Intellectual Property Unit of the U.S. Attorney’s Office in San Francisco, in consultation with the Counterespionage Section of the U.S. Department of Justice in Washington, D.C.  The investigation is being conducted by the Palo Alto Resident Agency/San Francisco Division of the Federal Bureau of Investigation.

Please note, an indictment contains only allegations and, as in all cases, the defendants must be presumed innocent unless and until proven guilty.