Chinese Business Owner, Employee Plead Guilty, Sentenced for Stealing Trade Secrets from Sedalia Plant
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Chinese business owner and his employee pleaded guilty and were sentenced in federal court today for conspiring to steal trade secrets from Pittsburgh Corning Corporation, which has a manufacturing plant in Sedalia, Mo., that produces FOAMGLAS® insulation.
“These defendants intended to inflict significant economic harm on an American corporation for their own illicit profit,” Dickinson said. “Theft of trade secrets from U.S. companies by foreign businesses is a national concern. Such thefts can cripple U.S. companies in the marketplace and cost the jobs of workers in the United States. Well-heeled business owners like Huang are put on notice that theft from U.S. companies will be prosecuted and will be punished.”
Ji Li Huang, 46, and Xiao Guang Qi, 32, both citizens of China, pleaded guilty before U.S. District Judge Brian C. Wimes to participating in a conspiracy to steal trade secrets. Huang is the CEO of Ningbo Oriental Crafts Ltd., which employs 200 factory workers to manufacture promotional products for export to the United States and Europe. Qi was his employee.
Huang was sentenced to 18 months in federal prison without parole and ordered to pay a fine of $250,000. Qi was sentenced to time served and ordered to pay a fine of $20,000. Both of the fines were paid today.
“A crime of this nature provides an unfair advantage to competing industries based solely upon an individual, a company or a foreign power’s ability to cheat and steal proprietary information,” stated Michael Kaste, Special Agent in Charge of the Kansas City Division of the FBI. “This results in a significant impact to the economy, a devastating result to the businesses targeted and a threat to the economic security of the United States.”
Pittsburgh Corning, headquartered in Pittsburgh, Penn., manufactures various grades or densities of cellular glass insulation sold under the trade name FOAMGLAS®. That material is used to insulate buildings, industrial piping systems and liquefied natural gas storage tank bases. Pittsburgh Corning’s customers include energy companies, petro chemical companies, and natural gas facilities. Pittsburgh Corning considers the product formula and manufacturing process for FOAMGLAS® proprietary and trade secrets.
By pleading guilty today, Huang and Qi admitted that they attempted to illegally purchase trade secrets of Pittsburgh Corning for the purpose of opening a plant in China to compete with Pittsburgh Corning.
Under the federal sentencing guidelines, Huang and Qi are held accountable for any reasonably foreseeable loss that would have resulted from their crime. The court ruled that the intended loss to Pittsburgh Corning exceeded $7 million, based on the company’s investment of time and resources to research, develop and protect the proprietary information the defendants attempted to steal.
Huang and Qi were arrested when they met with an individual they believed to be an employee of Pittsburgh Corning who had stolen documents that contained trade secret information and was willing to sell it to them for $100,000. That employee, however, was cooperating with law enforcement and the meetings in Kansas City were a sting operation that led to their arrests on Sept. 2, 2012.
On July 22, 2012, an advertisement was published in the local newspaper that solicited “technical talent” with experience at Corning Pittsburgh to lead a project to build a foam glass factory in the Asian market. A confidential source – working with the FBI – responded to the contact e-mail address cited in the newspaper advertisement. While in the United States for business, Huang met with the cooperating source. They agreed that $25,000 would be exchanged upfront (with $75,000 to follow later) for a package of Pittsburgh Corning’s processes and formulary on FOAMGLAS®. They also discussed paying the cooperating source to travel to China several times for consulting.
On Sept. 1, 2012, the cooperating source met with Huang and Qi at a Kansas City restaurant. Qi participated in the meeting and also acted as a translator for Huang for parts of the conversation. A follow-up meeting was scheduled for the next day, at which the cooperating source would bring the stolen proprietary information and Huang and Qi would bring the payment. The cooperating source told Huang and Qi that he had to drive back to Pittsburgh Corning and break into the engineering department to steal the documents and drawings for the equipment.
The next day, Huang and Qi met the cooperating source at a prearranged location and brought a bag containing the money. The cooperating source showed them documents that were purportedly Pittsburgh Corning’s trade secret information, some of which were stamped with secret and confidential markings. Shortly afterward, FBI agents arrested Huang and Qi at their hotel room.
The court ordered Huang and Qi to forfeit to the government $29,778 that was seized by law enforcement officers at the time of their arrest, which the defendants had brought to the United States in order to illegally purchase trade secrets.
This case was prosecuted by Assistant U.S. Attorneys Brian Casey and Matt Wolesky. It was investigated by the FBI.