First Federal Jury Conviction Under Economic Espionage Act

TiO2 technology: A commercially valuable white pigment with numerous uses, including coloring paint, plastics, and paper

SAN FRANCISCO:
A jury in San Francisco has found two individuals and a company guilty of espionage, theft of trade secrets, bankruptcy fraud, tax evasion, and obstruction of justice.

CONVICTIONS
The convictions were brought against Walter Lian-Heen Liew and his company, USA Performance Technology Inc. and Robert Maegerle for their joint role in obtaining U.S. trade secrets for the benefit of government companies of the People’s Republic of China (PRC).

FINDINGS
The jury found that Liew and Maegerle conspired to steal trade secrets regarding 'Chloride-Route Titanium Dioxide Production Technology (TiO2) from Delaware based E.I. du Pont de Nemours & Company. The pair then sold the secrets for large sums of money to state-owned companies in the PRC.

ESPIONAGE ACT
The case marks the first federal jury conviction on charges brought under the Economic Espionage Act of 1996.

“Fighting economic espionage and trade secret theft is one of the top priorities of this office, and we will aggressively pursue anyone, anywhere, who attempts to steal valuable information from the United States,” said U.S. Attorney Melinda Haag.

Haag commended the efforts of the FBI and the IRS in helping to bring convictions on the pair saying: "Today’s verdict demonstrates how foreign governments threaten our economic and national security by engaging in aggressive and determined efforts to steal U.S. intellectual property".

Acting Assistant Attorney General, John Carlin, said the theft of such trade secrets for the benefit of foreign governments posed a substantial threat to America's economic and national security.

“Today’s verdict clearly demonstrates that we take this threat seriously. This case shows that we will not hesitate to pursue and prosecute those who steal from American businesses.”

TAX RETURNS
The jury also found that the pair and the company obstructed justice during the course of their conspiracy. Liew filed false tax returns for USAPTI and his previous company, Performance Group. He also made false statements and oaths in bankruptcy proceedings for the Performance Group.
It's understood he filed false tax returns for the Performance Group for  2006, 2007, and 2008 and for USAPTI in 2009 and 2010.

The guilty verdicts followed a seven-week jury trial before the Honorable Jeffery S. White of the Northern District of California.

EVIDENCE
Evidence given during the trial showed that Liew met with the government of the PRC during the 1990's and was informed that they had prioritized the development of TiO2 technology, a commercially valuable white pigment with numerous uses, including coloring paint, plastics, and paper.

AS co-owner of USAPTI Liew entered into contracts worth in excess of $20 million to convey TiO2 trade secret technology to Pangang Group companies. Liew and his wife, Christina, received millions of dollars from the contracts. The proceeds were wired through the United States, Singapore, and ultimately back into several bank accounts in the PRC in the names of relatives of Christina Liew.

FORMER EMPLOYEES
Liew then assembled a team of former DuPont employees, including Maegerie to assist him in  conveying DuPont’s technology to entities in the PRC. He executed contracts with state-owned entities of the PRC for TiO2 projects that relied on the transfer of illegally obtained DuPont technology. They obtained and sold DuPont’s TiO2 trade secret to the Pangang Group companies for more than $20 million.

Between them, Liew, 56, of Walnut Creek, CA and Maegerle, 78, of Harbeson, Delaware were convicted of multiple crimes including conspiracy, attempted theft and attempted espionage and conveying trade secrets, amongst others.

OTHERS CHARGED
A second superseding indictment also saw charges brought against  Liew’s wife, Christina and a former DuPont employee named as Tze Chao.  The charges against Ms. Liew were severed seperate from those against Walter Liew, Maegerle, and USAPTI. Ms. Liew will appear before the Honorable Jeffery S. White tomorrow in San Francisco to set the date for her trial.

Hou Shengdong, Vice Director of the Chloride Process TiO2 Project Department for the Pangang Group, also faced charges in the second superseding indictment. He is currently a fugitive.

Charges of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, and attempted economic espionage are also pending against the four PRC state-owned companies charged in the second superseding indictment.

SENTENCING
Sentencing for Liew, Maegerle, and USAPTI is scheduled for June 10 this year in Oakland.
Liew was remanded to the custody of the U.S. Marshals pending sentencing. Maegerle remains out of custody on conditions of release.