Bay Area Residents Accused of Economic Espionage for Chinese Companies

Sell our trade secrets ... that's one way to ensure China's economy surpasses the U.S.

​A San Francisco federal grand jury has charged five people and several companies -- some located in the Bay Area -- with espionage and selling American trade secrets to help companies in China quickly flourish.

According to the indictment, China decided that it wanted to develop chloride-route titanium dioxide (TiO2) production capabilities, without investing the time and research. TiO2 is a commercially valuable white pigment used to color paint, plastics, and paper. To quickly pave the way for this development, companies controlled by China conspired to illegally obtain the TiO2 technology that had already been developed by the U.S.-based E.I.du Pont de Nemours & Company, also known as DuPont.

The companies used their employees, who obtained the TiO2 trade secrets and then allegedly sold trade secrets to the Pangang Group to help it develop large-scale chloride-route TiO2 production in China, including 10,000 planned factories.

In exchange, the companies and their employees received in excess of $20 million, according to the indictment.
 
The accused companies include USA Performance Technology and Performance Group, based in Oakland, as well as Pangang Group Company, Ltd; Pangang Group International Economic & Trading Co.; Pangang Group Titanium Industry Company, Ltd; and Pangang Group Steel Vanadium & Titanium Company, Ltd.

The following individuals have been charged: Walter Lian-Heen Liew, 54, of Orinda; Christina Hong Qiao Liew, 49, of Orinda; Hou Shengdong, 42, of China; Robert Maegerle, 76, of Delaware; and Tze Chao, 77, of Delaware.

The proceeds from these contracts were wired through the United States, Singapore, and ultimately back into several bank accounts in the People's Republic of China in the names of relatives of Christina Liew, court documents say.

"The theft of America's trade secrets for the benefit of China and other nations poses a substantial and continuing threat to our economic and national security, and we are committed to holding accountable anyone who robs American businesses of their hard-earned research," said Assistant Attorney General Lisa Monaco.

The defendants are scheduled to appear in court on March 1.

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