California Man Charged In Theft Of Military Secrets

[Ryan Ruck]

California Man Charged In Theft Of Military Secrets

A former Chinese national has been charged in a 36-count indictment in the theft of military trade secrets that authorities said he sought to sell to China, Malaysia and Thailand.

U.S. Attorney Kevin V. Ryan in California said Xiaodong Sheldon Meng, 42, of Cupertino, Calif., is charged with stealing military combat and commercial simulation software and other materials from his San Jose, Calif.-based former employer, Quantum3D Inc.

"This case highlights the vital importance of protecting the intellectual property and trade secrets not only in Silicon Valley but also for our country's businesses," Mr. Ryan said in announcing the indictment, which was handed up Wednesday.

"The alleged economic espionage and theft and export of trade secrets such as these -- visual simulation training software that has military application, no less -- has real consequences that could jeopardize our country's military advantages in the world, in addition to creating substantial financial losses for our businesses, which legitimately developed and owned this information," he said.

Mr. Ryan said the economic espionage charges accuse Mr. Meng, a former resident of Beijing of stealing trade secrets from Quantum3D with the intent they would be used to benefit the governments of China, Thailand and Malaysia.

The indictment said Mr. Meng stole numerous Quantum3D products, including "viXsen" and "nVSensor," which were used exclusively in military applications, and designed for precision training of military fighter pilots in night-vision scenarios among other applications. Both products are classified as defense articles on the U.S. Munitions List and cannot be sent outside the United States without an export license.

Many of Quantum3D's products were designed primarily for military purposes, including combat training in simulated real-time conditions and the use of advanced infrared, electro-optical and night-vision goggles.

According to the indictment, Mr. Meng took up employment with a competing company, Orad, to "pursue other career development opportunities in China." At one point, it said, Mr. Meng altered the Quantum3D's Mantis program to reflect the name of a program, which belonged to Orad, and used that program as part of a demonstration project in China.

The indictment includes three conspiracy counts, three counts of economic espionage and attempted economic espionage, two counts of violations of the Arms Export Control Act, 12 counts of theft of trade secrets and attempted theft of trade secrets, 15 counts of foreign and interstate transportation of stolen property, and three counts of making false statements to a government agency.

"The FBI is committed to aggressively pursue those attempting to illegally obtain and export trade secrets vital to maintaining the United States' position as a world leader in innovation," said FBI Special Agent in Charge Charlene B. Thornton, who heads the bureau's San Francisco field office.

"Today's indictment highlights the value of cooperation between law enforcement and private industry in effectively conducting these investigations," she said.

Mr. Ryan said Quantum3D cooperated fully in the government's investigation.

Mr. Meng is scheduled to be appear before U.S. Magistrate Judge Howard R. Lloyd in San Jose on Monday. He initially was charged by criminal complaint on Dec. 9, 2004, and the original indictment remains under seal. He currently is free on $500,000 bond. If convicted, he faces 55 years in prison and fines totaling $2.5 million.

[Brian Baldwin]

Chinese "business" men often are industrial spies. I read an article in Popular Mechanics last month or the month before discussing just this. Either way I find it shocking someone from California could be anti-american in nature.... Oh wait.....

[Ryan Ruck]

Chinese Agent Charged in Major Espionage Case

A Chinese national was charged last week with stealing military trade secrets and using them in demonstration and sales proposals to the Peoples Republic of China, the Malaysian Air Force, and the Thailand Air Force.

Xiaodong Sheldon Meng, 42, is charged with stealing military combat and commercial simulation software and other materials from his former employer Quantum3D, a company based in San Jose, CA. The economic espionage charges allege that Meng, formerly a resident of Beijing, China, and now a resident of Cupertino, CA, stole the trade secrets from Quantum3D with the intent to use them to benefit the foreign governments of China, Thailand, and Malaysia.

“One of ICE's top enforcement priorities is preventing terrorist groups and hostile nations from illegally obtaining U.S. military products and sensitive technology,” said San Francisco Immigration and Customs Enforcement special agent in charge Charles DeMore.

“These items are controlled for good reason -- in the wrong hands, they could be used to inflict harm upon America or its allies," he said.

“This case highlights the vital importance of protecting the intellectual property and trade secrets not only in Silicon Valley but also for our country's businesses," said a US Justice Department official.

The alleged economic espionage and theft and export of trade secrets such as these -- visual simulation training software that has military application, no less -- has real consequences that could jeopardize our country's military advantages in the world, in addition to creating substantial financial losses for our businesses which legitimately developed and owned this information, according to an FBI spokesperson.

Many of Quantum3D's products were designed primarily for military purposes, including military combat training in simulated real-time conditions during the day and night and the use of advanced infrared (IR), Electro-Optical (EO), and Night Vision Goggle (NVG) devices.

The indictment alleges that Meng stole numerous Quantum3D products which were used exclusively in military applications, and designed for precision training of military fighter pilots in night vision scenarios among other applications. The items are classified as defense articles on the US Munitions List and cannot be exported outside the United States without an export license.

According to the charges, Meng took up employment with a competing company, Orad, to “pursue other career development opportunities in China”. At one point, Meng altered the Quantum3D's Mantis program to reflect the name of a program which belonged to Orad, a competitor of Quantum3D, according to the charges. Meng then used that program as part of a demonstration project in the People's Republic of China.

The indictment includes three conspiracy counts; three counts of economic espionage and attempted economic espionage; two counts of violations of the Arms Export Control Act; twelve counts of theft of trade secrets and attempted theft of trade secrets; fifteen counts of foreign and interstate transportation of stolen property; and three counts of making false statements to a government agency.

FBI Special Agent in Charge Charlene B. Thornton said, “The FBI is committed to aggressively pursue those attempting to illegally obtain and export trade secrets vital to maintaining the United States' position as a world leader in innovation. [The] indictment highlights the value of cooperation between law enforcement and private industry in effectively conducting these investigations."

Quantum3D, Inc. has cooperated fully in the government's investigation. A company official noted that the company “believes that enforcement of export and trade secret laws is critical to the functioning of our industry and we're pleased to work with the government in these efforts.

Meng appeared before United States Magistrate Judge Howard R. Lloyd in San Jose on Monday, Dec. 18. Meng was initially charged by complaint on Dec. 9, 2004. The original indictment on the case remains under seal. Meng posted a bail bond for a half-million dollars. If convicted on all counts, he faces a maximum sentence and fine of 50 years and fines of up to $2 million.