By World News Report Bureau
Hongjin Tan, 36, a Chinese scientist working in the USA– accused of stealing proprietary information worth more than $1 billion from a U.S. petroleum company (his employer) has allegedly been sentenced to 24 months in federal prison by the federal court.
This was after Tan pleaded guilty to theft, unauthorized possession and unauthorized transmission of trade secrets from June 2017 to Dec 2018, while working to develop next-generation battery technologies for stationary energy storage, specifically flow batteries. Tan admitted to intentionally copying and downloading research and development materials without authorization from his employer.
Tan reportedly copied hundreds of files containing the proprietary information on a thumb drive before submitting his resignation and being escorted out of the premises on Dec. 12, 2018. Later that day, he returned the thumb drive, claiming that he had forgotten to do so before leaving his employer’s property. Upon examination, it was discovered that there was unallocated space on the thumb drive, indicating five documents had previously been deleted.
FBI investigators searched Tan’s premises and found an external hard drive containing the same five missing files downloaded from the thumb drive. Tan admitted that he copied the files on the hard drive to access the data at a later date. Further investigation revealed that the material could cause significant financial damage to the Oklahoma employer and financially benefit Tan.
Tan’s theft of a trade secret—one worth an estimated $1 billion—is an example of what the FBI says is a systematic campaign by the Chinese government to gain an economic advantage by stealing the innovative work of U.S. companies and facilities.
TWIST IN THE TALE
It seemed to be a routine case of an employee quitting an organization for personal reasons.
Tan was a legal permanent resident and had been living in the United States since 2012. He earned his PhD at an American university and had worked for a number of firms in California before making his way to the energy company in Oklahoma.
But an interesting twist in the tale was added when Hongjin Tan who had been working for the Oklahoma petroleum company for 18 months resigned from the job apparently to take care for his ageing parents back home to China. He also reportedly told his employers that he hadn’t lined by another job in the transition phase so the company allowed him to stay until his relieving date in December 2018.
WHO LET THE CAT OUT OF THE BAG?
Tan’s luck ran out when he revealed his real intentions to a colleague over dinner. Tan allegedly boasted to his colleague that he actually did have a job waiting for him in China with Xiamen Tungsten. Tan’s companion reported the conversation to his supervisor. Based on the new information, the company immediately dismissed Tan and began to scrutinize the documents and systems he had accessed in the immediate past.
While the review was in progress, Tan called up his supervisor to say that he had a thumb drive with company documents on it. “He said he was hoping to read them to continue his research work,” said FBI the Special Agent Jeremy Sykes, who worked on the case out of our Oklahoma City Field Office. “The company told him he needed to return the thumb drive.”
The company had already found Tan had been accessing sensitive documents that dealt with this innovative technology but did not directly relate to Tan’s work for the firm.
FBI agents said he began accessing these sensitive files around the time he applied to China’s Thousand Talents Program. U.S. intelligence agencies have found that, through this program, China provides financial incentives and other privileges to participants who are willing to send back the research and technology knowledge they can access while working in the United States. Tan also called up the documents around the times he made trips to China, and he accessed them for a final time on the day before he resigned.
“When he brought back the thumb drive, the firm looked at the slack space on the drive and found several files had been erased,” said Sykes. “The deleted files were the files the company was most concerned about.”
This is when the company sought the FBI to help to investigate the case and identify the company’s files stored at Tan’s home. Gaining this information allowed agents to get an arrest warrant for Tan.
“If you got your hands on this information, you would be decades ahead of where you would have started out on this technology,” said Special Agent Rebecca Day of FBI Oklahoma City’s Tulsa Resident Agency. “We won’t tolerate people who come into the United States to steal for the betterment of a foreign government or foreign company.”
It is pertinent to note that often companies resist reporting such crimes because of a fear that it may harm their stock price and have a negative impact on shareholders.
In this case, the firm’s willingness to report the suspected crime so quickly made the difference to arrest Tan just before he was planning to fly out of the country on December 29.
THE CHINA CONNECTION
Xiamen Tungsten is a Chinese firm that smelts, processes, and distributes metal products and also supplies battery materials.
U.S. petroleum company’s most innovative products were a battery technology that it had spent decades to research and development. The technology also has a secondary, and perhaps even more valuable, use in melting metal. “If you got your hands on this information, you would be decades ahead of where you would have started out on this technology,” says Rebecca Day, special agent, FBI Oklahoma City.
This prompted Tan’s employer to ask him to leave immediately—and report a possible crime to the FBI. The resulting investigation led to Tan’s guilty plea and 24-month prison sentence for stealing proprietary information that belonged to his company.
THE LEGAL ANGLE
“This investigation and prosecution uncovered another instance of China’s persistent attempts to steal American intellectual property,” said Assistant Attorney General for National Security John C. Demers. “The department of justice will continue to confront this type of illicit behaviour to safeguard American industry and protect American jobs.”
“American ingenuity inspires advances in science and technology and drives world markets. Nowhere is that more true than in Oklahoma’s energy industry. Unscrupulous individuals like Hongjin Tan seek to steal American trade secrets to take home to China so they can replicate our technology,” said U.S. Attorney Trent Shores for the Northern District of Oklahoma. “United States Attorneys from coast stand ready to combat China’s economic aggression that criminally threatens American industry.”
“American companies invest heavily in advanced research and cutting-edge technology. Trade secret theft is detrimental to our national security and a free-market economy. It takes profits away from companies and jobs away from hard-working Americans,” said Melissa Godbold, Special Agent in Charge of the FBI Oklahoma City Field Office. “The sentencing of Hongjin Tan underscores the FBI’s commitment to protecting our country’s industries from adversaries who attempt to steal valuable proprietary information.”
After reviewing the evidence on record U.S. District Judge Gregory K. Frizzell sentenced Hongjin Tan, 36, a Chinese national and U.S. legal permanent resident, to 24 months in federal prison and ordered the defendant to pay $150,000 in restitution to his former employer. Following his release from prison, Tan will spend three years on supervised release.
Tan was remanded into the custody of the U.S. Marshals Service until transfer to a U.S. Bureau of Prisons Facility.