Scientist Sentenced for Theft of Trade Secrets
When scientist Hongjin Tan resigned from the Oklahoma petroleum company he’d worked at for 18 months, he told his superiors that he planned to return to China to care for his aging parents.
He also reported that he hadn’t arranged his next job, so the company agreed to let him to stay in his role until his departure date in December 2018.
But Tan told a colleague a different story over dinner.
That conversation prompted Tan’s employer to ask him to leave the firm immediately—and then his employer made a call to the FBI tip line to report a possible crime. The resulting investigation led to Tan’s guilty plea and 24-month prison sentence for stealing proprietary information that belonged to his company.
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 economic advantage by stealing the innovative work of U.S. companies and facilities.
Tan had lived in the United States since 2012 and was a legal permanent resident. He earned his Ph.D. at an American university and had worked for a number of firms in California before making his way to the energy company in Oklahoma.
One of that firm’s most innovative products was a battery technology that employees had spent decades researching and developing. The technology also has a secondary, and perhaps even more valuable, use in melting metal.
When Tan revealed to his colleague that he actually did have a job waiting for him in China with Xiamen Tungsten, Tan’s dinner companion reported the conversation to his supervisor—who grew alarmed after researching the company. Xiamen Tungsten is a Chinese firm that smelts, processes, and distributes metal products and also supplies battery materials.
“If you got your hands on this information, you would be decades ahead of where you would have started out on this technology,” said Rebecca Day, Special Agent, FBI Oklahoma City
With this new information, the company immediately dismissed Tan from his responsibilities. Because they were now concerned about his motives, the company also began to look back at the documents and systems he had accessed while employed there.
While this review was going on, Tan called his supervisor to tell them 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 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.”
The company worked closely with the FBI to help them investigate the case and identify the company files Tan had stored at his 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.”
At a recent conference in Boston, FBI Director Christopher Wray addressed this disquieting threat: “We see Chinese companies stealing American intellectual property to avoid the hard slog of innovation and then using it to compete against the very American companies they victimized—in effect, cheating twice over.”
“The deleted files were the files the company was most concerned about.”-Jeremy Sykes, special agent, FBI Oklahoma City
FBI Oklahoma City Special Agent Quincy Barnett said that there are a number of things companies can do to protect their products, research, and innovations, and that the FBI is eager to develop relationships with firms. “If we reach out,” he said, “it’s not a negative. We may have identified opportunities to engage.”
The Bureau can provide briefings to executives and employees on insider threats, share precautions workers should take when they travel to certain countries, help IT staff assess how to compartmentalize system and file access, and remind firms to put nondisclosure agreements in place to ensure employees agree not to share certain information.
In this case, the firm’s willingness to report the suspected crime so quickly made the difference in being able to hold Tan accountable. “We were on the phone with the company on December 13,” Sykes said. “We knew Tan was flying out of the country on December 29.”
Barnett said the FBI has seen that some companies resist reporting because they fear it will harm their stock price or be seen as a negative among shareholders.
“Companies can bring this information to the FBI, and we can work through those fears and hesitations,” said Barnett. “We are trying to send a message that this won’t be tolerated, but we have to find out about it first.”
The case against Tan not only resulted in two years of prison time but also, with support from Homeland Security Investigations, the loss of his residency status. Tan will be deported when he is released, which is a strong indicator of just how seriously the U.S. is taking these types of criminal violations.
To learn more about how the FBI can partner with you to protect your business or company, visit the Office of Private Sector website.
To provide a tip on any suspected crime, visit tips.fbi.gov.
FBI.gov (May 2020) Billion-Dollar Secrets Stolen