FBI press release on this case follows article.
(Epoch Times) Charges against three researchers at New York University provide an example of what experts call a classic example of Chinese espionage.
Yudong Zhu, Xing Yang, and Ye Li allegedly provided a Chinese company with information on federally-funded research they were conducting.
Following an FBI investigation, Zhu and Yang were arrested, and Li is believed to have fled to China.
They are being charged with commercial bribery in a conspiracy they were paid by a Chinese company and a research institution that is supported by the Chinese Communist Party (CCP). Zhu is also being charged for lying about his conflicts of interest.
While there has been a lot of attention on China’s use of cyber espionage lately, traditionally the Chinese regime’s major strategy has been to use insiders to steal information, just as these three are accused of taking information from their employer.
“China, for a long time, has been engaging in that kind of economic espionage using students, employees, and other insiders to do this,” said David Fiddler, a law professor and an expert on economic espionage.
Fiddler said the use of insiders is the Chinese Communist Party’s most common approach.
“What we’re seeing at NYU is part of that classic strategy that Chinese companies and the Chinese government has used to get the economic information it wants to obtain,” he said. . . . . (read the rest)
Defendants Allegedly Acquired Proprietary, Federally Funded Research on Behalf of Chinese Company and Government-Supported Entity
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced today the filing of charges against Yudong Zhu, Xing Yang, and Ye Li, three researchers who worked on improving MRI technology at a university in New York, New York, but who also had undisclosed affiliations with a Chinese company performing the same type of research.
The research at the university was funded by a multi-million-dollar federal grant from the National Institutes of Health.
The defendants are each charged with one count of commercial bribery in connection with a conspiracy to receive payments from the Chinese company and a Chinese government-supported research institution in exchange for providing non-public information about research they conducted at the university.
Zhu is also charged with lying about conflicts of interest in connection with the federal research grant.
Zhu and Yang were arrested at their residences in New York yesterday, and Li is believed to have flown to China before charges were brought.
Zhu and Yang will be presented later today in Manhattan federal court before U.S. Magistrate Judge Sarah Netburn.
Manhattan U.S. Attorney Preet Bharara said,
“As alleged, this is a case of inviting and paying for foxes in the henhouse. These defendants allegedly colluded with representatives from a Chinese governmental entity and a direct competitor of the university for which they worked to illegally acquire NIH-funded research for the benefit of those entities, as described in the complaint. The defendants also allegedly deceived the university and others about their professional allegiances to competing Chinese interests. The acquisition of federally funded research for the benefit of these Chinese entities is a serious crime and will not be tolerated by this office.”
FBI Assistant Director in Charge George Venizelos said,
“As alleged, while in the United States, these defendants conducted important research partially funded by the federal government to advance important MRI technology. Instead of working exclusively for a New York research institution, the defendants took bribes to acquire research for the benefit of both a Chinese competitor and a Chinese government institution. Protecting our nation’s technology and intellectual property against these types of thefts remains one of the FBI’s top priorities.”
According to the allegations in the complaint unsealed today in Manhattan federal court:
In 2008, a university research medical center located in New York, New York (the “university”) hired Zhu, an accomplished researcher and innovator in the field of magnetic resonance imaging (MRI) technology, to teach and conduct research related to innovations in MRI technology.
Zhu came to the university, in large part, to use a specific university laboratory that possessed highly specialized equipment to test MRI innovations.
In 2010, Zhu caused the university to apply for and receive a grant from the National Institutes of Health (NIH) that provided millions of dollars in funding over a five-year period for Zhu’s research relating to improving the imaging capability of MRI equipment (the “NIH grant”).
After Zhu started his research pursuant to the NIH grant, he arranged for Yang and Li to move to New York from China to work with him in 2011 and 2012, respectively.
While working for the University, Zhu, Yang, and Li each had undisclosed affiliations with United Imaging Healthcare (“United Imaging”), a Chinese medical imaging company, and the Shenzen Institute of Advanced Technology (SIAT), a Chinese government-sponsored research institute.
When Zhu arranged for Yang and Li to work with him at the university, Zhu also arranged for them to receive certain financial benefits from a co-conspirator (“CC-1”), who was an executive with United Imaging and who was also affiliated with SIAT.
For example, Zhu arranged for CC-1 to pay for Yang’s tuition at a graduate school in New York, New York, that was affiliated with the university and Li’s rental apartment. CC-1 also paid for Yang and Li’s travel between China and New York while they worked at the university.
In addition, the university recently discovered that during their employment at the university, Zhu, Yang, and Li each maintained an e-mail address that included the domain “united-imaging.com.”
The university also obtained a United Imaging employee registration for Li, which included his signature dated September 27, 2012.
Zhu, Yang, and Li concealed from, and failed to disclose, these payments from and relationships with competing research entities in China.
Yang has stated that while working on the NIH grant at the university, he also shared with individuals at United Imaging the research results from his and Zhu’s work at the university that was conducted pursuant to the NIH grant.
Through an examination of university e-mail accounts, the university learned that from August 2011 through January 2013, individuals with e-mail addresses that included the united-imaging.com domain corresponded with Zhu and Yang regarding issues related to MRI equipment prototypes, experiments, and project updates.
These e-mails were sent to and/or from accounts including Zhu’s personal Gmail account, his United Imaging e-mail address, and Yang’s Hotmail account.
Zhu also had other material conflicts of interest that he concealed from the university.
Zhu owned a patent related to MRI technology, the value of which would be directly impacted by his NIH grant research.
In addition, at the same time that he was leading the research for the NIH grant, Zhu, along with CC-1, was leading a similar research project in China related to MRI technology that was funded by a grant from the Chinese government.
Zhu and CC-1 were also part of the same research team at SIAT.
The 2011-2012 annual report for a certain division of SIAT included photographs of ZHU and CC-1 as members of its MRI Research Team.
In financial interest disclosure forms that the university required Zhu to complete in connection with the NIH grant, Zhu failed to disclose, and falsely answered, questions regarding these outside affiliations and financial conflicts of interest.
* * *
Zhu, 44, of Scarsdale, New York; Yang, 31, of Hartsdale, New York; and Li, 31, of Hartsdale, New York, are each charged with one count of commercial bribery conspiracy, which carries a maximum sentence of five years in prison.
Zhu is also charged with one count of falsification of records in connection with the NIH grant, which carries a maximum sentence of 20 years in prison.
Mr. Bharara praised the outstanding investigative work of the FBI.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorneys Christian Everdell and Zachary Feingold are in charge of the prosecution.
The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
