Indianapolis Business Journal, 1 Sep 2010: The government’s allegations read like a spy novel: Dr. Ke-xue “John” Huang lands a job at Indianapolis-based Dow AgroSciences and over five years works himself into a position of trust, with access to trade secrets and processes the company has invested $300 million to develop.
Along the way, federal prosecutors say, the Carmel resident shares information on how to make a lucrative line of organic insecticides with contacts in Germany and his native China. Huang also secretly directs research at a Chinese university on Dow AgroSciences trade secrets, recruits investors and drafts a business plan for a new company in China that would begin producing its own insecticides as soon as the Dow patents begin to expire in 2012—potentially bringing in the equivalent of more than $26 million in its first two years.
Federal authorities say Huang passed along information on the organic insecticide to Hunan Normal University, where he is an adjunct professor, while he worked as a researcher for Dow AgroSciences in Indiana from January 2003 to February 2008. The government on Tuesday also revealed it is investigating Huang’s short stint working at Cargill, another chemical company, after he was fired by Dow AgroSciences. . . .
. . . . U.S. Attorney Cynthia Ridgeway said Huang engaged in “patient and calculating maneuvering” to gain access to Dow Agro’s trade secrets and had been working on plans for a company that would begin selling a competing product as soon as the Dow patents expired.
“He now has the full recipe: the products, the manufacturing facilities and patents about to expire,” said Ridgeway, who cited three e-mails that suggest Huang was working on a business plan built on his insider information. Huang has been held since his arrest July 13 in Massachusetts, where he now lives.
FBI Special Agent Karen Medernach said in testimony Tuesday that Huang took eight trips to China between May 2007 and December 2009, and on at least one occasion packed vials of a chemical substance in his son’s suitcase to avoid detection. . . .
Indy Star, 31 Aug 2010: A federal magistrate judge today ordered that a former Carmel man who worked for Dow AgroSciences be detained while he awaits trial on espionage charges. Ke-xue Huang lived outside Boston at the time of his arrest last month and has Canadian citizenship. He is accused of making plans with researchers at China’s Hunan Normal University to use his insider knowledge from five years at the Indianapolis-based Dow Chemical unit as well as the company’s trade secrets to produce an organic insecticide.
Dow’s Chinese patent is set to expire in 2012, and a federal prosecutor said during today’s detention hearing that Huang and his associates were gearing up to produce the same insecticide. Assistant U.S. attorney Cynthia Ridgeway noted that Huang was making plans to acquire and develop manufacturing facilities in China and already possessed bacterial strains needed for the insecticide. “He now has the full recipe,” she said, and urged Magistrate Kennard P. Foster to order Huang detained until his trial.
A federal indictment handed down by a grand jury in Indianapolis last month was unsealed at today’s hearing. Federal Marshalls transported Huang from a detention facility in Rhode Island to Indianapolis in recent days. Federal public defender Michael Donahoe urged Foster to allow Huang’s release with restrictions, as did his wife, Jie Sun. Sun testified that she would be willing to put up the family’s recently-purchased $300,000 home to secure his release. She and the couple’s two children are living just outside Boston.
Dow fired Huang in 2008. He worked briefly for Cargill, a Minneapolis-based food producer and marketer, before resigning and taking a job with Qteros in the Boston area. An FBI special agent testified today that the Minneapolis FBI office has opened an investigation into Huang’s activities concerning his work at Cargill. . . . .
Chinese researcher charged with stealing US trade secrets (AFP, 31 Aug 2010)
A Chinese researcher has been arrested and charged with stealing trade secrets about insecticides from US biotech company Dow and passing them on to China, court documents showed Tuesday. Huang Kexue, 45, was a researcher at Dow AgroSciences, a subsidiary of Dow Chemical, the largest US agrochemical and biotechnology company, between January 2003 and February 2008 in the central US state of Indiana.
Huang, who was arrested by the FBI on July 13, appeared for the first time Tuesday at a district court in Indiana. An indictment was unsealed alleging 17 separate counts against him, and a not guilty plea was entered on his behalf.
Huang, a legal permanent resident in the United States, where he was known by colleagues as John, was a lead researcher on the genetic engineering of spinosyns — products that attack the central nervous systems of insects. Dow had been pouring money into genetic engineering since 1989 to produce a new class of organic insect control and management products, the justice department said.
Despite signing a confidentiality agreement, Huang allegedly passed on vital information to Chinese institutions and won grants for further studies based on trade secrets belonging to Dow. Huang was the alleged co-author of an article in December 2008 entitled “Recent advances in the biochemistry of spinosyns,” which was published without Dow’s permission at a university in China’s Hunan province. From 2007, Huang also directed research at Hunan Normal University on trade secrets he had stolen from Dow, the charge sheet said.
Three weeks after the termination of his contract with Dow, Huang allegedly received a grant for insecticide work from the National Natural Science Foundation of China (NSFC), a foreign-based institution funded by Beijing. He went on to receive further grants from the NSFC in 2008 and 2009 for more genetic engineering work on insecticide, the indictment said. . . . .
Indiana scientist accused of stealing trade secrets (AP, 31 Aug 2010)
A former Indiana scientist accused of illegally sending trade secrets worth $300 million to China and Germany was ordered detained Tuesday on rare charges of economic espionage. A federal indictment unsealed in Indianapolis alleges that 45-year-old Kexue Huang, who was born in China, passed on proprietary information about the development of organic pesticides to Hunan Normal University while he worked as a researcher for Dow AgroSciences in Indiana from 2003 to 2008. Dow Agrosciences is a subsidiary of Midland, Mich.,-based Dow Chemical Co.
Assistant U.S. Attorney Cynthia Ridgeway said Huang, a Canadian citizen with permanent U.S. resident status, used a “patient and calculated” plan to “drain” the Indianapolis-based company of technology that took 20 years to develop. . . . . FBI Special Agent Karen Medernach testified that e-mails showed Huang was developing an operation to market the pesticides in China, where he stood to make millions of dollars. She said the agency believed that Huang stole samples of the bacterial strain used in the pesticides and smuggled them to China in his son’s suitcase.
The indictment also included a vague reference suggesting Huang also transported stolen material to Germany but the document didn’t go into detail. . . . .
Government witnesses countered that Huang had made eight trips to China in recent years and stood to make millions of dollars from marketing the stolen pesticides. Foster ordered that Huang remain in jail, saying he was a serious flight risk and that the alleged scheme posed a “clear economic danger.”
Daniel Kittle, Dow’s global vice president for research and development, testified that developing the organic pesticides called spinosyns had cost the company at least $300 million over 20 years. He said facing a new competitor in China would pose a threat to the company’s business.
Ridgeway said the FBI also is investigating allegations that Huang was involved in a similar scheme while he worked for Cargill Inc. in Minneapolis after he was fired from Dow. Most recently he had lived in Massachusetts and worked at a biofuels company called Qteros, witnesses said.
Ridgeway said the Department of Justice has only filed economic espionage charges seven times. Two cases last year resulted in trials, with one ending in a conviction and the other with a deadlocked jury.
The Economic Espionage Act was passed in 1996 after the U.S. realized China and other countries were targeting private businesses as part of their spy strategies. . . . .
US v Kexue Huang aka John (indictment)
♦ CI CENTRE COURSE: 170–Economic Espionage and Theft of Technology
♦ CI CENTRE COURSE: 207–An Introduction to the People’s Republic of China’s (PRC) Intelligence and Counterintelligence Methodologies
DOJ, 31 Aug 2010: Kexue Huang, aka John, 45, has been arrested and charged in a 17-count indictment with economic espionage intended to benefit a foreign government and instrumentalities, and interstate and foreign transportation of stolen property, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Timothy M. Morrison for the Southern District of Indiana.
Huang was arrested on July 13, 2010, in Westborough, Massachusetts by FBI agents, and today made his initial appearance in U.S. District Court for the Southern District of Indiana. According to the indictment, Huang is a Chinese national who was granted legal permanent resident status in the United States. The indictment alleges that Huang, formerly of Carmel, Indiana, misappropriated and transported trade secrets and property to the People’s Republic of China (PRC) while working as a research scientist at Dow AgroSciences LLC (Dow). While he was employed at Dow, he then directed university researchers in the PRC to further develop the Dow trade secrets. He also allegedly applied for and obtained grant funding that was used to develop the stolen trade secrets.
“Economic espionage robs our businesses and inventors of hard-earned, protected research, and is particularly harmful when the theft of these ideas is meant to benefit a foreign government,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “The protection of trade secrets and all intellectual property is vital to the economic success of our country, and our leadership in innovation. We will continue to bring charges under the Economic Espionage Act wherever supported by the evidence.”
“Complex cases like this one, where the challenge of highly technical evidence is compounded by geography, require extraordinary cooperation and flexibility between all components of the investigation,” said U.S. Attorney Timothy M. Morrison. “We had that here.”
According to the indictment, Dow is a leading agricultural company that provides agrochemical and biotechnology products. Since approximately 1989, Dow has made substantial investments in research and development to produce a class of organic insect control and management products. A proprietary fermentation process has been used to develop these organic insecticides.
According to the indictment, Huang was employed as a Dow research scientist from early 2003 until Feb. 29, 2008. As a Dow employee, Huang signed an agreement that outlined his obligations in handling confidential information, including trade secrets, and prohibited him from disclosing any confidential information without Dow’s consent. Dow employed several layers of security to preserve and maintain confidentiality and to prevent unauthorized use or disclosure of its trade secrets.
In December 2008, Huang allegedly published an article without Dow’s authorization through Hunan Normal University (HNU) in the PRC, which contained Dow trade secrets. The article allegedly was based on work supported by grants from the National Natural Science Foundation of China (NSFC), a foreign instrumentality of the PRC. Huang also allegedly directed individuals associated with HNU to conduct research at their laboratories on Dow trade secrets. The indictment also alleges that beginning in March 2008, after leaving Dow, Huang applied for and ultimately received grants from NSFC which he used to develop Dow trade secrets.
The indictment also alleges that beginning as early as September 2007, Huang directed research in the PRC on Dow confidential information, including trade secrets, which he was assigned to research in the course of his Dow employment. In addition, the indictment alleges that Huang sought information about manufacturing facilities in the PRC that would allow him and others to compete in the same market as Dow.
Huang faces a maximum of 15 years in prison and a $500,000 fine on each of the 12 counts of economic espionage. He faces 10 years in prison and a $250,000 fine on each of the five counts of transportation of stolen property.
The case is being prosecuted by Assistant U.S. Attorney Cynthia J. Ridgeway of the U.S. Attorney’s Office for the Southern District of Indiana as well as Assistant U.S. Attorney Mark L. Krotoski and Trial Attorney Evan C. Williams of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS). The National Security Division provided assistance in this matter. The investigation is being conducted by the FBI. Significant assistance in the case has also been provided by the CCIPS Cybercrime Lab.
US v Kexue Huang aka John (indictment)
Nature News, 28 July 2010: Could publishing a scientific article constitute an act of economic espionage? That question lies at the heart of charges against a Massachusetts-based scientist accused of passing US trade secrets to China.
Ke-xue Huang, a Canadian citizen and permanent US resident, was arrested on 13 July, and has been charged under a law designed to protect intellectual property held by US companies. At a bail hearing last week in Massachusetts, the US government claimed that the scientist provided secrets belonging to Dow AgroSciences, based in Indianapolis, Indiana, to the Hunan Normal University in Changsha, China. If convicted of passing the secrets, said to be worth some $100 million, Huang could face up to 15 years in prison for each of 12 counts of economic espionage.
The US Congress passed the Economic Espionage Act in 1996 to counter an apparent rise in foreign spies trading in commercial, rather than military, secrets. Six other cases have been prosecuted under the law, but Huang’s could set a precedent for the law to be applied to industry scientists and academic researchers publishing in the open literature.
This isn’t the first time a scientist has faced prison time for sharing research with China; a physicist at the University of Tennessee, Knoxville, was last year sentenced to four years in prison for violating export control laws. He had provided technical data to scientists in China and worked on sensitive technologies with foreign graduate students. . . . .
. . . . Huang’s problems stem from research related to a review article (K. Huang et al. Appl. Microbiol. Biotechnol. 82, 13–23; 2009). Co-authored with scientists at Hunan Normal University and James Zahn, a researcher at Coskata, a biofuel company in Warrenville, Illinois, the paper describes work on a new class of insecticides that Dow has been making and marketing.
The government alleges that the article contains confidential information — and that publishing it constituted theft of a trade secret, says James Duggan, Huang’s lawyer. At the hearing, however, prosecutors indicated that the article is not the sole basis for the charges, which also involve e-mail communications relating to the research.
Huang worked for Dow from 2003 to 2008, but by the time of his arrest had moved to Qteros, a company based in Marlborough, Massachusetts, that works on biofuels.
Originally from China, Huang had studied biology at China’s Jilin Agricultural University, and earned a PhD in Japan. After a two-year postdoctoral stint in the mid-1990s at Texas A&M University in College Station, where he worked on sequencing biosynthetic genes for vitamin B12 production, he went to Rice University in Houston, Texas. . . .
