Former Employee of New Jersey Defense Contractor Convicted of Exporting Sensitive Military Technology to China

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StoleTrade Secrets from Morris County Company
NEWARK—A federal jury today convicted aformer employee of a New Jersey-based defense contractor of exporting sensitiveU.S. military technology to the People’s Republic of China (PRC), stealingtrade secrets, and lying to federal agents, U.S. Attorney Paul J. Fishmanannounced.
Sixing Liu, a/k/a, “Steve Liu,” 49, aPRC citizen who had recently lived in Flanders, New Jersey, and Deerfield,Illinois, was taken into custody following the verdict, based on risk of flightconsiderations. Sentencing before U.S. District Judge Stanley R. Chesler isscheduled for January 7, 2013.
“The jury found that in order to promotehimself, Liu took highly sensitive defense information and trade secrets toChina, violating the rules of his company and the laws of this country, andthen lied about it upon his return to the United States,” U.S. Attorney Fishmansaid. “We will not tolerate the exploitation of this country’s opportunitiesthrough the theft of our secrets.”
“This specific investigation istroubling on many levels,” FBI Special Agent in Charge Michael B. Ward said.“Mr. Liu helped develop technology critical to our military, then took acomputer with that information on an unauthorized trip to China to present at aconference sponsored by the Chinese government. The United States spendsbillions of dollars each year on research and development, and this‘intellectual capital’ is very attractive to others. If they are able toacquire this research, they can save billions and quickly develop their ownproducts to compete against the United States, be it in the world economicmarket or on the battlefield.”
“Exporting military weapons andtechnical data and the theft of sensitive technology in violation of the ArmsExport Control Act are serious crimes with global consequences,” Andrew McLees,Special Agent in Charge of Immigration and Customs Enforcement-HomelandSecurity Investigations (ICE-HSI) in Newark, said. “Illegal foreign procurementnetworks continue to threaten our safety and this conviction reinforces thatHSI has no tolerance for those who try to undermine our nation’s safety andsecurity.”
“This arrest demonstrates thedetermination of Customs and Border Protection’s frontline officers, who workclosely with our law enforcement partners to safeguard the American public frompotential threats,” Robert E. Perez, Director Field Operations, for CBP NewYork, said.
The jury convicted Liu of nine of the 11counts in the second superseding indictment with which he was charged,including six counts of violating the Arms Export Control Act and theInternational Traffic in Arms Regulations, one count of possessing stolen tradesecrets in violation of the Economic Espionage Act of 1996, one count oftransporting stolen property in interstate commerce, and one count of lying tofederal agents. The jury acquitted Liu on two counts of lying to federalagents.
According to documents filed in the caseand evidence presented at trial:
In 2010, Liu stole thousands ofelectronic files from his employer, L-3 Communications, Space and NavigationDivision, located in Budd Lake, New Jersey. The stolen files detailed theperformance and design of guidance systems for missiles, rockets, target locators,and unmanned aerial vehicles. Liu stole the files to position and preparehimself for future employment in the PRC. As part of that plan, Liu deliveredpresentations about the technology at several PRC universities, the ChineseAcademy of Sciences, and conferences organized by PRC government entities.However, Liu was not charged with any crimes related to those presentations.
On November 12, 2010, Liu boarded aflight from Newark Liberty International Airport to the PRC. Upon his return tothe United States on November 29, 2010, agents found Liu in possession of anon-work-issued computer found to contain the stolen material. The followingday, Liu lied to agents of the Department of Homeland Security about the extentof his work on U.S. defense technology, which the jury found to be a criminalfalse statement.
The U.S. Department of State’sDirectorate of Defense Trade Controls later verified that several of the stolenfiles on Liu’s computer contained export-controlled technical data that relatesto defense items listed on the United States Munitions List (USML). Underfederal regulations, items and data covered by the USML may not be exportedwithout a license, which Liu did not obtain. The regulations also provide thatit is the policy of the United States to deny licenses to export items and datacovered by the USML to countries with which the United States maintains an armsembargo, including the PRC.
The jury heard testimony that Liu’scompany trained him about the United States’ export control laws and told himthat most of the company’s products were covered by those laws.
After the verdict, Judge Chesler orderedLiu taken into custody, citing the penalties Liu faces, his ties to the PRC,and the lack of an extradition treaty with the PRC, among other reasons.
Liu faces the following maximumpenalties, per count:
■Export violations—20 years in prison,$1 million fine ■Stolen trade secrets violation—10 yearsin prison, $250,000 fine ■Interstate transportation of stolenproperty—10 years’ in prison, $250,000 fine ■False statement—five years in prison,$250,000 fine
U.S. Attorney Fishman credited specialagents of the FBI, under the direction of Special Agent in Charge Ward; specialagents of ICE-HSI, under the direction of Special Agent in Charge McLees; andofficers of CBP, under Director of Field Operations Perez, for theinvestigation leading to today’s verdict.
The government is represented byAssistant U.S. Attorney L. Judson Welle of the United States Attorney’sOffice’s National Security Unit and Assistant U.S. Attorney Gurbir S. Grewal ofthe United States Attorney’s Office’s Economic Crimes Unit, both in Newark. Theprosecution received valuable support from attorneys of the U.S. Department ofJustice’s National Security Division, Counterespionage Section.