Legal News

Canadian Citizen Gets Two Years in Night-Vision Espionage Case

By Dan Slater

This summer, we could see several people of Chinese descent prosecuted in the U.S. for economic espionage. Yesterday, district judge Jeremy Fogel became the first judge to sentence a defendant convicted under economic espionage laws since Congress passed them in the 90’s.

Xiaodong Sheldon Meng received 24-months, the maximum under a plea deal in which he reportedly admitted to possessing night vision software for pilots, and using the software to benefit the Chinese Navy.

According to The Recorder and the AP, here’s what happened: Meng, 44, a Canadian citizen, left software company Quantum3D in 2004 to work for Orad, an Israeli competitor. However, Meng allegedly kept some of Quantum3D’s trade secrets on his computer, including a software program called Mantis which he then used in a demonstration to Chinese naval officials. Meng reportedly altered Quantum3D’s brand to make it seem like the software secrets regarding the space shuttle, a military transport plane and a rocket belonged to Orad, according to the government’s sentencing memo.

“The United States maintains a military advantage during night time operations,” wrote AUSA Mark Krotoski, the former Northern District criminal chief. “Most foreign countries do not have the same or similar night time capabilities. In the wrong hands, this advantage would be lost.”

Manual Araujo, the public defender who rep’d Meng, argued that the government oversold the nature of Meng’s behavior. While Meng did possess that source code, he never showed it to Chinese officials, unlike the Mantis program.

According to the AP, two other Silicon Valley engineers — a U.S. citizen from China, and a permanent resident of the U.S. from China — have pleaded guilty to economic espionage for stealing microchip blueprints from their employers and attempting to smuggle them to China. Their sentencing is set June 23. In a separate case, two other Silicon Valley engineers of Chinese descent were indicted in September on charges they stole chip designs and tried to launch a microprocessor startup with a Chinese VC firm. Their trial hasn’t been set.

Full post as published by Law Blog - WSJ.com on June 19, 2008 (boomark / email).