2 men guilty in sale of trade secrets to China
3/5/2014SAN FRANCISCO — A federal jury found two men guilty today of economic espionage involving the theft and sale of a U.S. company’s technology to a competitor controlled by the Chinese government.
The jury returned the verdicts against Robert Maegerle and Walter Liew.
They were accused of stealing Delaware-based DuPont Co.’s method for making titanium oxide, a chemical that fetches $17 billion a year in sales worldwide and is used to whiten everything from cars to the middle of Oreo cookies.
Each defendant could face sentences of 15 years or more in prison and hundreds of thousands of dollars in fines.
A court document showed that China buys more titanium oxide from the West than it makes domestically. So, U.S. prosecutors said, Chinese communist leaders had decreed that duplicating — or obtaining — DuPont’s manufacturing method was a national economic and scientific imperative.
DuPont’s patented manufacturing method, while still dangerous, dirty and complicated, is nonetheless still cleaner and quicker than the outdated production method employed by Chinese factories. DuPont controls 20 percent of the global market.
Prosecutors said DuPont was unwilling to sell its method to China, so it was stolen and sent to a company called Pangang Group Co. Ltd., according to testimony during the diplomatically dicey proceedings. The jury heard six weeks of testimony.
Prosecutors alleged that Pangang’s factory is the only facility inside China known to be producing titanium oxide the DuPont way, which uses chlorination.
Federal prosecutors say Walter Liew and his wife, Christina Liew, launched a small California company in the 1990s aimed at exploiting China’s desperate desire to build a DuPont-like factory.
The couple recruited former DuPont scientists with the single-minded goal of winning Chinese contracts. Maegerle worked for DuPont from 1956 to 1991 before joining the Liews.
Tze Chao, another former DuPont scientist who worked with the Liews, pleaded guilty in 2012 to conspiracy to commit economic espionage.
A trial for Christina Liew is scheduled for later this year.