Ex-DuPont Employee Pleads Not Guilty in Trade Secrets Case

Ex-DuPont Co. (DD) worker Robert J. Maegerle pleaded not guilty to conspiracy to steal trade secrets from his former employer in an economic espionage case alleging he and others gave the information to China’s Pangang Group Co. (000629)

Maegerle, 76, a process engineer for DuPont from 1956 to 1991, had detailed knowledge of the company’s titanium dioxide technology and expertise in building production lines for the substance, a white pigment widely used in paints, plastics and coatings, according to a revised indictment filed Feb. 7.

At the center of the case is Walter Liew, the owner of an now-defunct Oakland, California-based company who had contracts with state-owned Pangang. Prosecutors said in court papers that documents they obtained from Liew’s safety deposit box show Liew claimed he was directed by a Chinese government official in 1991 to obtain technology needed for China to build pigment factories.

As far back as 1998, Maegerle gave Liew secret information from Wilmington, Delaware-based DuPont, including trade secrets about the process and equipment needed to design a plant to make titanium dioxide, known as Ti02, prosecutors said in the indictment. DuPont is the world’s largest maker of Ti02 and won’t sell or license its technology to other companies.

In 2005, Maegerle e-mailed Liew photographs from DuPont plants containing secret information about the company’s inventions for a cost-efficient process to develop the substance using chloride, according to the indictment.

New Plant

Maegerle, Liew and a former DuPont employee, Tze Chao, provided information to Pangang in 2008 for the design and construction of a new plant in China to make 100,000 metric tons of titanium dioxide a year, prosecutors said. After DuPont filed a trade-secret lawsuit against Liew, Maegerle gave the Californian information for responding to the case which falsely stated that nothing from DuPont was used by Liew, according to prosecutors.

In addition to the conspiracy count, Maegerle is charged with attempted theft of trade secrets, aiding and abetting and conspiring to tamper with witnesses and evidence. The most serious charge, tampering, carries a maximum penalty of 20 years in prison and at least a $250,000 fine.

Jerome Froelich, Maegerle’s attorney, appeared with his client and entered his not guilty plea.

Liew, his wife, Christina, Pangang and three subsidiaries have also been charged. Liew’s arraignment is scheduled for March 21. He has been in prison in Oakland since his arrest in July.

Liew Denies Allegations

Liew has denied stealing trade secrets and allegations about his connections to Chinese government officials aren’t accurate, his lawyer, Tom Nolan, said in court filings.

Christina Liew, charged with conspiracy, possession of trade secrets and witness tampering, pleaded not guilty today. She has been free on $100,000 bond since July, when she and Walter Liew were first charged.

Pangang plans to seek dismissal of the charges against it on grounds that the U.S. government can’t serve the company or its units in China, Robert Feldman, an attorney for the company, said in a court filing. A hearing on that matter was scheduled for June 7.

The other U.S. defendant in the case, Chao, 77, who was with DuPont from 1996 to 2002, pleaded guilty March 1 to one count of conspiracy to commit economic espionage and is cooperating with the government.

The case is U.S. v. Liew, 3:11-cr-00573, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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