Ex-GM Engineer, Husband Guilty of Trade Secrets Theft

An ex-General Motors Co. (GM) engineer and her husband were convicted of stealing trade secrets on hybrid- car technology from the automaker to help develop such vehicles in China.

A federal court jury in Detroit reached the guilty verdicts yesterday after a trial that started Nov. 5. Jurors began deliberating Nov. 29.

The U.S. claimed Shanshan Du, the ex-GM employee, copied the Detroit-based company’s private information on the motor control of hybrids and provided documents to her husband, Yu Qin. Prosecutors accused Qin of using the data to seek business ventures or employment with GM’s competitors, including the Chinese automaker Chery Automobile Co.

Qin was convicted of all seven counts. Du was convicted on three trade-secret counts, including conspiracy to possess trade secrets without authorization. She was acquitted on wire fraud charges.

General Motors contended that the secrets are worth more than $40 million, prosecutors said. Lawyers for both defendants, who pleaded not guilty, argued that the information didn’t consist of trade secrets, wasn’t stolen and was useless for other companies.

‘Unfair Advantage’

Robert Morgan, Du’s attorney, declined to comment after the verdict. Frank Eaman, Qin’s lawyer, didn’t immediately respond to a phone call and e-mail seeking comment.

Sentencing will be in February, U.S. District Judge Marianne O. Battani said after the verdict was read.

“These defendants stole trade secrets, which General Motors spent many years and millions of dollars to develop, to give an unfair advantage to a foreign competitor,” U.S. Attorney Barbara McQuade said after the verdict. “We hope that this prosecution will send a message that stealing proprietary information from an employer or competitor is a serious crime.”

The defendants face a maximum sentence of 10 years on each of the trade secrets counts, prosecutors said after the verdict. Qin faces additional prison time on the wire fraud and obstruction convictions, the U.S. said.

The trade secret counts carry a $250,000 fine, the U.S. said at the time of the indictments. The wire fraud and obstruction of justice counts carry fines of $250,000.

Other Cases

The case is one of more than a dozen brought in the past three years by the U.S. Justice Department alleging defendants of Chinese ancestry or citizenship sought to take trade secrets from U.S.-based companies for use by the Chinese government or businesses.

In October in Chicago, a former software engineer for Chicago-based CME Group Inc. (CME), the world’s largest derivatives exchange, pleaded guilty to charges of downloading more than 10,000 files containing source code from his employer to support trading activities in an exchange in China.

In September in Newark, New Jersey, a native of China who worked for L-3 Communications Holdings Inc. (LLL)’s space and navigation division was convicted of transporting stolen property and possession of trade secrets related to precision navigation devices.

In the Detroit case, Du and Qin were indicted in July 2010 on three counts each of trade secrets theft and wire fraud. Qin was also charged with obstruction of justice.

Copied Material

The U.S. alleged that Du, an electrical engineer who worked at GM from 2000 to March 2005, sought assignment to the company’s hybrid work project to gain access to information on the motor control of such vehicles.

The U.S. claims that Du began providing GM documents to her husband for use in a company they had started, Millennium Technology International. Du copied material and Qin developed a plan to sell hybrid vehicle technology through a joint venture in China, the U.S. said.

The process accelerated after GM sought Du’s resignation in late January 2005, according to the indictment. Prosecutors said at the beginning of the trial that 16,262 GM files were found on Du’s computer.

“These were never trade secrets,” Qin’s lawyer, Frank Eaman said in his closing argument at the end of trial yesterday. The material wasn’t marked secret and, as proof that the documents weren’t significant, he said, “they gave them to Ms. Du, a low-level engineer.”

Home Computer

After Du left the company, the couple uploaded GM documents containing secret information onto a computer at their home, the U.S. claimed. In July or August 2005, Qin “communicated with others, by e-mail and in person, about collaboration on a new business venture which would provide hybrid vehicle technology to Chery,” the U.S. said in court papers.

The U.S. also alleged that Qin destroyed evidence during the government’s initial investigation. In May 2006, the U.S. said, the defendants dumped bags of shredded documents in a Dumpster behind a grocery store.

The case is U.S. v. Qin, 10-cr-20454, U.S. District Court, Eastern District of Michigan (Detroit).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Steve Raphael in Detroit at sraphael5@bloomberg.net.

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

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