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U.S. Charges Chinese Man With Conspiracy to Steal Secrets

Photographer: Daniel Acker/Bloomberg

Monsanto Co. DeKalb brand seed corn sits on a palate at a farm in Princeton, Illinois. Close

Monsanto Co. DeKalb brand seed corn sits on a palate at a farm in Princeton, Illinois.

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Photographer: Daniel Acker/Bloomberg

Monsanto Co. DeKalb brand seed corn sits on a palate at a farm in Princeton, Illinois.

A Chinese national investigated by the U.S. after he was seen visiting cornfields in Iowa was charged with plotting to steal genetically modified seeds worth tens of millions of dollars to Monsanto Co. (MON) and DuPont Co. (DD)

Mo Hailong, who drove through the Midwest in a rental car and visited farms that had no signs marking them as secret test fields for bio-engineered crops, may have had help from insiders at U.S.-based seed companies, according to an FBI agent’s statement filed with a criminal complaint.

Mo conspired with others “to steal the intellectual property of the U.S.-based seed manufacturing companies” and transport it to China, according to the complaint unsealed this week in Des Moines, Iowa, federal court.

The defendant, who was arrested in Miami and is also known as Robert Mo, was employed as director of international business at Beijing Dabeinong Technology Group Co. (002385), part of the Beijing-based DBN Group, according to the U.S.

The U.S. alleges Mo and his conspirators stole inbred corn seed from production fields in Iowa and Illinois to benefit Kings Nower Seed, DBN’s corn seed unit. Inbred or parent lines, developed by scientists to have a particular trait, such as resistance to herbicides, are cross bred with other lines to develop hybrid seeds, the U.S. said.

Mo’s Attorney

Mo hasn’t been indicted yet, his attorney, Valentin Rodriguez Jr., said in a phone interview.

If he is indicted,“he will be entering a not guilty plea,” Rodriguez said. “He had no intention to commit any crime.”

Mo has been in the U.S. for more than 15 years and didn’t steal or conspire to steal trade secrets, Rodriguez said.

“They haven’t been able to prove that any seeds were proprietary seeds of Monsanto or DuPont,” he said. “He expects to fight this to the end.”

Mo has been jailed in Florida until he can be transferred to Iowa, Rodriguez said.

The Federal Bureau of Investigation is investigating several potential “insiders” at U.S.-based seed companies, according to an affidavit by FBI special agent Mark Betten.

‘Insider Employees’

“These insider employees are suspected of conspiring with Mo to provide the location of test fields being utilized to grow bio-engineered seed and/or providing the gene sequences for bio-engineered seed developed by victim companies,” Betten said.

The investigation started when DuPont’s Pioneer seed unit detected suspicious activity, according to a statement by the office of Nicholas Klinefeldt, the U.S. attorney in Des Moines. DuPont, Monsanto and their employees have cooperated with the FBI investigation, according to the statement.

Mo and others visited farms, bought seed and individual ears of corn, stashing these items in storage lockers to be shipped back to China, according to Betten’s affidavit. In China, scientists would use the seed and corn to develop their own products, according to the complaint.

Mo and Wang Lei, the vice chairman of Kings Nower Seed, approached a grower of a Pioneer test field near Tama, Iowa, on May 2, 2011, and “asked what he was planting in his field,” the FBI agent said in his affidavit. “The grower replied seed corn.”

‘On His Knees’

The next day, “a Pioneer field manager saw Mo on his knees in the same grower’s field, which had just been planted within the previous two days, and another Asian male sitting in a nearby car,” Betten said.

Four months later, Mo, Wang and another scientist were stopped by a deputy from the Polk County’s Sheriff’s Office, responding to a report of “Asian males acting suspiciously near a farm field in Bondurant, Iowa,” Betten said. Mo told the deputy they were driving across the Midwest looking at crops, he said.

“An individual wishing to steal an inbred line of seed can either obtain the seed in seed form, i.e. either straight from the bag or shortly after it’s been planted and before germination (such as digging in the field as Mo was doing), or the seed can be obtained from grown ears during the harvest season when grown by contract growers,” Betten said.

Companies such as Monsanto require dealers to sell seed only to farms that have signed agreements promising not to use these methods to develop their own seeds, Betten said. Mo wasn’t authorized to buy the seeds, according to the affidavit.

“Pioneer executives estimated that the loss of an inbred line of seed would result in losing approximately 5-8 years of research and a minimum of $30-40 million,” Betten said in the filing.

A woman who answered the phone at Kings Nower Seed and asked not to be identified said she couldn’t immediately comment on the allegations. Kings Nower Seed didn’t respond to an e-mail seeking comment.

The case is U.S. v. Mo Hailong, 413-mj-00267, U.S. District Court, Southern District of Iowa (Des Moines).

To contact the reporters on this story: Andrea Tan in Singapore at atan17@bloomberg.net; Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net

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