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Couple Gets Gets Prison Time for GM Trade Secrets Theft

May 1 (Bloomberg) -- A former General Motors Co. engineer’s husband was sentenced to three years in prison for stealing hybrid technology trade secrets from the carmaker to help develop vehicles in China.

Yu Qin was accused of using the Detroit-based carmaker’s data to seek business ventures or employment with its competitors, including China’s Chery Automobile Co. His wife, Shanshan Du, was accused of copying GM’s private information on the motor control of hybrids and providing documents to her husband. Du was given a year and a day in prison.

“This is an extremely serious case involving a serious crime,” U.S. District Judge Marianne O. Battani said today at the sentencing hearing in federal court in Detroit. “It is a crime in which our whole community, our whole economic structure is a victim.”

The judge also said Du must pay $12,800 in fines and face a year’s probation after serving her prison term. Qin agreed to pay $25,000 as part of his sentence, prosecutors said in a statement.

Qin was convicted in November of three counts of trade secrets theft, three of wire fraud and one of obstruction of justice. Du was convicted on three trade-secret counts.

“This is all my fault,” Qin said at the hearing. “I want to take full responsibility. I want to apologize to the court for all the trouble I caused.”

$40 Million

The secrets at issue were worth more than $40 million to General Motors, prosecutors said in a presentencing memorandum. The U.S. asked Battani to sentence Qin and Du to as long as 10 years and a month in prison.

The defendants, who pleaded not guilty, said the information didn’t consist of trade secrets, wasn’t stolen and was useless for other companies. They sought probation.

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. Qin and Du are both U.S. citizens.

In October, a former software engineer for Chicago-based CME Group Inc., 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.’s space and navigation division was convicted of transporting stolen property and possession of trade secrets related to precision navigation devices. The defendant, who has appealed, was sentenced in March to five years and 10 months in prison.

Copied Material

The U.S. alleged that Du, an electrical engineer who worked at GM from 2000 to March 2005, sought assignment to the hybrid project to gain access to information about motor control.

The U.S. claimed 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 in November. 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 initial investigation. In May 2006, the U.S. said, the defendants discarded bags of shredded documents in a Dumpster behind a grocery store.

“GM suffered no actual loss as a result of the defendants’ possessing the alleged GM ‘trade secrets’ pertaining to hybrid vehicle technology,” Eaman said in court papers April 25 seeking probation for his client. “GM was not physically deprived of this technology.”

Qin was involved only in what his lawyer termed “misguided attempts” to help his wife in her work with GM, Eaman wrote. “Mr. Qin and Ms. Du would discuss information related to her work, thereby Mr. Qin would gain access to GM information in order to provide Ms. Du with the assistance she needed.”

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 federal court in Detroit at sraphael5@bloomberg.net

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

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