Meng Pleads Guilty to Economic Espionage

Engineer Xiaodong Sheldon Meng pleaded guilty to stealing military training software and trying to sell it to the Chinese Navy, becoming only the third person to be convicted on the very rare charge of economic espionage.^[1]

Meng pleaded guilty in San Jose federal court Wednesday to one count of economic espionage for trying to sell stolen software to China's Navy Research Center, and one count of violating U.S. arms control regulations for illegally exporting software used to train military fighter pilots.^[2] Under the terms of the plea agreement, he faces a reduced sentence of up to two years in prison and a $1.5 million fine.^[3]

Meng was indicted in December on 36 felony counts alleging he stole code for software made by his former employer, San Jose-based Quantum3D Inc., and attempted to sell it to the Royal Thai Air Force, the Royal Malaysian Air Force and the Navy Research Center in China.^[4]

Jay Rorty, Meng's federal criminal defense attorney, said the plea agreement resolves potential charges in Alabama, Florida and Minnesota.^[5] "Mr. Meng remains free of custody and is glad to put these charges behind him," Rorty said in a statement.^[6]

While authorities say Silicon Valley is a hotbed for trade-secret thefts motivated by the desire to fuel technological and military development in countries like China and Iran, the indictment is only the third time prosecutors have ever charged someone with economic espionage.^[7] Economic espionage is the most serious crime under the Economic Espionage Act of 1996 which alleges the theft of trade secrets with the intent to benefit a foreign government; however, the charge of economic espionage is hard to prove, and many defendants are charged with the lesser offense of theft of trade secrets.^[8]

The Economic Espionage Act of 1996^[9] makes the theft or misappropriation of a trade secret a federal crime. 18 U.S.C. § 1831(a), criminalizes the theft of trade secrets to benefit foreign powers; in General the code states that whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, 1)knowingly steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret;^[10] 2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret;^[11] 3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;^[12] 4) attempts to commit any offense described in any of paragraphs (1) through (3);^[13] or 5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy,[14] shall, except as provided in subsection (b), be fined not more than $500,000 or imprisoned not more than 15 years, or both.

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^[1] AP Staff, Guilty plea in economic espionage case, Associated Press Newswire, August 2, 2007, available at LEXIS, News Library, Wire News Services File.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] 18 U.S.C. §§ 1831-1839 (2007).
^[10] 18 U.S.C. § 1831(a)(1)(2007).
^[11] Id., at §1831(a)(2).
^[12] Id., at §1831(a)(3).
^[13] Id., at §1831(a)(4).
^[14] Id., at §1831(a)(5).