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Economic espionage case full of intrigue

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The government's allegations read like a spy novel: Dr. Ke-xue "John" Huang lands a job at Indianapolis-based Dow AgroSciences and over five years works himself into a position of trust, with access to trade secrets and processes the company has invested $300 million to develop.

Along the way, federal prosecutors say, the Carmel resident shares information about how to make a lucrative line of organic insecticides with contacts in Germany and his native China. Huang also secretly directs research at a Chinese university on Dow AgroSciences trade secrets, recruits investors and drafts a business plan for a new company in China that would begin producing its own insecticides as soon as the Dow patents begin to expire in 2012 – potentially bringing in  the equivalent of more than $26 million in its first two years.

Federal authorities say Huang passed along information about the organic insecticide to Hunan Normal University, where he is an adjunct professor, while he worked as a researcher for Dow AgroSciences in Indiana from January 2003 to February 2008. The government on Tuesday also revealed it is investigating Huang's short stint working at Cargill, another chemical company, after he was fired by Dow AgroSciences.

Attorneys for Huang, 45, have denied the allegations, blaming the dust-up on his zeal for research and publishing in scientific journals. The Indianapolis Business Journal first reported on the allegations in July.

A grand jury indictment, unsealed Tuesday, lists 17 charges, including 12 involving theft or attempted theft of trade secrets under the 14-year-old Economic Espionage Act. The law, rarely used in court, is aimed at those who knowingly target or acquire trade secrets and knowingly benefit any foreign government or instrumentality.

Five additional counts involve interstate and foreign transportation of stolen property. At least 15 of Huang's former neighbors and friends from Carmel attended the hearing in a show of support.

U.S. Attorney Cynthia Ridgeway said Huang engaged in "patient and calculating maneuvering" to gain access to Dow Agro's trade secrets and had been working on plans for a company that would begin selling a competing product as soon as the Dow patents expired.

"He now has the full recipe: the products, the manufacturing facilities and patents about to expire," said Ridgeway, who cited three e-mails that suggest Huang was working on a business plan built on his insider information. Huang has been held since his arrest July 13 in Massachusetts, where he now lives.

FBI Special Agent Karen Medernach said in testimony Tuesday that Huang took eight trips to China between May 2007 and December 2009, and on at least one occasion packed vials of a chemical substance in his son's suitcase to avoid detection.

Daniel Kittle, Dow Agro's vice president of research and development, pegged the value of the technology Huang took at more than $300 million. He said the company objects to releasing Huang before trial because doing so would put in jeopardy 20 years of work by the company's scientists.

"Dr. Huang was put in a lead role, a position of trust with access to trade secrets," Kittle said. "He violated that trust repeatedly, on dozens and dozens of occasions."

Ridgeway argued Huang is a flight risk, a seasoned world traveler with minimal ties to the United States and a strong incentive to flee prosecution and set up shop making chemicals overseas. Releasing him from custody could cause "irreversible" economic damage to Dow Agro and the local community, she argued.

Huang's attorney, Michael Donahue, disagreed, pointing to the fact he and his wife just put their $300,000 life savings into a new house near Boston. The couple are Canadian citizens and have two children, one a U.S. citizen and the other Canadian. And they've surrendered their passports, meaning they cannot leave the country.

Huang's wife, Jie Sun, teared up at the hearing Tuesday as she offered testimony in support of her husband. She said the children miss their father, and offered to put up their new home as collateral to ensure Huang shows up in court.

"There's no reason for us to go anywhere else," she said. "This is our home."

In the U.S. District Court, Southern District of Indiana, Magistrate Judge Kennard Foster, who entered a not-guilty plea on Huang's behalf, agreed with prosecutors that Huang is a flight risk and ordered him held. The move overturned a decision in Massachusetts suggesting supervised release would be appropriate.

Dow AgroSciences, which employs 1,200 people in central Indiana, is a unit of Dow Chemical Co.
 

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  1. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  2. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  3. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  4. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  5. I totally agree with John Smith.

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