Engineers sentenced to 1 year for espionage case

By: AP
By: AP

SAN JOSE, Calif. (AP) -- Two engineers from China were sentenced to a year in prison Friday for stealing computer chip designs from their Silicon Valley employers and trying to smuggle the secrets to their homeland to launch a government-backed startup there.

Fei Ye, a U.S. citizen, and Ming Zhong, a permanent resident of the U.S., had pleaded guilty in 2006, becoming the first people convicted of the most serious crime under the Economic Espionage Act of 1996. They were accused of trying to benefit China with their stolen chip designs, though prosecutors did not allege that the Chinese government knew of their illegal activities.

Ye and Zhong could have gotten 30 years, but prosecutors asked for less because the men cooperated with investigators. Both engineers apologized in court Friday.

Only a handful of cases have been filed under the Economic Espionage law, mostly because it's difficult to prove someone was trying to benefit a foreign nation, even if investigators suspect it. Prosecutors say the trail of evidence often goes cold because of a lack of cooperation by other countries in investigations.

The case against Ye and Zhong stretches back seven years, when they were arrested at the San Francisco airport trying to board a flight to China. Their luggage was allegedly stuffed with sensitive documents on chip designs stolen from four tech companies they had worked for.

Other papers seized from the men allegedly showed they were trying to solicit funding from Chinese government agencies to help get their startup going. Prosecutors say the documents showed that Ye and Zhong were promoting the startup as something that would elevate China's chip-making smarts and help China compete better against other countries in microelectronics.

Those documents were critical to federal prosecutors' assertion that Ye and Zhong were trying to help China - but the papers say nothing about whether anyone in the Chinese government knew the chip designs were stolen. Court papers are fuzzy on how much success the pair had in securing money for the project. And the indictment doesn't charge anyone in the Chinese government as a coconspirator.

Four companies were victims of the plot: NEC Electronics Corp., Sun Microsystems Inc., Transmeta Corp. and Trident Microsystems Inc. Ye and Zhong both had worked at Transmeta and Trident. Ye had also worked at NEC and Sun.

The allegations against Ye and Zhong amounted to one of the first economic espionage cases filed. Since then, other cases in Silicon Valley have developed, including one in which an engineer admitted in June he tried to sell fighter-pilot training software to the Chinese Navy. He was sentenced to two years in prison.

Prosecutors in that case said the engineer, Xiaodong Sheldon Meng, who was raised in China and holds Canadian citizenship, was focused on profit, not a foreign allegiance, so they asked for a more lenient sentence than they would if someone was accused of spying.

In a separate case, two other Silicon Valley engineers, Lan Lee and Yuefei Ge, are under indictment on charges they stole chip designs and tried to launch a microprocessor startup with a Chinese venture capital firm. Their trial hasn't been set.

In Southern California, Chinese-American engineer Dongfan "Greg" Chung, who worked at Boeing Co. and space shuttle-builder Rockwell International, is accused of stealing secrets regarding the space shuttle, a military transport plane and a rocket on behalf of China. Chung has pleaded not guilty.

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