China Used U.S. Tax Money for|High-Tech Biz Spies, Feds Say

     MANHATTAN (CN) – Chinese citizens working on a multimillion-dollar federal research grant funneled information about MRI technology to a Chinese government-sponsored corporation for their own profit, federal prosecutors say.
     Charged in Federal Court with commercial bribery conspiracy and falsification of records are Yudong Zhu, Xing Yang and Ye Li.
     In a complaint unsealed Tuesday, FBI agent Michael J. Weniger wrote that since February 2010, Zhu has “knowingly altered, destroyed, mutilated, concealed, covered up, falsified and made false entries in records, documents and tangible objects with the intent to impede, obstruct and influence the investigation … related to a multimillion-dollar NIH research grant for Zhu to develop enhanced magnetic resonance imaging (‘MRI’) technology.”
     The NIH, National Institutes of Health, is the primary medical research group directly funded by the U.S. government.
     The FBI agent claims that Zhu “provided false statements regarding his affiliation with a Chinese government-sponsored research institution, a Chinese medical imaging company, and his application for and ownership of a patent that related to the research being funded by NIH.”
     NIH grants are fiercely competitive, as professorships and laboratories in private and state-sponsored universities often depend on professors securing their own grant money.
     Zhu was ostensibly working for NYU, which is not a party to the complaint. He has been an associate professor of radiology since 2008.
     Zhu recruited defendant Xing Yang in 2011, to work for him as an engineer. Before then, “Yang worked in China for an international company under Zhu’s supervision on matters related to MRI technology,” according to the complaint.
     Zhu recruited defendant Ye Li in September 2012 to work form his as a postdoctoral fellow, and supervised his work. During this time, “Li was also a research associate professor at a Chinese government-sponsored research institution,” the FBI agent said in the complaint.
     “In or about 2010, Zhu caused the University to apply for and receive the NIH grant, which was awarded for Zhu to research and develop certain technology to improve MRI imaging capability,” the complaint states. “The NIH grant awarded millions of dollars over a five-year period to fund Zhu’s research.”
     Money assured, Zhu arranged for defendants Yang and Li to move to New York as researchers and “also arranged for certain payments to be made to Yang and Li by CC-1 [co-conspirator 1] who (1) was an executive with United Imaging, a Chinese medical imaging company, and (2) was affiliated with SIAT, a Chinese government-sponsored research institute. While working on the NIH grant at the University, Yang shared information regarding his and Zhu’s research with individuals at United Imaging in China. Li, despite being employed at the University to assist with the NIH grant research, was simultaneously employed by United Imaging and SIAT, with which CC-1 was affiliated. Zhu, Yang, and Li concealed from and failed to disclose to the University these payments from and relationships with competing research entities in China.
     “Zhu also had material conflicts of interest that he concealed from and failed to disclose to the University. Zhu owned a patent related to MRI technology, the value of which would be directly impacted by Zhu’s NIH grant research. In addition, at the same time that he was leading the research for the NIH grant, Zhu, with CC-1, was leading a similar research project in China related to MRI technology that was funded by a grant from the Chinese government. Zhu and CC-1 were also part of a research team at SIAT. In forms that the University required Zhu to complete in connection with the NIH grant, Zhu falsely answered questions regarding outside affiliations and financial conflicts of interest.”
     The U.S. university discovered the defendants’ deception by sifting through emails from university-owned laptops and watching footage from surveillance cameras, the FBI agent said.
     “On or about April 15, 2013, University surveillance cameras captured Yang in a University research work area taking photographs of equipment that was designed by Research Team-2 as part of the Research Team-2 grant,” the complaint states.
     “Li’s University laptop computer contained photographs, taken on or about April 15, 2013, of the equipment that was designed as part of the Research Team-2 grant. …
     “On numerous occasions from in or about August 2011 through in or about January 2013, individuals with email addresses that included the ‘’ domain corresponded with Zhu and Yang regarding issues related to MRI equipment prototypes, experiments and project updates. These emails were sent to and/or from Zhu’s personal Gmail account, Zhu’s United Imaging email address and Yang’s Hotmail account, among others.”
     When confronted by the university, the defendants said, among other things, that “the research Zhu conducted for the China grant and the NIH grant both related to MRI technology and were ‘synergistic,'” that “Yang shared with individuals at United Imaging research results from his and Zhu’s work at the University,” and that “United Imaging is being funded by the Chinese government in connection with an MRI-related research project,” the complaint states.
     The FBI asked that all three be arrested.
     Theft of intellectual property and industrial espionage are multibillion-dollar businesses in China, for the government and its citizens. Sale of bootleg music, movies and books are a lucrative, but relatively unsophisticated aspect of the business.
     High-ranking U.S. officials have accused the Chinese army, and colleges and/or institutes and businesses associated with it, of hacking into U.S. businesses, banks and government computer systems across the country, to steal information, and, possibly, as test runs should China want to disable U.S. systems in case of war.
     China is hardly alone in this. The United States and Israel apparently cooperated to disrupt Iran’s nuclear program by infiltrating a laboratory there and programming high-speed centrifuges to destroy themselves. When a New York Times reporter exposed the U.S.-Israeli program, the U.S. government investigated him.
     Japan became a worldwide economic power after World War II in great part by violating patent and copyright laws. It did not join international treaties on protection of intellectual property until the 1980s, by which time Japan had earned a worldwide reputation as a good imitator of others’ products.
     Industrial spying is a worldwide enterprise, as can be seen practically every day on the Courthouse News web page. That China managed to get the United States to spend millions of U.S. tax dollars on Chinese high-tech medical-industrial espionage, as alleged in this complaint, is merely one more step, albeit a sophisticated one, in a worldwide cold war for technology.

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