Ph.D. Chemist Convicted Of Conspiracy To Commit Economic Espionage, Theft Of Trade Secrets, And Wire Fraud | USAO-EDTN

GREENEVILLE, Tenn. Following a twelve-day trial, Dr. Xiaorong You, a/k/a Shannon You, 59, of Lansing, Michigan, was convicted of conspiracy to commit economic espionage, conspiracy to steal trade secrets, possession of stolen trade secrets, economic espionage, and wire fraud. Dr. You was originally indicted in February 2019 for trade secret offenses and wire fraud, and a superseding indictment adding economic espionage and conspiracy to commit economic espionage issued in August 2020. Sentencing has been set for November 1, 2021 at 10:30 a.m., before the Honorable J. Ronnie Greer, in the United States District Court for the Eastern District of Tennessee at Greeneville.

According to court documents and evidence presented at trial, Dr. You stole valuable trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings for the inside of beverage cans. Evidence introduced at trial proved that Dr. You stole these trade secrets for the purpose of establishing a global can-coating manufacturer in China with a Chinese chemical company called the Weihai Jinhong Group. Dr. You’s plan was designed to benefit the Chinese Communist Party, the Chinese government, the government of the Shandong Province, and the government of the City of Weihai – a city of 2.5 million people on the Northeast Coast of China – by advancing the Made in China 2025 Initiative and the 13th Five-Year Plan.

Dr. You was granted access to the trade secrets while working at the Coca-Cola company in Atlanta, Georgia, and Eastman Chemical company in Kingsport, Tennessee. The stolen trade secrets belonged to major chemical and coating companies including Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, Sherwin Williams, and Eastman Chemical company, and cost nearly $120,000,000 to develop.

According to court documents and evidence presented at trial, Dr. You stole the trade secrets to set up a new BPA-free coating company in China. Dr. You and her Chinese corporate partner, Weihai Jinhong Group, received millions of dollars in Chinese government grants to support the new company (including a Thousand Talents Plan award). Documents related to Dr. You’s Thousand Talents Program application were admitted at trial; those documents, and other evidence presented at trial, showed the defendant’s intent to benefit not only Weihai Jinhong Group, but also the governments of China, the Chinese province of Shandong, and the Chinese city of Weihai, as well as her intent to benefit the Chinese Communist Party.

Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss and prevent the container from corroding or reacting with the food or beverage contained therein. However, due to BPA’s potential health risks, companies began searching for BPA-free alternatives. As witnesses from the chemical and coating companies testified at trial, developing these BPA-free alternatives was a very expensive and time-consuming process.

From December 2012 through Aug. 31, 2017, Dr. You was employed as Principal Engineer for Global Research at Coca-Cola, which had agreements with numerous companies to conduct research and development, testing, analysis and review of various BPA-free technologies. Because of Dr. You’s extensive education and experience with BPA and BPA-free coating technologies, she was one of a limited number of Coca-Cola employees with access to BPA-free trade secrets belonging to Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, and Sherwin Williams. From approximately September 2017 through June 2018, Dr. You was employed as a packaging application development manager for Eastman Chemical company in Kingsport, Tennessee, where she was one of a limited number of employees with access to trade secrets belonging to Eastman.

Assistant Attorney General John C. Demers of the National Security Division; Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; and Acting U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee made the announcement.

The FBI’s Knoxville Field Office and Department of Homeland Security’s Homeland Security Investigation (HSI) investigated the case investigated the case.

Assistant U.S. Attorney T.J. Harker of the Eastern District of Tennessee; Senior Counsel Matt Walczewski of the Criminal Division’s Computer Crime and Intellectual Property Section; and Trial Attorney Nic Hunter of the National Security Division’s Counterintelligence and Export Control Section and are prosecuting the case. April Denard and Bryan Brandenburg of the U.S. Attorney’s Office for the Eastern District of Tennessee provided technical assistance at trial.   

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