Sino-American Double Loyalty

Apple has 'deep concerns' that Sino-American ex-employees accused of theft will flee to China

By Stephen Nellis

SAN JOSE, California -- Apple Inc on Monday told a federal court it has “deep concerns” that two Chinese-born former employees accused of stealing trade secrets from the company will try to flee before their trials if their locations are not monitored.

The Apple Inc. logo is seen hanging at the entrance to the Apple store on 5th Avenue in Manhattan, New York, U.S., October 16, 2019. 

At a hearing in U.S. District Court for the Northern District of California, prosecutors argued that Xiaolang Zhang and Jizhong Chen should continue to be monitored because they present flight risks.
Zhang worked on Apple’s secretive self-driving car program and took files related to the project before disclosing that he was going to work for a Chinese competitor. 

Federal agents arrested Zhang last year at the San Jose airport as he was about to board a flight for China.
Chen took from Apple more than 2,000 files containing “manuals, schematics, diagrams and photographs of computer screens showing pages in Apple’s secure databases” with intent to share them. 

Agents arrested him in January at a train station on his way to San Francisco International Airport for a trip to China.
The men were each charged with one count of criminal trade secrets theft and pleaded not guilty. They were released on bail shortly after their arrests and have been monitored since then.
Attorney Daniel Olmos, who represents the men, said Monday that both had family reasons to visit China and had shown no signs of violating their pre-trial conditions so far.
Assistant U.S. Attorney Marissa Harris argued that if either man fled to China, it would be impossible for federal officials to secure their extradition for a trial. 

Three Apple employees sat in the courtroom to support prosecutors, including Anthony DeMario, a strategic adviser to Apple’s global security group and veteran of the U.S. Central Intelligence Agency.
Harris read Apple’s statement to U.S. District Judge Edward J. Davila in San Jose, California.
“Apple’s intellectual property is at the core of our innovation and growth,” the statement said. 

“The defendants’ continued participation in these proceedings is necessary to ensure a final determination of the facts, and we have deep concerns the defendants will not see this through if given the opportunity."
Zhan stood listening through an interpreter and was dressed in a white and blue dress shirt, black jeans and Nike sneakers. 

Harris said Zhang’s wife told federal agents that Zhang, who is a permanent U.S. resident, attempted to flee to Canada when agents searched his home.
During that search, agents found a laptop at the bottom of a laundry hamper that contained trade secrets about Ethernet technology from Zhang’s prior employer, chip supplier Marvell Technology Group Ltd, according to court documents.
Chen, a U.S. citizen who emigrated from China in 1991, listened to the proceedings through an interpreter and wore a dark blue hoodie. 

He has been under radiofrequency monitoring, which is less precise than GPS tracking.

CONFIDENTIAL MISSILE DOCUMENTChen is a flight risk in part because prosecutors found documents from several other former employers -- including General Electric Co and Raytheon Co -- at Chen’s second residence in Maryland, where his wife and son live. 

Prosecutors found a 2011 document from Raytheon that they later determined was classified as “confidential,” the lowest level of sensitivity in the U.S. government system.
“This document contains information relating to Raytheon’s work on the Patriot Missile program and was not (and is not) permitted to be maintained outside of Department of Defense secured locations,” prosecutors wrote.
Trial dates have not been scheduled. 

A hearing is scheduled for February.

Tech Quisling

Chinese engineer arrested on his way to China, charged with stealing Apple’s autonomous car secrets
By Allyson Chiu

The Apple Inc. logo is shown outside the company’s Worldwide Developers Conference in San Francisco on June 13, 2016. 

For about two years, Xiaolang Zhang was privy to information to which many in the tech world can only dream of having access: the inner workings of Apple’s secretive autonomous car research.
Over the weekend, the former Apple engineer was arrested by U.S. authorities at San Jose International Airport while preparing to board a flight to China and charged with stealing proprietary information related to Apple’s self-driving car project. 

At the time of his arrest, he said he was working for a Chinese start-up that is also developing autonomous vehicles, according to a criminal complaint filed in federal court in San Jose on Monday by the FBI and the U.S. attorney’s office.
Zhang, who started working at Apple in December 2015, was accused of downloading files that included engineering schematics and technical reports before leaving to work for Xiaopeng Motors, a Guangzhou-based company also known as XMotors, documents said. 

XMotors could not be reached for comment.
As a hardware engineer on Apple’s autonomous vehicle development team, Zhang’s position granted him “broad access to secure and confidential internal databases containing trade secrets and intellectual property,” according to the complaint.
Aside from making general comments about their interest in developing self-driving technology, Apple has not openly discussed its research, leaving many to wonder what exactly the company is working on. 

Information is even kept from a majority of the company’s employees. 

About 5,000 employees out of more than 135,000 are “disclosed” on the project, meaning they are working on the project or know details about it, the complaint said. 

Even fewer people, about 2,700 “core employees,” have access to the project’s databases.
According to the complaint, information about the project “is a closely guarded secret that has never been publicly revealed.”
“Apple takes confidentiality and the protection of our intellectual property very seriously,” company spokesman Tom Neumayr told Bloomberg in an email. 

“We’re working with authorities on this matter and will do everything possible to make sure this individual and any other individuals involved are held accountable for their actions.”
Zhang appeared in court Monday and was remanded to custody, according to court documents. 

A plea has not yet been filed. 

Tamara Crepet, a federal public defender provisionally appointed to represent Zhang, could not be reached for comment.
The complaint states that Apple first became suspicious of Zhang in late April. 

Zhang had just returned to the company after taking paternity leave when he informed his supervisor on April 30 that he would be resigning, according to the complaint. 

He said he wanted to move back to China, citing his mother’s poor health as the reason, but later disclosed that he intended to work for XMotors, the FBI complaint said. 

Shortly before this meeting and while on leave, authorities say Zhang had taken a trip to China with his family.
An internal investigation revealed that in the days before Zhang’s resignation, his Apple network activity “increased exponentially,” the complaint said. 

Authorities allege that Zhang had downloaded “copious pages of information” from various confidential databases. 

Records and closed-circuit TV footage also showed Zhang entering the autonomous car software and hardware labs on April 28, documents state. 

He was seen leaving less than an hour later carrying a computer keyboard, some cables and a large box.
Armed with that evidence, Apple called Zhang in for a second interview on May 2.
He initially denied going to Apple’s labs to take anything. 

But Zhang later admitted taking two circuit boards and a server, according to documents. 

He also admitted to using Airdrop, a file transferring system for Apple devices, to upload company data to his wife’s personal laptop, the complaint said. 

Zhang explained that he had taken the hardware because he thought it would be useful to him on another project. 

As for the files, he said he had wanted to study the data on his own time. 

Additionally, Zhang revealed that he had been working to secure a job with XMotors while still employed by Apple.
After examining his wife’s laptop, Apple’s digital forensic investigations team discovered that more than half the data on the computer was “‘highly-problematic,'” the complaint said. 

A complete evaluation of the files is still ongoing.
Effective May 5, Zhang was “voluntarily terminated,” and according to the complaint, said he is now employed by XMotors at their Mountain View, Calif. office. 

He also told Apple investigators he plans to move his family to Guangzhou, China “in the near future,” the complaint said.
On July 7, authorities learned that Zhang had bought “a last-minute round-trip airline ticket” for himself to Beijing, with the final destination of Hangzhou, China. 

The flight was scheduled to depart that same day. 

At the airport, Zhang was intercepted by federal agents and “arrested without incident.”
Zhang is scheduled to be arraigned July 27, according to court documents. 

If found guilty, he could face 10 years in prison along with a $250,000 fine.