Sino-American Peril

GE's Chinese Engineer Stole Power Plant Technology
The spy, who worked at GE since 2008, hid purloined computer files in a photo of a sunset
By Thomas Gryta

An FBI agent escorts Xiaoqing Zheng, an engineer with GE’s Power division, into the federal courthouse in Albany, N.Y., on Wednesday.

A General Electric Co.'s Chinese engineer was arrested and accused of stealing files related to proprietary power-turbine technology, which the FBI says he elaborately concealed to avoid detection.
Xiaoqing Zheng, a U.S. citizen, was hired by GE in 2008 to work in its power division in Schenectady, N.Y., according to an affidavit by a Federal Bureau of Investigation agent filed Wednesday in federal court in Albany, N.Y.
The FBI is conducting a wider inquiry into the theft and use of GE’s trade secrets. 

Agents searched Zheng’s house Wednesday and seized his passport, electronic devices and a handbook that explains “the type of resources the government of China will give to individuals or entities who can provide certain technologies,” according to the affidavit.
To conceal the documents, Zheng on July 5 embedded encrypted files into the code of a seemingly innocuous image of a sunset to send them to a personal email address.

He told FBI agents that he used similar techniques to take GE materials on five to 10 previous occasions, according to the affidavit.
Zheng’s attorney, Kevin Luibrand said his client had not given the GE files to anyone else.
Zheng appeared in court Thursday afternoon and was ordered to post $100,000 bail, which he agreed to do by using equity in his house. 

He was also ordered to restrict his travel and to wear an electronic monitoring device, according to a court filing.
GE said it was aware of the arrest and has been in “close cooperation with the FBI for some time on this matter.” 

The company said it protects and defends its intellectual property with “strict processes in place for identifying these issues and partnering with law enforcement.”
Zheng has degrees from Northwestern Polytechnic University and the Massachusetts Institute of Technology. 

While employed by GE, Zheng owned at least one company in China that is working on technology similar to his work at GE, according to the affidavit. 

GE was aware of his potential business conflicts, the FBI said, and permitted Zheng to remain employed.
Zheng told GE he was the owner of a business called Nanjing Tainyi Aeronautical Technology Ltd. located in Nanjing, China, which he described as a parts supplier for civil aviation engines, according to the complaint. 

The FBI said he was also an owner and general manager of other Chinese firms.
GE declined to comment beyond its statement, citing the continuing investigation.
In 2014, GE’s corporate security learned that Zheng had copied more than 19,000 files from a GE-owned computer to an external storage device.

Zheng told GE security officials in 2014 that he had deleted the files.
In late 2017, GE discovered he had saved about 400 files on his desktop computer using encryption software not used by the company. 

This prompted GE to install software on Zheng’s computer to monitor his activities, leading to the discovery of him sending the confidential files to himself in early July, the FBI said.
“Zheng’s actions (moving the files, renaming them, encrypting them, and hiding them within the binary code of seemingly harmless files) are "uncommon" even among trained computer experts,” the FBI said.

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.