Print Page   |   Contact Us   |   Sign In   |   Register
Search CI CENTRE

 

ECONOMIC ESPIONAGE CASE: Yan (Westerly) Zhu

Name

ZHU, Yan

aka Westerly Zhu

Photo

Employer

Dates of Employment

April 2006 - July 2008

Employee Type

Civilian

Job Title/Duties

Senior Environmental Engineer

Military Rank

N/A

Clearance Level

Unknown

Spying For

People's Republic of China

Codename

Unknown

Spying Dates

April 2006 - July 2008

Ages when spying

Co-conspirators

Two Chinese nationals identified only as Co-conspirators 1 (CC-1) and 2 (CC-2).

Methodology

Timeline

Possible Motivations, Problems

Financial gain

Finances

Identified/ Investigation

The investigation, code named "Westerly Winds”, began in November of 2008 based on a complaint from the victim company.

According to the criminal complaint filed in Federal District Court in Trenton, ZHU was employed at "Company A” in Mercer, New Jersey as a senior environmental engineer from May of 2006 until his termination in July of 2008. Company A is a comprehensive multi-media environmental information management portal that developed a proprietary software program for the Chinese market which allows users to manage air emissions, ambient water quality, and ground water quality. This program source code was protected through encryption as well as restricted security access within Company A in an effort to protect its commercial value and future revenue derived from software sales and upgrades. Research to develop this source code was a costly process.

ZHU had signed employment, confidentiality, and non-disclosure agreements as part of his hiring process with Company A, as well as an agreement to return all confidential and proprietary information, including source codes upon his termination in July of 2008. Additionally, ZHU also signed a notarized affidavit alleging he had not provided Company A source codes to anyone and had returned all copies of confidential Company A information in his possession.

The criminal complaint alleges that ZHU had two co-conspirators, identified only as Co-conspirators 1 (CC-1) and 2 (CC-2), both Chinese nationals residing in China. CC-1 had been introduced to Company A through ZHU and hired as Company A's sales representative in the Science and Technology High-Tech Zone in Xian City, Shanxi Province, China. CC-2, together with ZHU and CC-1, were associated with "Company X”, an environmental software company in China.

Based on information in the criminal complaint, it appears that ZHU and his co-conspirators took advantage of the trust placed in them by Company A by exploiting an opportunity for Company A to market its product to the Chinese government. Company A had rented office space in Xian City from which CC-1 represented Company A and hosted the subject software on its own computer system. Due to regulations of the Chinese government which prevented payment overseas, Company A also entrusted CC-1 of Company X to accept payment on its behalf for its services.

January 2008: Company A learned that the Hebei Environmental Protection Administration (Hebei EPA) of China, was interested in its software. This is significant because, based on the criminal complaint, defendant ZHU, CC-1, and CC-2, and another individual believed to be associated with Company X allegedly began exchanging emails about unspecified business meetings. On or about July 17, 2008, Company A terminated ZHU, citing the emails they discovered as a breach of the May 2006 employment, confidentiality, and non-disclosure agreement.

10 November 2008: Company A found a link on Shanxi Province's internet web site to a program described as a multi-media environmental system — very similar to a description used to describe Company A's software. When Company A followed this link, it was discovered that the software allegedly consisted of an operational version of module 1 of the Company A software. But the module had been changed from the original version Company A had provided to Shanxi Province. According to Company A, these changes could not have been made without Company A's source codes. Furthermore, Company A had called the designers of their software into a meeting where they were shown the software on the Shanxi Province web site. These employees allegedly recognized the software on the web site as their own.

Another curious change to the software on the website was the contact information for the supplier of the software. The Company A software listed Company A's address, telephone number and email address as the supplier. The program on the website allegedly listed the contact information for Company X with the address of the office Company X had rented for CC-1, along with a Chinese telephone and fax number, and an email address. Other similarities to the original Company A software were allegedly discovered.

October 2008: Hebei EPA, the same Chinese government entity that had expressed an interest in Company A's product in January of 2008, made a public announcement that they had agreed to purchase software from Company X for a specified figure that was approximately one-tenth of what Company A had sought for their software, according to the criminal complaint.

Arrest Date/Location

Charges

COUNT 1: Title 18, United States Code, Section 1832(a)(1) and (2)- Conspiracy to steal trade secrets.

COUNTS 2 - 10: Title 18, United States Code, Section 1343, 1346, 2- Wire fraud.

Court

United States District Court, District of New Jersey (Trenton)

Presiding Judge:

Lawyers

Prosecution:

Defense: Assistant Federal Public Defender David Schafer

Status

13 April 2009: Detention hearing for ZHU scheduled.

Date/Place of Birth

1978, People's Republic of China

Citizenship

PRC

Residences

9 Victor Street, Apartment 26, Lodi, New Jersey

Education

ZHU holds a Ph.D. from Columbia University in Geo-environmental Engineering.

Family

Other Employment

Additional Bio

ZHU was in the United States on a legal work Visa.

Documents

FBI Arrests Chinese National Yan Zhu on Charges of Theft of Trade Secrets (DOJ Press Release, 9 April 2009)

Citizen of the People's Republic of China Indicted in Scheme to Steal Trade Secrets (DOJ Press Release, 24 September 2009)

Yan "Westerly" Zhu Indictment (Department of Justice, 24 September 2009)

Quotes

Case Links

Books, Video, Audio

News

Chinese man Yan Zhu in US accused of trade secret theft

A Chinese national living in the United States has been accused of stealing a software program from his former U.S. employer and selling a modified version to the Chinese government after being fired. Yan Zhu, 31, a resident of Lodi, was arrested Thursday for stealing programming-source code needed to modify the encrypted program as well as internal sales materials from the company, the FBI said. Authorities would not name the company or identify its corporate headquarters, saying only that it is located in Mercer County, New Jersey. He and two conspirators sold the program to environmental protection agencies in China's Hebei and Shanxi provinces for about 10 percent of its $1.5 million value, according to the FBI. The incident is the latest episode in the ongoing battle over intellectual property rights between the two countries. Weysan Dun, special agent in charge of the FBI's Newark field office, estimates that the number of federal investigations into Chinese economic espionage has increased 10 percent since 2001…(AP, 10 April 2009)

FBI Arrests Chinese National Yan Zhu on Charges of Theft of Trade Secrets

Yan Zhu, also known as "Westerly Zhu”, age 31, a Chinese citizen in the U.S. on a work visa, was arrested this morning by FBI agents at his residence, 9 Victor Street, Apt 26, Lodi, New Jersey, on charges of theft of trade secrets, conspiracy, wire fraud, and theft of honest services fraud announced Weysan Dun, Special Agent In Charge. The investigation, code named "Westerly Winds”, began in November of 2008 based on a complaint from the victim company. According to the criminal complaint filed in Federal District Court in Trenton, Zhu was employed at "Company A” as a senior environmental engineer from May of 2006 until his termination in July of 2008. Company A is a comprehensive multi-media environmental information management portal that developed a proprietary software program for the Chinese market which allows users to manage air emissions, ambient water quality, and ground water quality…(Australia, 10 April 2009)

Chinese national Yan Zhu arrested in Lodi by feds for theft of trade secrets

. . . . Yan Zhu, a Chinese citizen in the United States on a work visa, was arrested by FBI agents at his Lodi residence on Thursday, April 9 on charges of theft of trade secrets, conspiracy, wire fraud, and theft of honest services fraud. . . . According to the criminal complaint filed in federal district court in Trenton, Zhu, 31, was employed at the victim company as a senior environmental engineer from May of 2006 until his termination last July. The company is a comprehensive multi-media environmental information management portal that developed a proprietary software program for the Chinese market which allows users to manage air emissions, ambient water quality, and ground water quality. The program's source code was protected through encryption as well as restricted security access within the company, in an effort to protect its commercial value and future revenue derived from software sales and upgrades. Zhu had signed employment, confidentiality, and non-disclosure agreements as part of the company's hiring process, as well as an agreement to return all confidential and proprietary information, including source codes, upon his termination. Additionally, Zhu signed a notarized affidavit stating that he had not provided the company's source codes to anyone and had returned all copies of confidential company information in his possession. The criminal complaint alleges that Zhu had two co-conspirators, both Chinese nationals residing in China, who were associated with another environmental software company in China, "Company X". (Bergen Now, 13 April 2009)

Chinese National Yan Zhu Arrested For Source Code Theft

The information was taken from a New Jersey company that develops, implements, and supports software for environmental applications. A Chinese citizen on a work visa in the United States was arrested by the FBI last week for allegedly revealing proprietary software code owned by his unidentified U.S. employer to a Chinese government agency. Yan Zhu, 31, of Lodi, N.J. -- also known as "Westerly Zhu" -- was arrested on charges of theft of trade secrets, conspiracy, wire fraud, and theft of honest services fraud. . . . Zhu, who holds a Ph.D. from Columbia University in geo-environmental engineering, was hired by the U.S. company around April 2006 as a senior environmental engineer and signed a confidentiality agreement. In July 2007, the U.S. company signed a contract with Shanxi Province, China, to provide its software to the local Environmental Protection Administration ("Shanxi EPA")…(Information Week, 14 April 2009)

Chinese Espionage Continues with Latest Theft of Trade Secrets

Yan Zhu, also known as "Westerly Zhu”, age 31, a Chinese citizen in the U.S. on a work visa, was arrested Friday morning by FBI agents at his residence, 9 Victor Street, Apt 26, Lodi, New Jersey, on charges of theft of trade secrets, conspiracy, wire fraud, and theft of honest services fraud announced Weysan Dun, Special Agent In Charge. The investigation, code named "Westerly Winds”, began in November of 2008 based on a complaint from the victim company…(Canada Free Press, 16 April 2009)

Sign In


Forgot your password?

Haven't registered yet?


 


Join Mailing List

 

©Copyright 2011 The Centre for Counterintelligence and Security Studies (CI CENTRE)®
The Leader in Counterintelligence Training and Education, since 1997
Falls Church, VA    |    703-642-7450    |    1-800-779-4007   |    Contact Us

Terms & Conditions   |   Privacy Statement