NASA researcher arrested for making false statements and wire fraud

Add caption

A criminal complaint has been unsealed today, charging Zhengdong Cheng, 53, of College Station, Texas, for conspiracy, making false statements and wire fraud. 

Texas A&M University (TAMU) Professor Zhengdong Cheng is expected to make his initial appearance before U.S. Magistrate Judge Sam Sheldon today at 10 a.m. in Houston, Texas.  Authorities took him into custody Sunday, Aug. 23. 

Cheng allegedly led a team conducting research for NASA. According to the criminal complaint, for several years he willfully took steps to obscure his affiliations and collaboration with a Chinese University and at least one Chinese-owned company.  The terms of Cheng’s grant prohibited participation, collaboration or coordination with China, any Chinese-owned company or any Chinese University, according to the charges.

“Once again, we have witnessed the criminal consequences that can arise from undisclosed participation in the Chinese government’s talent program,” said Assistant Attorney General for National Security John C. Demers.  

“Professor Cheng allegedly made false statements to his university and to NASA regarding his affiliations with the Chinese government.  The Department of Justice will continue seeking to bring participation in these talent programs to light and to expose the exploitation of our nation and our prized research institutions.”

“NASA’s funding restrictions are in place to protect taxpayer-financed research dollars and intellectual property,” said Special Agent in Charge Mark Zielinski, NASA Office of Inspector General (OIG) - Eastern Field Office.  “We will continue pursue anyone who attempts to circumvent these guidelines and conceal affiliations with Chinese institutions and companies in order to obtain NASA grant money.”

The charges allege Cheng and TAMU received funds based on Cheng knowingly providing false information to TAMU and consequently to NASA.  

In addition to the funds, Cheng personally benefited from his affiliation with TAMU and NASA with increased access to unique NASA resources, such as the International Space Station, according to the complaint.  This access allegedly allowed Cheng to further his standing in China at Guangdong University of Technology and other universities.  

The charges further allege he held senior research positions there unknown to TAMU and NASA and was able to serve in the People’s Republic of China controversial Talents program.  China’s Talents Plans are allegedly designed to attract, recruit and cultivate high-level scientific talent in furtherance of China’s scientific development, economic prosperity and national security.

“China is building an economy and academic institutions with bricks stolen from others all around the world,” said U.S. Attorney Ryan K. Patrick for the Southern District of Texas. 

“While 1.4 million foreign researchers and academics are here in the U.S. for the right reasons, the Chinese Talents Program exploits our open and free universities," continued Patrick. "These conflicts must be disclosed, and we will hold those accountable when such conflict violates the law.”

Feds’ campaign to root out spies has morphed into racial profiling of Chinese, says legal advocates

Franklin Tao

Scientists, researchers and students of Chinese descent have been the target of a government campaign that is practicing racial profiling say two civil rights organizations.

Advancing Justice – AAJC and Advancing Justice – ALC filed an amicus brief Wednesday (Aug. 20) in United States v. Tao, providing significant evidence of racial profiling against Asian American and immigrant scientists and researchers. 

The two Asian American civil rights organizations submitted the brief in support of Dr. Feng “Franklin” Tao to show opposition to the government’s increased efforts to profile and target Chinese American scientists and researchers based on ethnicity under the pretext of ferreting out economic espionage. 

In United States v. Tao, Dr. Tao, a tenured engineering professor at the University of Kansas, is fighting criminal allegations for not disclosing to the University an alleged affiliation with a university in China.

“Failure to disclose information on a university form is not economic espionage,” said John C. Yang, president and executive director of Advancing Justice – AAJC. 

“Xenophobia from leadership and agents within the U.S. government has translated to real consequences for the Chinese and Asian American community," said Yang. "Chinese scientists and researchers, like Dr. Tao, are caught in the Department of Justice’s broad net for prosecutions and sudden criminalization of minor infractions and we are deeply concerned with the pattern of misguided suspicion and racial discrimination we are seeing in these cases."

The government has been mounting a broad campaign scrutinizing and targeting Chinese American scientists, researchers and students through the China Initiative. Fueled by xenophobia, the China Initiative was adopted by the Department of Justice in 2018 for the purported purpose of combating economic espionage. 

Out of fear that government funding might be withheld, some institutions such as universities or organizations conducting research have been cooperating with investigators. 

The China Initiative is part of the latest wave of xenophobia against Chinese and Asian Americans and follows a long history of Asian Americans and immigrants being criminalized, stereotyped as “perpetual foreigners,” scapegoated, and profiled as spies disloyal to the United States, say the community advocates.

FBI Director Christopher Wray reported on July 7 that his agency is “opening a new China-related counterintelligence case about every 10 hours.” Of the 5,000 such cases currently on the FBI ledger, “almost half are related to China,” said Wray reports The Diplomat.

“The government needs to prosecute people who steal national security and trade secrets, but targeting people of Chinese descent for investigation without evidence of wrongdoing is not how to do that,” noted Glenn Katon, litigation director at Advancing Justice - Asian Law Caucus and former Department of Justice trial attorney. 

“Bringing dubious charges against people like Dr. Tao for conduct the government would not have known or cared about but for the China Initiative is discriminatory and a waste of resources.”

"We have seen a surge in prosecutions as the government increases pressure on academic institutions to criminalize previously administrative issues and federal agencies to increase prosecution efforts across the country," says Keaton. 

Data and individual cases of wrongful arrests and prosecutions along with biased rhetoric from public officials reveal that racial bias exists in the charging, prosecution, and sentencing of Chinese, Asian Americans, and immigrants.

The amicus brief addresses the government’s broad campaign to scrutinize and target Chinese American scientists and researchers and discusses how the government’s xenophobic and overzealous prosecutions does real harm to the lives of Chinese and Asian Americans and immigrant communities.

In a meeting held last year by the Committee of 100, an organization of prominent Chinese Americans in business, government, academia, and the arts, the FBI denied the racial profiling charge. 

“With growing U.S. – China tensions and fears of Chinese espionage, we hear clearly from our members that Asian Americans, especially those who work in the STEM fields, are facing an increasingly hostile environment where our loyalty is being consistently and unfairly challenged,” said H. Roger Wang, Committee of 100 chair.

“We are a nation built on immigrants, and we must not allow our fears to create an environment that erodes America’s talent pool nor America’s values of equal opportunity for all, freedom of inquiry, scientific integrity, and openness,” Wang said.

Alleged researcher leaves Chinese Consulate then gets arrested by FBI

The Chinese Consulate in San Francisco is in Japantown.

A Chinese national who took refuge in the Chinese consulate in San Francisco after allegedly lying to investigators about her Chinese military service was arrested and will appear in court on Monday, according to a senior Justice Department official, who spoke on condition of anonymity.

On Thursday evening, the FBI arrested Tang, who had avoided arrest by taking refuge in the Chinese Consulate in San Francisco. If convicted, Tang faces a maximum statutory penalty of 10 years in prison and a fine of $250,000. 

Juan Tang is one of four individuals recently charged with visa fraud in connection with a scheme to lie about their status as members of the People’s Republic of China’s military forces, the People’s Liberation Army (PLA), while in the United States conducting research. 

Three of these individuals -- Xin Wang, Chen Song and KaiKai Zhao -- were arrested earlier. The arrests were described as “a microcosm of a broader network of individuals in more than 25 cities,” the Justice Department official said.

According to court documents unsealed earlier this week in the Eastern District of California, Tang, was a researcher at the University of California, Davis. She applied for a nonimmigrant J1 visa in October 2019, in which she disavowed any connection with the Chinese military. The visa was issued in November 2019 and Tang entered the United States a month later.

An FBI investigation learned that Tang was an officer of the People’s Liberation Army Air Force after photographs of her were uncovered on electronic media seized in accordance with a search warrant.

“I won’t discuss the circumstances of the arrest,” said the official, who spoke to NBC, adding that the individual did not have diplomatic immunity. The person said that the details of the arrest could be released when the defendant appears before the Eastern District of California court on Monday.

“The issue here is that their true status wasn’t disclosed by visa application,” the official said, adding that the arrest was not a tit-for-tat move as tensions between Washington and Beijing simmer.

“By their very nature consulates are a base of operations for foreign governments to the United States, including their intelligence services and it’s understood that there will be some activity here by those services,” the person said.

“But because of their location within the United States and their status of sovereign territory of a foreign country, they can be exploited and the espionage and influence activities run out of a consulate can rise, ultimately to a level that threatens our national security,” the person added.

Hackers charged with 10 years of cyber spying on governments and private corporations

A federal grand jury in Spokane, Washington, earlier this month indicted two hackers, both nationals and residents of the People’s Republic of China, for their alleged involvement in a massive global hacking operation that targeted hundreds of companies and governments for more than a decade.

The defendants alleged broke into the computer systems of hundreds of victim companies, governments, non-governmental organizations, and individual dissidents, clergy, and democratic and human rights activists in the United States and abroad, including Hong Kong and China. 

The accused pair in some instances acted for their own personal financial gain, and in others for the benefit of the MSS or other Chinese government agencies. The hackers stole terabytes of data which comprised a sophisticated and prolific threat to U.S. networks.

The 11-count indictment alleges LI Xiaoyu (李啸宇), 34, and DONG Jiazhi (董家志), 33, who were trained in computer applications technologies at the same Chinese university, conducted a hacking campaign lasting more than ten years to the present, targeting companies in countries with high technology industries, including the United States, Australia, Belgium, Germany, Japan, Lithuania, the Netherlands, Spain, South Korea, Sweden, and the United Kingdom. 

Targeted industries included, among others, high tech manufacturing; medical device, civil, and industrial engineering; business, educational, and gaming software; solar energy; pharmaceuticals; defense. 

In at least one instance, the hackers allegedly sought to extort cryptocurrency from a victim entity, by threatening to release the victim’s stolen source code on the Internet. More recently, the defendants supposedly probed for vulnerabilities in computer networks of companies developing COVID-19 vaccines, testing technology, and treatments.

The charges were announced by Assistant Attorney General for National Security John C. Demers; FBI Deputy Director David Bowdich; U.S. Attorney for the Eastern District of Washington William D. Hyslop; and Special Agent in Charge of the FBI’s Seattle Field Division Raymond Duda.

The alleged hackers were first discovered after they targeted a US Department of Energy network in Hanford, Washington, the Justice Department said. The hackers also targeted companies in Australia, South Korea and several European nations. The hackers used known but unpatched vulnerabilities in widely used web server software to break into their victims’ networks. By gaining a foothold onto the network, the hackers installed password-stealing software to gain deeper access to their systems. The prosecutors said that the hackers would “frequently” return to the networks — in some cases years later.

The defendants used their initial unauthorized access to place malicious web shell programs (e.g., the “China Chopper” web shell) and credential-stealing software on victim networks, which allowed them to remotely execute commands on victim computers, according to court documents.

The defendants frequently returned to re-victimize companies, government entities, and organizations from which they had previously stolen data, in some cases years after the initial successful data theft. In several instances, however, the defendants were unsuccessful in this regard, due to the efforts of the FBI and network defenders.

If prosecuted, the hackers could each face more than 40 years in prison. But since the hackers are believed to still be in China, any extraditions to the U.S. are unlikely.

“China has now taken its place, alongside Russia, Iran and North Korea, in that shameful club of nations that provide a safe haven for cyber criminals in exchange for those criminals being ‘on call’ to work for the benefit of the state, here to feed the Chinese Communist party’s insatiable hunger for American and other non-Chinese companies’ hard-earned intellectual property, including COVID-19 research,” said Assistant Attorney General for National Security John C. Demers.

Tour guide who spied for China sentenced to 4 years in prison

The FBI secretly videotaped Bay Area resident Xuehua Peng during one of his dead drops.

A tour guide based in the San Francisco Bay Area received a 4-year sentence for acting as an agent for People’s Republic of China’s Ministry of State Security (MSS).

In addition to his sentence, Xuehua Peng aka Edward Peng was ordered to pay a $30,000 fine for his role in a scheme to conduct pickups known as “dead drops” and transport Secure Digital (SD) cards from a source in the United States to the MSS operatives in China, announced the Department of Justice.

The sentence and fine was announced Monday by Judge Haywood S. Gilliam, of the U.S. District Court.

“This case exposed one of the ways that Chinese intelligence officers work to collect classified information from the United States without having to step foot in this country" said Assistant Attorney General for National Security John C. Demers. 

"Peng acted as an agent of the Chinese Ministry of State Security in the United States, conducting numerous dead drops here on their behalf and delivering classified information to them in China. He pled guilty and is now being held accountable for his criminal actions and his betrayal of his oath of citizenship.”

According to his Nov. 25, 2019, guilty plea, Peng, a 56-year-old US naturalized citizen living in Hayward, Calif., acted at the direction and under the control of MSS officials in China in retrieving classified information passed to him and leaving money behind for the source. Peng admitted that in March 2015, an official from the People’s Republic of China (PRC) introduced himself to Peng while Peng was on a business trip to China. The official asked Peng to use his citizenship in the United States to assist the official with matters of interest to the PRC. 

Peng eventually came to learn that the official was employed as an intelligence or security services officer of the PRC, specifically of the Ministry of State Security (MSS), and nevertheless agreed to perform activities in the US on behalf of the PRC. Peng’s plea acknowledged that he knew he was acting on behalf of the government of the PRC.

Specifically, Peng admitted that in March of 2015, he received instructions regarding how to use dead drops to exchange money for items to deliver to the PRC. Peng admitted that the official directed him to locate and reserve hotel rooms where he was to leave money and then depart for several hours. The official instructed Peng to return later and retrieve small electronic storage devices that the source would leave for him. Peng was to fly to the PRC later and deliver the retrieved devices to the PRC official. 

Peng said he never met nor interacted with the individual who left the devices for him and was instructed not to access the information stored on the SD cards.

According to court documents, Peng participated in five dead drops involving drop-offs of cash and/or pick-ups of SD cards, after a practice run in June 2015. 

After he participated in two dead drops in the San Francisco Bay Area between October 2015 and April 2016, Peng began making dead drops in Columbus, Georgia. After three dead drops in Georgia, Peng informed the PRC official that he wanted to resume dead drops in the San Francisco Bay Area. Peng did not complete a seventh dead drop before his arrest by federal authorities in September 2019.

Undercover video released by the Federal Bureau of Investigation following his arrest last September showed Peng taping cash and secure digital computer cards to the underside of a chest of drawers in a hotel room for his source to retrieve.

Peng also admitted that the PRC official paid him at least $30,000 for the acts he performed as a courier for the MSS.

Peng reportedly had a degree in mechanical engineering and was trained in traditional Chinese medicine but worked most recently as a guide for Chinese tourists visiting California.

Peng entered the country in 2001 on a temporary business visa. He became a lawful permanent resident in 2006 following his marriage and was naturalized in September 2012.

Peng's lawyers said in court documents that their client was “a simple man who was recruited by sophisticated foreign agents” who had no criminal record, lived with his wife and two young daughters, and “deeply regrets his actions” in the case.

Ex-CIA officer sentenced to 19 years for spying for China

Former CIA agent Jerry Chun Shing Lee.

A former Central Intelligence Agency (CIA) case officer was sentenced Friday (Nov. 22) to 19 years in prison for spying for the People’s Republic of China (PRC).

According to court documents, Jerry Chun Shing Lee, 55, Lee pleaded guilty to conspiracy to deliver national defense information to aid a foreign government on May 1.

“Lee betrayed his own country for greed and put his former colleagues at risk. The seriousness of his betrayal and crime is demonstrated by today's sentencing,” said Timothy R. Slater, Assistant Director in Charge of the FBI's Washington Field Office.

Lee left the CIA in 2007 and moved to Hong Kong. In April 2010, two Chinese intelligence officers (IOs) approached Lee and offered to pay him for national defense information he had acquired as a CIA case officer. The IOs also told Lee they had prepared for him a gift of $100,000 cash, and they offered to take care of him “for life” in exchange for his cooperation.

He was arrested in Honolulu in 2012. A search of his hotel room found a thumb drive and documents with sensitive information about his activities as a CIA officer.

“Mr. Lee served as a CIA officer and was entrusted with extremely sensitive national security information, and he broke that trust with no regard for the consequences,” said John Brown, Assistant Director of Counterintelligence for the FBI. “His actions aided a foreign government, hurt our national security, and jeopardized the safety of his former intelligence colleagues."

______________________________________________________________________

NY Times: NIH investigating 180 cases of theft of medical research for China

The National Institute of Health is investigating 180 cases involving possible theft of medical research by scientists and researchers working -- knowingly or not -- for the benefit of China, according to a report from The New York Times.

If the NIH investigations borne out, they will be turned over to government agencies such as the Department of Justice, for possible prosecution.

The NYTimes report published Tuesday (Nov. 4), repeats some of the individual cases that online news agencies, including Views From the Edge and other Asian American bloggers, have been reporting for the last few years.

“You could take a dart board with medical colleges with significant research programs and, as far as I can tell, you’d have a 50-50 chance of hitting a school with an active case,” Dr. Ross McKinney Jr., chief scientific officer of the Association of American Medical Colleges, told the NYTimes.

The N.I.H. and the F.B.I. have begun a huge investigation to identify out scientists who they say are stealing biomedical research for other countries from institutions across the United States. Almost all of the incidents they uncovered and that are under investigation involve scientists of Chinese descent, including naturalized American citizens, allegedly stealing for China, reports the NYTimes.

The effort is fanning fears among the Asian American community that the aggressive government-led effort in the current tense environment over trade issues could lead to racial profiling and could be just another bargaining chip in the geopolitical wrangling between the Trump administration and the Peoples Republic of China.

“We can’t tell who is guilty or innocent, but look at the actual effect on people of Chinese descent,” said Frank Wu, a law professor at the University of California Hastings School of the Law and former president of the Committee of 100, an organization of Chinese Americans scientists, researchers and innovators in private industry as well as academic institutions. “People are living in fear. It is a question of impact rather than intent.”

“I am getting calls and emails constantly now from ethnic Chinese — even those who are U.S. citizens — who feel threatened,” he said. But few are willing to step forward with allegations of discrimination, Wu told the NYTimes.

"The US-China relationship is the world's most consequential bi-lateral relationship. We must be concerned about security concerns and condemn illegal activity, but in recent years there have been many cases of wrongful prosecution,"  said Chinese American Gary Locke, former US Ambassador to China and former U.S. Secretary of Commerce.

"Our pride in our heritage does not mean we are any less loyal or patriotic to America," Locke added.

READ the entire New York Times report here.

_________________________________________________________________________________

US Navy officer & wife indicted for allegedly smuggling military hardware to China

US NAVY

Lt. Fan Yang, left, gives a tour of an aircraft to members of Royal Saudi Naval forces last year.

A US Navy officer and his wife conspired to smuggle military-style boats to China and sold a firearm to a Chinese national, allege federal prosecutors.

Lt. Fan Yang and his wife, Yang “Yuki” Yang, were arrested Friday (Nov. 1) following a joint FBI and NCIS raid on their home, said Amy Filjones, a spokeswoman for the U.S. District Court for Florida’s Middle District.

Besides the indictments announced against the Yang couple, indictments were also issued for two Chinese nationals. The four face charges of conspiring to unlawfully smuggle military-style inflatable boats, with military outboard motors tot he People's Republic of China.

“The illegal exportation of sensitive technology to prohibited entities poses a clear, significant threat to our national security," Rachel L. Rojas, the special agent in charge of the FBI’s Jacksonville division, said in a statement Tuesday to Navy Times.

The Navy officer and two other defendants have also been charged with conspiring to violate firearms law, and the Navy officer has been charged with an additional firearms-related offense and with making false official statements.

The four defendants arrested on Oct. 17, 2019, and are currently detained. The quartet charged in the indictment are:

Fan Yang, 34, a naturalized citizen of the United States and Lieutenant in the United States Navy residing in Jacksonville, Florida; Yang Yang, 33, wife of Fan Yang, and a naturalized US citizen residing in Jacksonville; Ge Songtao, 49, and and Zheng Yan, 27, both of whom are citizens of the People’s Republic of China.

Both Sontao and Yan held temporary visas allowing them to travel to the US for business and tourism.

All four defendants have been charged with conspiring to submit false export information and to fraudulently attempt to export articles from the United States. 

Additionally, Yang Yang, Ge Songtao, and Zheng Yan have been charged with causing the submission of false and misleading information into the U.S. Automated Export System, and fraudulently attempting to export seven vessels and eight engines. 

If convicted for conspiracy or for the submission of false export information, the charged defendants each face a maximum penalty of five years in federal prison. If convicted on the attempted-smuggling charge, the defendants each face a maximum sentence of 10 years in federal prison.

Fan Yang, Yang Yang, and Ge Songtao are charged with other offenses as well. All three have been charged with conspiring to violate laws prohibiting an alien admitted under a nonimmigrant visa from possessing a firearm and prohibiting the transfer of a firearm to a nonresident. 

Fan Yang has also been charged with making a false statement to a firearms dealer, which carries a maximum penalty of 10 years’ imprisonment, and with making false official statements in his application for a security clearance, which carries a maximum penalty of five years’ imprisonment. 

Lt. Yang immigrated to the U.S. as a teenager in 1999 and enlisted in the Navy six years later, according to court documents and a military biography released to Navy Times.

A LinkedIn account appearing to belong to Lt. Yang indicates he rose to electrician’s mate second class during active and reserve duty while assigned to the guided-missile cruiser Cape St. George and Naval Reserve Cargo Afloat Rig Team 1′s Detachment A.

He earned an undergraduate degree in computer engineering at the State University of New York at Binghamton in 2011 and then a master’s degree in computer engineering from Syracuse University the following year.

He was commissioned in 2012.

Both Yangs have detention hearings scheduled for Wednesday afternoon.

______________________________________________________________

Texas man convicted of trying to steal industrial secrets

A Texas man was convicted Monday (July 29) by a federal jury in Washington D.C. of conspiracy to commit theft of trade secrets.

Following a nine-day trial, Shan Shi, 54, of Houston, Texas, was convicted of one count of conspiracy to commit theft of trade secrets. 

Shi was originally indicted in June 2017 for conspiracy to commit theft of trade secrets, and a superseding indictment containing one count of conspiracy to commit economic espionage and one count of conspiracy to commit money laundering charges issued in April 2018. Shi was acquitted on the other charges.

“The jury’s verdict makes clear that Shan Shi conspired to steal trade secrets by poaching employees from a U.S. company and enticing them to bring technical data to his company,” said Assistant Attorney General for National Security John C. Demers. “He did this against the backdrop of China’s strategic plan to close the gap between China and United States in buoyancy technology and with the benefit of millions of dollars of funding from China."

Evidence introduced at trial established that Shi conspired with others to steal trade secrets from a Houston-based company, Trelleborg Offshore, relating to syntactic foam, a strong, lightweight material with commercial and military uses that is essential for deep-sea oil and gas drilling. 

In public statements of its national priorities, China has made clear its desire to develop this technology. Shi sought to obtain information about syntactic foam for the benefit of CBM-Future New Material Science and Technology Co. Ltd. (CBMF), a Chinese company based in Taizhou, and for the ultimate benefit of the People’s Republic of China. 

Four of Shi’s codefendants—some of whom worked at Trelleborg—had pleaded guilty to conspiring to steal trade secrets, and two testified as cooperating witnesses at trial. From 2014 to 2017, CBMF sent Shi’s company in Houston approximately $3.1 million from China in order to promote Shi’s activity in the United States. 

“We take very seriously the theft of intellectual property that was developed in the United States through long years of research, development, and innovation,” said U.S. Attorney Jessie K. Liu for the District of Columbia. “Shi chose to steal the secrets of a U.S. company rather than do the hard work necessary to succeed honestly in the free market. He is now being held accountable for that choice.”

Sentencing has been set for Oct. 25, 2019.

______________________________________________________________________