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Stopping economic espionage becomes top FBI priority

Yihao “Ben” Pu 24 who is charged with theft trade secrets from Citadel leaves Dirksen Federal Building Thursday.  |

Yihao “Ben” Pu, 24, who is charged with theft of trade secrets from Citadel, leaves the Dirksen Federal Building on Thursday. | Richard A. Chapman~Sun-Times

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Updated: December 7, 2011 8:23AM

The crime of espionage once conjured images of dark street corners, fedora-wearing spies and government agents who stayed in the shadows, rarely seeing the inside of a public courtroom.

These days, the game has changed. The same agents are now looking for different kinds of spies, ones who increasingly threaten corporate America — while they’re working within it.

The crime is called economic espionage and it has catapulted to one of the top federal law enforcement priorities in the country.

It often involves American-based employees who burrow into company computer systems, steal prized trade secrets and hand over the information to overseas competitors for tens of thousands — even millions — of dollars.

The FBI has placed economic espionage on both a national and local level second on its list of priorities, right behind fighting terrorism.

That’s because the potential for damage is severe, law enforcement officials say, with the potential loss to companies in the tens of billions of dollars and, according to one expert, growing at a rate of 9 percent a year.

“I can turn to a person on the street and say: ‘The reason you got laid off is because someone stole your intellectual property from your business, took it overseas and created a competing enterprise,’ ” said Robert Grant, the FBI Special Agent in Charge in Chicago. “That’s the reality. And that is happening on an enormous scale right now.”

Many companies, he said, are protected against outside hackers but don’t do enough to protect data from within the company. In fact, many firms don’t even know their security was breached and sensitive data stolen until they see the exact same product they had spent years inventing being released overseas.

By then, a company that thought it would have a market advantage for up to 10 years sees its advantage vanish and often, along with it, jobs, Grant said.

In Chicago alone, several new allegations of economic espionage or stealing trade secrets emerged in recent months. In fact, one of the highest-profile cases in Chicago, involving onetime Motorola employee Hanjuan Jin, goes to trial on Monday.

According to the charges, after taking a leave, Jin returned to work to meet with managers in February 2007. At that point, she had already bought a one-way ticket to China and was set to leave two days later, her indictment says.

Jin, 41, is accused of stealing sensitive documents dealing with telephone communications technology off the company’s internal network with the plan to sell the data to another company.

At a time when she had no work assignments, she allegedly spent 44 minutes downloading 232 documents. The charges say she went back after-hours when surveillance cameras caught her with armloads of binders, books and other materials. She was arrested at O’Hare Airport on Feb. 28, 2008, while allegedly carrying more than 1,000 electronic and paper documents that were technical in nature. Some were marked confidential and proprietary.

Jin’s lawyer would not comment on the case. In court, the attorney requested a bench trial instead of a trial by jury. Opening statements are to begin Monday morning.

Jin’s case is similar to others cropping up nationwide, said Kevin Peterson, chairman of the information asset protection council for ASIS International, an industry group representing security specialists.

“More and more of a company’s value is in intellectual property,” Peterson said. “It’s what’s in people’s heads and in their hard drives that’s really transportable. It’s like big business with people.”

Peterson said economic espionage is usually from the inside, with the culprits emerging in two main ways:

† One is through “volunteers.” They are employees who become angry with their employers or are in a financially tenuous situation and offer to sell sensitive data.

† The other is through recruitment by a foreign government, a foreign intelligence service or a foreign broker targeting employees already working at companies with the promise of a large payout.

Traditionally, it has been senior engineers experiencing “almost a mid-life crisis” who get involved in espionage, he said.

But recently the allegations are trending toward younger people, he said, pointing to a case last month in which a Citadel employee in Chicago was charged. He said companies still don’t know why younger people are becoming more prone to stealing data.

Yihao “Ben” Pu, 24, a quantitative financial engineer with Citadel, was charged in October with theft of trade secrets, which carries a maximum 10-year prison sentence if he’s convicted. In August, the company noticed an “unusually large amount of data and programs associated with his user profile.”

It began investigating and confronted Pu, charges say. He is accused of directing an unnamed “Individual A” to throw a bag Pu gave him, which contained hard drives, into the sanitary canal off Sheridan Road near Wilmette Harbor. Authorities sent in a diver and found that thousands of documents had been stored on the hard drive, then deleted, according to charges. The files were restored and found to contain Citadel’s sensitive, proprietary information, the charges say. Authorities also say they found outlines for a plan for Pu to obtain “execution data” and use it to start a hedge fund in China.

Inside spies are increasingly offered huge sums of money or jobs overseas. Or they simply see the potential to make money. It’s like “a lot of cash at a bank and nobody’s watching it,” Grant said.

A U.S. intelligence report released Thursday blamed China and Russia, saying the nations are trying to escalate themselves technologically, militarily and economically by stealing our greatest advantages, including our advances in technology. The report did not cite how many cases in the U.S. are thought to have been orchestrated by foreign governments, but Peterson said many past cases involved China.

In March, authorities charged Sixing “Steve” Liu, of Deerfield, 48, with exporting military secrets to China, allegedly taking sensitive data from his employer, a defense contractor. Liu, a Chinese national who has lived in the United States for 18 years, worked at L-3 Communications’ Space and Navigation division in New Jersey.

His lawyer, James Tunick, said his client simply had work documents on his laptop while he attended an international conference and was never even accused of disseminating the information or having a financial agreement to sell the data.

Tunick called the government “hypocritical” for taking his client to trial over the incident when the company, L-3, has had its own entanglements with the government that resulted in a settlement and hefty fine but no criminal charges. “There’s no money, no promises, no nothing,” Tunick said of his client’s case.

Federal prosecutors in Chicago did not want to comment for this article, citing the start of the Jin trial.

However, in the past, U.S. Attorney Patrick Fitzgerald has made clear his office has increasingly made economic espionage a priority.

“Economic espionage is a crime that affects both the interests of corporations and our national interest in protecting intellectual property,” Fitzgerald said.

With the damage seeming to mainly affect private enterprises, why is this a law enforcement priority?

“Our job is to protect the United States,” Grant said. “We can’t afford to have our telecommunications companies compromised by countries that would be an adversary down the road.”

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