Former New Jersey Tech Company Employee Arrested, Charged with Exporting Sensitive Military Technology to China

NEWARK, NJ—Federal agents arrested a former employee of a New Jersey-based technology company today for allegedly misappropriating sensitive military technology and exporting it to the People's Republic of China (PRC), United States Attorney Paul J. Fishman announced.

Sixing Liu, a/k/a, "Steve Liu," 47, of Deerfield, Ill., and recently of Flanders, N.J., was charged in a criminal complaint with one count of exporting defense-related technical data without a license. Liu was arrested at his residence by special agents of the FBI and the U.S. Department of Homeland Security's Immigration and Customs Enforcement, Homeland Security Investigations (HSI).

The defendant is expected to appear this afternoon before U.S. Magistrate Judge Sheila Finnegan in Chicago federal court.

According to the criminal complaint unsealed today:

Liu, a PRC national with permanent legal resident status in the United States, worked for the technology company from March 2009 through November 2010 as a senior staff engineer. He holds a doctoral degree in electrical engineering and was part of a research and development team that worked on precision navigation devices and other innovative components for the U.S. Department of Defense. Liu was never issued a company laptop or approved to access or possess the company's work product outside the company's New Jersey facility.

On November 12, 2010, Liu boarded a flight from Newark Airport to the PRC. Upon his return from Shanghai on November 29, 2010, U.S. Customs and Border Protection (CBP) agents found Liu to be in possession of a non-work-issued computer that was later found to contain hundreds of documents relating to the company's projects. A search also revealed images depicting Liu making a presentation at a technology conference, which, according to the conference's website, was organized by the PRC government. Although listed as a representative of the company on the PRC conference's website, Liu never told the company about his travel or his role in the conference—in violation of the company's security rules.

The U.S. Department of State's Directorate of Defense Trade Controls later verified that information on Liu's computer is export-controlled technical data that relates to defense items listed on the United States Munitions List (USML). Under federal regulations, items and data covered by the USML may not be exported without a license, which Liu did not obtain. The regulations also provide that it is the policy of the United States to deny licenses to export items and data covered by the USML to countries with which the United States maintains an arms embargo, including the PRC.

As early as April 2009, the company provided training to Liu regarding export control laws. Numerous documents that Liu possessed on the non-work-issued computer were prominently marked as containing sensitive proprietary company information and/or exportcontrolled technical data.

U.S. Attorney Fishman stated: "According to the complaint, Liu took highly sensitive defense information to China, violating the rules of his company and the laws of this country. The defendant allegedly chose to become a criminal in the United States for VIP status abroad. We will not tolerate the exploitation of this country's opportunities through the theft of our secrets."

"This charge is troubling on many levels," said Edward Kahrer, Assistant Special Agent in Charge of the FBI's Newark Division. "The fact that Mr. Liu, an individual who helped develop technology critical to our military infrastructure, allegedly took a computer with that information to China and used it to give a presentation sponsored by the Chinese government raises very serious questions. The FBI is committed to working with its partners to prevent such leaks of information and to mitigate them if and when they do occur."

"The enforcement of arms and export controls keeps America safe," said Peter T. Edge, Special Agent in Charge of Homeland Security Investigations in Newark. "One of HSI's top enforcement priorities is preventing sensitive items, such as data, technology and equipment, from falling into the hands of those who might seek to harm America or its allies."

If convicted of the charge, Liu faces a maximum potential penalty of 20 years in prison and a $1 million fine.

U.S. Attorney Fishman credited special agents of the FBI and HSI, along with CBP, for the investigation leading to today's arrest. He also thanked FBI and HSI special agents in Chicago for their assistance.

The government is represented by Assistant U.S. Attorney L. Judson Welle of the United States Attorney's Office National Security Unit in Newark.

The charge and allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.