Michigan couple stole GM secrets for Chinese, US says

A former General Motors engineer and her husband stole trade secrets of the automaker's related to hybrid-car technology to help develop such vehicles in China, a US prosecutor said Monday at the beginning of their trial.

Shanshan Du, the ex-GM employee, copied the Detroit-based company's private information on the motor control of hybrids and provided documents to her husband, Yu Qin, the government alleges. Qin used the confidential data to seek business ventures or employment with GM's competitors, including the Chinese automaker Chery Automobile Co., the U.S. said. General Motors contends the stolen trade secrets are worth more than $40 million, prosecutors said.

"This case is about theft as well as deceit," prosecutor Michael Martin said in federal court in Detroit in opening statements for the trial. The defendants are "partners in life, partners in business and partners in crime," he said.

The defendants aren't guilty, the couple's lawyers said in their opening. The items at issue weren't trade secrets and were "completely useless" for other companies, Frank Eaman, Qin's lawyer said.

"A lot of fear is going on in this case," Eaman said. This includes fear of Chinese people working in U.S. companies and planning ventures in China, as well as the defendants' fear of the police, he said.

"The government has a fear that people will look at the evidence and see these are not trade secrets, no obstruction of justice, no wire fraud," Eaman said.

The case is one of more than a dozen brought in the past three years by the Justice Department alleging defendants of Chinese ancestry or citizenship sought to take trade secrets from U.S.-based companies for use by the Chinese government or businesses.

Last month in Chicago, a former software engineer for the Chicago-based CME Group Inc., the world's largest derivative exchange, pleaded guilty to charges of downloading more than 10,000 files containing source code from his employer to support trading activities in an exchange in China.

In September in Newark, N.J., a native of China who worked for L-3 Communications' Space & Navigation division was convicted of transporting stolen property and possession of trade secrets related to precision navigation devices.

In the Detroit case, Du and Qin were indicted in July 2010 on three counts each of trade theft and wire fraud. Qin was also charged with obstruction of justice. Both have pleaded not guilty.

The defendants argued in court papers that the government withheld evidence about the case, hampering their rights to a fair trial.

This evidence included details of an FBI interview with a witness who indicated "several items named in the indictment were not secret" and that "contrary to the allegations in the indictment, several items of software possessed by Du were necessary for her work," defense lawyers said in an Oct. 15 filing.

The U.S. alleges that Du, an electrical engineer who worked at GM from 2000 to March 2005, sought assignment to the company's hybrid work project to gain access to information on the motor control of such vehicles. Du worked on various software engineering projects related to hybrid vehicle technology and was responsible for some code used in motor controller cards.

The U.S. claims that Du began providing GM documents to her husband for use in a company they had started, called Millennium Technology International. Du copied material and Qin developed a plan to sell hybrid vehicle technology through a joint venture in China, the U.S. said.

The process accelerated after GM sought Du's resignation in late January 2005, according to the indictment.

"Approximately five days after GM offered defendant Shanshan Du a severance package, defendant Shanshan Du copied thousands of GM documents, including documents containing GM trade secrets, to an external hard drive used for MTI company business," the U.S. said.

Martin said in his opening statement today that 16,262 GM files were found on Du's computer. "The central issue, was this theft or as Du said, 'a big misunderstanding?'" Martin asked.

Du told GM when confronted with the files, that it was a "big misunderstanding," Martin said. She also told GM that she forgot to delete files from her computer when she left the company, the prosecutor said.

"The government took a lot of different things and tried to link them together," Robert Morgan, Du's lawyer said in his opening. "Things that are conveniently connected may or may not be connected."

Of the more than 16,000 files, only 18 items are in question, Morgan said. These documents aren't trade secrets, he said.

Du was hampered by language problems in dealing with GM and faced racism and sexism while working at the company, Morgan said. While Du was at GM, the company was already going through financial problems, Morgan said.

The allegations arose at "a time of great economic concern" at General Motors, he said.

After Du left the company, the couple uploaded GM documents containing secret information onto a computer at their home, the U.S. claimed. In July or August 2005, Qin "communicated with others, by e-mail and in person, about collaboration on a new business venture which would provide hybrid vehicle technology to Chery," the U.S. said.

General Motors was informed by Qin's employer, Controlled Power Co., in 2005 that CPC workers discovered a bag with an internal hard drive containing electronic documents that appeared to be the property of GM, according to a federal appeals court decision in July on evidence in the case.

The U.S. alleges in the obstruction-of-justice charge against Qin that he destroyed evidence during the government's initial investigation. In May 2006, the U.S. said, the defendants "drove to a Dumpster behind a grocery store where defendant Yu Qin discarded plastic bags containing shredded documents responsive to federal grand jury subpoenas."

U.S. District Judge Marianne O. Battani, who is overseeing the case, said the trial should last several weeks.