Monday, May 8, 2017
Court Orders In Camera Review in Economic Spying Case
Panel Says Judge Should Look at FBI Notes Re: Deceased Accomplice, but Otherwise Affirms
By KENNETH OFGANG, Staff Writer
The Ninth U.S. Circuit Court of Appeals Friday remanded the appeal of a Chinese-American engineer convicted of selling stolen technology to a Chinese company for millions of dollars.
The panel said Walter Liew is entitled to in camera review of the raw notes of interviews the FBI conducted with co-defendant Tim Spitler. Spitler, a retired engineer at E.I. Dupont de Nemours and Company, committed suicide just before he was scheduled to execute a plea agreement.
U.S. District Judge Jeffrey White of the Northern District of California sentenced Liew to 15 years in prison after a jury found him guilty of multiple charges, including conspiracy and attempt to commit economic espionage and theft of trade secrets, possession of misappropriated trade secrets, and conveying trade secrets. White also ordered him to pay $28 million in restitution, although he predicted the money had been spirited out of the country and would never be recovered.
The panel Friday rejected Liew’s claims of insufficient evidence and instructional error regarding the trade secrets charges and upheld the restitution award. It did, however, reverse Liew’s convictions on charges of obstruction of justice and witness tampering in connection with a civil suit brought by DuPont.
Judge John B. Owens, writing for the court, said Liew had met the relatively low threshold showing needed to obtain in camera review of the Spitler notes. But he cautioned that the panel was not finding that the notes contained exculpatory—“or even admissible or relevant— material, a determination that must be made by the district judge in the first instance, he said.
If the judge finds that the notes are not discoverable, or that disclosure would not have given the defendant a more favorable outcome, he must resentence defendant on the remaining counts of conviction, Owens explained in a footnote. In that event, he said, Liew may renew his claims that White erroneously calculated the guidelines sentence, which exceeded the term he actually imposed.
“If you wanted to learn about the secretive and lucrative world of titanium dioxide production,” the appellate jurist explained, “this was the trial for you.” Prosecutors said Liew and co-defendant Robert Maegerle were the first persons to be convicted of violating the Economic Espionage Act of 1996 following jury trial, although a number of earlier cases e ended with guilty pleas.
Prosecutors said Liew had obtained the TiO2 technology, used to make cars, paper and a long list of everyday items whiter, with the aid of Spitler and Maegerle, a former DuPont project engineer. Liew’s company, USA Performance Technology, Inc., hired the pair as consultants in 1997; their involvement with the company, evidence showed , increased as Liew paid them thousands of dollars for sensitive company documents laying out a process to make the pigment, although they had certified to DuPont upon retirement that they had returned all “secret or confidential” information to the company.
Maegerle, 79 years old at the time, was tried with Liew and convicted on all counts. He was sentenced to 30 months in prison but allowed a delay to care for his terminally ill wife.
Bureau of Prisons records show he served his sentence and was released in the past two months.
In 2009, the Chinese government-controlled Pangang Group Co. awarded Liew’s company, called USAPTI for short, a $17 million contract to build a factory that could produce 100,000 metric tons of the pigment annually. Pangang had earlier awarded the USAPTI millions more in similar contracts for smaller projects.
Evidence suggested the Chinese factory was built with a detailed DuPont instruction manual stamped “confidential,” which earlier was used to build DuPont’s plant at Kuan Yin, Taiwan.
DuPont said it became concerned after receiving an anonymous letter claiming that John Liu, an employee of both USAPTI and Chevron, had stolen confidential information from DuPont. DuPont informed Chevron, which searched Liu’s work computer, eventually leading DuPont to inform the FBI of its findings and to sue Liew, Liu, and USAPTI.
The defense argued at the criminal trial that whatever DuPont information was obtained did not constitute trade secrets because DuPont had used similar technology to build an Ohio plant for the paint company Sherwin-Williams. But prosecutors successfully argued that was a red herring and that the case was “all about Kuan Yin,” which was built more than two decades later and processed different types of ores, so that the arrangement with Sherwin-Williams had no bearing on the protection of the purloined material.
Owen, writing for the Ninth Circuit, rejected the defense argument on appeal, saying prosecutors successfully distinguished between two types of technology. He added that the government was not required to prove that the TiO2 technology was not disclosed by DuPont, only that the company took reasonable measures to protect it.
The judge did, however, agree with the defense attacks on the obstruction of justice and witness tampering convictions.
Liew, he said, could not be convicted of obstruction of justice based on what the prosecution characterized as an agreement between Liew and Liu to file a false answer in DuPont’s civil suit. That answer, the judge said, amounted to a general denial, not a specific falsehood that would support an obstruction charge.
As for the witness tampering charge, the judge said, Liew’s telling Liu that it would not be good for him or his family if he told DuPont—which had offered to dismiss him from the civil suit in exchange for cooperation—about former DuPont workers at USAPTI, was not sufficient “to prove beyond a reasonable doubt that Liew intimidated, threatened, or corruptly persuaded Liu to prevent the use of his testimony in the DuPont civil lawsuit as charged.”
The case is United States v. Liew, 14-10367.
Copyright 2017, Metropolitan News Company