In New Jersey, Former Lucent Scientists Accused of Passing Trade Secrets to Chinese Company

cybercrime.gov, Dec 30, 2005

A federal grand jury today returned a new indictment against three men, two of them former employees of Lucent Technologies

NEWARK – A federal grand jury today returned a new indictment against three men – two of them former employees of Lucent Technologies – for stealing trade secrets from Lucent for transfer to a joint venture with a Chinese telecommunications company, U.S. Attorney Christopher J. Christie announced.

The Superseding Indictment adds, in Count Two through Count Fifteen, allegations of possession of trade secrets stolen from Lucent; and, in Count Sixteen through Count Twenty-Four, allegations of wire fraud.

The original one-count Indictment charged conspiracy to steal trade secrets and to possess stolen trade secrets. It was returned on May 31, 2001, and charged Hai Lin and Kai Xu – both former Distinguished Members of the Lucent staff developing the PathStar Access Server – and Yong-Qing Cheng, who served as a Lucent consultant on the PathStar project.

Lin, Xu and Cheng are scheduled to be arraigned on the new Indictment on Monday, April 15, at 9:30, before U.S. District Judge William H. Walls. Each of the defendants are currently free on bail.

Lin, 30, is of Scotch Plains; Xu, 33, is of Somerset, and Cheng, 37, is of East Brunswick. All three are legal U.S. resident aliens from China.

Count One carries a maximum penalty of 10 years in prison and a $250,000 fine. Each of the counts of possession of stolen trade secrets carries a maximum penalty of 10 years in prison and a $250,000 fine. The wire fraud counts each carries a maximum penalty of five years in prison and a $250,000 fine.

The Superseding Indictment, like the original Indictment, describes how the defendants, via e-mail, a password-protected Web site and visits to China, conspired to steal and transfer the software and hardware of the PathStar Access Server to a joint venture with Datang Telecom Technology Co. of Beijing, according to Assistant U.S. Attorney Scott S. Christie.

According to the Superseding Indictment, the PathStar Access Server was a sophisticated computer that facilitated the transmission of voice communications over the Internet. It converted analog voice signals to and from Internet-recognized transmission units (“IP packets”), merged voice and data IP packets, and handled delivery and routing of these merged IP packets over the Internet while, at the same time, providing call waiting, speed dialing, conference calling and dozens of other telephony features.

As the Superseding Indictment alleges, Lin, Xu and Cheng founded ComTriad Technologies, Inc., a New Jersey high-tech startup, in January 2000, purportedly to develop products integrating the transmission and reception of voice and data over the Internet.

Under U.S. Sentencing Guidelines, actual prison sentences are, upon conviction, determined under a formula that takes into account the severity and characteristics of an offense and the criminal histories, if any, of the defendants. Parole has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.