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U.S. Law Enforcement Struggles to Combat China Spys

Posted by chinaview on July 24, 2007

By David J. Lynch, USA TODAY , July 22, 2007-

Seated at his dining room table on his final Sunday as a free man, engineer Chi Mak was unaware that FBI agents were watching and listening.

For almost two hours, as his wife, Rebecca, stood behind him and government sleuths looked on, Mak copied onto compact disks technical information that he had taken from his office at Power Paragon, a California defense contractor. At 11:13 a.m., when Mak climbed into his brown 1988 Oldsmobile sedan to take the disks to the nearby home of his brother, Tai, the G-men tailed him.

Five days later, as neighbors were preparing for bed, local police and FBI agents swarmed Chi Mak’s single-story wood-frame house in a Los Angeles suburb, arresting him and his wife. Another team of agents pulled Tai Mak and his wife, Fuk Li, out of a security line at Los Angeles International Airport, 25 miles to the west, where they were waiting to board a midnight flight to China. Hidden in their luggage was a disk containing encrypted copies of the unclassified U.S. Navy research Chi Mak had given his brother.

The government, which detailed its surveillance of the Mak family in court documents, would eventually claim the material he disclosed would enable an enemy to track and kill American sailors.

The Oct. 28, 2005, arrests capped a 20-month probe that illuminated the difficulty of combating what government officials say is an aggressive Chinese espionage campaign that vacuums up advanced U.S. technology secrets from defense and civilian companies alike.

“The Chinese are putting on a full-court press in this area. … They are trying to flatten out the world as fast as possible,” says Joel Brenner, national counterintelligence executive. “One of the ways they accelerate that process is economic espionage. If you can steal something rather than figure it out yourself, you save years. You gain an advantage.”

Brenner, who directs the United States’ counterspy efforts in the office of the director of national intelligence, says China’s technology thieving is “the norm” among industrial nations. But if China is not unique, it does stand out — along with Russia, Cuba and Iran — as among the most active nations, Brenner says.

Beijing’s goals aren’t limited to traditional national security interests. The world’s fastest-growing economy operates a shadowy technology bazaar where individuals offering trade secrets find a ready buyer. About one-third of all economic espionage investigations are linked to Chinese government agencies, research institutes or businesses, according to Bruce Carlson of the FBI’s counterintelligence division, who leads the bureau’s efforts to combat Chinese spying.

Since 2001, the number of FBI investigations of suspected Chinese economic espionage cases increased 12%. “The basis for the whole program is money. People (in the USA) are looking to make a buck. China has money to spend,” says Carlson.

China’s technology-targeting differs from classic Cold War-era spying, which pitted American intelligence agents against their KGB counterparts. Along with using intelligence professionals, China seeks to capitalize on some of the thousands of Chinese and Chinese-American engineers, researchers, scientists and students who fill key positions in U.S. industry and academia, say current and former U.S. counterintelligence officials.

“This is not some ‘yellow peril’ witch hunt. … The counterintelligence environment in terms of China right now is just white-hot,” says James Mulvenon, director of the Center for Intelligence Research and Analysis, a Washington, D.C., think tank that advises U.S. intelligence agencies.

Long-running spy plot

In some cases, individuals stealing trade secrets execute Beijing’s orders. That’s what the Justice Department says occurred with Chi Mak, 66, who was born in Guangzhou, was educated in Shanghai and became a naturalized U.S. citizen in 1985. He obtained a “secret”-level security clearance in 1996.

FBI agents found four Chinese-language “tasking lists” in Mak’s trash, which they say itemized specific technologies that China covets, such as “aircraft carrier electronic systems” and “submarine propulsion technology.” One of the lists also directed Mak, a senior engineer working on power systems for Navy submarines, to join professional associations and attend advanced research seminars.

The Justice Department presented other evidence that alleged Chinese government involvement. An FBI wiretap, for example, heard Tai Mak, 57, nine days before he was arrested, call a man in Guangzhou and identify himself as being from “Red Flower of North America.”

On the other end of the line was Pu Pei Liang, a researcher at Zhongshan University’s Chinese Center for Asia Pacific Studies, which the prosecution said performs “operational research” for China’s People’s Liberation Army. Chinese intelligence operations routinely use the names of flowers, such as “winter chrysanthemum” and “autumn orchid,” prosecutors said.

Especially damaging to Mak were four letters from another Chinese official, Gu Weihao, a relative of his wife’s and a senior engineer at the Ministry of Aviation Industry. Written in the late 1980s, three of the letters were discovered in Mak’s home; the fourth was found in the home of Greg Chung, an engineer for Boeing (BA).

In a May 2, 1987, letter, Gu introduces Mak to Chung and discusses the latter’s upcoming trip to China: “You can discuss the time and route of your trip to China with Mr. Mak in person. … You may use ‘traveling to Hong Kong’ or ‘visiting relatives in China’ as reasons for traveling abroad. … Normally, if you have any information, you can also pass it on to me through Mr. Mak. This channel is much safer than the others.”

Assistant U.S. Attorney Greg Staples argued that documents found in Mak’s home dealing with the F-16 fighter and NASA’s space shuttle were from programs that Chung had worked on at Boeing. There is an active grand jury investigation concerning Chung, according to a recent prosecution court filing.

Last month, after a six-week trial, a federal jury convicted Mak — who denied spying and insisted the technical material at issue was publicly available — of conspiracy, two counts of attempting to violate export control laws and failing to register as a foreign agent. The convictions, which carry a potential prison term of up to 45 years, followed guilty pleas by the four other relatives involved in what prosecutors say was a long-running spy plot.

Some driven by greed

Beijing often capitalizes on what might be called espionage entrepreneurs: engineers or executives who exploit their positions in U.S. companies to pilfer corporate data they know will be welcomed in a China that is eager to catch up with the West. “In the vast majority of cases, it’s the almighty dollar,” says Mulvenon. “It’s just pure greed.”

Next month in San Jose, Calif., two men who pleaded guilty in December to two counts each of economic espionage for stealing trade secrets from Sun Microsystems (SUNW) and semiconductor maker Transmeta (TMTA) are scheduled to be sentenced in U.S. District Court. They each face up to 30 years in jail.

Fei Ye and Ming Zhong, former co-workers at Transmeta, based in Santa Clara, Calif., admitted to stealing secrets to produce computer chips for a firm they had established in Hangzhou, about 100 miles southwest of Shanghai. Theirs were the first convictions under the 1996 Economic Espionage Act, which made the theft of trade secrets a federal crime.

Their new company, called Supervision, expected funding from the Hangzhou municipal government and the provincial government of Zhejiang province, renowned as China’s capitalist heartland. The men were working with a professor at Zhejiang University who planned to help them secure additional funding from a national technology research program, according to their plea agreements.

Supervision would “raise China’s ability to develop superintegrated circuit design and form a powerful capability to compete with worldwide leaders’ core development technology and products in the field of integrated circuit design,” according to a corporate charter found at Ye’s home.

Documents discovered after the men were arrested at San Francisco International Airport on Nov. 23, 2001, demonstrate that the Supervision project was highly regarded by Chinese officials. “The project will be extremely useful to the development of China’s integrated circuit industry,” said a Chinese panel of experts, which recommended that “every level of government offer their support toward the implementation of this project.” (…… More details )

- from UsaToday.com report: Law enforcement struggles to combat Chinese spyin

One Response to “U.S. Law Enforcement Struggles to Combat China Spys”

  1. Wow. This is an incredible story. I wish law enforecment was as eager to fight scientific misconduct by falsification and fabrication as it is spying. Here is a link to a page we are constructing to out fraudulent scientists funded by NASA and the NSF.

    http://www.bccmeteorites.com/misconduct-planetary.html

    Cordially
    S. Ray DeRusse

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