Our story begins when Xu Jiaqiang, 29, decided to resign from his employer.
Xu began working as a developer for a United States company in November 2010. During that time, he enjoyed access to the company’s proprietary software, a clustered file system which enhanced computer performance by coordinating tasks across multiple servers. The developer also had access to the software’s underlying source code.
After years in that position, Xu voluntarily decided to resign from his employer, whose exact identity remains unclear as of this writing. A LinkedIn profile for Xu says he was employed as a system software developer at IBM between 2010 and 2014, reports Reuters, and a search on IBM’s site still lists him as a developer.
Regardless of its identity, the company thought it was done with Xu after he left in 2014.
But Xu had other plans.
According to a statement issued by the FBI, Xu at one point communicated with two undercover law enforcement officers who posed as a financial investor and project manager working together to start a large-data storage technology company. He told them about his experience with his previous employer and said he would consider providing the officers with a copy of the source code so that their company could use it as a platform to create their own data storage system. To help test the source code and confirm its functionality, Xu requested that the officers set up a small network on which he could remotely install the proprietary software.
Around early August 2015, Xu remotely installed the software onto the undercover officers’ test network. Without the developer’s knowledge, the agents sent the upload to an experienced employee at Xu’s former company, who confirmed that someone with knowledge of the proprietary software had built the upload.
Xu’s fate was sealed on December 7, 2015 when the man met the two undercover officers in a hotel in White Plains, New York. There, he told them how he had built a copy of the proprietary software using his former company’s source code and how he could write computer scripts to conceal the fact he had copied the source code without his previous employer’s authorization. He even showed them a copy of the source code stored on his laptop.
The two undercover agents arrested Xu that same day and had him arraigned in federal court on December 8. U.S. Magistrate Judge Judith C. McCarthy charged Xu with one count of theft of trade secrets after she heard the agents’ testimony and learned the developer had been planning on sharing the source code with the National Health and Family Planning Commission of the People’s Republic of China.
China has a reputation for hacking Western enterprises in an effort to steal trade secrets. To put a stop to this behavior, U.S. President Barack Obama Obama announced in September 2015 that he and Chinese President Xi Jinping had agreed neither of their countries would knowingly support acts of digital espionage. Not a month later, however, it was discovered that Chinese hackers had yet again attempted to hack into American enterprises with the intention of stealing intellectual property.
U.S. Attorney Preet Bharara observes it is the ongoing seriousness of economic espionage as a federal crime that led the Department of Justice to unseal a six-count superseding indictment against Xu, charging the developer with three counts of both economic espionage and theft of trade secrets:
“As alleged, Xu Jiaqiang is charged with stealing valuable, proprietary software from his former employer, an American company, that he intended to share with an agency within the Chinese government. Economic espionage not only harms victim companies that have years or even decades of work stolen, but it also crushes the spirit of innovation and fair play in the global economy. Economic espionage is a serious federal crime, for which my office, the Department of Justice’s National Security Division, and the FBI will show no tolerance.”
Each of the counts of espionage carry a maximum sentence of 15 years in prison, whereas each count of theft of a trade secret carries 10 years in prison.
Xu is set to answer for the new charges on June 16, reports the BBC.