Federal fraud indictment: KU professor secretly worked for Chinese university
kansas.com
kansas.com
Wait, who are the bad guys here?
> Zhang, a lawful permanent resident in the U.S., was a rice researcher at Kansas State University and received a doctorate in rice genetics from Louisiana State University. He began working for Ventria in 2008 and was in charge of plant breeding and nursery operations.
> In 2012, Zhang and a co-defendant traveled to visit a crop research institute in China where Zhang once worked. The following year, the two made arrangements for a delegation from the Chinese institute to visit Kansas.
> ...
> Ventria invested about $75 million to develop this proprietary technology and is the only company in the U.S. that has it. The lab maintains seed banks in a climate-controlled environment. Only six employees had access to the storage area. Zhang was one of them.
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The story here is:
> “Tao is alleged to have defrauded the US government by unlawfully receiving federal grant money at the same time that he was employed and paid by a Chinese research university — a fact that he hid from his university and federal agencies,” Assistant Attorney General John Demers said in a statement. “Any potential conflicts of commitment by a researcher must be disclosed as required by law and university policies.”
> The Kansas Board of Regents requires faculty and staff of its universities to file a conflict of interest report when they are hired and every year afterward for as long as they are employed.
> According to court documents, Tao “knowingly and intentionally submitted to the University false statements concerning his lack of a conflict of interest.”
> The indictment alleges that Tao “fraudulently received” more than $37,000 in salary paid for by the Department of Energy and the National Science Foundation.
Just the other day in another part of HN there was a discussion about the collecting and continued use the HeLa cell line for research and (a lot of) profit. If you look this up the conclusion of every discussion tends to be "end justify the means in this case", "the needs of the many outweigh the needs of the few", etc. One has to wonder about the double standard here.
The ability to profit off of innovation is necessary to pay for facilities, equipment, and researchers.
> The ability to profit off of innovation is necessary to pay for facilities, equipment, and researchers.
I'm sorry but lets not talk about incentives until the CEO and the entire board at Boeing, Equifax, and Wells Fargo are in prison. Our "justice" system openly pursues "viable" cases which means we only send people to prison who we think we can convict because we have "limited resources".
Lets not try to defend the prosecutors here by rationalizing what they do. I won't vilify them either because they are just doing what WE incentivized them to do but I won't throw any accolades their way either.
Usually companies are allowed to use justifications that nobody else is allowed to.
> The ability to profit off of innovation is necessary to pay for facilities, equipment, and researchers.
The ability to profit is not a binary thing. Which is why patents aren't granted in perpetuity. Given that there's no upper limit to how much profit a company would like to make, I'm not sure you can reasonably support the point. How much profit is enough to motivate?
As your parent probably should have known from the fact that it was a story about a KSU professor, whereas the linked story is about a KU professor.
From a first order effects perspective, the person stealing the seeds is a good guy. Once you take into account second and third order effects over the long haul, people stealing these developments are undermining the system that produced them in the first place. Without that system in place, society will be worse off long term.
I also feel that foods/medications must have two distinct, separately owned sources in order to be broadly sold. That's just how I feel about it from a security stance.
> Last year, a Chinese national who was a research professor at Kansas State University was arrested and sentenced to 10 years in federal prison for stealing valuable American rice seeds — a trade secret — that can be used to treat gastrointestinal disease, antibiotic-associated diarrhea, hepatic disease, osteoporosis and inflammatory bowel disease.
So yes, this was prosecuted under trade secret and economic espionage law.
> Last year, a Chinese national who was a research professor at Kansas State University was arrested and sentenced to 10 years in federal prison for stealing valuable American rice seeds — a trade secret — that can be used to treat gastrointestinal disease, antibiotic-associated diarrhea, hepatic disease, osteoporosis and inflammatory bowel disease.
This was a trade secret.
Theft of trade secrets is covered in 18 U.S. Code § 1832 - https://www.law.cornell.edu/uscode/text/18/1832
> Whoever, with intent to convert a trade secret, that is related to a product or service used in or intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly ... steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information; ... shall, except as provided in subsection (b), be fined under this title or imprisoned not more than 10 years, or both.
> Any organization that commits any offense described in subsection (a) shall be fined not more than the greater of $5,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided.
Economic espionage is in § 1831 - https://www.law.cornell.edu/uscode/text/18/1831
which reads much the same... though has a slight difference in subsection a.1. :
> Whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, knowingly
> ...
> shall, except as provided in subsection (b), be fined not more than $5,000,000 or imprisoned not more than 15 years, or both.
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http://www.mondaq.com/unitedstates/x/739680/Trade+Secrets/Re... has recent prosecutions
https://www.justice.gov/opa/pr/chinese-national-sentenced-ec... has one at 5 years for theft of source code.
The difference between the 5 and 10 years is likely related to the amount of investment in the trade secret and the degree of trust placed in that individual (one of six people).
https://www.justice.gov/usao-ndia/pr/former-dupont-employee-...
> On the same day Isler accepted a position with the competitor, the competitor’s Chief Operating Officer (COO) informed Isler that Isler would be servicing two particular ethanol plant customers, who had also been customers of DuPont, and asked Isler if he had seen “any baseline data” for those plants. Isler responded by stating, “let me see what I can before I can’t.” In a later message that day, the COO told Isler, “I think you made the right choice.”
> Isler submitted his resignation letter to DuPont the following day. However, Isler did not leave DuPont until two weeks later. During the intervening two weeks, Isler downloaded and sent to the competitor numerous electronic files that contained proprietary and trade secret information of DuPont. This included test, yield, and pricing information for products and customers of DuPont.
There you have three and a half years in prison and supervision for another three years for test, yield and pricing data.
Innovation should always reap rewards, it's all dependant on how the owner wants it rewarded.
Some could share it as "open-source" if it was code, but at the end of the day. It's their choice, not from the thief.
:)
How? Want explain how that works?
Elaborate your viewpoint
Company invests $75 million. Gross revenues of $150 million. Net profit $75 million. Companies exist in perpetuity, so that net profit gets reinvested in new research to develop more advances.
Alternate scenario: Company invests $75 million. IP stolen and company recoups $0. Company goes out of business and a successful research organization that took years to build is destroyed.
You can equally well blame competitors for "criminally" driving you out of business.
Is driving a company out of business be now a crime for anybody else?
I can see personally defending both types of theft, and I agree that they are probably morally equivalent (all else being equal); but I'm not sure that one can make a blanket declaration that people generally do defend Indian patent theft. Do you have references?
Of course, the rice here was not patented -- according to the article, it was just a trade secret.
> Of course, the rice here was not patented -- according to the article, it was just a trade secret.
This seems to have little to do with my question, which was:
> > I can see personally defending both types of theft, and I agree that they are probably morally equivalent (all else being equal); but I'm not sure that one can make a blanket declaration that people generally do defend Indian patent theft. Do you have references?
Did you perhaps intend to reply to my parent (https://news.ycombinator.com/item?id=20788203)?
> According to the federal indictment, in May 2018 Tao signed a five-year contract with Fuzhou University in China as a Changjiang Scholar Distinguished Professor and full-time employee.
and not disclosing this while seeking grants worth $37000?
Am I missing something or is this behind ridiculous? I’m pretty sure I had professors who were similarly “employed” by a vast variety of universities and didn’t always disclose that, not out of malice, but because they just didn’t care. In fact, my college recently had a couple of high profile professors fired for the same issue, without the Feds barging in.
I also find it interesting that this article references a completely different case, where someone was actually accused of theft, but has absolutely no connection to this individuals case at all.
https://www.justice.gov/opa/press-release/file/1197256/downl...
> On or about September 25, 2018, in the District of Kansas, the defendant, for the purpose of executing the scheme described above, caused to be transmitted by means of wire communication in interstate commerce an online certification that he (1) read and understood the Kansas Board of Regents policy concerning conflicts of interest, (2) understood that any external personal professional activities in which he engaged that take time away from the University must not interfere with him meeting his faculty teaching and research responsibilities at the University, and (3) agreed to secure approval prior to engaging in any such external activities; all of which was in violation of Title 18, United States Code, Section 1343.
The indictment doesn't say whether the fraud was that (1) he didn't read or understand the conflict of interest policy (presumably not, since that would indicate this wasn't intentional); (2) he didn't understand that external activities must not interfere with his University work (same); so it must be (3) that he agreed to secure approval prior to engaging in any such activities.
So the fraud is that he agreed to secure approval, but didn't follow through.
The indictment also claims:
> Tao certified to KU that he did not labor under any conflict of interest.
But the only certification mentioned in the indictment was that he agreed to secure approval, not that he lacked any conflict of interest.
Regardless, the result of this failure to secure approval for a conflict of interest was a four count indictment for wire fraud and theft by receiving salary, plus a forfeiture request. He allegedly "embezzled, stole, and obtained by fraud" grant money that funded his University salary, by virtue of continuing to receive that salary.
Now Iowa State University ECpE, they have full on corrupt faculty working full time for their private company, showing just up for lectures to read out of the book. Their TA's do all grading. Their RA's must sign NDAs and take forever to graduate because he won't let them publish his "proprietary" stuff. That is fraud.
https://www.pewresearch.org/fact-tank/2019/06/11/only-2-of-f...
Most likely he looks at the 20 years he's facing if convicted of wire fraud and decides to take a plea deal involving a couple years in prison.
Out of curiosity, can you be charged with wire fraud if you personally only transact in cryptocurrencies completely on chain? value sent to you is in crypto, value you pay out to others is in crypto?
(I've run several businesses for several years that do that and have never needed to "cash out", even easier now with stablecoins which don't fluctuate in value)
It doesn't matter what or how he benefited from the fraud but what he have stolen. So I guess using crypto won't change anything.
"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both." [18 U.S.C. 1343]
"Money or property" includes cryptocurrencies, and "wire" has been repeatedly interpreted to include the internet, email and text messages.