Cybercrime Roundup: A Pivot to Asia in Espionage Prosecutions

By Sarah Tate Chambers

 Thursday, October 6, 2016, 7:30 AM

After indicting five People’s Liberation Army (PLA) officers for cyber-espionage in 2014, the Department of Justice was criticized for the lack of effectiveness of its action. However, a FireEye report released this summer showed a dramatic and continual decrease in Chinese intrusions since mid-2014. The DOJ credits both prosecutorial pressure and the ability to apply economic sanctions. That pressure does not appear to be over.

Late last month, FBI Director Comey gave remarks at the Symantec Government Symposium, emphasizing a continual campaign against cyberespionage:

We want to lock some people up, so that we send a message that it’s not a freebie to kick in the door, metaphorically, of an American company or private citizen and steal what matters to them. And if we can’t lock people up, we want to call (them) out. We want to name and shame them through indictments, or sanctions, or public relations campaigns—who is doing this and exactly what they’re doing.

The department has been doing a bit of calling out of late. During his speech, Director Comey also said, that “We are working hard to make people at keyboards feel our breath on their necks and try to change that behavior. We’ve got to get to a point where we can reach them as easily as they can reach us and change behavior by that reach-out.”

The recent quantity of cases provides at least some evidence that Chinese spies may be feeling the breath of the FBI. The following are some recent criminal cases of Chinese cyberespionage, along with more old-fashioned espionage for technological gain:

• On June 14, 2016, Jiaqiang Xu was charged in a superseding indictmentwith three counts of economic espionage and one count each of theft, distribution, and possession of trade secrets. Xu allegedly stole source code from the proprietary software of an American software company, where he was previously employed as a developer. Xu intended for this information to benefit the People’s Republic of China’s (PRC) National Health and Family Planning Commission.
• Kun Shan Chun pled guilty on August 1, 2016 to acting in the United States as an agent of the PRC without providing prior notice to the Attorney General. An employee of the FBI, Chun had a Top Secret clearance and was assigned to the Computerized Central Monitoring Facility of the FBI’s Technical Branch. During the investigation, Chunstated that his Chinese associates asked him to “‘consult’ by providing ‘ideas’ relating to ‘technology’ and to ship materials from the United States to them in China.” According to the DOJ press release, Chun repeatedly shared sensitive information with Chinese government officials, including sensitive information on multiple surveillance technologies. Chun faces a maximum sentence of ten years in prison.
• On June 9, 2016, Fuyi Sun was indicted for attempting to illegally export high-grade carbon fiber, typically used for military and aerospace purposes, to the PRC. Sun, a Chinese national, allegedly usedemail and Skype to negotiate the deal with an U.S. company which had an online showroom featuring various export-controlled items and, unbeknownst to Sun, was run by undercover agents. In 2013, he nearly came to the United States to obtain the carbon fiber but was spooked by an article about the FBI’s efforts to deter the export of carbon fiber to the PRC. In 2015, Sun recommenced negotiations, and he flew to the United States in April 2016. Before he was arrested, Sun offered many stories for where the carbon fiber was going, including a suggestion that he was selling it to a Chinese military research lab.
• On July 9, 2016, Wenxia Man was convicted of conspiring to export and cause the export of defense articles without a license. Man attempted to procure fighter jet engines and a MQ-9 Reaper drone, as well as all the accompanying technical data, in order to ship them to her partner-in-crime, Xinsheng Zhang. According to the superseding indictment, Zhang was a resident and an official agent of the PRC. Man repeatedly referred to Zhang as a “technology spy.” Man was sentenced to 50 months in prison on August 19, 2016.
• As previously discussed, Su Bin was charged with conspiracy for a six-year Chinese operation that stole designs for cutting edge U.S. military aircraft by hacking into defense contractors’ networks. He wassentenced to 46 months in prison on July 13, 2016.
• On September 26, 2016, Amin Yu was sentenced to 21 months in prison based on her guilty plea to acting as an illegal agent of a foreign government in the United States without prior notification to the Attorney General and conspiracy to commit international money laundering. In an 18-count indictment, the 53 year old Chinese national was also charged with conspiring to defraud the United States and to commit offenses against the United States and smuggling goods from the United States, among other things. Prior to moving to the United States, Yu was the Laboratory Manager at the Marine Control Equipment and System Research Division of Harbin Engineering University (HBU), which conducts research and development for the PRC, the PLA navy, and other government entities. While a resident of the United States, Yu allegedly obtained items for use in the development of marine submersive vehicles and exported them to the PRC for the use of HEU, the PLA navy, and others.
• On June 29, 2016, Kan Chen, a Chinese national, was sentenced to 30 months in prison and three years supervised release. After being arrested in Saipan, Chen pled guilty in early March to conspiring to and attempting to violate the Arms Export Control Act and violating the International Emergency Economic Powers Act. Chen caused, or attempted to cause, the illegal export of more than 180 items. Over 40 of those items were night vision and thermal imaging scopes. Adding to the severity of the crime, Chen sold the military technology indiscriminately.
• On April 14, 2016, a two-count indictment against Szuhsiung Ho, a naturalized U.S. citizen, was unsealed. Ho, China General Nuclear Power Company (CGNPC), and Energy Technology International (ETI) were charged with conspiracy to unlawfully engage and participate in the production and development of special nuclear material outside the United States. Ho was also charged with conspiracy to act within the United States as an agent of a foreign government. Ho was a nuclear engineer employed by CGNPC, and he owned ETI, a U.S. corporation. Allegedly, he recruited U.S. based civil-nuclear experts to assist CGNPC with producing special nuclear material in the PRC. After recruiting the experts, Ho executed their contracts, arranged their travel, and facilitated their payments. The maximum sentence for conspiracy to unlawfully engage and participate in the production and development of special nuclear material outside the United States is life in prison and a $250,000 fine.