A A0 91 Rev 03 09 CnmmaIComplamt 1 g Edging-ti UNITED STATES DISTRICT COURT for the ZQIB MR 2i AH l9 1 5 Southern District of Ohio SIMS CGUR 5 SOUTHERN Ul ST OHM United States of America Div CiHCiiti iATl V- CaseNo ig g jmigo XU YANJUN a k a Qu Hui Defendant s CRIMINAL COMPLAINT I the complainant in this case state that the following is true to the best of my knowledge and belief On or about the date s of March 2017 to present in the county of Hamilton in the Southern District of Ohio the defendant s violated Code Section O nse Description 18 U S C Section 1831 Economic Espionage 18 U S C Section 1832 Trade Secret Theft This criminal complaint is based on these facts See the Af davit of FBI Special Agent Bradley Hutt Continued on the attached sheet Complaihant signature Bradley D Hull FBI Special Aqent Printed name and title Sworn to before me and signed in my presence Date 3 31 1 l8 Judge 9 Signature City and state Cincinnati Ohio Stephanie K Bowman United States Magistrate Judge Printed name and title AFFIDAVIT IN SUPPORT OF COMPLAINT 1 Bradley D Hull being rst duly sworn hereby depose and state as follows INTRODUCTION AND AGENT BACKGROUND 1 I am a Special Agent with the Federal Bureau of Investigation and have held this position for 7 years I am currently assigned to one of Cincinnati Field Of ce s Counter- Intelligence squads During my employment with the FBI I have conducted and participated in several investigations involving violations of United States laws relating to espionage and the unlawful export om the United States of goods and technology restricted for national security and foreign policy reasons I have participated in the execution of several federal search and arrest warrants in such investigations I have had training in and through experience I have observed many methods used to smuggle goods and technology out of the United States and commit espionage contrary to United States law I am responsible for investigating Violations of law related to economic'espionage and the theft of trade secrets 18 U S C 1831-1832 and export controls Arms Export Control Act 22 U S C 277 8 and the International Emergency Economic Powers Act 50 U S C 1701-1707 2 This af davit is intended to show only that there is suf cient probable cause for the requested complaint and does not set forth all of my knowledge about this matter Where the contents of documents and the actions statements and conversations of others are reported herein they are reported in substance and in part except where otherwise indicated 3 I am familiar with the facts and circumstances set forth below from my personal participation in the investigation including my review of pertinent documents and om my conversations with others including other Special Agents with the FBI and representatives of a particular US company Victim Company with expertise regarding the relevant design 1 testing manufacturing data and information related to aviation technology Proprietary Information Based on my training and experience and the facts as set forth in this affidavit there is probable cause to believe that XU YAN JU a k a has attempted and conspired to obtain trade secrets in violation of 18 U S C 1831 a 4 and Economic Espionage and 18 U S C 1832 a 4 and Theft of Trade Secrets in the Southern District of Ohio and elsewhere THE DEFENDANT 4 XU YAN JU is a Deputy Division Director Sixth Bureau of Jiangsu Province Ministry of State Security for the People s Republic of China MSS is the intelligence and security agency for China and is responsible for counter-intelligence foreign intelligence and political security MSS has broad powers in China to conduct espionage both domestically and abroad 5 One of job duties on behalf of MSS is to obtain technical information including trade secrets from aviation and aerospace companies in the United States and throughout Europe XU sometimes uses the aliases Qu Hui and Zhang Hui in connection with his duties He has been known to attempt to conceal the true nature of his employment by representing that he is associated with iangsu Science Technology Promotion Association 6 Beginning in at least December 2013 and continuing through the present XU has worked traveled and communicated with individuals associated with or employed by MSS and various Chinese universities and institutions Xu has also actively targeted speci c companies in the United States and abroad that are recognized as leaders in the eld of aviation and aerospace technology design and manufacturing aviation companies Within these aviation 2 companies XU and other individuals some of whom are known to law enforcement would identify people whom they deemed potential experts who worked for these aviation companies and who could be targeted and recruited to travel to China initially under the guise or false belief that they were traveling to China merely for an exchange of ideas and or to give a presentation at a university XU and others would pay the experts stipends and would arrange for and pay expenses associated with their travel to China To achieve their objective which was to obtain speci c aviation technology documents and information XU and others exchanged messages regarding the types of information that they wanted to obtain and actively discussed methods for obtaining the desired information Furthermore communications between XU and others who worked for M88 and other institutions in China reveal the methods used in order to obtain highly sensitive information from employees of the various aviation companies As mentioned above and as demonstrated in some of the communications detailed below XU used an alias in his efforts to recruit experts and falsely represented his employment all in an effort to conceal his true identity as an of cer of M88 Furthermore XU and others communicated about the best way to protect and conceal the true nature of the information they were seeking from aviation companies and their employees including the use of codes and series of letters in place of the technology being discussed and the name of the victim company targeted 7 XU often communicates travels and exchanges information related to aviation technology with individuals at the Nanjing University of Aeronautics and Astronomics a public university located in Nanjing China NUAA is operated by the People s Republic of China s Ministry of Industry and Information Technology NUAA is regarded as one of the top engineering universities in China and has signi cant in uence over China s 3 aerospace industry The Ministry of Industry and Information Technology of the Chinese government plays a signi cant role in regulating major industries and approving new industrial investments and projects in key areas including information technology telecommunications and national defense NUAA is a regular collaborator with Commercial Aircraft Corporation of China and Aviation Industries of China hosting academic and commercial seminars and symposium and sponsoring researched published by academics from NUAA THE VICTIM COMPANIES AND THE PROPRIETARY INFORMATION 8 Victim Company A has of ces in the Southern District of Ohio Victim Company A is among the world s top aircraft engine suppliers for both commercial and military aircraft Victim Company A has devoted substantial resources to research and development in the eld of using unique materials to manufacture jet engine fan blades and fan containment structures Worldwide Victim Company A s exclusive use of certain types of materials which provide greater engine durability weight reduction and lower costs provides Victim Company A with a signi cant competitive advantage over its competitors Victim Company A has spent several decades developing its unique jet engines engaging in costly trial and error testing in order to advance the use of its products This testing research and development have led to a deep knowledge base that affords Victim Company A a powerful competitive advantage Release of some or all of this information to a competitor or any other entity attempting to conduct its own research and development in this eld would provide a tremendous economic value because it would enable the other entity to short-circuit its research and development efforts and expend signi cantly fewer resources 9 Victim Company A employs several layers of security to preserve and maintain con dentiality and to prevent unauthorized use or disclosure of its trade secrets These steps were enforced to maintain its competitive advantage and to maintain the integrity of years of research and development pertaining to Victim Company A s use of unique materials to manufacture jet engine fan blades and fan containment structures 10 11 12 Some of the external physical security measures are Limiting physical access to restricted portions of Victim Company A s campus including through the use of manned gated entrances and requiring identi cation and access badges and Mandating visitor sign-in and escorts Some of the internal security measures are Requiring employee non-disclosure and other con dentiality agreements that extend beyond the length of employment at Victim Company Recurrent training and instruction for employees regarding the processes in place to safeguard restricted and con dential business information Notifying all employees that publication and or disclosure of restricted or con dential company information is prohibited without express company authorization Various data security policies and Limited access to company proprietary information to employees or contractors on a need to-know basis Victim Company B headquartered in the United States is one of the world s largest aerospace companies and a leading manufacturer of commercial jetliners and defense 5 space and security systems Victim Company provides services including advanced information and communication systems and products to both commercial and military aircraft 13 Victim Company is a multinational company Victim Company produces a variety of commercial products and engineering services In fact Victim Company supplies engines wheels brakes and other aircra parts to both civilian and military aircraft Additionally Victim Company is a leading U S Company in the eld of unmanned aerial vehicle technology PROBABLE CAUSE 14 Beginning in at least March 2017 an individual identi ed as a Deputy Director at NUAA Co-Conspirator began corresponding via email with an individual Employee employed by Victim Company A Employee 1 has been employed by Victim Company A as an engineer since 2012 With the assistance of XU Co-Conspirator 1 solicited Employee 1 to come to NUAA for an exchange based on Employee l s engineering experience at Victim Company A NUAA offered to pay for Employee 1 s travel expenses 15 On May 10 2017 Co-Conspirator I emailed Employee 1 that the Institute of Energy and Power had proposed that Employee 1 give a report on Victim Company A s signature materials design and manufacturing technology Co-conspirator 1 wanted Employee 1 to focus on highly-technical topics including the latest developments in the application of Victim Company A s signature material used in aeroengines as well as engine structure design analysis technology and manufacturing technology development 16 On May 15 2017 in preparation for the trip XU sent a message to Employee 1 from one of email accounts but signed the email using the name of Co-Conspirator 1 On May 25 2017 Employee I traveled to China Employee 1 gave a presentation at NUAA on June 2 2017 17 Following Employee 1 s presentation at NUAA Employee I sent messages to Co Conspirator l asking that NUAA delete any and all copies of the presentation from the university computers The presentation included details regarding engines that were designed and produced by Victim Company A One of the slides contained the logo of Victim Company A Employee 1 then emailed a second edited version of the presentation back to NUAA The I second version deleted the nal page of the presentation as well as content and images from other slides 18 NUAA reimbursed Employee 1 for expenses incurred during his visit to Nanjing meals and hotel expenses Employee 1 was also paid $3 500 in US currency for the presentation 19 While in China Co-Conspirator 1 introduced Employee 1 to XU During this meeting XU introduced himself using his alias Qu Hui and claimed to be om the iangsu Science Technology Promotion Association in China Employee 1 had meals with XU both before and after the NUAA presentation Employee I understood from their conversations that the money paid to Employee 1 came from AST XU gave a business card to Employee 1 that contains the name Qu Hui and contact information associated With JAST which as explained below are an alias and cover af liation for XU 20 Employee 1 continued to communicate with XU following the trip to China In fact XU invited Employee 1 to return to NUAA the following year 21 On November 21 2017 Co-Conspirator 1 expressed an interest in having Employee 1 come to exchange and instruct again in Co-Conspirator informed Employee 1 that he had spoken with Qu Hui XU from JAST and that Qu Hui would be able to help with travel expenses and handle the details of the exchange 22 On January 23 2018 XU using his alias sent a message to Employee 1 and informed him that domestically there is more focused on the system code XU later elaborated that the information he wanted pertained to system speci cation design process This term is understood to refer to system code integration -- the application of research data to engine production XU provided an email address for Employee 1 to use to send the requested information Employee 1 informed XU that the email may be blocked if he used his company computer XU responded It might be inappropriate to send directly from the company right 23 In response to the system integration reference on February 3 2018 Employee I emailed an excerpt of a presentation orn Victim Company A and asked XU if it included the type of information he needed The attachment was a two-page document from Victim Company A The rst page contained the Victim Company A logo as well as a Proprietary Label and Warning from Victim Company A This Warning reads as follows Victim Company A Proprietary Information The information contained in this document is Victim Company A information and is disclosed in con dence It is the property of Victim Company A and shall not be used disclosed to others or reproduced without the express written consent of Company A including but without limitation it is not to be used in the creation manufacture development or derivation of any repairs modi cations spare parts designs or con guration changes or to obtain FAA or any other government or regulatory approval to do so If consent is given for reproduction in whole or in part this notice and the notice set 1 Communications in quotation marks are in substance and in part translations from communications that were not originally in English These translations are subject to revision at a later time 8 forth on each page of this document shall appear in any such reproduction in Whole or in part The information contained in this document may also be controlled by the US export control laws Unauthorized export or re- export is prohibited 24 XU also sent Employee 1 a list of technical topics that organization was interested in XU wrote the attached le is some domestic requirements that I know of can you take a look and let me know if you are familiar with those The attached list stated the following Regarding the current development situation and future development direction of foreign countries structural materials for fun rotor blades made from composite materials question followed Regarding the design criteria for the foreign countries composite material rotor fan blade stator fan blade and fan casing list of questions followed 25 The questions pertain to composite materials in the manufacture of fan blades and fan blade encasements Victim Company A is the only company in the world that has been producing fan blades and encasements constructed of composite materials Based upon information provided to me by technical experts at Victim Company A these questions pertain directly to aspects of Victim Company A s fan blade and containment system the materials involved and Victim Company A s testing and design systems For example according to technical experts at Victim Company A questions regarding the baseline value and allowed values seek proprietary and trade secret information 26 Employee 1 directly advised XU that some of the posed questions involved Victim Company A s commercial secrets XU replied they would discuss it when they met in person 27 In February 2018 XU also began discussing with Employee 1 the possibility of meeting in Europe during one of Employee 1 s business trips 28 XU asked Employee 1 to send a copy of the le directory for his company issued computer XU sent speci c directions for how Employee 1 should sort and save such a directory Following the steps in these directions led to the creation of a document that was essentially a menu of les on the Employee 1 s Victim Company A-issued computer Employee 1 provided a purported le directory to XU This le directory had been heavily edited to remove all sensitive information and was sent with the approval of Victim Company A 29 On February 28 2018 at insistence XU and Employee 1 spoke on the phone During the phone call XU referred to the le directory list Employee I sent XU told Employee 1 that they had looked at it and it is pretty good stuff XU asked if Employee 1 would be able to bring it with him when he traveled to Europe for their meeting XU further stated the computer you will bring along is the company computer right XU also asked if the material Employee I intended to bring could be exported out of the computer Employee 1 informed XU that it could be exported onto a portable hard drive XU said Good good good XU asked So if possible we will look over the stuff Can we do that Employee I agreed to request and XU stated Do you understand Carry the stuff along 30 Later in this conversation XU told Employee 1 that what he was sent so far was good enough XU continued If we need something new later we can talk about that in person when we meet What do you think All right we really we really don t need to rush to do everything in one time because if we are going to do business together this won t be the last time right 10 31 On March 5 2018 XU sent Employee 1 a message asking Regarding the document directory you sent last time is it possible to dump it to a portable hard drive or USB drive from work computer in advance 32 In preparation for the trip to Europe Employee 1 asked XU where and when he was arriving XU responded that he would be traveling to Greece before meeting up later with Employee 1 in another country 2 ADDITIONAL SCHEMES BY XU TO OBTAIN INFORNIATION FROM US AVIATION COMPANIES 33 Between December of 2013 and December of 2014 XU communicated with an individual believed to be associated with a university in China regarding attempts to acquire sensitive information including analytical tools design manuals and software rightfully belonging to Victim Company B In these chats XU discussed plans to travel with another individual to conduct an exchange with a customer In late December of 2013 XU and others believed to be employed by institutions in China discussed travel arrangements and the types of information that contact in China was the most interested in obtaining This information appears to be Victim Company B s design manual that relates to structural analysis methods In these exchanges XU reminded his contact that t he customer doesn t know our identities I approached him with the identity of QU Hui the Deputy Secretary General of Science and Technology Association associate in China responded will make sure everybody here knows you are from Nanjing Science and Technology Association 2 Empioyee 1 has reviewed pictures of XU that were obtained by the FBI Although Employee 1 did not identify an earlier younger picture of XU he did identify XU from a more recent picture 11 34 In April 2014 XU communicated with two different individuals believed to be in China In these messages XU stated that he was bringing materials related to electric landing gear deicing ight control and electric jet braking It also appears that some of this material related to a speci c type of fueling equipment and or wing design that pertains to a speci c type of military aerial refueling aircraft designed by Victim Company B articulated plan was to nd people in China to read the information and then review the proposed seminar the recruited expe was supposed to give XU mentioned the possibility of obtaining additional information or projects which would include a type of design specification for certain unique technologies system requirements and system evaluation unique to Victim Company B Once again XU reminded his contacts of the need to keep his true identity hidden and stated that he had approached the expe using the name under iangsu Science and Technology Association 35 Various documents obtained in the course of this investigation indicate that XU has contact information pertaining to two individuals believed to be current employees of Victim Company B 36 In November 2014 XU sent a document to an individual believed to be associated with a Chinese company that engages in the research development production and sale of exhaust turbochargers engine valves cooling fans and other engine parts The document pertains to a speci c technology related to diesel engine variable nozzle turbocharging technology In with the individual XU explained speci c codes contained in the document For instance meant Ministry of State Security while stood for diesel engine VNT turbocharging technology There was also a speci c code found in this document that referred to Victim Company C 12 37 In September 2015 XU received emails from an individual employed as an engineer at Victim Company C This email included an outline of a proposed white paper discussing unmanned aerial vehicle technology The employee of Victim Company subsequently sent his resume to XU who forwarded it to NUAA LEGAL BACKGROUND Economic Espionage l8 U S C 1831 38 Section 1831 punishes economic espionage for the bene t of any foreign government foreign instrumentality or foreign agent Whoever intending or knowing that the offense will bene t any foreign government foreign instrumentality or foreign agent knowingly -- 1 steals or without authorization appropriates takes carries away or conceals or by fraud arti ce or deception obtains a trade secret 2 Without authorization copies duplicates sketches draws photographs downloads uploads alters destroys photocopies replicates transmits delivers sends mails communicates or conveys a trade secret 3 receives buys or possesses a trade secret knowing the same to have been stolen or appropriated obtained or converted without authorization 4 attempts to commit any offense described in any of paragraphs 1 or 5 conspires with one or more other persons to commit any offense described in any of paragraphs 1 through 3 and one or more of such persons do any act to effect the object of the conspiracy Shall except as provided in subsection be ned not more than $5 000 000 or imprisoned not more than 15 years or both 18 U S C 1831 39 The term foreign instrumentality means any agency bureau ministry component institution association or any legal commercial or business organization corporation firm or entity that is substantially owned controlled sponsored commanded managed or dominated by a foreign government 13 40 The term foreign agent means any of cer employee proxy servant delegate or representative of a foreign governmen Theft of Trade Secrets 18 U S C $1832 41 Section 1832 punishes the commercial theft of trade secrets carried out for economic advantage whether or not it bene ts a foreign government instrumentality or agent 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 bene t of anyone other than the owner thereof and intending or knowing that the offense will injure any owner of that trade secret knowingly 1 steals or without authorization appropriates takes carries away or conceals or by fraud arti ce or deception obtains such information 2 without authorization copies duplicates sketches draws photographs downloads uploads alters destroys photocopies replicates transmits delivers sends mails communicates or conveys such information 3 receives buys or possesses such information knowing the same to have been stolen or appropriated obtained or converted without authorization 4 attempts to commit any offense described in paragraphs 1 through or 5 conspires with one or more other persons to commit any offense described in paragraphs 1 through 3 and one or more such persons do any act to effect the object of the conspiracy Shall except as provided in subsection relating to organizations be ned under this title or imprisoned not more than 10 years or both 18 U S C 1832 a l4 CONCLUSION 42 Based on the foregoing I believe there is probable cause to nd that XU YAN JUN a k a has conspired to and attempted to obtain trade secrets from Victim Company A in Violation of 18 U S C 183 and Economic Espionage and 1832 a 4 and Theft of Trade Secrets Respectfully submitted a 432 ue M Bradley D Hull Special Agent Federal Bureau of Investigation Subscribed and sworn to before me on March 21 2018 W a owmaw UNITED STATES MAGISTRATE JUDGE 15 FILED RICHARD as CLERK GF 1331 321 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO 2 2 to WESTERN DIVISION GISIRICT ssust UNITED STATES OF AMERICA CASE NO A v MAGISTRATE JUDGE BOWMAN XU YANJUN a k a QU HUI MOTION AND ORDER - TO SEAL COMPLAINT The United States respectfully requests that the Court seal the Complaint and any other pleadings and proceedings in the above-numbered case until further order of this Court This motion to seal is for the purposes of apprehending the defendant mitigating the risk of ight and law enforcement safety and security Respectfully submitted BENJAMIN C GLASSMAN United States Attorney s Timothy S Mangan TIMOTHY S MANGAN 069287 Assistant United States Attorney 221 East Fourth Street Suite 400 Cincinnati Ohio 45202 513 6843711 Fax 513 684-6385 IT IS ORDERED that the Complaint and any other pleadings and proceedings in the above-numbered case shall now be sealed The US government may share the sealed Complaint and Arrest Warrant with other law enforcement agencies domestic and foreign as needed to effect the arrest DATE STEPHANIE BOWMAN United States Magistrate Judge