The defendant allegedly used a VPN in China to access his employer’s network.
A Chinese national has been indicted for allegedly stealing his employer’s trade secrets and using them to establish his own company in China, the U.S. Attorney’s Office for the District of Massachusetts announced on Oct. 31.
Zhang Xiao, 33, of Shanghai, was indicted by a federal grand jury in Boston on one count of theft of trade secrets. Currently, Zhang remains at large overseas.
According to the indictment, Zhang began working for a global investment management company in Massachusetts in July 2015, holding the position as an associate in the company’s research division.
The indictment did not name the company but said it used forecasting models to assist investors in choosing investments “that will outperform the market.”
In August 2021, Zhang left the United States for China. To circumvent the company’s security measures, Zhang allegedly used a virtual private network (VPN) to access his employer’s network. He allegedly copied his employer’s code, research, and projects and sent them via a China-based file-sharing application, which prosecutors said allowed him to evade the company’s firewall.
In the same year, Zhang established an investment company in China, according to the indictment. Prosecutors alleged that he had stolen the trade secrets with the intent to assist his own company.
If convicted, Zhang could face up to 10 years in prison, three years of supervised release, and a fine of up to $250,000.
The Epoch Times contacted the Department of Justice (DOJ) for comment but did not receive a response by publication time.
Zhang’s case sheds light on the Chinese Communist Party’s (CCP’s) relentless effort to steal U.S. trade secrets, intellectual property (IP), and technology. The Office of the U.S. Trade Representative, in a report published in 2018, called China the “worst infringer of American IP,” costing the U.S. economy between $225 billion and $600 billion annually.
In April, FBI Director Christopher Wray said at the Vanderbilt Summit that China “is engaged in the largest and most sophisticated theft of intellectual property and expertise in the history of the world,” according to his prepared remarks.
“We’ve seen Beijing hit just about every industry we have—everything from biotech to aviation, to advanced technologies like AI [artificial intelligence], to different forms of healthcare and agriculture—to steal our intellectual property, technology, and research,” Wray said. “You could close your eyes and pull an industry or sector out of a hat and, chances are, Beijing has targeted it.”
There were at least 55 CCP-related espionage cases in 20 U.S. states between January 2021 and October 2024, according to a new report published by the House Committee on Homeland Security last month.
In September, Song Wu, a Chinese national working for one of China’s state-owned aerospace and defense companies, was indicted on charges related to a multiyear phishing scheme targeting the U.S. military, NASA, and other U.S. entities. Song allegedly tried to fraudulently obtain computer software and source code from his targets for potential military applications in China.
Also in September, Jia Wei, a Chinese national and member of China’s military, was indicted for unlawfully accessing U.S. communications company networks to steal proprietary information on behalf of Chinese entities.
In recent months, Congress has tried to address the issue with new legislation.
Reps. John Moolenaar (R-Mich.) and Young Kim (R-Calif.) introduced the Protecting American Innovation and Development (PAID) Act in July. If enacted, one provision of the legislation would require the secretary of commerce to identify foreign adversary entities that use U.S. intellectual property related to critical or emerging technology areas without a license.
In June, Sens. Marsha Blackburn (R-Tenn.) and Gary Peters (D-Mich.) introduced the Countering Chinese Espionage Reporting Act. If passed, one aspect of the legislation would require the attorney general to prepare an annual report on the DOJ’s efforts to counter the CCP’s efforts to steal U.S. trade secrets and other intellectual property.