Former Employee of New Jersey Defense Contractor Sentenced to 70 Months in Prison for Exporting Sensitive Military Technology to China

NEWARK—A former New Jersey-based defense contractor employee who was convicted by a federal jury of exporting sensitive U.S. military technology to the People’s Republic of China (PRC), stealing trade secrets, and lying to federal agents was sentenced today to 70 months in prison, New Jersey U.S. Attorney Paul J. Fishman announced.

Sixing Liu, aka, “Steve Liu,” 49, a PRC citizen who had recently lived in Flanders, New Jersey, and Deerfield, Illinois, has been in custody since the September 2012 verdict, based on his risk of flight.

“Instead of the accolades he sought from China, Sixing Liu today received the appropriate reward for his threat to our national security: 70 months in prison,” said U.S. Attorney Fishman. “As an innovation leader, the United States is a target for those seeking to cut corners at the expense of American businesses and consumers. As this sentence shows, the Department of Justice is making great progress in the fight against trade secret theft in order to protect the engines of our nation’s economic recovery.”

The jury convicted Liu of nine of the 11 counts in the second superseding indictment with which he was charged, including six counts of violating the Arms Export Control Act and the International Traffic in Arms Regulations, one count of possessing stolen trade secrets in violation of the Economic Espionage Act of 1996, one count of transporting stolen property in interstate commerce, and one count of lying to federal agents.

In addition to the prison term, Liu was sentenced to serve three years of supervised release and ordered to pay a $15,000 fine. Restitution is to be determined at a later date.

According to documents filed in the case and evidence presented at trial:

In 2010, Liu stole thousands of electronic files from his employer, L-3 Communications, Space and Navigation Division, located in Budd Lake, New Jersey. The stolen files detailed the performance and design of guidance systems for missiles, rockets, target locators, and unmanned aerial vehicles. Liu stole the files to position and prepare himself for future employment in the PRC. As part of that plan, Liu delivered presentations about the technology at several PRC universities, the Chinese Academy of Sciences, and conferences organized by PRC government entities.

On November 12, 2010, Liu boarded a flight from Newark Liberty International Airport to the PRC. Upon his return to the United States on November 29, 2010, agents found Liu in possession of a non-work-issued computer containing the stolen material. The following day, Liu lied to agents of the Department of Homeland Security about the extent of his work on U.S. defense technology, which the jury found to be a criminal false statement.

The U.S. Department of State’s Directorate of Defense Trade Controls later verified that several of the stolen files on Liu’s computer contained export-controlled technical data that relates to defense items listed on the United States Munitions List (USML). Under federal regulations, items and data covered by the USML may not be exported without a license, which Liu did not obtain. The regulations also provide that it is the policy of the United States to deny licenses to export items and data covered by the USML to countries with which the United States maintains an arms embargo, including the PRC.

The jury heard testimony that Liu’s company trained him about the United States’ export control laws and told him that most of the company’s products were covered by those laws.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez; special agents of ICE-Homeland Security Investigations, under the direction of Special Agent in Charge Andrew McLees; and officers of U.S. Customs and Border Protection, under the leadership of Director of New York Field Operations Robert E. Perez, for the investigation leading to the sentence.

The government is represented by Assistant U.S. Attorney L. Judson Welle of the U.S. Attorney’s Office National Security Unit and Assistant U.S. Attorney Gurbir S. Grewal of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit, both in Newark. The prosecution received valuable support from attorneys of the U.S. Department of Justice’s National Security Division, Counterespionage Section.