3 accused of selling trade secrets to China

Thursday, July 06, 2006
3 accused of selling trade secrets to China
Metaldyne case highlights growing concern about economic espionage.
Paul Egan / The Detroit News






DETROIT -- U.S. Attorney Stephen Murphy on Wednesday announced charges of stealing trade secrets against three former employees of a Plymouth-based auto supplier, saying economic espionage stabs at the heart of the Michigan economy and is a growing priority among his federal prosecutors.

The former employees of Metaldyne Corp., arraigned in U.S. District Court following the unsealing of a 64-count grand jury indictment, are accused of stealing the company's trade secrets and sharing them with Chinese competitors. They each face up to 20 years in prison and fines of up to $250,000 if convicted.

"We have sent a message to those in the community who would be thinking about participating in the theft of trade secrets," said Daniel Roberts, special agent in charge of the FBI's Detroit office.

Anne Lockwood, 53, Metaldyne's former vice president of sales, her husband, Michael Haehnel, 51, who was a senior engineer at the company, and Fuping Liu, 42, a metallurgist who worked for Metaldyne and GKN Sinter Metals of Auburn Hills, are charged with conspiracy, wire fraud, theft of trade secrets and other crimes.

The indictment alleges they breached confidentiality agreements and shared with Chinese companies Metaldyne's and GKN's secrets on how to manufacture auto parts and other manufactured parts from powdered metals.

The three were to receive commissions based on the sales the companies received by using the trade secrets, the indictment alleges.

Charges are more serious

Not guilty pleas were entered at their arraignments Wednesday and lawyers for Lockwood, Haehnel and Liu said the charges are false. All three were released on bond. Lockwood and her husband, formerly of Rochester Hills, live in Rockford, near Grand Rapids; Liu lives in Westland.

Neither Murphy nor Metaldyne officials would place a dollar value on the alleged theft, but officials said it is the biggest case the Detroit office has brought to date under the U.S. Economic Espionage Act of 1996.

The only similar case federal officials in Detroit could recall Wednesday was a 2003 complaint against two men accused of attempting to steal and sell company secrets from auto supplier Visteon Corp. that was dismissed in 2004.

In the Metaldyne case, Lockwood and Liu initially had been charged in the case last year under a federal complaint. Haehnel had not been charged. Indictments such as the one unsealed Wednesday are for more serious charges and generally must be brought by a grand jury.

Murphy said officials searched Lockwood's residence and seized additional materials following the 2005 complaint, leading to the recent grand jury indictment and the addition of Haehnel as a defendant.

Mark Kriger, Lockwood's attorney, said the "allegations are completely unfounded and we are looking forward to having a jury decide these issues."

Ed Wishnow, Haehnel's attorney, said "we feel the accusations are unfounded and ultimately that Mr. Haehnel will be vindicated."

Michael Gordner, Liu's lawyer, said Liu also maintains his innocence.

Metaldyne, which has 45 plants in 14 countries, makes a wide range of auto parts for engines, drivelines and chassis systems. The company has annual sales of $2 billion and about 6,500 employees.

Though Lockwood and Liu left Metaldyne early in 2004, Haehnel remained there until February 2005, the indictment alleges. While Lockwood and Liu negotiated with Chinese competitors, Haehnel used his position at Metaldyne to gain access to hundreds of confidential company files and copy them onto compact discs, the indictment alleges.

A specific allegation is that the former Metaldyne employees shared trade secrets about Metaldyne's manufacture of engine-connecting rods from powdered metal that would allow a Chinese company to replace Metaldyne as a supplier to International Truck and Engine Corp., a Metaldyne customer.

"We've co-operated with the FBI throughout the process and we will continue to work with them until the matter is resolved," said Tina Kozak, a spokeswoman for Metaldyne.

Officials at GKN, a Metaldyne competitor that FBI officials said was also victimized through Liu's employment there, could not be reached for comment Wednesday.

Detroit to get theft unit

On June 20, U.S. Attorney General Alberto Gonzales announced that Detroit was among seven new cities that would receive funding for a Computer Hacking and Intellectual Property unit, bringing the total number of such units in the country to 25. As a result, the Detroit office is soon to have two assistant U.S. attorneys devoted to cases involving computer hacking and theft of intellectual property.

"We take these violations extremely seriously," Murphy said.

Murphy would not comment on whether the Chinese companies involved knew they were buying stolen trade secrets. But he said a recent initiative of the Justice Department is to try to educate companies in countries in Southeast Asia about the way the United States views intellectual property rights.

"We're not going to be able to put the horses back in the barn," in connection with this theft, but can try to prevent future ones, he said.

If the theft had been state-sponsored, there could also be ramifications from the U.S. State Department, Roberts said.

But that did not appear to apply in the Metaldyne case, he said.

You can reach Paul Egan at (313) 222-2069 or pegan@detnews.com.





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