DOJ versus China

• The United States has concluded that multiple instances of recent IP theft are linked to China or Chinese entities controlled by the Chinese government.
• The federal government has therefore increased its efforts and resources to investigate and prosecute China for these crimes.
• One of the federal government’s responses was the China Initiative—first launched in 2018. The Justice Department’s “China Initiative” has the objective of dedicating additional resources to investigate and prosecute Chinese companies and encouraging prosecutors to focus their investigative activities on Chinese-backed investments into the United States.
• Under this Initiative, the Justice Department has charged Chinese government officials with espionage, IP theft, and other crimes and has also charged U.S. officials, professors, and researchers in the United States with similar charges.
• The aggressive approach by U.S. federal authorities to combat Chinese-related crimes may impact the daily business activities of U.S. businesses that are linked somehow to China either through their business operations, foreign investments, employees, etc.
• The resulting increase in federal investigations and prosecutions may result in significant challenges for U.S. companies including federal charges, civil and criminal penalties, jail time, and reputational harm.
• Consider hiring an experienced team of national security attorneys that can advise on the DOJ’s recent efforts against China and how this may affect your business.

Put our highly experienced team on your side

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former Department of Justice

Brian J. Kuester

Former U.S. Attorney
Former DA

John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach

Former Special Agent (OIG)

Michael Koslow

Former Supervisory Special Agent (FBI)

Chris Quick

Former Special Agent (FBI & IRS-CI)

Ray Yuen

Former Supervisory Special Agent (FBI)

Experienced Defense Team

If you need advice regarding past and current DOJ efforts as it pertains to China, you need the advice of an experienced foreign policy and relations attorney.

The federal government has recently ramped up its investigative efforts to prosecute individuals—including executives, academics, and business individuals—for working with the Chinese government against the interests of the United States.

Today’s threats to U.S. economic and national security from Chinese crimes have demanded a strong federal response.

This could invariably impact businesses that regularly accept foreign investments into their businesses or otherwise transact with Chinese-backed investments.

Do not wait to get in touch with a qualified attorney today that is skilled in the DOJ’s recent initiatives against China and national security threats.

Put Oberheiden, P.C. on your side to advise you on the potential for Chinese IP theft and other crimes.

The Current U.S.-China Relationship

The United States and China are currently battling an intense trade war—sometimes referred to as a cyber war.

Recent conclusions from the United States have placed the blame for recent IP theft on China or Chinese entities controlled by the Chinese government.

As a response, the federal government has increased its efforts and resources to investigate and prosecute China for these crimes.

Recent examples include racketeering charges against the telecommunications giant, Huawei, and the likely revocation by the FCC of China Telecom’s license to provide telecommunications services in the United States.

These efforts have been confronted by the unprecedented coronavirus, which has further unsettled both nations with additional trade tensions and back-to-back accusations.

What is the China Initiative?

Leadership from the Justice Department

In November 2018, the Justice Department launched its China Initiative, which dedicates additional funding, resources, and authority to investigate and prosecute Chinese companies for alleged violations of U.S. laws such as IP and data theft.

It is composed of federal prosecutors, FBI agents, Assistant Attorneys General for various governmental divisions, and U.S. Attorneys from multiple U.S. districts.

The Initiative was started due to concerns about Chinese economic espionage and state-backed measures to steal IP and other valuable data from U.S. citizens and U.S. companies.

In fact, about 80% of all economic espionage cases brought by the DOJ involve conduct that benefits or would benefit the Chinese government. Further, in about 60% of cases involving trade secret theft, there is at least some nexus to China.

Objectives of the China Initiative

The China Initiative strongly encourages prosecutors to focus their investigative activities on Chinese-backed investments and transactions into U.S. businesses for possible efforts to steal U.S. IP and other data.

Prosecutorial tactics under this strategy involve investigating all possible connections to China, including the recent ties to China from academic professors and U.S. universities.

In addition to IP and trade secret theft, the China Initiative aims to protect U.S. critical infrastructure from the threats associated with foreign direct investment.

The Initiative demonstrates the seriousness of DOJ measures to combat Chinese security threats and protect the national security of the United States.

Components of the China Initiative

The U.S. Attorney General has outlined the following goals of the China Initiative, which are summarized below:

• Identify trade secret theft cases, ensure investigations are adequately resourced, and bring them to fruition in a timely manner;
• Develop an enforcement strategy concerning “non-traditional collectors” such as universities by which technology is being transferred contrary to U.S. interests;
• Educate universities about potential threats to academic freedom and open discourse;
• Apply and enforce the Foreign Agents Registration Act—which is an act of Congress that requires agents that represent the interests of other foreign governments to disclose their relationships with those foreign governments—to unregistered agents seeking to advance China’s political agenda;
• Equip the U.S. Attorneys with intelligence and materials to raise awareness of these threats;
• Implement the Foreign Investment Risk Review Modernization Act (“FIRRMA”) for the DOJ;
• Identify opportunities to address supply chain threats, such as those in the telecommunications sector prior to the transition to 5G networks;
• Identify Foreign Corrupt Practices Act (“FCPA”) cases involving Chinese companies that compete with U.S. businesses;
• Increase efforts to improve Chinese responses under the Mutual Legal Assistance Agreement (“MLAA”), which governs the gathering and exchanging of information between two or more countries; and
• Evaluate whether additional authorities are required to protect U.S. assets from foreign aggression.

Examples of Charges Involving China

Not only has the Justice Department charged Chinese government officials with espionage, IP theft, and other crimes, but it has also charged U.S. officials, professors, and researchers in the United States in connection to the goals of the Initiative.

Below we provide some recent examples of charges regarding China-related prosecutions:

• July 9, 2020– A rheumatology professor and researcher with significant ties to China was ordered to face a charges of (1) grant fraud for failing to disclose that he was engaged in an elaborate scheme to use about $4.1 million in grants to develop China’s expertise in rheumatology and immunology and (2) making false statements regarding his employment in China at the same time he was employed at U.S. universities.
• June 26, 2020—A Chinese national was found guilty of economic espionage, theft of trade secrets, and conspiracy.
• June 9, 2020—Harvard University Professor who was former Chair of Harvard’s University’s Chemistry and Chemical Biology Department was indicted on charges of making false statements to federal authorities concerning his participation in China’s Thousand Talents Program, which is a program developed by China to recruit thousands of high-quality overseas experts or talents and give them salaries, funding for research, and other various incentives to entice them to work and research for China.
• April 9, 2020—The Executive Branch recommended to the FCC that it revoke and then terminate China Telecom’s authorizations to provide international telecommunications services in the United States. China Telecom is the U.S. subsidiary of a company owned by China.
• February 27, 2020—A Chinese national who was a former scientist was sentenced to 24 months in federal prison for stealing information worth $1 billion from his employer, which was a U.S. petroleum company.
• February 13, 2020—Chinese telecommunications giant, Huawei, was charged with racketeering and conspiracy to steal trade secrets in a superseding indictment.

Predictions for the Future

The federal government response to Chinese-related thefts of U.S. data and trade secrets can be expected to increase both in extent and aggressiveness.

The China Initiative was first launched in 2018 by the Justice Department and has already led to multiple arrests on a broad range of charges in various industry sectors.

Individuals—including those in academia and research—who work closely with Chinese companies can expect an increase in prosecutions.

Further, U.S. businesses that are linked somehow to China either by a foreign Chinese-backed investment, an employee connected to China, or other link to China or Chinese-controlled entities may have their business operations scrutinized by the DOJ for possible national security threats.

This may impact daily business activities and lead to some significant challenges for U.S. companies including federal charges, civil and criminal penalties, jail time, and reputational harm.

Need Advice Regarding the Justice Department’s Efforts Against China?

Chinese-related theft and crimes are not a new phenomenon but have become particularly dangerous over the years due to the increase and sophistication in technology, escalating trade war between the United States and China, and negative implications of the coronavirus on both nations.

The DOJ’s China Initiative is a direct response to the perceived growing threat of Chinese-related theft of sensitive U.S. information and data.

If you have any concerns or questions on how these recent federal efforts will impact your business or if you are under investigation or have been charged in connection with Chinese-related economic espionage, IP theft, or other crimes, contact our law firm today.

The attorneys at Oberheiden, P.C. have the experience and knowledge needed to advise you on evolving issues as they relate to the trade war and escalating political tensions between the United States and China and, most importantly, how your business falls in the middle of it and what to do about it.

Call us today at 888-680-1745 or contact our office for a free consultation to advise you on these recent federal efforts and how it affects your business.