GM trade-secret trial: How the scheme failed

DETROIT -- A General Motors trade-secrets trial peppered with accounts of FBI aircraft surveillance, incriminating recordings and dumping of shredded documents ended with guilty verdicts for a former GM engineer and her husband.

The case is part of a trend of industrial espionage that has menaced the auto industry -- and major corporations and government agencies throughout the United States -- in recent years.

Ford and Toyota also have dealt with rogue employees who took trade secrets that could benefit foreign competitors.

Federal agents opened 1,212 intellectual property investigations in the fiscal year ending Sept. 30, 2011, a 66 percent increase from 2009, according to the U.S. Intellectual Property Enforcement Coordinator's annual report.

In the latest case, former GM engineer Shanshan Du, who was hired in 2000 by GM's Advanced Technology Vehicles Group in suburban Detroit, copied 16,262 documents covering hybrid vehicles onto a USB drive in early February 2005 -- about five days after being offered a severance agreement.

Often, the greed of trade-secret thieves makes it easy to trap them during investigations, a computer forensics expert says. With tiny thumb drives capable of holding huge amounts of information now commonplace, the thieves aren't settling for stealing only one document, said Lee Neubecker, president of Forensicon, a Chicago computer forensics firm with expertise in trade secrets.

"They aren't taking one customer list. They're taking database models. They're taking historical [computer-aided design] files for how every product was designed," Neubecker said. "Their greed is what I rely on in trying to figure out what happened.

"If someone goes in and takes one thing and they do it long before they resign, that's hard for me to discern and make an opinion about. I see that people steal stuff right before they hand their letter of resignation in."

Du and her husband, Yu Qin, faced charges of taking GM hybrid motor control technology for a business venture to build a hybrid vehicle in China with Chery Automobile Co., a Chinese automaker and GM competitor. Both were convicted Nov. 30 in U.S. District Court in Detroit of multiple felony counts. Sentencing is expected in February.

Qin's attorney said he hopes the court or the court of appeals will set aside the verdict.

Of the more than 16,000 documents Du copied, 18 allegedly contained trade secrets. BMW and the former DaimlerChrysler paid GM around $40 million to use similar hybrid-vehicle information, prosecutors said. U.S. Attorney Cathleen Corken called Du the "linchpin" of the conspiracy.

About 4 percent of company data breaches come from employees, according to Joseph Varani, a cybercrimes analyst for the U.S. Department of Justice.

The couple's plans began to unravel a few months after Du left GM.

On Aug. 30, 2005, an external hard drive containing GM documents was found in Qin's bag at his job at Controlled Power Co. in suburban Detroit. Controlled Power had fired Qin that day for operating a rival company, Millennium Technology International Inc., and turned over the hard drive to GM.

Prosecutors played segments of a recorded interview from that day with Qin and other Controlled Power executives.

Qin, who was vice president of engineering for Controlled Power, denied involvement with Millennium and said his wife ran the company even though he was listed as president in corporate filings.

Millennium, like Controlled Power, concentrated on power electronics, but Qin and Du wanted to venture into hybrid technology.

During the recorded interview, the other Controlled Power executives left the room briefly with Qin still inside, but they left the recorder on.

While Qin was alone, the recorder captured him calling a co-worker and directing the co-worker to get a bag from Qin's office and put it in the co-worker's office, where it was found hidden later that day.

On May 23, 2006, FBI agents said they used ground and air surveillance to watch the couple as they drove to a grocery store in suburban Detroit, where Qin unloaded two plastic bags containing shredded documents, including some relating to GM inverter technology that were the subject of a federal grand jury subpoena.

Agent Jonathan Adkins, a surveillance pilot at the time of the incident, said he monitored the defendants from the sky and communicated with a ground team stationed in the store's parking lot.

He said the couple's minivan circled the lot twice after discarding the bags.

Agent Roberta Bero, who was on the ground team, took photos of the trash receptacle area and retrieved the bags.

"Their actions are not the actions of the innocent," Corken argued.

Sensitive source code critical to hybrid vehicles was found on Qin's Controlled Power laptop, said Peter Savagian, one of Du's supervisors at GM. The source code, developed between 1994 and 2004, ensures that hybrid vehicles operate as smoothly as possible.

To show the sensitivity of source code, the prosecution asked Savagian if Toyota or Ford have ever published code relating to their hybrid offerings. Savagian replied, "No."

Other assets Du copied to an external hard drive included schematics of engine components such as power-managing inverter technology.

Sharing this information with other companies could benefit GM's competitors, Savagian told prosecutors.

Keeping track of how people steal intellectual property such as trade secrets is like a constant cat-and-mouse game, Forensicon's Neubecker said.

The computer forensics community is seeing a shift in how perpetrators swipe information, he said.

People used to send attached files from their company e-mail accounts to their personal Web accounts, but that was before they figured out that companies were hiring computer forensics firms to find out what they sent. Then people tried using Yahoo or Gmail accounts to transfer stolen items.

The next stage began in the mid-2000s when people started burning information to CDs or using thumb drives.

One of the latest trends involves cloud storage accounts where people can save documents online without having to plug anything into their computer.

"Trying to figure the next way someone is doing something keeps morphing," Neubecker said. "Companies need to stay ahead on it."