Schenectady, N.Y – A Schenectady County man who hid data in the code of a digital photograph of a sunset was convicted Thursday of conspiracy to commit economic espionage against General Electric in order to benefit the Chinese government.
Xiaoqing Zheng, 59, was originally accused of stealing GE trade secrets regarding turbine technology and planning to give the information to contacts in China, according to federal court documents.
Although the jury convicted Zheng, a U.S. citizen, of conspiracy to commit economic espionage, they could not reach a unanimous decision regarding the charge of economic espionage, according to a news release from the U.S. Attorney’s Office of the Northern District of New York.
The evidence was not strong enough to convince the entire jury that Zheng actually sent GE’s trade secrets to contacts in China, court documents said.
“Today’s verdict holds Xiaoqing Zheng accountable for betraying his employer and trying to help China cheat in the global marketplace,” United States Attorney Carla B. Freedman stated in the news release.
Between 2008 and 2018, Zheng was employed at GE as an engineer specializing in sealing technology, federal prosecutors said. Zheng and others in China conspired to steal GE’s trade secrets regarding steam and gas turbine technologies, they said.
Zheng disclosed to his employers that he was the owner of an aviation technology company, which opened in 2015, located in China, according to court documents. An internal GE conflict of interest analysis determined Zheng posed a potential threat for corporate espionage.
Zheng, an MIT graduate, downloaded and encrypted GE technology data before sending it to his personal email, according to court documents. Zheng hid the data in a digital photograph file.
In 2014, GE corporate security determined Zheng had copied over 19,000 electronic files onto an external hard drive, according to court documents. He was interviewed by the company and told them the files had been deleted.
In 2017, it was determined 400 encrypted files had been save on Zheng’s work computer. The files were encrypted using a program that GE did not use, according to court documents. Following the discovery of the encrypted files, Zheng’s computer was monitored by the company.
In 2018, Zheng used a means of hiding data within the code of another file to conceal 40 files in the code of a digital photograph of a sunset. He then emailed the photograph file to his personal email account, according to court documents.
“Zheng’s use of encryption and steganography techniques are both uncommon and serve no apparent purpose but for concealing his activities from his employers,” court documents said.
The entire encryption process took Zheng less than 10 minutes to complete, according to the criminal complaint document. A federal investigator told prosecutors this implied Zheng had utilized these techniques in the past.
In late 2018, FBI agents executed a federal search warrant at Zheng’s residence in Schenectady County. During the search they discovered the following:
- A handbook that explains the type of resources the government of China will give individuals who can provide certain technologies.
- Zheng’s passport showing five international trips to China in the past two years.
- Various electronic items, which were confiscated for forensic examination.
In an interview with federal investigators following the search of his home, Zheng said he had used this encryption technique on five to 10 occasions in order to steal material belonging to GE, according to court documents.
He also told investigators that the company he own in China, which works on the same technologies as GE, received funding from the Chinese government.
“Zheng conspired to steal trade secrets from his employer, GE, and transfer this information to his business partner in China, so they could enrich themselves and companies receiving support from the PRC government” Assistant Attorney General Matthew G. Olsen said in the release.
After his conviction, Zheng faces up to 15 years in federal prison and a fine of up to $5 million, prosecutors said. He will be sentenced on Aug. 2.
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