GE engineer’s attorney: “This is not espionage”

ALBANY — A day after his arrest by the FBI, an engineer employed by General Electric appeared before a federal judge Thursday and was released on $100,000 bond.

Xiaoqing Zheng, 55, was taken into custody Wednesday at his Niskayuna home and charged with using sophisticated techniques to steal digital files on the company’s turbine technology — possibly to benefit his interest in Chinese firms that compete with GE.

At a detention hearing Thursday afternoon, Zheng’s attorney, Kevin A. Luibrand, said his client’s reputation had been unnecessarily “destroyed” and offered a forceful defense against many of the government’s arguments. Luibrand said there is no evidence that Zheng colluded with the Chinese government or that he sold or used the GE data.

Luibrand told U.S. Magistrate Christian F. Hummel that the data his client copied were programs of patented information that he had created. The charges do not allege Zheng sold the data or used it in furtherance of several technology businesses he is involved with in China.

“This is not state secrets,” Luibrand said. “This is not espionage. … GE fully knew that he had another business.”

The attorney said the patented data technology relates to steam-turbine engineering and there are no export controls that would prohibit transfer of that type of information between China and the United States.

Federal prosecutors said the Chinese government had provided grant money to at least one of Zheng’s businesses overseas, but made no suggestions that China was involved in any alleged theft of GE information.

Luibrand also disputed the assertion that Zheng was a flight risk and said that he had relinquished his Chinese citizenship when he became a U.S. citizen in 2001. The attorney said that the government’s contention that Zheng was likely to flee to China was no different from arguing that a person of Irish descent was likely to flee to Ireland.

Prosecutors, who asked that Zheng be released on $200,000 secured bond and remain confined to his residence, revealed that Wednesday’s search of Zheng’s  home uncovered a knapsack carrying the family’s passports, immunization records and $20,000 in cash — a package investigators described as a “go-bag” meant to aid in a hasty escape. The FBI also found $30,000 hidden in the home’s basement.

Luibrand said that the cash belonged to Zheng’s wife, Hui Jin, and that the preference to keep large sums of cash was cultural, not an indication of criminal activity. Jin, a realtor, sat in the second row of the courtroom for the brief proceeding with the couple’s two daughters, ages 21 and 28. The couple’s 15-year-old son was not at the hearing.

Zheng and Jin have been married 31 years. On her real estate business website, Jin’s profile states: “I left my job and home in China with my daughter, two suitcases, and a big dream to (come to) the United States … with my husband. We found happiness in this heavenly country. Fast-forward a few years: we applied for a green card and bought our dream house.”

Assistant U.S. Attorney Richard Bellis told the judge the government considers Zheng a flight risk, but Luibrand countered that federal sentencing guidelines would give Zheng, a first-time offender if he is convicted, a prison term of less than a year in prison, and possibly probation.

“No one’s going to run from that,” Luibrand said. “They’re just trying to jack up suspicion.”

Luibrand suggested the case should have been handled as a civil patent-infringement matter “on a different floor of this courthouse.”

Prosecutors, in a statement Wednesday, said that Zheng “used an elaborate and sophisticated means to remove electronic files containing GE’s trade secrets involving its turbine technologies. … Zheng is alleged to have used (encrypted technology) to hide data files belonging to GE into an innocuous looking digital picture of a sunset, and then to have emailed the digital picture, which contained the stolen GE data files, to Zheng’s (private) email account.”

The federal complaint indicates the email containing the stolen trade secrets that Zheng sent to himself included the subject line “Nice view to keep.”

Prosecutors said the single criminal count filed against Zheng — theft of trade secrets — relates to an incident that took place on July 5 when he moved 40 encrypted files to a digital folder on his laptop. But the federal criminal complaint indicates Zheng is also suspected of stealing the data files “on multiple occasions” dating back years.

The complaint says that in 2014, Zheng “downloaded more than 19,000 files from GE’s computer network onto an external storage device, believed by GE investigators to have been a personal thumb drive.”

GE was aware of that incident at the time and investigated it internally but took no action against Zheng, according to the complaint.

Zheng was hired by GE in 2008 and holds master’s and doctorate degrees in aeroengineering from Northwestern Polytechnic University and Massachusetts Institute of Technology.

Zheng previously told GE officials that he and his brothers own a technology company in Nanjing, China, that supplies parts for civil aviation engines, according to the federal complaint. GE officials had reviewed Zheng’s interest in that company and determined it may conflict with his employment here, but allowed him to continue working for GE.

Zheng had been held in federal custody at the Rensselaer County jail and was scheduled to be released late Thursday afternoon. The couple’s house in Niskayuna will be used as collateral to secure the bond.

Hummel, who addressed Zheng as “doctor” because of his educational accomplishments, cut the government’s bond request in half and declined the prosecutor’s request to have Zheng remain confined to his residence.

The judge agreed to the government’s request that Zheng wear an electronic-monitoring bracelet on his ankle and remain under the supervision of U.S. probation officials.A condition of his release — which is standard in federal court — requires that he maintain or seek employment.

“I suspect he’s lost his job at GE,” Luibrand told the court.