MIT Professor Charged with Fraud in Chinese Trade Secret Theft Case

A Massachusetts Institute of Technology professor is facing federal fraud charges after allegedly lying about transferring nanotechnology research to organizations associated with the Chinese government.

On grant applications and tax forms, MIT professor Gang Chen allegedly did not disclose that he had received $29 million from Chinese research programs, according to the Justice Department.

The incident is another example of conflicts with China over what the U.S. government describes as stolen technology.

“The Chinese government would rather siphon off U.S. technology rather than do the work themselves,” U.S. Attorney Andrew E. Lelling said at a press conference Thursday.

At the same time Chen, 56, was receiving $19 million in grants from various U.S. agencies to assist his research, he also was being paid by Chinese research and national talent programs designed to attract foreign expertise, the prosecutors’ complaint says.

“Through these various undisclosed appointments, Chen has sought to advance the scientific and technological development of the [People’s Republic of China] by providing advice and expertise — sometimes directly to PRC government officials — often in exchange for financial compensation and awards,” the complaint filed in federal court in Massachusetts says.

Nanotechnology refers to equipment and techniques to control individual atoms and molecules, especially to manufacture computer chips and other microscopic devices.

The Justice Department criminal complaint says Chen, a naturalized American citizen, was hired by the government-managed National Natural Science Foundation of China as an adviser to its “Outstanding Talent Plan.” The program identifies exceptional students seeking admission to the best U.S. universities.

He failed to disclose the potential conflict of interest to MIT or in his U.S. grant applications to the Energy Department, prosecutors said. He also did not mention on his tax forms that he held a Chinese bank account with more than $10,000 in it, they said.

His attorney, Robert Fisher, a partner with the law firm of Nixon Peabody LLP, told The Well News, “Since Gang moved to this country over 30 years ago, his life has been the epitome of the American dream. He has dedicated his life to scientific advancement in mechanical engineering. He loves the United States and looks forward to vigorously defending these allegations.”

MIT, where Chen has worked since 2001, said in a statement, “We take seriously concerns about improper influence in U.S. research. Professor Chen is a long-serving and highly respected member of the research community, which makes the government’s allegations against him all the more distressing.”

In a similar case last year, the Justice Department filed charges against Harvard University professor Charles Lieber after accusing him of fraudulent statements in his affiliations with a Chinese research university. He was chairman of the university’s chemistry and chemical biology department as well as a leading nanotechnology expert.

Justice Department officials said the Chinese attempts in both cases to gain inside information on U.S. nanotechnology were not coincidence.

“The Chinese government has identified nanotechnology as one of its strategic gaps,” Lelling said at the press conference Thursday. “The purpose of these Chinese talent programs is so the Chinese can fill those gaps without developing the technology themselves.”

President Donald Trump repeatedly has mentioned threats to U.S. intellectual property rights as he sought to crack down on what he described as China’s unfair trade practices. He also said the information leaks threaten national security as China uses the technology to increase its military capabilities.

A May 29, 2020 White House “Fact Sheet” said, “China’s theft of American technology, intellectual property and research threatens the safety, security, and economy of the United States.”

Trump signed a trade deal with China on Jan. 16, 2020 intended to protect U.S. trade secrets from foreign businesses. 

It called on China to develop an “action plan” to strengthen intellectual property rights. China also agreed to purchase $200 billion in U.S. goods over the next two years as a response to complaints about American businesses being shut out of its markets.

However, the deal failed to silence all complaints about technology and trade secret thefts.

John Demers, the Justice Department’s head of its National Security Division, described threats from China’s appropriation of U.S. technology at an Aug. 12, 2020 event sponsored by the Center for Strategic and International Studies in Washington, D.C.

He said 80 percent of economic espionage and 60 percent of trade secret theft cases investigated by the Justice Department could be traced to China.

Typically, the Chinese infiltrators steal American trade secrets, reproduce them first for their own market and then try to compete with U.S. companies that originated the technology in the global marketplace, Demers said. Some of the Chinese firms operate with government subsidies.

In the past seven years, China’s attempts to acquire American intellectual property have shifted from the People’s Liberation Army to clandestine intelligence operations focused on recruiting insiders at U.S. corporations, he said.

The Justice Department case against Chen is filed as U.S. v. Chen, case number 1:21-mj-01011, in the U.S District Court for the District of Massachusetts.