A U.S. federal grand jury on Thursday indicted three men for conspiring to steal Lucent Technologies Inc. trade secrets and sell them to a Chinese government-owned company, prosecutors said.
Charged in the one-count indictment are Hai Lin, 30, and Kai Xu, 33, both former employees of Lucent, and Yong-Qing Cheng, 37, who had served as a consultant to the Murray Hill, New Jersey-based telecommunication equipment provider, according to a statement from the office of the U.S. Attorney for the District of New Jersey. All three men had worked on Lucent's Pathstar Access Server, a system that is capable of sending voice and data services over the Internet.
Attorneys representing Lin and Cheng said their clients say they are innocent and will fight the federal charges against them in court. Xu's attorney could not be reached for comment.
"Mr. Lin unqualifiedly asserts his innocence and plans to vigorously contest the charges in court," said Bob Fettweis, an attorney with the Newark, New Jersey law firm of Wolf, Block, Schorr and Solis-Cohen LLP.
"(Mr. Cheng) is looking forward to the trial and to prove his innocence and to prove there was no conspiracy as the government alleges," said Jim Plaisted, Cheng's attorney, who is with the law firm of Walder, Sondak & Brogan in Roseland, New Jersey.
With e-mail, a password-protected Web site and visits to China, the three men conspired to steal and transfer the source code, software and the entire design of the Pathstar Server to enter a joint telecom venture in China with Datang Telecom Technology Co., according to Assistant U.S. Attorney Scott S. Christie, in a statement. Beijing-based Datang is majority-owned by the Chinese government.
U.S. Federal Bureau of Investigation investigators arrested the three men on May 3 after piecing together the case with the assistance of Lucent. The three men allegedly sought to capitalize on their insight on the Pathstar system and use it to develop the "Cisco of China."
They allegedly founded a New Jersey-based company known as ComTriad Technologies Inc. in January 2000. All three men allegedly traveled to China in October 2000 to meet with Datang officials and set up a joint venture between ComTriad and Datang.
Ultimately, the source code and software for Lucent's Pathstar system allegedly was stored on ComTriad's Web site. Lin, Xu and Cheng transferred the source code and software to Datang early in 2001, prosecutors have said.
Cheng's attorney Plaisted said his client's position is that the Pathstar project was abandoned by Lucent. Also, he said it seems the tone and tenure of the prosecution's case is less serious than it initially was and the case seems more like a "garden variety" civil case.
Cheng and Xu are out of jail on US$900,000 bail., according to federal prosecutors. Lin has not made bail and remains in custody.
All three men, who are legal U.S resident aliens, are expected to be arraigned on charges of conspiracy to steal trade secrets and possess stolen trade secrets in the U.S. Federal District Court in New Jersey within the next two weeks. The charge carries a maximum penalty of 10 years in prison and a $250,000 fine.