Albany

Trial in GE espionage case delayed over COVID concerns

General Electric's Schenectady campus is shown in this file image.
PHOTOGRAPHER:

General Electric's Schenectady campus is shown in this file image.

The federal trial of a former GE Power engineer for allegedly funneling information to his native China, previously scheduled to start Tuesday, has been pushed back to March 2022 amid COVID concerns.

Xiaoqing Zheng of Niskayuna was arrested in August 2018 and indicted in April 2019 on 14 counts alleging theft of trade secrets, economic espionage, conspiracy to commit both and make false statements to investigators. A superseding indictment in August 2021 reduced it to 12 counts.

The allegations involved General Electric technology related to the design and manufacture of gas and steam turbines. Federal prosecutors say the thefts came amid one of the Chinese government’s five-year plans, this one with a general focus on improving quality and quantity of manufacturing, and a specific focus on gas turbines and aviation engines.

Zheng is alleged to have worked with a relative by marriage in China to accomplish the thefts. The two men own companies in China that have similar names, the same logo and function as separate divisions of an organization that seeks to develop and manufacture parts for turbines, the indictment reads.

Trial briefs prepared by prosecuting and defense attorneys and submitted in late August for the planned Sept. 7 trial give an indication of the strategy they will pursue.

Zheng’s attorneys, Kevin Luibrand of Albany and Bradley Henry of New York City, write:

Based on the evidence they’ve seen, the government will not be able to establish Zheng’s guilt beyond a reasonable doubt.

GE encouraged him and other employees to engage projects beyond the scope of their work, and formally rewarded him for doing so; his work advanced GE’s business model.

They seek to exclude certain testimony, use of the term “trade secret” as prejudicial, block evidence of prior acts by Zheng, and exclude mention or video footage of the seizure of $50,000 cash at his home — $20,000 of it in a travel bag $30,000 hidden in the wall of a basement.

The U.S. Attorney’s Office in its trial memorandum states:

The prosecution will rely on expert testimony from an FBI computer scientist, GE engineers, FBI linguists and a witness who bills himself a leading international expert on Chinese cyber and espionage matters.

Zheng had earlier disclosed his outside interests to GE and the company authorized him to pursue them as they were not related to his work at GE; investigating agents later found indication that his company in China was doing the same research he was doing in Schenectady.

Prosecutors will seek to play for the jury portions of an audio recording of a nearly six-hour interview of Zheng that investigators conducted in the kitchen of his Cephalonia Drive home while their colleagues undertook a more than seven-hour search of the rest of the residence.

Prosecutors may seek to play portions of a July 2018 video recording captured by monitoring software that GE covertly installed on Zheng’s GE-issued computer, or they may seek to display screen grabs of that video.

Prosecutors may try to block any attempt of an entrapment defense or any use of expert witnesses by the defense attorneys, as they have given the prosecution no notice of either during the discovery phase.

Under the revised schedule discussed by the parties and approved by U.S. District Judge Mae A. D’Agostino on Sept. 1, jury selection is now scheduled for March 3 and 4 and opening arguments for March 7.

Also indicted in April 2019 Zhaoxi Zhang, whose aunt is married to Zheng.

Zhang apparently remains in China.

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