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Ex-GE engineer gets two years in prison after stealing turbine tech for China

Beijing isn't the only one spying on work computers, right GE?

An ex-General Electric engineer has been sentenced to two years in prison after being convicted of stealing the US giant's turbine technology for China.

New York resident Xiaoqing Zheng, 59, who used to be employed at GE Power and specialized in turbine sealing technology, was convicted of conspiracy to commit economic espionage at the end of March after a jury trial in the Northern District of New York courthouse.

"This is a case of textbook economic espionage," Assistant Attorney General Matthew Olsen said in a statement. "Zheng exploited his position of trust, betrayed his employer and conspired with the government of China to steal innovative American technology." 

Zheng worked at GE from 2008 until the summer of 2018. According to court documents [PDF], he conspired with his wife's nephew and other individuals in China to steal GE's proprietary information related to the company's ground - and aviation-based turbine technologies — both of which Beijing has listed as major research and manufacturing priorities for 2030 under the county's latest five-year plan.

To this end, Zheng and his co-conspirators hatched a plan to benefit the Chinese government and its organizations by stealing GE tech, prosecutors said.

Beginning in 2016, Zheng and others in China founded a company called Nanjing Tianyi Avi Tech (NTAT) that develops turbine parts. Meanwhile, Zheng also owned a 45 percent interest in another company Liaoning Tianyi Aviation Technology (LTAT), which was established and owned by his wife's nephew, Zhaoxi Zang, who is a Chinese citizen. LTAT manufactures turbine parts, and the two companies maintained a very close relationship.

Both share the same logo, and, according to court documents, "function as separate divisions of an organization that aims to develop and manufacture parts for turbines."

Zheng told GE about his Chinese company in February 2016, but assured his employer that the business did not pose a conflict of interest. Spoiler alert: it did, and the monetary value of the stolen trade secrets totaled "millions of dollars," the indictment said.

Olsen said Zheng's crimes also posed a national security threat. "The Justice Department will hold accountable those who threaten our national security by conniving to steal valuable trade secrets on behalf of a foreign power," he continued.

Beginning in late November 2017, GE discovered a "large number" of encrypted files had been saved to Zheng's work computer using AxCrypt, a program that GE doesn't provide to its employees. GE then installed monitoring software on Zheng's machine to determine what he was encrypting, and what he was doing with the secret information. 

In July 2018, Zheng moved about 40 encrypted files to a temp folder on his work desktop. "GE Power determines that the files related to sealing and optimizing turbine technology — information that GE considers to be proprietary and secret," the indictment noted.

Then, Zhend hid the files within the code of another file using steganography to smuggle the trade secrets out of GE's facilities, cleverly disguised as a sunset photo:

"Through the steganography technique, Zheng placed the aforementioned electronic files into the binary code of a separate electronic file on the computer — an otherwise innocuous-looking digital photograph of a sunset. Zheng then emailed the digital photograph file of the sunset, which secretly contained the hidden GE electronic files containing GE's proprietary data, from his GE-provided email address to his personal email address at Hotmail."

On August 1, 2018, the FBI swooped in, interviewed Zheng, and he copped to using steganography "on fewer than 10 prior occasions" to steal GE's information off of GE's computer systems. He also told agents that his Chinese companies weren't yet profitable, but they had received grants and other funding from Beijing. 

In addition to two years behind bars, a US judge also sentenced Zheng to pay a $7,500 fine and serve one year of post-imprisonment supervised release. ®

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