Read the criminal complaint filed against the alleged Chinese spy

In what's been called "an exceptionally rare achievement" for the Justice Department, an officer with China's Ministry of State Security appeared in federal court in Cincinnati to face charges that he sought to commit economic espionage and steal trade secrets from U.S. aviation and aerospace companies.

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UNITED STATES DISTRICT COURT

for the ZQIB MR 2i AH l9: 1&5

Southern District of Ohio SIMS CGUR 5

SOUTHERN Ul ST OHM

United States of America Div CiHCiiti?iATl
V-

CaseNo. ig?g?jmigo

XU YANJUN (a/k/a Qu Hui)

Defendant(s)
CRIMINAL COMPLAINT

I, the complainant in this case, state that the following is true to the best of my knowledge and belief.

On or about the date(s) of March 2017 to present in the county of Hamilton in the
Southern District of Ohio the defendant(s) violated:
Code Section O?nse Description
18 U.S.C. Section 1831 Economic Espionage
18 U.S.C. Section 1832 Trade Secret Theft

This criminal complaint is based on these facts:

See the Af?davit of FBI Special Agent Bradley Hutt.

Continued on the attached sheet.

Complaihant? signature

Bradley D. Hull, FBI Special Aqent

Printed name and title

Sworn to before me and signed in my presence.

Date: 3/31! 1 l8

Judge? .9 Signature

City and state: Cincinnati, Ohio /Stephanie K. Bowman, United States Magistrate Judge
Printed name and title

AFFIDAVIT IN SUPPORT OF COMPLAINT
1, Bradley D. Hull, being ?rst duly sworn, hereby depose and state as follows:
INTRODUCTION AND AGENT BACKGROUND

1. I am a Special Agent with the Federal Bureau of Investigation, and have held this
position for 7 years. I am currently assigned to one of Cincinnati Field Of?ce?s Counter-
Intelligence squads. During my employment with the FBI, I have conducted and participated in
several investigations involving violations of United States laws relating to espionage and the
unlawful export ?om the United States of goods and technology restricted for national security
and foreign policy reasons. I have participated in the execution of several federal search and
arrest warrants in such investigations. I have had training in, and through experience I have
observed, many methods used to smuggle goods and technology out of the United States and
commit espionage contrary to United States law. I am responsible for investigating Violations of
law related to economic'espionage and the theft of trade secrets (18 U.S.C. 1831-1832) and
export controls (Arms Export Control Act, 22 U.S.C. ?277 8 and the International
Emergency Economic Powers Act, 50 U.S.C. ??1701-1707

2. This af?davit is intended to show only that there is suf?cient probable cause for
the requested complaint and does not set forth all of my knowledge about this matter. Where the
contents of documents and the actions, statements, and conversations of others are reported
herein, they are reported in substance and in part, except where otherwise indicated.

3. I am familiar with the facts and circumstances set forth below from my personal
participation in the investigation, including my review of pertinent documents, and ?om my
conversations with others, including other Special Agents with the FBI, and representatives of a

particular US. company (?Victim Company with expertise regarding the relevant design,

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testing, manufacturing data and information related to aviation technology (?Proprietary
Information?). Based on my training and experience and the facts as set forth in this affidavit,
there is probable cause to believe that XU YAN JU (a/k/a has attempted and
conspired to obtain trade secrets in violation of 18 U.S.C. 1831(a)(4) and (Economic
Espionage) and 18 U.S.C. 1832(a)(4) and (Theft of Trade Secrets) in the Southern
District of Ohio and elsewhere.

THE DEFENDANT

4. XU YAN JU is a Deputy Division Director, Sixth Bureau of Jiangsu
Province, Ministry of State Security, for the People?s Republic of China MSS is the
intelligence and security agency for China, and is responsible for counter-intelligence, foreign
intelligence, and political security. MSS has broad powers in China to conduct espionage both
domestically and abroad.

5. One of job duties on behalf of MSS is to obtain technical information,
including trade secrets, from aviation and aerospace companies in the United States and
throughout Europe. XU sometimes uses the aliases ?Qu Hui? and ?Zhang Hui? in connection
with his duties. He has been known to attempt to conceal the true nature of his employment, by
representing that he is associated with iangsu Science Technology Promotion Association

6. Beginning in at least December 2013 and continuing through the present, XU has
worked, traveled, and communicated with individuals associated with or employed by MSS and
various Chinese universities and institutions. Xu has also actively targeted speci?c companies in
the United States and abroad that are recognized as leaders in the ?eld of aviation and aerospace

technology, design, and manufacturing (?aviation companies?). Within these aviation

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companies, XU and other individuals, some of whom are known to law enforcement, would
identify people whom they deemed potential ?experts? who worked for these aviation
companies, and who could be targeted and recruited to travel to China, initially under the guise
or false belief that they were traveling to China merely for ?an exchange? of ideas and/or to give
a presentation at a university. XU, and others, would pay the ?experts? stipends and would
arrange for and pay expenses associated with their travel to China. To achieve their objective,
which was to obtain speci?c aviation technology documents and information, XU and others
exchanged messages regarding the types of information that they wanted to obtain, and actively
discussed methods for obtaining the desired information. Furthermore, communications between
XU and others who worked for M88 and other institutions in China reveal the methods used in
order to obtain highly sensitive information from employees of the various aviation companies.
As mentioned above, and as demonstrated in some of the communications detailed below, XU
used an alias in his efforts to recruit ?experts? and falsely represented his employment, all in an
effort to conceal his true identity as an of?cer of M88. Furthermore, XU and others
communicated about the best way to protect and conceal the true nature of the information they
were seeking from aviation companies and their employees, including the use of codes and series
of letters in place of the technology being discussed and the name of the victim company
targeted.

7. XU often communicates, travels, and exchanges information related to aviation
technology with individuals at the Nanjing University of Aeronautics and Astronomics
a public university located in Nanjing, China. NUAA is operated by the People?s
Republic of China?s Ministry of Industry and Information Technology. NUAA is regarded as

one of the top engineering universities in China and has signi?cant in?uence over China?s

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aerospace industry. The Ministry of Industry and Information Technology of the Chinese
government plays a signi?cant role in regulating major industries and approving new industrial
investments and projects in key areas including information technology, telecommunications,
and national defense. NUAA is a regular collaborator with Commercial Aircraft Corporation of
China and Aviation Industries of China hosting academic and
commercial seminars and symposium and sponsoring researched published by academics from
NUAA.

THE VICTIM COMPANIES AND THE PROPRIETARY INFORMATION

8. Victim Company A has of?ces in the Southern District of Ohio. Victim
Company A is among the world?s top aircraft engine suppliers for both commercial and military
aircraft. Victim Company A has devoted substantial resources to research and development in
the ?eld of using unique materials to manufacture jet engine fan blades and fan containment
structures. Worldwide, Victim Company A?s exclusive use of certain types of materials, which
provide greater engine durability, weight reduction and lower costs, provides Victim Company A
with a signi?cant competitive advantage over its competitors. Victim Company A has spent
several decades developing its unique jet engines, engaging in costly trial and error testing in
order to advance the use of its products. This testing, research, and development have led to a
deep knowledge base that affords Victim Company A a powerful competitive advantage.
Release of some or all of this information to a competitor or any other entity attempting to
conduct its own research and development in this ?eld would provide a tremendous economic
value, because it would enable the other entity to short-circuit its research and development

efforts and expend signi?cantly fewer resources.

9.

Victim Company A employs several layers of security to preserve and maintain

con?dentiality and to prevent unauthorized use or disclosure of its trade secrets. These steps

were enforced to maintain its competitive advantage and to maintain the integrity of years of

research and development pertaining to Victim Company A?s use of unique materials to

manufacture jet engine fan blades and fan containment structures.

10.

11.

12.

Some of the external physical security measures are:
Limiting physical access to restricted portions of Victim Company A?s campus;
including through the use of manned, gated entrances and requiring identi?cation

and access badges; and

. Mandating visitor sign-in and escorts.

Some of the internal security measures are:

Requiring employee non-disclosure and other con?dentiality agreements that
extend beyond the length of employment at Victim Company

Recurrent training and instruction for employees regarding the processes in place
to safeguard restricted and con?dential business information;

Notifying all employees that publication and/ or disclosure of restricted or
con?dential company information is prohibited without express company

authorization;

. Various data security policies; and

Limited access to company proprietary information to employees or contractors
on a need?to-know basis.

Victim Company B, headquartered in the United States, is one of the world?s

largest aerospace companies, and a leading manufacturer of commercial jetliners and defense,

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space and security systems. Victim Company provides services, including advanced
information and communication systems, and products to both commercial and military aircraft.

13. Victim Company is a multinational company. Victim Company produces a
variety of commercial products and engineering services. In fact, Victim Company supplies
engines, wheels, brakes, and other aircra? parts to both civilian and military aircraft.
Additionally, Victim Company is a leading U.S. Company in the ?eld of unmanned aerial
vehicle technology.

PROBABLE CAUSE

14. Beginning in at least March 2017, an individual identi?ed as a Deputy Director at
NUAA (?Co-Conspirator began corresponding via email with an individual (?Employee
employed by Victim Company A. Employee 1 has been employed by Victim Company A as an
engineer since 2012. With the assistance of XU, Co-Conspirator 1 solicited Employee 1 to come
to NUAA for an ?exchange? based on Employee l?s engineering experience at Victim Company
A. NUAA offered to pay for Employee 1?s travel expenses.

15. On May 10, 2017, Co-Conspirator I emailed Employee 1 that the ?Institute of
Energy and Power? had proposed that Employee 1 give a report on Victim Company A?s
signature materials design and manufacturing technology. Co-conspirator 1 wanted Employee 1
to focus on highly-technical topics, including the latest developments in the application of
Victim Company A?s signature material used in aeroengines, as well as engine structure design
analysis technology and manufacturing technology development.

16. On May 15, 2017, in preparation for the trip, XU sent a message to Employee 1

from one of email accounts, but signed the email using the name of Co-Conspirator 1. On

May 25 2017, Employee I traveled to China. Employee 1 gave a presentation at NUAA on June
2, 2017.

17. Following Employee 1?s presentation at NUAA, Employee I sent messages to
Co?Conspirator l, asking that NUAA delete any and all copies of the presentation from the
university computers. The presentation included details regarding engines that were designed
and produced by Victim Company A. One of the slides contained the logo of Victim Company
A. Employee 1 then emailed a second, edited version of the presentation back to NUAA. The I
second version deleted the ?nal page of the presentation, as well as content and images from
other slides.

18. NUAA reimbursed Employee 1 for expenses incurred during his visit to Nanjing
meals and hotel expenses). Employee 1 was also paid $3,500 in US. currency for the
presentation.

19. While in China, Co-Conspirator 1 introduced Employee 1 to XU. During this
meeting, XU introduced himself using his alias, Qu Hui, and claimed to be ?om the iangsu
Science Technology Promotion Association in China. Employee 1 had meals with XU both
before and after the NUAA presentation. Employee I understood from their conversations that
the money paid to Employee 1 came from AST. XU gave a business card to Employee 1 that
contains the name Qu Hui and contact information associated With JAST, which, as explained
below, are an alias and cover af?liation for XU.

20. Employee 1 continued to communicate with XU following the trip to China. In

fact, XU invited Employee 1 to return to NUAA the following year.

21. On November 21, 2017, Co-Conspirator 1 expressed an interest in having

Employee 1 ?come to exchange and instruct again in

Co-Conspirator informed
Employee 1 that he had spoken with Qu Hui (XU) from JAST, and that Qu Hui would be able to
help with travel expenses and handle the details of the ?exchange.?

22. On January 23, 2018, XU, using his alias, sent a message to Employee 1 and
informed him that ?domestically, there is more focused on the system code.? XU later
elaborated that the information he wanted pertained to ?system speci?cation, design process.?
This term is understood to refer to system code integration -- the application of research data to
engine production. XU provided an email address for Employee 1 to use to send the requested
information. Employee 1 informed XU that the email may be blocked if he used his company
computer. XU responded, ?It might be inappropriate to send directly from the company, right??

23. In response to the ?system integration? reference, on February 3, 2018, Employee
I emailed an excerpt of a presentation ?orn Victim Company A and asked XU if it included the
type of information he needed. The attachment was a two-page document from Victim
Company A. The ?rst page contained the Victim Company A logo, as well as a Proprietary
Label and Warning from Victim Company A. This Warning reads as follows:

Victim Company A Proprietary Information The information contained
in this document is Victim Company A information and is disclosed in
con?dence. It is the property of Victim Company A and shall not be used,
disclosed to others or reproduced without the express written consent of
Company A, including, but without limitation, it is not to be used in the
creation, manufacture, development, or derivation of any repairs,
modi?cations, spare parts, designs, or con?guration changes or to obtain

FAA or any other government or regulatory approval to do so. If consent
is given for reproduction in whole or in part, this notice and the notice set

1 Communications in quotation marks are in substance and in part translations from communications that were not
originally in English. These translations are subject to revision at a later time.

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forth on each page of this document shall appear in any such reproduction
in Whole or in part. The information contained in this document may also
be controlled by the US. export control laws. Unauthorized export or re-
export is prohibited.?
24. XU also sent Employee 1 a list of technical topics that organization was
interested in. XU wrote, the ?attached ?le is some domestic requirements that I know of, can

you take a look and let me know if you are familiar with those?? The attached list stated the

following:

Regarding the current development situation and future development direction of
foreign countries? structural materials for fun rotor blades made from composite
materials:

question followed.

Regarding the design criteria for the foreign countries? composite material rotor
fan blade, stator fan blade, and fan casing:

list of questions followed.

25. The questions pertain to composite materials in the manufacture of fan blades and
fan blade encasements. Victim Company A is the only company in the world that has been
producing fan blades and encasements constructed of composite materials. Based upon
information provided to me by technical experts at Victim Company A, these questions pertain
directly to aspects of Victim Company A?s fan blade and containment system, the materials
involved, and Victim Company A?s testing and design systems. For example, according to
technical experts at Victim Company A, questions regarding the ?baseline value? and
?allowed values? seek proprietary and trade secret information.

26. Employee 1 directly advised XU that some of the posed questions involved
Victim Company A?s commercial secrets. XU replied they would discuss it when they met in

person.

27. In February 2018, XU also began discussing with Employee 1 the possibility of
meeting in Europe during one of Employee 1?s business trips.

28. XU asked Employee 1 to send a copy of the ?le directory for his company?issued
computer. XU sent speci?c directions for how Employee 1 should sort and save such a
directory. Following the steps in these directions led to the creation of a document that was
essentially a menu of ?les on the Employee 1?s Victim Company A-issued computer. Employee
1 provided a purported ?le directory to XU. This ?le directory had been heavily edited to
remove all sensitive information and was sent with the approval of Victim Company A.

29. On February 28, 2018, at insistence, XU and Employee 1 spoke on the
phone. During the phone call, XU referred to the ?le directory list Employee I sent. XU told
Employee 1 that ?they? had looked at it and it is ?pretty good stuff.? XU asked if Employee 1
would be able to bring it with him when he traveled to Europe for their meeting. XU further
stated, ?the computer you will bring along is the company computer, right?? XU also asked if the
material Employee I intended to bring could be exported out of the computer. Employee 1
informed XU that it could be exported onto a portable hard drive. XU said, ?Good, good, good.?
XU asked, ?So, if possible, we will look over the stuff. Can we do that?? Employee I agreed to
request and XU stated, ?Do you understand? Carry the stuff along.?

30. Later in this conversation, XU told Employee 1 that what he was sent so far was
?good enough.? XU continued: ?If we need something new later, we can. . .talk about that in
person when we meet. . . What do you think? . . . All right, we really, we really don?t need to
rush to do everything in one time, because, if we are going to do business together, this won?t be

the last time, right??

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31. On March 5, 2018, XU sent Employee 1 a message asking, ?Regarding the
document directory you sent last time, is it possible to dump it to a portable hard drive or USB
drive from work computer in advance??

32. In preparation for the trip to Europe, Employee 1 asked XU where and when he
was arriving. XU responded that he would be traveling to Greece before meeting up later with

Employee 1 in another country.2

ADDITIONAL SCHEMES BY XU TO OBTAIN
INFORNIATION FROM US. AVIATION COMPANIES

33. Between December of 2013 and December of 2014, XU communicated with an
individual, believed to be associated with a university in China, regarding attempts to acquire
sensitive information, including analytical tools, design manuals, and software, rightfully
belonging to Victim Company B. In these chats, XU discussed plans to travel with another
individual to conduct an ?exchange? with a ?customer.? In late December of 2013, XU and
others, believed to be employed by institutions in China, discussed travel arrangements and the
types of information that contact in China was the most interested in obtaining. This
information appears to be Victim Company B?s design manual that relates to structural analysis
methods. In these exchanges, XU reminded his contact that ?[t]he customer doesn?t know our
identities. I approached him with the identity of QU Hui, the Deputy Secretary?General of
Science and Technology Association.? associate in China responded, will make sure

everybody here knows you are from Nanjing Science and Technology Association.?

2 Empioyee 1 has reviewed pictures of XU that were obtained by the FBI. Although Employee 1 did not identify an
earlier, younger picture of XU, he did identify XU from a more recent picture.

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34. In April 2014, XU communicated with two different individuals believed to be in
China. In these messages, XU stated that he was bringing materials related to electric landing
gear, deicing, ?ight control, and electric jet braking. It also appears that some of this material
related to a speci?c type of fueling equipment and/or wing design that pertains to a speci?c type
of military aerial refueling aircraft designed by Victim Company B. articulated plan was
to ?nd people in China to read the information, and then review the proposed seminar the
recruited ?expe was supposed to give. XU mentioned the possibility of obtaining additional
information or ?projects? which would include a type of design specification for certain unique
technologies, system requirements, and system evaluation, unique to Victim Company B. Once
again, XU reminded his contacts of the need to keep his true identity hidden, and stated that he
had approached the ?expe using ?the name under iangsu Science and Technology
Association.?

35. Various documents obtained in the course of this investigation indicate that XU
has contact information pertaining to two individuals believed to be current employees of Victim
Company B.

36. In November 2014, XU sent a document to an individual believed to be associated
with a Chinese company that engages in the research, development, production, and sale of
exhaust turbochargers, engine valves, cooling fans, and other engine parts. The document
pertains to a speci?c technology related to diesel engine variable nozzle turbocharging
technology. In with the individual, XU explained speci?c codes contained in
the document. For instance, meant Ministry of State Security, while stood for
diesel engine VNT turbocharging technology. There was also a speci?c code found in this

document that referred to Victim Company C.

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37. In September 2015, XU received emails from an individual employed as an
engineer at Victim Company C. This email included an outline of a proposed white paper
discussing unmanned aerial vehicle technology. The employee of Victim Company

subsequently sent his resume to XU, who forwarded it to NUAA.

LEGAL BACKGROUND
Economic Espionage: l8 U.S.C. 1831
38. Section 1831 punishes economic espionage for the bene?t of any foreign
government, foreign instrumentality, or foreign agent:

Whoever, intending or knowing that the offense will bene?t any foreign government,
foreign instrumentality, or foreign agent, knowingly --
1) steals, or without authorization appropriates, takes, carries away, or
conceals, or by fraud, arti?ce, or deception obtains a trade secret;

(2) Without authorization copies, duplicates, sketches, draws, photographs,
downloads, uploads, alters, destroys, photocopies, replicates, transmits,
delivers, sends, mails, communicates, or conveys a trade secret;

(3) receives, buys, or possesses a trade secret, knowing the same to have been
stolen or appropriated, obtained, or converted without authorization;

(4) attempts to commit any offense described in any of paragraphs (1) or

(5) conspires with one or more other persons to commit any offense described
in any of paragraphs (1) through (3), and one or more of such persons do any
act to effect the object of the conspiracy.

Shall, except as provided in subsection be ?ned not more than $5,000,000 or
imprisoned not more than 15 years, or both.

18 U.S.C. 1831.

39. The term ?foreign instrumentality? means ?any agency, bureau, ministry,
component, institution, association, or any legal, commercial, or business organization,
corporation, firm, or entity that is substantially owned, controlled, sponsored, commanded,

managed, or dominated by a foreign government.?

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40. The term ?foreign agent? means ?any of?cer, employee, proxy, servant, delegate,
or representative of a foreign governmen
Theft of Trade Secrets: 18 U.S.C. $1832

41. Section 1832 punishes the commercial theft of trade secrets carried out for
economic advantage, whether or not it bene?ts a foreign government, instrumentality or agent:

Whoever, with intent to convert a trade secret, that is related to a product or
service used in or intended for use in interstate or foreign commerce, to the
economic bene?t of anyone other than the owner thereof, and intending or
knowing that the offense will, injure any owner of that trade secret, knowingly?

(1) steals, or without authorization appropriates, takes, carries away, or
conceals, or by fraud, arti?ce, or deception obtains such information;

(2) without authorization copies, duplicates, sketches, draws,
photographs, downloads, uploads, alters, destroys, photocopies, replicates,
transmits, delivers, sends, mails, communicates, or conveys such
information;

(3) receives, buys, or possesses such information, knowing the same to
have been stolen or appropriated, obtained, or converted without
authorization;

(4) attempts to commit any offense described in paragraphs (1) through
or

(5) conspires with one or more other persons to commit any offense
described in paragraphs (1) through (3), and one or more such persons do
any act to effect the object of the conspiracy,

Shall, except as provided in subsection [relating to organizations], be ?ned under this
title or imprisoned not more than 10 years, or both.

18 U.S.C. 1832(a).

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CONCLUSION
42. Based on the foregoing, I believe there is probable cause to ?nd that XU
YAN JUN (a/k/a has conspired to and attempted to obtain trade secrets from Victim
Company A in Violation of 18 U.S.C. 183 and (Economic Espionage) and
1832(a)(4) and (Theft of Trade Secrets).

Respectfully submitted,

a? 432.. ?ue/M
Bradley D. Hull
Special Agent

Federal Bureau of Investigation

Subscribed and sworn to before me
on March 21, 2018:

W?a??owmaw

UNITED STATES MAGISTRATE JUDGE

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FILED
RICHARD as

CLERK GF 1331.321
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO 2 2 to:
WESTERN DIVISION
GISIRICT ssust
UNITED STATES OF AMERICA CASE NO.: A
v. MAGISTRATE JUDGE BOWMAN

XU YANJUN (a/k/a QU HUI) MOTION AND ORDER
- TO SEAL COMPLAINT

The United States respectfully requests that the Court seal the Complaint and any other
pleadings and proceedings in the above-numbered case until further order of this Court. This
motion to seal is for the purposes of apprehending the defendant, mitigating the risk of ?ight, and
law enforcement safety and security.

Respectfully submitted,

BENJAMIN C. GLASSMAN
United States Attorney

s/ Timothy S. Mangan

TIMOTHY S. MANGAN (069287)
Assistant United States Attorney

221 East Fourth Street; Suite 400
Cincinnati, Ohio 45202

(513) 6843711; Fax: (513) 684-6385

IT IS ORDERED that the Complaint and any other pleadings and proceedings in the
above-numbered case shall now be sealed. The US. government may share the sealed
Complaint and Arrest Warrant with other law enforcement agencies (domestic and foreign) as

needed to effect the arrest.

DATE STEPHANIE BOWMAN
/United States Magistrate Judge