Guilty Plea in Chinese Economic Espionage Case

A former DuPont employee pleaded guilty to an economic espionage conspiracy by admitting he passed trade secrets for a proprietary DuPont chemical process to Chinese-controlled companies.

Tze Chao, 77, pleaded guilty March 1 to giving away the manufacturing process for titanium dioxide (TiO2), which DuPont spent millions of dollars and years developing.  Beginning in 2003, the year he left DuPont, he gave the information to companies he knew were controlled by the government of the People’s Republic of China,according to U.S. Attorney Melinda Haag.

He learned that the PRC placed a high priority on developing the chloride process and wanted to acquire it quickly from Western companies, the government said.

His plea comes three weeks after an amended grand jury indictment added three new defendants and USA Performance Technology Inc. to the indictment.

As part of his plea he agreed to cooperate with the government investigation.

He pleaded guilty to a single count of conspiracy to commit economic espionage before U.S. District Judge Jeffrey S. White.  The maximum statutory penalty is 15 years in prison and $500,000 in restitution, but that does not take the sentencing guidelines into account.

Chao worked at DuPont from 1966 to 2002, primarily on the TiO2 process. 

According to the plea, the year he left DuPont he began a consulting business called Cierra Technology and began consulting for the Pangang Group, which was controlled by the PRC.

He helped the Pangang Group modernize its factory to produce TiO2, according to court papers.

After the FBI searched his home and home office in October 2011, during the trade secrets investigation, Chao admitted he burned documents that had been kept in his basement and not located by the FBI.

Case:  US v. Chao, No. CR11-0573JSW

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