China Trade Secrets Conspiracy Charges Blocked

China’s Pangang Group Co. won efforts Monday to block a U.S. indictment accusing the company of conspiracy to steal trade secrets about titanium dioxide technology.   U.S. District Judge Jeffrey White  blocked service of the indictment in the international trade secrets theft case against the a Chinese-owned company and eight individual company officials.

The effect is to throw out charges against the company and eight of its officials because government service of the summons went to the wrong person.  White gave prosecutors until August 16 to tell him how they plan to proceed.

Federal prosecutors in San Francisco accused Pangang and eight company officials of conspiring to steal titanium dioxide technology from DuPont Co.  China wanted to develop the titanium process used create a white pigment used in paint, plastic and paper.

Pangang, one of China’s largest titanium pigment producers and a state-owned company, argued that federal prosecutors could not legally deliver the charges to Pan America Inc.

White agreed.

He found that Pangang Group and its officials  cannot be served the summons to respond to the indictment through its American-based subsidiary, Pan America, Inc., which is 75 percent owned by Pangang.

“Because the court finds that the government has not established that Pangang Group has the requisite control over Pan America, the court finds that the government has nto established that Pan America acted as Pangang Group’s general agent,” White wrote.

A summons must be delivered to a company agent authorized to receive it.  The government prosecutors argued that it satisfied the requirement by delivery to Pan America, because the company has long been the general agent for Pangang in the U.S.

The action does not eliminate the charges against Walter Liew, who is accused of selling trade secrets belonging to DuPont to companies controlled by the People’s Republic of China.  Liew and his wife, Christina Liew, were charged in 2011 with witness tampering, conspiracy and lying to authorities in connection with alleged theft of the valuable chemical technology from DuPont.

Liew allegedly has links to high ranking Chinese government officials, including meeting in 1991 with Luo Gan, a high-ranking official in the Communist Party Central Committee.  He went on to become a member of the PRC Politburo.

Liew allegedly received over $20 million in proceeds from the sales of TiO2 technologies to companies in the PRC.

The technology was developed by DuPont in the 1940s.

Case:  U.S. v. Pangang Group Co., No. CR11-573JSW




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