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April 23, 2021Greeneville, TN, United StatesFinancial Crimes

Federal jury convicts US citizen of conspiracy to commit economic espionage, theft of trade secrets and wire fraud

GREENEVILLE, Tenn. — A federal jury convicted a Ph.D. chemist of charges associated with the theft of trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings for the inside of beverage cans.

The announcement was made on April 22, by the acting U.S. Attorney for the eastern district of Tennessee and the Department of Justice National Security Division.

Homeland Security Investigations (HSI) and the FBI investigated the case.

Following a twelve-day trial, Dr. Xiaorong You, aka Shannon You, 59, of Lansing, Michigan, was convicted of conspiracy to commit trade secret theft, conspiracy to commit economic espionage, possession of stolen trade secrets, economic espionage and wire fraud. You, was originally indicted in February 2019, for trade secret offenses and wire fraud and was charged in a superseding indictment with economic espionage and conspiracy to commit economic espionage in August 2020.

“Theft of trade secret and protected information from American companies poses a threat to our overall national and economic security,” said HSI Special Agent in Charge Jerry C Templet, Jr. “HSI is committed to working with our law enforcement partners to help stop these illegal and deceptive practices that allow companies in other countries to profit by using stolen information that our companies have paid millions of dollars to develop.”

According to court documents and evidence presented at trial, Dr. Xiaorong You, aka Shannon You, 59, of Lansing, Michigan, stole valuable trade secrets related to formulations for BPA-free coatings for the inside of beverage cans. You, was granted access to the trade secrets while working at The Coca-Cola Company (Coca Cola) in Atlanta, Georgia, and Eastman Chemical Company (Eastman) in Kingsport, Tennessee. The stolen trade secrets belonged to major chemical and coating companies including Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, Sherwin Williams, and Eastman, and cost nearly $120,000,000 to develop.

Court documents and trial evidence showed that You stole the trade secrets to set up a new BPA-free coating company in China. You and her Chinese corporate partner, Weihai Jinhong Group, received millions of dollars in Chinese government grants to support the new company (including a Thousand Talents Plan award). Documents related to her Thousand Talents Program application were admitted at trial. Those documents, and other presented evidence, showed her intent to benefit not only Weihai Jinhong Group, but also the governments of China, the Chinese province of Shandong, and the Chinese city of Weihai, as well as her intent to benefit the Chinese Communist Party.

Until recently, BPA was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss and prevent the container from corroding or reacting with the food or beverage contained therein. However, due to BPA’s potential health risks, companies began searching for BPA-free alternatives. As witnesses from the chemical and coating companies testified at trial, developing these BPA-free alternatives was a very expensive and time-consuming process.

From December 2012 through Aug. 31, 2017, You was employed as Principal Engineer for Global Research at Coca-Cola, which had agreements with numerous companies to conduct research and development, testing, analysis and review of various BPA-free technologies. Because of her extensive education and experience with BPA and BPA-free coating technologies, she was one of a limited number of Coca-Cola employees with access to BPA-free trade secrets belonging to Akzo-Nobel, BASF, Dow Chemical, PPG, Toyochem, and Sherwin Williams. From approximately September 2017 through June 2018, You was employed as a packaging application development manager for Eastman, where she was one of a limited number of employees with access to trade secrets belonging to them.

Sentencing is set for November 1, 2021.

HSI is a directorate of U.S. Immigration and Customs Enforcement (ICE) and the principal investigative arm of the U.S. Department of Homeland Security (DHS), responsible for investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move. HSI’s workforce of over 10,400 employees consists of more than 7,100 special agents assigned to 220 cities throughout the United States, and 80 overseas locations in 53 countries. HSI’s international presence represents DHS’s largest investigative law enforcement presence abroad and one of the largest international footprints in U.S. law enforcement.