Newly Unsealed Federal Indictment Charges Software Engineer with Taking Stolen Trade Secrets to China

A software engineer at a suburban Chicago locomotive manufacturer stole proprietary information from the company and took it to China, according to an indictment unsealed this week in federal court in Chicago.

Xudong Yao, also known as “William Yao,” 57, is charged with nine counts of theft of trade secrets. Yao is currently at large and believed to be residing in China.

The indictment was announced by Assistant Attorney General for National Security John C. Demers, U.S. Attorney John R. Lausch Jr. for the Northern District of Illinois and Special Agent-in-Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office. The government is represented by Assistant U.S. Attorney Peter M. Flanagan of the Northern District of Illinois.

According to the indictment, Yao began working for the suburban Chicago manufacturer in August 2014. Within two weeks of being hired, Yao downloaded more than 3,000 unique electronic files containing proprietary and trade secret information relating to the system that operates the manufacturer’s locomotives, the indictment states. During the next six months, Yao downloaded numerous other electronic files containing proprietary and trade secret information, including technical documents and software source code, the indictment states. During the time of this illicit downloading of trade secrets, Yao allegedly simultaneously sought, negotiated, and accepted employment with a business in China that provided automotive telematics service systems.

The suburban Chicago manufacturer terminated Yao in February 2015 for reasons unrelated to the alleged theft, which at that time had not been discovered. Shortly thereafter, according to the indictment, Yao made copies of the stolen trade secret information and then traveled to China in July 2015 and began working for the Chinese company.

On Nov. 18, 2015, Yao traveled from China to O’Hare International Airport in Chicago, according to the indictment. At the time, he had in his possession the stolen trade secret information, including nine complete copies of the suburban Chicago company’s control system source code and the systems specifications that explained how the code worked, the indictment states. Yao returned to China at some point thereafter.

The indictment was returned in December 2017 and ordered unsealed Wednesday.
[link to www.justice.gov (secure)]