SAN FRANCISCO He won't be home for the holidays.
But after 17 months in jail, the man accused of selling U.S. trade secrets to Chinese companies could soon be released on bond, thanks to a push from his lawyers at Keker & Van Nest.
In a departure from two prior orders, U.S. Magistrate Judge Nathanael Cousins in San Francisco tentatively agreed Friday to place Walter Liew on home detention with electronic monitoring and possibly a 24-hour security guard.
"The fair thing to do at this point in the case is to release Mr. Liew with greater security than was proffered before," said Cousins, who told lawyers he would set an appropriate financial bond after reviewing Liew's finances.
Prosecutors allege Liew and his wife handed China the keys to a secret method developed by E.I. du Pont de Nemours & Co. for manufacturing titanium oxide, an industrial pigment used to give paper, paint and plastic coatings a bright white color.
Assistant U.S. Attorneys Peter Axelrod and John Hemann, who are handling the economic espionage case, vigorously opposed Liew's release, which must still be approved by the district judge overseeing the case.
Axelrod said an electronic ankle bracelet wouldn't prevent Liew from finding a way to flee the country to China, where prosecutors insist Liew controls bank accounts in the names of family members.
"If this guy wants to go, he's gone," Axelrod told Cousins. "What you have in this case is a dishonest person with tens of millions of dollars that are unaccounted for."
In reaching his decision to grant bond, Cousins said he considered that the case remains far from trial and Liew's detention would likely stretch into a third year.
Cousins said safeguards could be found to reasonably, if not "perfectly," assure Liew's appearance in court, particularly given the nonviolent nature of the allegations.
"We're not talking about a uranium case here or some kind of nuclear secrets," Cousins said. "We're talking about titanium oxide."
Securing Liew's release has been a top priority for lawyers Stuart Gasner and Simona Agnolucci since Keker entered the case in April, replacing two previous sets of defense lawyers.
They proposed a financial bond of $2 million as sufficient to secure Liew's appearance and told Cousins preparing for trial would be impossible with their client in detention, unable to access a computer or review confidential information at the crux of the trade secrets case.
The 55-year-old Liew an American citizen with no passport, no criminal record and a 12-year-old son attending school in the East Bay does not pose a flight risk, argued Gasner, a former federal prosecutor.
"The idea that he would stow away on a Chinese tanker is somewhat ridiculous," he said.
Liew was born in Malaysia and immigrated to the United States in 1980, receiving a degree in electrical engineering from the University of Oklahoma.
He moved to the Bay Area in 1982 and worked for technology companies, including Advanced Micro Devices and Hewlett-Packard Co., before starting a series of small consulting businesses.
It was through his company USA Performance Technology Inc., headquartered in Oakland, that prosecutors allege Liew entered deals with Chinese companies to provide them with DuPont's proprietary method for producing titanium oxide, or TiO2. DuPont is the largest supplier of TiO2 worldwide and China was willing to pay Liew nearly $30 million for a piece of the action, prosecutors contend.
To fulfill three contracts with state-owned Chinese companies, Liew conspired with former DuPont employees willing to reveal closely guarded designs and technical information for a price, according to the indictment.
A federal raid on Liew's home turned up a key to a safe deposit box that contained two DuPont documents with specific descriptions of the TiO2 manufacturing process, prosecutors allege.
The indictment also names Liew's wife, Christina; two former DuPont employees; and China's Pangang Group, a state-owned enterprise consisting of four subsidiary corporations, who are accused of paying Liew for the DuPont secrets.
Serving the foreign entities to the satisfaction of U.S. District Judge Jeffrey White has proven a headache for prosecutors.
In July, White quashed service of indictment, saying there wasn't proof prosecutors had served a proper agent for the Pangang corporations.
Updating the court earlier this month, Hemann and Axelrod said the government has now successfully served two of the four entities. In October, they said, the FBI hand delivered summons to one Chinese executive while he attended a plastics conference in Kentucky.
Pangang Group attorney Robert Feldman, a Quinn Emanuel Urquhart & Sullivan partner, said he would file another motion to quash early next year.
Meanwhile, prosecutors told Cousins they intend to file a superseding indictment accusing Liew of money laundering profits from his deals with the Pangang Group through Singapore shell companies.
Gasner accused prosecutors in court filings of moving at a "glacial pace" and drowning the defense in a "Mount Everest of electronic materials."
To date, defense lawyers have received five terabytes of electronic discovery, which if printed would yield more than 250 million pages some of it in Chinese Gasner stated in a brief.
As for the trade secrets his client allegedly stole, Gasner argues much of the information is outdated, common knowledge in the industry, and in some cases, available from public sources like patents.
The case, Gasner wrote in Liew's motion for release, "is less the stuff of a spy novel and much more the grist of an ordinary civil trade secret case."