Jury Convicts Engineer of Selling DuPont Secrets to China

Jury Convicts Engineer of Selling DuPont Secrets to China Jason Doiy Melinda Haag, United States Attorney, Department of Justice

SAN FRANCISCO — An East Bay businessman has been found guilty of stealing trade secrets from the industrial giant DuPont and selling them to China as part of an economic espionage conspiracy.

On the fifth day of deliberations, a San Francisco jury handed federal prosecutors a complete victory on a 22-count indictment. Walter Liew, 56, was also convicted on Wednesday of possessing trade secrets, filing false tax returns and witness and evidence tampering, among other charges. He stood trial with business partner Robert Maegerle, a 78-year-old former DuPont engineer who was convicted on charges including trade secret theft and witness and evidence tampering.

The prosecution had strong political undertones, with the Justice Department tying the case to its efforts to combat domestic spying by China. It was among the first economic espionage cases to go to trial and one of the most significant white-collar prosecutions of U.S. Attorney Melinda Haag’s tenure.

“Justice is served,” Haag said. “We are gratified by the jury’s time and attention.”

The hard-fought trial pit Assistant U.S. Attorneys John Hemann and Peter Axelrod against Liew’s defense team at Keker & Van Nest. Stuart Gasner, Liew’s lead lawyer, said he was disappointed with the verdict.

“Walter Liew is a good man in whom we believe and for whom we will continue to fight,” he said in a statement.

U.S. District Judge Jeffrey White set a sentencing hearing for Liew and Maegerle on June 10. Both men could face more than 15 years in prison. Liew was remanded to custody after the verdict.

Liew, a U.S. citizen of Chinese descent, was accused of handing China the keys to E.I. du Pont de Nemours & Co.’s process for making titanium dioxide, or TiO2, a commercially valuable white pigment. Prosecutors told jurors that Chinese officials coveted TiO2 and paid Liew about $28 million to help them build manufacturing plants of their own.

Throughout the nearly two-month trial, prosecutors relied heavily on Liew’s own words, particularly a letter in which Liew detailed a benefit thrown in his honor by the Chinese government. Gasner dismissed the letter as cultural “puffery” that is prevalent in Chinese business.

The defense also disputed that details of DuPont’s decades-old process for manufacturing TiO2 met the legal definition for trade secrets. Atlanta lawyer Jerome Froelich told jurors that his client, Maegerle, was convinced his confidentiality obligations to DuPont had expired long ago.

“It was a tough trial,” Froelich said in an interview. “I thought we had a chance.”

Gasner fought to keep Liew out on bail after the verdict was read, arguing that his client had been forced to confront the possibility of a guilty verdict during the long prosecution.

“The fact that that’s come to pass doesn’t really change his flight risk,” Gasner told White.

But Hemann soon brought White around to his side. He reminded the judge that the government believes Liew has more than $17 million overseas.

“There are substantial assets available to Mr. Liew in China,” he said. “That provides an obvious place for Mr. Liew to go to enjoy the fruits of his criminal activity.”

Contact the reporter at jlove@alm.com.

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