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Former Employee Stole Ford Secrets Worth $50 Million 236

Posted by Soulskill
from the yu-did-it dept.
chicksdaddy writes "A ten year veteran of US automaker Ford pleaded guilty in federal court on November 17 to charges that he stole company secrets, including design documents, valued at between $50 million and $100 million, and shared them with his new employer: the Chinese division of a US rival of Ford's. Xiang Dong ('Mike') Yu admitted to copying some 4,000 Ford Documents to an external hard drive, including design specifications for key components of Ford automobiles, after surreptitiously taking a job with a China-based competitor in 2006. Yu, who took a job for Beijing Automotive Company in 2008, was arrested during a stopover at Chicago in October, 2009. The FBI seized his Beijing Automotive-issued laptop, and an analysis found 41 stolen Ford specification documents on the hard drive. He faces five to six years in prison and a $150,000 fine (PDF)."
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Former Employee Stole Ford Secrets Worth $50 Million

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  • Wake up, people. (Score:5, Interesting)

    by ScrewMaster (602015) * on Monday November 22, 2010 @11:21PM (#34313536)

    valued at between $50 million and $100 million

    That's probably an inflated value. When companies get burned like this, they generally vastly overstate the value of the stolen goods.

    and shared them with his new employer: the Chinese division of a US rival of Ford's.

    Hello boys and girls. Can you say "tip of the iceberg?" I knew you could.

    He faces five to six years in prison and a $150,000 fine (PDF).

    Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.

    • Re:Wake up, people. (Score:5, Informative)

      by toastar (573882) on Monday November 22, 2010 @11:24PM (#34313546)

      Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.

      8 years

      http://www.foxnews.com/world/2010/07/04/chinese-court-sentences-geologist-tortured-state-security-agents-years-jail-1624851947/ [foxnews.com]

    • Re: (Score:3, Insightful)

      by causality (777677)

      Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.

      Playing Devil's advocate here: so we can commit injustice and that's okay, because another country's injustices justify it?

      I'm not claiming that this punishment is too harsh or too lenient for that matter. I'm not familiar enough with this incident nor do I know why this is a criminal matter and not a civil

    • by mbone (558574) on Monday November 22, 2010 @11:30PM (#34313596)

      I bet that hypothetical American Engineer would avoid stop-overs in Beijing.

    • Re: (Score:3, Informative)

      by Nursie (632944)

      I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.

      FTFS - "Chinese division of a US rival of Ford's."

      Sounds like american companies doing it to each other, to me.

      • Re:Wake up, people. (Score:4, Informative)

        by magarity (164372) on Tuesday November 23, 2010 @12:09AM (#34313834)

        "Chinese division of a US rival of Ford's."

        Sounds like american companies doing it to each other, to me.

        All the manufacturing companies in China must be majority owned by a local Chinese company which is owned by Chinese citizens. So it may be a joint venture partnership "division" of a US rival who owns a large chunk, but no, it is not just two US companies involved.

    • Re:Wake up, people. (Score:5, Interesting)

      by jms (11418) on Tuesday November 23, 2010 @12:01AM (#34313796)

      I suppose that by failing to elaborate on how they came up with the value, they invite speculation.

      Sometimes, when asked the value of a document, companies will give a figure that corresponds to the cost of producing that document. In other words, if you were to add up all the engineer-hours involved in designing a car, it might add up to $50-$100M. Since Ford is not deprived of access to their own design (because they still have copies of it), this does not represent $50-$100M losses to Ford. They could be saying that, by stealing the design, the Chinese company saved themselves $50-$100M in engineering costs, but that explanation isn't really complete, because the design was manufactured, so the Chinese company could easily buy one and reverse engineer it. So, by stealing the design, the Chinese company at the most saved themselves the cost of a full reverse-engineering job on the Ford car. This might still be a substantial figure. However, automobile manufacturers regularly buy each others products and reverse engineer them anyway, to keep track of what the competition is doing, so the Chinese auto company's engineers were probably already pretty familiar with the basic Ford design before they stole the documents. They probably had already done most of the reverse engineering. These documents let them fill in the gaps in their knowledge.

      This has damaged Ford to the extent that the design revealed trade secrets that the Chinese car company might not have been able to reverse engineer from existing cars. This might allow them to improve their cars to the extent that some number of people choose to buy Chinese cars instead of Fords. That is the real value of the stolen documents and might be worth $50-$100 million or more.

      • by afidel (530433) on Tuesday November 23, 2010 @12:18AM (#34313886)
        It could also be that the design docs were from the manufacturing process rather than the product itself. The process engineering behind a plant could easily be worth significantly more than even $100M because the plants today cost upwards of $1B to design, build, and furnish and the lifetime efficiency gains for a well engineered plant can also reach into the billions.
        • by rjstanford (69735)

          It could also be that the design docs were from the manufacturing process rather than the product itself. The process engineering behind a plant could easily be worth significantly more than even $100M because the plants today cost upwards of $1B to design, build, and furnish and the lifetime efficiency gains for a well engineered plant can also reach into the billions.

          That, and its a lot harder to buy one of your competitors' manufacturing plants and reverse engineer it. Plus you have to pay customs getting the plant off the boat into the country... its just a big mess.

      • by woolio (927141)

        Let me put it this way:

        I work in a high technology company that makes a lot of software.

        If our source code got into the hands of the competition, it would set them back a few decades.

        They would run into so many bugs without knowing the 'workarounds' (or just flat out what to avoid), they wouldn't know what hit them.

        Considering the crap that American car companies design, I think the Chinese are probably just trying to figure out what NOT to do.

        • by Ihmhi (1206036)

          Ah, so that's why developers never comment their code - it's to protect industrial secrets!

        • by Balthisar (649688)

          No, no, that would be the case if it were Chrysler or GM product design. But this was the *good* stuff that they stole.

    • More to the point, if they actually implement any of this stuff, it'll be an open secret the moment they start producing it, right? I mean, we're not talking about some fabulous machine that produces cars - we're talking about the cars themselves, which anyone can buy and tear down. If I'm wrong, I'd appreciate someone who understands the industry letting me know, but it seems that the product engineering is the one part of car manufacturing that you can't possibly hide. Right?
    • Re:Wake up, people. (Score:5, Informative)

      by wvmarle (1070040) on Tuesday November 23, 2010 @02:52AM (#34314826)

      Maybe not american, still accusation is theft of state secrets: 10 years prison.

      http://www.theaustralian.com.au/business/mining-energy/rio-tintos-stern-hu-jailed-10-years/story-e6frg9df-1225847088979 [theaustralian.com.au]

      • by wvmarle (1070040)

        Plus a fine of RMB 1 mln (approx USD 150,000).

        Sorry for replying to myself, was too quick in posting.

    • by JamesP (688957)

      I agree

      And by the way, what kind of "secrets" are that?!

      How they are going to screw up their next models?
      How they are going to keep pushing gas guzzling SUVs after SUVs?
      The design of the new models? (hint: they're going to look like exactly the same as last years model)

      Really guys, really...

      Sometimes I think that some companies have overall lower intelligence than others. Like, stealing "secrets" for '1+1'

    • by sorak (246725)

      He faces five to six years in prison and a $150,000 fine (PDF).

      Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.

      I'd say it depends on the real value of what he stole. If he stole something valued at 100 million, then giving it back and paying a fine equal to 0.15% of that amount seems like a slap on the wrist.

      I do disagree with the notion that we should judge our actions based on how China's laws work. Had he been from a country where this is legal, it wouldn't make sense to let him go, or reduce his sentence, so we shouldn't argue for a tougher sentence because he is from a country where such is the norm.

  • by ScrewMaster (602015) * on Monday November 22, 2010 @11:25PM (#34313554)

    The FBI seized his Beijing Automotive-issued laptop, and an analysis found 41 stolen Ford specification documents on the hard drive.

    Dear "Mike",

    When you get out, and if you decide to again play industrial spy, try this [truecrypt.org]

  • by pecosdave (536896) * on Monday November 22, 2010 @11:26PM (#34313568) Homepage Journal

    have bad power steering pumps and short life torque converters from now on?

    (sorry, had to go there, the problems I've had to deal with on my own/families/friends Fords the most)

    • Re: (Score:3, Informative)

      by whoever57 (658626)

      have bad power steering pumps and short life torque converters from now on?

      or V6 engines that die prematurely due to head gasket failure?

      • have bad power steering pumps and short life torque converters from now on?

        or V6 engines that die prematurely due to head gasket failure?

        Head gaskets are called engine failure now?

      • by phantomfive (622387) on Monday November 22, 2010 @11:47PM (#34313718) Journal
        Ford's been doing better. Over the last decade, they've built up some engineer teams in Europe (is it flamebait to say they are better because they are away from US unions?) who really are doing top notch work. The Fusion, for example, ranked #1 in its category for reliability. The Mustang has 300 horsepower at 30 MPG. I own a Honda, but if Ford continues the direction they're going, my next car may well be a Ford. Now if only they would do something about that horrid logo.....
        • by happyhamster (134378) on Tuesday November 23, 2010 @02:14AM (#34314598)

          >>Europe (is it flamebait to say they are better because they are away from US unions?)

          Probably yes, because:

          1) Workers in good old Europe have stronger unions than the withering joke the U.S. has.

          2) European workers enjoy a terrific safety net which looks like the great wall of china compared to the spider web the U.S. wage slaves have. Never underestimate explosion of creativity in a geek who feels safe for economic future of his family.

        • by wvmarle (1070040)

          This also explains why Ford was the only one of the big-three not begging for cash handouts from your central government. Not sure whether they actually got any bailout money or so, I didn't follow it well enough.

          Anyway. Ford has been selling quite well in Europe for a very long time - many decades. My parents used to own one, and were quite happy with it. They called it the most European American car when it comes to quality, reliability and overall design. American cars have the name to be oversized and

          • by Binestar (28861)

            This also explains why Ford was the only one of the big-three not begging for cash handouts from your central government. Not sure whether they actually got any bailout money or so, I didn't follow it well enough.

            Ford didn't ask for Bailouts because they had just finished mortgaging the company through private sector borrowing because they saw the writing on the wall. They got in just before the available cash in the US tightened up so nothing was being loaned out. Because they had just got a nice cash infusion, Ford was the only company that didn't require a bailout.

            I will be buying Ford when I need a car again just because they didn't need a bailout, even if they were having problems, they handled them on thei

        • Have you driven the Mustang though? I rented one in Florida a year or two back (V8), and it drove like one of their F150s. Fuel economy doesn't fix other engineering problems.

          • What car in that class do you suggest driving? I drove one a few years back, and it did feel a bit heavy, but it certainly beat the GM convertible I tried more recently.
            • Try a Corvette if possible (I'm aware it's a bit above the Mustang's class). Renting is difficult, but buying one isn't that expensive if bought used (C6, the latest generation, go for about $27-29K at Carmax around here with 20-30K miles on them). I used to own a '99 Targa Top and '01 Convertible (both bought used) and they were awesome. Excellent handling and quite a bit of power.

              If that's not your thing, I'd look at the Subaru WRX, a Lexus IS250, a Mini Cooper (++handling), or a Mazda RX-8. I've had grea

        • My current car is a ford - a mondeo - and I'm perfectly happy with it, power-wise and l/100km-wise as well. My next car will also be a mondeo (if we get them in SA again).
        • by Balthisar (649688)

          Ford engineers are *not* unionized.

        • by Timo_UK (762705)
          If you think the US unions are strong then you have not seen the European/German ones! I know somebody who wants VPN access to his company network but the unions would not allow it (they think the company would force him to work from home). This way he has no access to his email on business trips.
    • Of course. Part of the skill of a good engineer is to ensure the parts fail as soon as possible after the warranty expires.

  • Let's see, steal $ 75 million USD worth of stuff. 10% "finders feee" seems reasonable. So, with a 6 year sentence, that's over $ 1 million USD / year. (The fine is of course irrelevant in this scenario.)

    I bet a lot of people would sign up for that.

  • Pffft...amateur... (Score:5, Interesting)

    by afabbro (33948) on Monday November 22, 2010 @11:37PM (#34313650) Homepage

    Small potatoes [cnet.com]

    "Lopez was head of purchasing for GM and defected abruptly to VW in 1993. GM accused Lopez of masterminding the theft of more than 20 boxes of documents on research, manufacturing and sales. The world's largest international corporate espionage case officially ended in 1997, when VW admitted no wrongdoing but settled the civil suit by agreeing to pay GM $100 million in cash and spend $1 billion on GM parts over seven years.

  • "Ford Design Documents?" ... "$100 million"...

    LOL

    90's-era Ford's weren't exactly the pinnacle of world-class engineering.

    Now if they claimed $100 million dollars in plans to trick consumers into buying three transmissions, two alternators, and four water pumps for every car they sold, I'd maybe believe it...

    • by sjwt (161428)

      Because as well all know, the turn around on any new R&D is 1-3 months tops, nothing is ever the fruition of 5-10years R&D.

    • by Obyron (615547)
      So your counterargument is that Ford sucked 20 years ago? My head hurts.
      • Yes...and given that I keep cars for up to 15 years - It's going to take more than a new Radio with "Microsoft Technology" (1-3 month R&D Cycle) to wow me back into a Ford.

        Prove to me that you car will last that 10 or 15 years - like my Hondas - and my Toyotas - and *then* we will talk. Don't try to bullshit me with a Consumer Reports survey that goes 3 years back - or a JD Power & Associates study that measures **INITIAL** quality.

        That kind of reputation *does* take 20 years to shake, sorry to

  • Why was the FBI and taxpayer money involved?

    • From the FBI's website [fbi.gov]

      The FBI investigates matters relating to fraud, theft, or embezzlement occurring within or against the national and international financial community. These crimes are characterized by deceit, concealment, or violation of trust and are not dependent upon the application or threat of physical force or violence. Such acts are committed by individuals and organizations to obtain personal or business advantage. The FBI focuses its financial crimes investigations on such criminal activities as corporate fraud, securities and commodities fraud, health care fraud, financial institution fraud, mortgage fraud, insurance fraud, mass marketing fraud, and money laundering. These are the identified priority crime problem areas of the Financial Crimes Section (FCS) of the FBI.

    • by nedlohs (1335013)

      They are often involved when someone is being arrested for a Federal crime.

  • by walterbyrd (182728) on Tuesday November 23, 2010 @12:17AM (#34313878)

    This story come right on the heals of that other slashdot story: "Malaysian Indicted After Hacking Federal Reserve."

    http://yro.slashdot.org/story/10/11/22/1446256/Malaysian-Indicted-After-Hacking-Federal-Reserve

    I guess US companies are saving a bundle by putting so much trust in foreign nationals.

    These two stories are hardly unique.

    Sure, offshoring jobs has ruined the careers, and lives, of countless Americans, but look at the money that the US companies are saving!

  • When I was working at a defense contractor, they would tell us in training about industrial espionage being a huge problem. And not just by other companies.

    I would surmise that most American companies are blissfully unaware about the threat they face.

  • The government should be giving this guy a medal, not prosecuting him. By sending those designs and documents to China, he single-handedly set their automotive industry back by at lease a decade.

  • Or he'd REALLY get nailed, not the slap on the wrist he's getting1
  • old news (Score:2, Interesting)

    by Malenx (1453851)

    This is how Chinese companies generally innovate, they steal the information so they don't have to invent it themselves. We were constantly trained to keep eyes out for people stealing confidential and classified information when I worked on some Air-force Systems. Even back then, we were told the greatest threat was people being bought out by the Chinese, the US government were already dealing with tons of them trying to steal military technology. They are so far behind, they would generally do anything

    • I'm guessing you don't know about Boeings long stint with industrial espionage earlier this decade? In 2003 they enticed a DoD employee to pass them extensive confidential details of a rivals bid to supply the USAF with tanker aircraft, sparking a criminal investigation within the DoD and punitive measures against Boeing. Again in 2003 Lockheed successfully sued Boeing over allegations that a former Lockheed employee took significant quantities of confidential and proprietary Lockheed corporate documentati
  • by HW_Hack (1031622) on Tuesday November 23, 2010 @01:08AM (#34314198)

    - hard at work stealing our information and creative processes. People (that includes politicians + CEOs) just tend to forget that China is not some quaint country that has rules of law and enforces those laws. This is a state run government and economy - anything goes to enrich the state and acrue power. We've already sent most of our production machines over there - now they are coming back to collect any intellectual property they can grab as well.

    They are starting to eat our lunch and will shortly just take our lunch money

    And contrary to some comments -- Ford makes some damn fine vehicles -- I dearly miss my 2001 F-150 4x4 - great truck

    • by microbee (682094)

      Like this one [amazon.com]?

    • Ford makes some damn fine vehicles

      My '85 E150 with almost 180,000 miles runs like a champ. Just failed smog because the cat failed, but they said the exhaust directly from the engine is clean as a whistle.

    • See my above comment about it not just being the Chinese (Boeing/Lockheed, 2003. Boeing/Airbus, 2003). Your own closet has some skeletons as well...
    • by couchslug (175151)

      That's why WE need to do the same thing to compete, and fuse state and business into an international weapon to make money. The Chinese system is more profitable, has brought the people of China vastly more wealth than ever in their history, and took China from a smoking ruin in 1948 to a near-superpower now.

      We must have wealth. Business is war.

    • by houghi (78078)

      It is not theft. It is copyright infringement.

      It is not as if these companies suddenly are unable to use that information anymore.

      • by Obyron (615547)
        Actually it's Theft of Trade Secrets. Not Copyright. Not Trademark. Trade Secrets. That other branch of intellectual property law that doesn't get dusted off and discussed too often, because you're less likely to find it on a torrent tracker. The problem isn't that they've "lost" the information. They haven't. The problem is that that information can represent 50-100 million dollars worth of engineering efforts that the other team will not have to pay for, which damages the competitive environment, fucks wi
  • Sentence (Score:4, Insightful)

    by Andy Smith (55346) on Tuesday November 23, 2010 @03:41AM (#34315024) Homepage

    "five to six years in prison and a $150,000 fine"

    Can you imagine how awfully unbalanced it would seem if people got lesser sentences for causing death by dangerous driving?

    • by Ecuador (740021)

      Surely the judge was thinking that this case would allow the rival company construct cheaper cars by saving R&D costs, thus enabling MORE people to buy a car and cause death by driving dangerously!

  • by dcavanaugh (248349) on Tuesday November 23, 2010 @07:56AM (#34316164) Homepage

    Returning home, outside US jurisdiction? Just wondering.

    Gotta love those non-compete agreements. The employer can harass you to the end of the earth for simply trying to get a job after being laid off (even if you have no access to "secrets" at all). Meanwhile, if you take a boatload of top-secret material offshore, all they can do is shrug their shoulders and have the legal department send a few nastygrams.

    • Re: (Score:3, Informative)

      by EricWright (16803)

      Wow, put away your xenophobia for 5 minutes to RTFA. He was a naturalized US Citizen who completed his doctorate at UChicago.

      • Spare me the xenophobia crap.

        TFA does not mention citizenship. Maybe a link of a link of a link does, but I never saw it.

        In any event, mentioned H1-B because I have direct knowledge of a case where the employer was shocked...SHOCKED! to discover they had no recourse when an H1-B returned to his home country and brought proprietary information to a competitor.

        Although anyone can leave the country and take trade secrets with them, you have to wonder about the wisdom of giving such secrets to people who have

  • by The Hatchet (1766306) on Tuesday November 23, 2010 @08:09AM (#34316252)

    That Ford and its competitors have stolen significantly more information than that from independent inventors, small firms, employees, etc. Call it stealing or not, but making millions-billions on others work is immoral and stealing in my book, even if you make them sign something to let you.

  • When I worked for BMW, I visited their UK design centre many times during the developement stage of the X5.

    There was a workshop, big enough for two cars, and it always held two cars. A team of techs would strip the car, measure and digitise the parts. Anyone in the company could borrow any car part they liked complete with drawings.

    I beleive it's called reverse engineering in the game. :p

    Stealing drawings? Laughable.

    When I worked for BMW, inbetween leads for new models, we often did work for Renault, Peugeo
  • "Corporate espionage": Chinese for "good morning."

  • If the Chinese had waited a few more years, Ford would have *given* them the documents anyhow as part of an offshoring initiative. And what does China hope to gain from these documents? They are going to ignore them anyhow, as each subcontractor cuts a corner or two to maximize profit.

    So you wind up with a car with paper-mache quality steel, that folds the passenger compartment upon impact, with airbags that don't work, and the door handle falls off while still at the dealership.

    Seriously, have you *seen* t

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