A pair of Chinese agricultural scientists, one of whom lives in Arkansas, were arrested by federal investigators Wednesday and are accused of conspiring to steal trade-secret seeds from a biopharmaceutical company in Kansas and hand them over to a Chinese delegation that visited this summer.
Wengui Yan, 63, a research geneticist at the Agriculture Department’s Dale Bumpers National Rice Research Center in Stuttgart since 1996, appeared in federal court in Little Rock on Thursday on one count of conspiring to steal trade secrets.
According to federal prosecutors, the case will be tried in the U.S. District Court of Kansas, where another scientist, Weiqiang Zhang, 47, appeared Thursday morning on the same charge. If convicted of the conspiracy charge, Yan and Zhang could face up to 10 years in prison as well as a $250,000 fine.
The investigation, spearheaded by FBI investigators in Kansas and Arkansas, dates to October 2010, according to a federal arrest complaint that contends Zhang stole two unique types of seeds from the unidentified Kansas company where he worked and supplied them to a group of Chinese nationals.
According to the complaint, which referenced recorded phone calls as well as emails, Yan and Zhang worked together to bring the Chinese delegation to the United States for a tour of agricultural businesses and universities and hosted them during their trip.
On Aug. 7, U.S. Customs and Border Protection officials searched the checked and unchecked luggage of the Chinese delegation - which had been visiting the United States since July 16-and found two types of seeds that delegation members said were from an “agricultural research center in Arkansas and from the son a farmer also visited in Arkansas” and were taken for research purposes.
The seeds were stowed in a series of envelopes in different bags and some were wrapped in a Best Western hotel “remote control bag” and a July 23 edition of the Arkansas Democrat-Gazette.
After analysis at a USDA lab, the seeds were confirmed to be a special type of rice seed only developed by the company that employed Zhang.
Neither officials from the U.S. attorney’s offices in Kansas or Arkansas, nor FBI officials in Arkansas, would say what happened to the Chinese delegation found with the seeds or at what airport they were stopped.
“Those details will come out as the prosecution progresses,” said Kim Brunell, a special agent and spokesman for the FBI’s Little Rock field office.
Jim Cross, spokesman for the U.S. attorney’s office in Kansas, said prosecutors did not identify the companies or schools involved for the sake of protecting them as victims.
According to investigators, the unidentified company that employed Zhang has invested $75 million into the technology that made the seeds’ design and production possible.
The seeds themselves were capable of expressing proteins that could be applied in medical and pharmaceutical research and products, including treatments to halt or prevent liver disease, osteoporosis and inflammatory bowel disease.
Zhang, a Chinese citizen working legally in the United States as a permanent resident, had worked for the unidentified company since 2008 and had access to the seeds.
When federal agents raided his Manhattan, Kan., home Wednesday, they found the same types of seeds that had been found in the luggage of the Chinese delegation in August.
Zhang admitted to hosting the group but denied supplying them the proprietary seeds and “was at a loss to explain … how the delegation … came into possession of agricultural seeds produced only by [the company],” according to the complaint.
He later said he had the company’s seeds stored in his home for “‘private research’ purposes,” according to the complaint.
Both Zhang and Yan went to the Crops Research Institute in China in 2012 where they met with two of the officials they hosted during the summer.
Zhang took off work July 17 and 18 to tour agricultural facilities and universities in Kansas and Missouri with the delegation.
On July 22, FBI agents watched Yan pick up the Chinese delegation from a Best Western Hotel in Stuttgart and take them to the Dale Bumpers research center.
After listening to a recording of a phone conversation between him and Zhang, Yan admitted to federal agents that he and the Kansas scientist had been discussing a rare type of seed sought by a member of the delegation and no longer available at Yan’s place of work.
He also admitted to forging his supervisor’s signature on some documents as he worked to set up a visit for the Chinese delegation, according to the complaint.
Brunell declined to comment further on the tactics or other findings of the investigation but said it was an extremely important operation in protecting American trade secrets.
“It’s something that the FBI is uniquely poised to investigate, being within the realm of counter-intelligence investigations,” Brunell said.
Yan remained in custody at the Pulaski County jail Thursday night. He will appear at a federal detention hearing today. Federal officials did not know when he would be transported to Kansas to appear in federal court there.
Arkansas, Pages 11 on 12/13/2013