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Engineer Convicted of Selling Space Shuttle Secrets to China

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A former Rockwell and Boeing engineer from Orange County, Calif., was
remanded into custody this morning after a federal judge convicted him
of charges of economic espionage and acting as an agent of the People’s
Republic of China, for whom he stole restricted technology and Boeing
trade secrets, including information related to the Space Shuttle
program and Delta IV rocket.

Dongfan "Greg" Chung, 73, who was employed by Rockwell International
from 1973 until its defense and space unit was acquired by Boeing in
1996, was found guilty by U.S. District Judge Cormac J. Carney, who
presided over a three-week bench trial last month.

In his ruling read this morning in court, Judge Carney found Chung
guilty of conspiracy to commit economic espionage, six counts of
economic espionage to benefit a foreign country, one count of acting as
an agent of the People’s Republic of China and one count of making
false statements to the FBI.

Immediately following the reading of the verdicts, Judge Carney
remanded Chung into custody, where he will remain until his sentencing,
which was scheduled for Nov. 9, 2009. Chung had been freed after being
arrested by special agents with the FBI and investigators with NASA in
February 2008.

Chung, a native of China who is a naturalized U.S. citizen, held a
"secret" security clearance when he worked at Rockwell and Boeing on
the Space Shuttle program. He retired from the company in 2002, but the
next year he returned to Boeing as a contractor, a position he held
until September 2006. At trial last month, the government proved that
Chung took and concealed Boeing trade secrets relating to the Space
Shuttle and the Delta IV rocket, materials he acquired for the benefit
of the PRC.

David Kris, Assistant Attorney General for National Security, said:
"For years, Mr. Chung stole critical trade secrets from Boeing relating
to the Space Shuttle and the Delta IV rocket – all for the benefit of
the government of China. Today’s verdict should serve as a warning to
others willing to compromise America's economic and national security
to assist foreign governments. The many agents, analysts and
prosecutors who worked on this important case deserve special thanks
for their efforts."

"Mr. Chung stole restricted technology for the benefit of a foreign
nation, and as a result he has lost the freedom he was offered by this
nation," said U.S. Attorney Thomas P. O’Brien. "The stolen technology
compromised not only the American company that developed and owned the
trade secrets, but national security as well because the secrets could
be used by the PRC to develop its own military technology."

Salvador Hernandez, Assistant Director in Charge of the FBI in Los
Angeles, stated: "The cost of Mr. Chung’s traitorous actions to
American security and the economy cannot be quantified, but have now
been exposed, and his ability to exploit critical technology has come
to an end. FBI counter-intelligence agents and NASA received the full
cooperation of the Boeing Company in building this three-year
investigation, the successful outcome of which marks the first
conviction by trial under the Economic Espionage Act of 1996. I’m
confident this milestone conviction will serve as a deterrent to
would-be spies contemplating theft of precious U.S. secrets."

The case against Chung resulted from an investigation into another
engineer who worked in the United States and obtained sensitive
military information for the PRC. That engineer, Chi Mak, and several
of his family members were convicted of providing defense articles to
the PRC. Chi Mak was sentenced last year to more than 24 years in
federal prison (see:

According to the evidence presented during the trial, individuals in
the Chinese aviation industry began sending Chung "tasking" letters as
early as 1979. Over the years, the letters directed Chung to collect
specific technological information, including data related to the Space
Shuttle and various military and civilian aircraft. Chung allegedly
responded in one undated letter that "I would like to make an effort to
contribute to the Four Modernizations of China." In various letters to
his handlers in the PRC, Chung referenced engineering manuals he had
collected and sent to the PRC, including 24 manuals relating to the B-1
Bomber that Rockwell had prohibited from disclosure outside of the
company and "selected federal agencies."

Between 1985 and 2003, Chung made multiple trips to the PRC to deliver
lectures on technology involving the Space Shuttle and other programs,
and during those trips he met with PRC government officials, to include
agents affiliated with the People’s Liberation Army. Chung and PRC
officials exchanged letters that discussed Chung’s travel to China and
recommended methods for passing information, including suggestions that
Chung use Chi Mak and his wife Rebecca to transmit information. A May
2, 1987, letter from Gu Weihao, an official in the Ministry of Aviation
and China Aviation Industry Corporation, discussed the possibility of
inviting Chung’s wife, who is an artist, to visit an art institute so
that Chung could use her trip as an excuse to travel to the PRC. This
same letter suggested that passing information to the PRC through Chi
Mak would be "faster and safer" and concluded with the statement: "It
is your honor and China’s fortune that you are able to realize your
wish of dedicating yourself to the service of your country."

On Sept. 11, 2006, FBI and NASA agents searched Chung’s house and found
more than 250,000 pages of documents from Boeing, Rockwell and other
defense contractors inside the house and in a crawl space underneath
the house. Among the documents found in the crawl space were scores of
binders containing decades’ worth of stress analysis reports, test
results and design information for the Space Shuttle.

Each charge of economic espionage carries a maximum possible penalty of
15 years in federal prison and a $500,000 fine. The charge of acting as
an agent of a foreign government carries a maximum penalty of 10 years
imprisonment and a $250,000 fine. The charges of conspiracy to commit
economic espionage and making false statements to federal investigators
each carry a maximum possible penalty of five years imprisonment and a
$250,000 fine.

In this morning’s ruling, Judge Carney acquitted Chung of one count of obstruction of justice.

The investigation in this case was conducted jointly by the FBI and NASA Counterintelligence.


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