Chinese postdoc arrested for economic espionage in Wisconsin

Via Deborah Blum, the story of a really dumb really unwise postdoc:

A researcher at the Medical College of Wisconsin has been charged with stealing a possible cancer-fighting compound and research data that led to its development, all to benefit a Chinese university. Huajun Zhao, 42, faces a single count of economic espionage, according to a federal criminal complaint, an offense punishable by up to 15 years in prison and a $500,000 fine. 

Zhao was arrested Saturday and held without bail over the weekend pending a detention hearing in Milwaukee federal court on Monday, when he was ordered detained until trial. No date has been set. 

According to the complaint, Zhao worked as an associate researcher at the college, assisting professor Marshall Anderson by conducting experiments in pharmacology. On Feb. 22, Anderson set down three pill bottle-size containers of a cancer research compound called C-25, and later noticed they were missing from his desk. After searching extensively for the bottles, he reported them lost or stolen on Feb. 26. 

The next day, security video showed Zhao entering Anderson's office on Feb. 22, and leaving shortly after. No one else was seen entering the office on the videos. Security officials questioned Zhao, who didn't admit or deny taking the compound, but said he couldn't understand the questions, and that, regardless, everything would be resolved in 10 days.  

The public safety manager of the college, Jessica Luedtke, contacted the FBI. She said Zhao had been disciplined months earlier for putting lab data on his personal computer. The college staff also discovered that on a professional researcher's website, Zhao claimed to have discovered a cancer-fighting compound that he wanted to bring back to China, where he had been from December till mid-February...

The story only gets better:

On March 1, Zhao met with Anderson, college security and the FBI to go over his computer, hard drive and flash drive, where 384 items related to Anderson's C-25 research were discovered and deleted. He also had some research from another professor in the Hematology/Oncology department, without permission. 

Among Zhao's paperwork, investigators found more C-25 research and a grant application, written in Mandarin, claiming he had discovered the compound and seeking more Chinese funding to continue research. Anderson observed the application was identical to one he had submitted years earlier, in English. 

During the same March 1 review, college security informed the FBI that after his suspension on Feb. 27, Zhao had remotely accessed the Medical College servers and deleted Anderson's raw data from the C-25 research, information the college was later able to restore. 

Zhao denied stealing any research or deleting data, and again said he did not understand the questions, though his co-workers told investigators Zhao spoke excellent English and had lived in the United States several years. Finally, on Thursday, agents served a search warrant at Zhao's apartment and recovered a receipt for a package he sent to his wife in China on Feb. 28, the day after he was suspended from the Medical College. 

They also found that Zhao had purchased, on Feb. 3 and Feb. 17, identical airline tickets to China from Chicago for April 2. Asked about C-25, a spokeswoman for the Medical College said "it is being studied to see if it can assist cancer drugs in killing cancer cells and not damaging 'normal' cells," but declined further comment on the case. 

According to Zhao's LinkedIn page, he has worked at the Medical College of Wisconsin since August 2011, and before that spent four years at the University of Cincinnati as a postdoctoral fellow doing breast cancer research. From December 2006 to July 2007 he did cancer research at H. Lee Moffitt Cancer Center & Research Institute in Tampa. 

The headline should really read: "Dumb Postdoc reaches for assistant prof job, tenure in home country with lead compound." I think the odds suggest that C-25 does not have significant future economic value (certainly not $500,000). It would be interesting to know if it might be worth decent grant money in China. Conducting intellectual property crime via computer is unwise; at least, you should be a lot better at covering your tracks than it seems Dr. Zhao was.

Assuming that this report is complete (unlikely) and that the actions of Dr. Zhao are accurately described (probably true), it seems fairly clear that he was up to no good. It seems to me that this was a fairly run-of-the-mill example of the Money part of the MICE (Money, Ideology, Compromise, Ego) explanation for why people conduct espionage. Assuming the case doesn't fall apart, he's headed for prison; they don't joke about federal trials being long guilty pleas for nothing.

Here's the funny thing, though: Would it not have been better to let Dr. Zhao go, and see how far he could get in China with stolen IP? Why openly burn him when you could see how the Chinese system works and whether or not Zhejiang University (where Dr. Zhao seemingly obtained an assistant professor slot and not a insignificant school, I note) would have found him out and thrown him out? Sigh; the FBI is not known for its creative thinking.

UPDATE 11182013: Changing some language in the post to remove negative comments. 

WuXi employees steals compounds, offers them for sale

From this week's C&EN, an article about a WuXi employee in Shanghai from Marc Reisch:

A former employee of Chinese contract research firm WuXi PharmaTech has been convicted of stealing samples of several proprietary Merck & Co. compounds and offering them for sale over the Internet through a broker. WuXi says it was the first theft of intellectual property in the firm’s 11-year history. 

According to Chinese media reports, the unidentified WuXi assistant researcher was sentenced on May 22 by a Chinese court to pay restitution of $45,000. He also was sentenced to an 18-month prison term, although the sentence was suspended because he is a first-time offender. 

“We regret that one of our employees committed a crime on our premises,” says WuXi CEO Ge Li, identifying the victim of the theft only as “a customer.” Li also notes that the breach of the company’s security protocols is an isolated case and involves only samples of two patented compounds whose chemical structures are available in patent filings. 

A Merck spokesman tells C&EN only that Merck “believes the situation has been satisfactorily resolved.” According to Chinese reports, the pharmaceutical maker initially got wind of the conspiracy in March 2011 when it discovered a website that was offering to sell MK-3102, an oral dipeptidyl peptidase-4 inhibitor then under development as a treatment for type 2 diabetes.

I'm really rather skeptical that this is the first time that IP has been stolen from WuXi (or its customers.) Also, does this mean that large pharmaceutical companies need to be trolling the backwaters of the web, looking for structures of their proprietary compounds? 

I have long thought that it is interesting that there is very little active industrial espionage in the established pharmaceutical industry. That Abbott employees do not have to fend off Merck agents while taking their documents to the shredder bin suggests that there is simply not enough benefit to make such measures worthwhile. One wonders if, in China, such espionage efforts might just be worth the trouble? 

Don't steal your company's IP!

With the SOPA/PIPA blackout at Wikipedia today, it's appropriate that we're covering yet another dumb IP theft case by an organic chemist. From Ed Silverman at Pharmalot:

Yuan Li began was hired as a medicinal chemist for Sanofi nearly six years ago. During that time, she worked on countless compounds and signed all the usual paperwork in which she acknowledged there were no conflicts of interest and that the intellectual property belonged to the drugmaker. But last year, Sanofi learned otherwise. 

In May 2011, a little-known company called Abby Pharmatech began advertising chemical compounds on its web site and by the following month, Sanofi had identified more than 6,000 propriety chemical structures on an online database called SciFinder that were registered to Abby Pharmatech.

MICE wins again! She pled guilty to trade secret theft -- she's facing $250,000 in fines and possibly 10 years in prison.

You have to love what her attorney had to say about the matter, (via the Star-Ledger):

Her attorney, Paul Brickfield, said the compounds his client had listed for sale on the Abby website were not actually bought by anyone. He did note that since Li had posted the chemical structure of the Sanofi compounds, the information could have been used by others to develop competing compounds or eventually drugs. "She’s a young lady and she made a terrible error," he added.

There's an obvious lesson here: don't steal your company's IP. Even if you think they're not going to use it, even if you think you're not going to get caught, it's wrong -- and they will come down on you eventually. At best, you'll lose your job. At worst, you'll be caught in the headlights of an oncoming truck driven by merciless federal prosecutors.

Organic chemist charged with IP theft

From this week's Chemical and Engineering News, a pretty awful little story of an employee stealing trade secrets for their own. From the article by Marc Reisch: 

As at the larger companies, Frontier requires employees to sign confidentiality agreements when they start work. Mohapatra signed such an agreement when he joined Frontier in October 2009. The scientist’s profile on the business networking website LinkedIn shows that he came to Frontier with a Ph.D. in organic synthesis from Delhi University and had worked as a research scientist at India-based pharmaceutical maker Ranbaxy Laboratories. 

According to the complaint filed in Utah Federal District Court, in October 2011 a coworker witnessed Mohapatra call up the syntheses for 2,2´-dipyrromethane and Fe(III) meso-tetra [o-dichlorophenyl] porphine chloride on his company desktop computer and mail them through his personal e-mail account. Miller says the former compound is an intermediate for a drug now undergoing clinical studies, and the latter is a conductive compound in development for use in solar panels and batteries. 

After the coworker reported her observations to her superiors, the firm’s information technology manager reviewed the hard drive in Mohapatra’s computer and discovered he had e-mailed those two formulas as well as two others to the president of Medchemblox, a planned Indian fine chemicals company. The complaint identifies Medchemblox’ president as an official with Dr. Silviu Pharmachem, an India-based company specializing in porphyrins and porphyrin building-block compounds. The review also turned up an e-mail from the president of Medchemblox. It told Mohapatra that the information he provided would enable Medchemblox to make a six-month supply of the iron porphyrin complex for a competitor of Frontier’s based in Germany.

On Oct. 26, Frontier placed Mohapatra on administrative leave and revoked his access to company computers. The complaint notes that Mohapatra subsequently admitted to Frontier officials that he had a stake in Medchemblox, as did his brother-in-law. Mohapatra also sent an e-mail to Frontier’s chief operating officer in which he wrote, “I realize I may have done something wrong. … Even if you lay off me [sic] or put me in jail I will not do anything to hurt FSI. I will keep out all together for myself of Frontier’s business.” Frontier fired Mohapatra on Nov. 1.

According to Miller, Frontier has an internal security system that mandates rigorous data isolation and requires, for instance, the use of multiple passwords and user-names. “We were surprised this happened,” he says.

Yet another chemist that fell victim to MICE. I find it interesting that Frontier (best known by me for being in Utah) has better IT security (i.e. something) rather than the typical nothing. Corporate IT security needs to get better -- and companies need to think about whether they have trade secrets that need to be protected.

Perhaps this is buying trouble, but... the intelligence agencies during the Cold War were famous for their molehunts and their molehunters, with careers (and lives?) hanging in the balance. Is that in our future?

(Hey, what was that employee doing watching her colleague cut-and-paste (or whatever) and e-mail?)
(Did you know that ASDI went out of business? I sure didn't.)