Newly Unsealed Federal Indictment Charges Software Engineer with Theft of Trade Secrets

CHICAGO — A software engineer at a suburban Chicago locomotive manufacturer stole proprietary information from the company and took it to China, according to an indictment unsealed this week in federal court in Chicago.

XUDONG YAO, also known as “William Yao,” 57, is charged with nine counts of theft of trade secrets.  Yao is currently at large.  He is believed to be residing in China.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; John C. Demers, Assistant Attorney General for National Security; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  The government is represented by Assistant U.S. Attorney Peter M. Flanagan.

According to the indictment, Yao began working for the suburban Chicago manufacturer in August 2014.  Within two weeks, Yao downloaded more than 3,000 unique electronic files containing proprietary and trade secret information relating to the system that operates the manufacturer’s locomotives, the indictment states.  Over the next six months, Yao downloaded numerous other electronic files containing proprietary and trade secret information, including technical documents and software source code, the indictment states.  During that time, Yao allegedly sought, negotiated, and accepted employment with a business in China that provided automotive telematics service systems.

The suburban Chicago manufacturer terminated Yao in February 2015 for reasons unrelated to the alleged theft, which at that time had not been discovered.  Shortly thereafter, Yao made copies of the stolen trade secret information, the indictment states.  He allegedly traveled to China in July 2015 and began working for the Chinese company.

On Nov. 18, 2015, Yao traveled from China to O’Hare International Airport in Chicago, according to the indictment.  At the time, he had in his possession the stolen trade secret information, including nine complete copies of the suburban Chicago company’s control system source code and the systems specifications that explained how the code worked, the indictment states.  Yao returned to China at some point thereafter.

The indictment was returned in December 2017 and ordered unsealed Wednesday.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Theft of trade secrets is punishable by a maximum sentence of ten years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.