Couple Who Worked at Local Research Institute for 10 Years Charged with Stealing Trade Secrets, Wire Fraud

COLUMBUS, Ohio – A former Dublin, Ohio couple has been charged with crimes connected to stealing exosome-related trade secrets concerning the research, identification and treatment of a range of pediatric medical conditions.

John C. Demers, Assistant Attorney General for National Security, Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, and Todd A. Wickerham, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, announced the charges.

According to the indictment, Yu Zhou, 49, and Li Chen, 46, currently of San Diego, Calif., conspired to, attempted to and did steal scientific trade secrets related to exosomes and exosome isolation from Nationwide Children’s Hospital’s Research Institute for their own personal financial gain.

The defendants were arrested in California in July and the case was unsealed today at the defendants’ arraignments in federal court in Columbus at 2pm before U.S. District Judge Sarah D. Morrison.

Zhou and Chen are spouses who worked in separate medical research labs at the Research Institute for 10 years each (Zhou from 2007 until 2017 and Chen from 2008 until 2018). Exosomes play a key role in the research, identification and treatment of a range of medical conditions, including necrotizing enterocolitis (a condition found in premature babies), liver fibrosis and liver cancer.

The husband and wife allegedly founded a company in China in 2015 without the hospital’s knowledge. While Zhou and Chen continued to be employed by Nationwide Children’s, they marketed products and services related to exosome isolation through their Chinese company.

The indictment also alleges that in 2017, Zhou helped co-found an American biotechnology company. As of 2019, the company’s website advertised multiple products and services related to exosome isolation, including a kit that was developed from a trade secret created at a Nationwide Children’s research lab.

Zhou and Chen allegedly used the hospital’s Research Institute resources and equipment to conduct the exosome research for their unauthorized, outside work.

In November 2017, Zhou and Chen allegedly received more than $876,000 and stock related to an asset purchase agreement involving the American biotechnology company. It is also alleged Zhou entered into a stock purchase agreement with that same company under which he would receive $450,000.

Zhou resigned from the Research Institute at Nationwide Children’s, effective November 10, 2017.  On January 31, 2018, Chen resigned from her position at the research institute.

Before his official last day of employment with the research institute, Zhou allegedly participated in a press release announcing the American company’s plans to market and distribute “proprietary exosome isolation systems” from its headquarters in Central Ohio.

“Nationwide Children’s Hospital devoted years of work and its own money to researching exosomes in order to promote honorable medical advances,” U.S. Attorney Glassman said. “The hospital’s Research Institute took reasonable measures to keep its trade secrets secret. I commend the cooperation of Nationwide Children’s throughout this investigation.”

“The theft of trade secrets is a growing threat that severely impacts our economy and our national security,” stated FBI Cincinnati Special Agent in Charge Todd Wickerham. “The FBI is committed to investigating these cases and working with all of our partners to protect intellectual property.”

Conspiring to, attempting to and committing theft of trade secrets is punishable by up to 10 years in prison. Conspiring to, attempting to and committing wire fraud carries a potential maximum sentence of up to 20 years in prison.

Assistant Attorney General Demers and U.S. Attorney Glassman commended the investigation of this case by the FBI, as well as Assistant United States Attorneys S. Courter Shimeall, Peter K. Glenn-Applegate and J. Michael Marous and National Security Division Trial Attorney Matthew J. McKenzie, who are prosecuting the case.

An indictment merely contains allegations, and defendants are presumed innocent unless proven guilty in a court of law.

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