July 9, 2014

Toray Chemical Korea Resolves Attempted Theft of Trade Secrets Investigation and Agrees to Pay More Than $2 Million Penalty

RICHMOND, VA—Toray Chemical Korea, Inc., formerly doing business as Woongjin Chemical Co., Ltd., a South Korean chemical company, agreed to pay a criminal penalty of over $2 million to resolve an attempted theft of trade secrets investigation, announced Dana J. Boente, U.S. Attorney for the Eastern District of Virginia.

The U.S. Attorney’s Office filed a criminal information today against Toray Chemical and a two-year deferred prosecution agreement in the U.S. District Court for the Eastern District of Virginia. The one-count information charges Toray Chemical with attempted theft of trade secrets. As part of the deferred prosecution agreement, Toray Chemical agreed to pay a $2,058,000 penalty for its illegal activity, implement an enhanced compliance and ethics program, continue to cooperate with the government’s investigation and remediate past problems.

“These criminal charges reflect the Eastern District of Virginia’s continued commitment to protecting one of this country’s greatest assets—the innovation and ingenuity of the American people,” said U.S. Attorney Boente. “The terms of the deferred prosecution agreement in this case should send a strong message to businesses in the United States and around the world that substantial cooperation with law enforcement is one of the most effective ways to demonstrate that a company is truly committed to addressing the criminal conduct of its executives and ensuring that such conduct does not occur in the future.”

According to court documents, Toray Chemical, formerly doing business as Woongjin Chemical, endeavored to develop Arawin®, a meta-aramid fiber designed to compete with a product called Nomex®. Meta-aramid fibers are used in a variety of applications, including protective fabrics, electrical insulation and lightweight structural support for commercial aircraft. Nomex is produced by E. I. du Pont de Nemours and Company (DuPont), one of the largest chemical companies in the United States.

From January 2011 through November 2011, Woongjin Chemical sought to improve its Arawin product by hiring and attempting to hire as consultants former DuPont employees with knowledge of Nomex technology, in particular the process for manufacturing Nomex paper. To that end, two former DuPont employees met with Woongjin Chemical executives in South Korea. During this visit, Woongjin Chemical engineers repeatedly asked the former DuPont employees to disclose aspects of the Nomex manufacturing process, including details about the short-cut fiber, known as floc, used to make Nomex paper.

One of the former DuPont employees offered to confirm the specific length and conditions used to produce floc by speaking with a current DuPont employee when he returned to the United States. Although the former DuPont employee did not obtain the information Woongjin Chemical requested when he returned to the United States, the company continued to seek information about DuPont’s process for manufacturing Nomex paper. Indeed, a Woongjin Chemical executive directed another employee to obtain a sample of Nomex floc from a DuPont distributor or customer by legal or illegal means. Shortly thereafter, Woongjin Chemical executives learned that FBI agents interviewed the two former DuPont employees regarding the potential theft of DuPont trade secrets.

The deferred prosecution agreement acknowledges Toray Chemical’s extraordinary cooperation with the government’s investigation, including an extensive, thorough and swift internal investigation, producing relevant documents from outside the United States, and collecting, analyzing, organizing and, in many instances, translating voluminous evidence and information for the United States. In addition, the agreement highlights that Toray Chemical has already undertaken remedial measures, including suspension of and ultimate refusal to renew contracts with certain consultants and implementation of new policies and procedures for key employees.

This case was investigated by the FBI’s Richmond Field Office. Assistant U.S. Attorneys Katherine Lee Martin and Michael S. Dry are prosecuting the case.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.