STOLE MILITARY SECRET, TRIED TO SELL TO CHINA

By Howard Mintz

Mercury News

Article Launched: 06/19/2008 01:31:57 AM PDT

A former Silicon Valley software engineer was

sentenced Wednesday to two years in federal prison

for stealing military technology and trying to sell it

to the Chinese government.

Xiaodong Sheldon Meng, 44, was the first to be

convicted under a 12-year-old anti-espionage law.

In sentencing Meng, U.S. District Judge Jeremy Fogel

agreed with federal prosecutors' recommendation of

a two-year prison term. Meng, a Cupertino resident

and Chinese national, pleaded guilty last year to

violating the Economic Espionage Act of 1996 and

federal export laws, admitting he stole technology

from his former employer, Quantum 3D.

The espionage act makes it a crime to steal trade

secrets to benefit a foreign government, and was

passed by Congress in response to concerns that

engineers were robbing U.S. companies of valuable

technology and secretly shipping it overseas.

There are a number of other pending local cases

involving defendants accused of trying to shop

stolen valley technology to China. Those include Fei

Ye and Ming Zhong, two former engineers at

Transmeta who face sentencing next week in San

Jose federal court for violating economic espionage

laws in their dealings with China.

In Meng's 4-year-old case, federal prosecutors said

he stole a trade secret from Quantum known as

"Mantis," a product used to simulate real-world

motion for military training purposes. The

government alleges that Meng installed a

demonstration unit of Mantis on the China Navy

Research Center site, using stolen technology that

Quantum officials have called the "crown jewel" of

their company.

Federal prosecutors also said Meng stole other

Quantum technology that he intended to provide to

the Chinese government. While prosecutors depicted

Meng as a man motivated by greed, not spying, they

warn that his conduct still posed a threat to national

security.

"The United States maintains a military advantage

during night time operations," the Justice

Department wrote in a 30-page sentencing memo in

Meng's case. "Most foreign countries do not have

the same or similar night time capabilities. In the

wrong hands, this advantage would be lost."

Meng's lawyers dispute the scope of the Bush

administration's allegations of espionage. In court

papers and in the hearing before Fogel, Meng's

federal public defender sought a sentence of oneyear

home detention, arguing that Meng's actions

were driven by a feud with his former company, not

to spy for China.

"He is not a spy for the Chinese," said Manual

Araujo, an assistant federal public defender. "It is

overblown. As in most of these kinds of economic

espionage cases, a lot of this has to do with

disgruntled employees."

Contact Howard Mintz at hmintz@mercurynews.

com or (408) 286-0236.

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