Closing arguments in Boeing spy case

SANTA ANA, Calif. — A Chinese-born, former engineer for Boeing Co. knowingly possessed critical trade secrets on the U.S. space program and intended to pass them to China during a decades-long spy career, a federal prosecutor said today in her closing argument at the first economic espionage case to reach a U.S. courtroom.

Former Boeing Co. engineer Dongfan “Greg” Chung, 73, has pleaded not guilty to conspiracy, economic espionage, lying to federal agents, obstruction of justice and acting as a foreign agent. He is free on $250,000 bail.

Prosecutors allege Chung used his 30-year career as a stress analyst at Boeing and his previous employer, Rockwell International, to steal 300,000 pages of sensitive documents, including trade secrets on a phased array antenna for the U.S. space shuttle and on the Delta IV booster rocket.

FBI investigators found the papers stacked throughout Chung’s house and even in a crawl space beneath the dwelling, according to court papers and testimony.

“Your honor, I’m just going to cut to the chase. Defendant is guilty of all counts charged in the indictment,” said Assistant U.S. Attorney Ivy Wang. “Defendant is guilty … because defendant intended or knew his actions would benefit a foreign government, specifically the People’s Republic of China.”

Wang said the information included specifications on a fueling system for the booster rocket that was so sensitive that Boeing employees were ordered to lock away hard copies of documents related to it before leaving work each day.

The fueling system was designed to retract from the rocket in less than 30 seconds, just prior to liftoff, and the company invested $50 million in the technology over a five-year period using 30 engineers, Wang said.

“If any of Boeing’s competitors in this field obtained this technology, Boeing will lose its competitive edge,” she said.

The government case is being closely watched as a test for prosecutions under the Economic Espionage Act of 1996. The law was designed to help the government crack down on the theft of information from private companies that have contracts with the government to develop future U.S. space and military technologies.

The legislation became a priority in the mid-1990s when the United States realized China and other countries were targeting private businesses as part of their spy strategy.

Chung’s defense attorney, however, told U.S. District Judge Cormac Carney his client was not a spy. He said prosecutors had grossly exaggerated the case and misinterpreted evidence.

Attorney Thomas Bienert Jr. told the judge in the non-jury trial that Chung may have tried to share unclassified, publicly available information with China more than 20 years ago but balked when his overseas contacts began requesting information that was more sensitive.

Bienert cited as proof of Chung’s refusal to cooperate a series of letters in which a man prosecutors have called his Chinese “handler” rebukes him for not writing and wonders about his long silence.

The attorney conceded that Chung “did some dumb things” and may have violated Boeing policy but did stop short of doing anything illegal.

“Mr. Chung walked an interesting line and certainly a risky line, but not a line that was criminal once we look at the evidence,” Bienert said. “He’s a guy who likes knowledge for the sake of knowledge, including sharing knowledge … but he does that because he wants China to become more like America, not because he wants America to be under the thumb of China.”

Six similar economic espionage cases have settled before trial since the Economic Espionage Act was passed. Another is set for trial in U.S. District Court in San Jose later this year.

Chung, a naturalized U.S. citizen, worked for Rockwell International until it was bought by Boeing in 1996 and remained with the aerospace giant until he was laid off in 2002. He was brought back as a consultant on stress analysis after the Columbia space shuttle disaster in 2003 and was fired when the FBI began its probe in 2006.

The government believes Chung began spying for the Chinese in the late 1970s, just a few years after he became a U.S. citizen and was hired by Rockwell.

Prosecutors say they discovered Chung’s activities while investigating the case of another suspected Chinese spy, Chi Mak. Searches of Mak’s house turned up an address book and a letter containing Chung’s name.

Mak was convicted in 2007 of conspiracy to export U.S. defense technology to China and sentenced to more than 24 years in prison. Mak was not charged under the Economic Espionage Act.