Two charged with espionage sought funding in China

A federal grand jury indicted two men in California of conspiring to steal high tech trade secrets and develop them with venture capital funding they sought to obtain from China.

The two, Lan Lee, 42, of Palo Alto and Yuefei Ge, 34, of San Jose, are accused of trying to steal trade secrets from their employer, chip maker NetLogics Microsystems. The indictment indicates the two allegedly hoped to win funding from China's General Arms Department and the 863 program, which is a government-led project aimed at boosting technology research in China.

Lee is an American, while Ge is a Chinese national.

The grand jury indicted the men on a total of six counts, including two counts of conspiracy and as well as two counts of economic espionage and two of theft of trade secrets, said a statement issued Wednesday and attributed to Scott Schools, U.S. attorney for the Northern District of California.

A large amount of evidence against the two men appears to have come from their home computers, according to the original indictment made on June 15. Wednesday's indictment supersedes that one.

Lee allegedly downloaded chip technology belonging to Taiwan Semiconductor Manufacturing Co. (TSMC) from a server at NetLogics and installed it on his home computer sometime between May, 2002 and the end of July, 2003; while Ge allegedly installed data sheets for network coprocessor chips from NetLogics on his home computer around the same time.

The two men also allegedly established a Delaware company, SICO Microsystems, to further develop the technologies and sell them in tandem with a Chinese venture capital company, Beijing FBNI Electronic Technology Development Co.

"SICO agreed with FBNI to develop and sell microprocessor chips and to assist in securing funding for SICO," the original indictment says. The original indictment makes no mention of possible involvement by the government of China.

The two men had been released on the original indictment on $300,000 bonds. Their next court appearance in the superseding indictment is Oct. 29, 2007.

NetLogic and TSMC cooperated with the investigation, the statement says.