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GE Aviation leaders testify against accused Chinese spy charged with stealing their trade secrets

Did FBI arrest or entrap accused spy?
Accused Chinese spymaster Yanjun Xu listens to testimony with help from Mandarin interpreter.
Posted at 5:00 AM, Oct 29, 2021
and last updated 2021-10-29 19:49:25-04

CINCINNATI — An accused spy from Arizona and two high-ranking GE Aviation leaders were some of the final witnesses to testify in the espionage trial of Yanjun Xu as prosecutors wind down their case against the Chinese intelligence agent.

Arthur Ching-Fu Gau, a former engineer at Honeywell Aeropspace in Phoenix, testified against Xu, telling jurors that Xu gave him $5,000 in cash and paid for his plane ticket to China in 2017 to give a university presentation on legacy aircraft’s auxiliary power units. Gau pleaded guilty in May to exporting items without a license in U.S. District Court in Arizona and is awaiting sentencing.

“I made a mistake,” testified Gau, who made several trips to China a decade before, while working with a man that FBI agents believe was Xu’s superior intelligence officer, before he was handed off to Xu.

Yanjun Xu faces a jury on espionage charges.
Yanjun Xu faces a jury on espionage charges.

Gau testified some of the data included in his PowerPoint presentation that he emailed to Chinese agents ahead of his presentation contained “proprietary material.”

FBI agents were led to Gau after they arrested Xu in 2018 and found a recording on his confiscated cell phone. The government is trying to establish Xu as a spymaster who tried to recruit employees of aviation companies to share information.

Whether these actions constitute the legitimate sharing of knowledge and expertise or the illegal theft of trade secrets will be up to the jury to decide.

Prosecutor Matthew McKenzie questions Rizwan Ramakdawala on Oct. 26 in trial of Yanjun Xu.
Prosecutor Matthew McKenzie questions Rizwan Ramakdawala on Oct. 26, 2021 in trial of Yanjun Xu.

Prosecutors tied Xu to other espionage cases this week, trying to persuade a jury that he was part of a wide-reaching conspiracy to attack aviation companies worldwide and steal their trade secrets.

Earlier this week, a project manager with French aviation company Safran testified his laptop computer was infected with malware during a visit to China in January 2014. He had traveled there to oversee a joint venture between Safran and a Chinese company to assemble jet engine parts.

A federal grand jury in Cincinnati indicted Xu in 2018 on charges of conspiring and attempting to commit economic espionage and theft of trade secrets from Evendale-based GE Aviation. Prosecutors say China desperately wants to duplicate GE’s highly successful gas turbine engine.

Xu is the first Chinese intelligence agent ever to be extradited to the U.S. to stand trial.

Assistant U.S. Attorney Tim Mangan questions FBI agent at espionage trial of Yanjun Xu.
Assistant U.S. Attorney Tim Mangan questions FBI agent at espionage trial of Yanjun Xu.

Xu, who is also known as Qu Hui and Zhang Hui, is a deputy division director at the Chinese Ministry of State Security, which is the Chinese intelligence agency.

It was the FBI who alerted GE Aviation in 2017 about a possible security breach by one of its engineers who had traveled to China, testified Eric Ridder, vice president of cyber security for the company.

WCPO is not naming the engineer, who GE suspended without pay in 2017 and fired in 2018, because he has not been charged with a crime, but he gave a presentation at a university in China with GE documents loaded onto his personal laptop.

FBI agents executed a search warrant on the engineer’s home on Nov. 1, 2017, and he began cooperating. He eventually lured Xu to a meeting in Brussels on April 1, 2018, where Belgian police were waiting to arrest him.

U.S. District Court Judge Timothy Black and a Belgian federal police chief inspector at the espionage trial of Yanjun Xu.
U.S. District Court Judge Timothy Black and a Belgian federal police chief inspector at the espionage trial of Yanjun Xu.

The FBI used the engineer to trap Xu, a point defense attorney Ralph Kohnen repeatedly tried to make during cross-examination of Ridder.

For example, GE asked the engineer to return to the company under the guise of collecting his laptop, which they never in fact returned to him. But then GE’s cyber security team questioned him about his activity during a meeting that the FBI secretly listened to by audio and video. Then the FBI met with the engineer separately.

GE also created a “fabricated directory,” Kohnen said, of GE file names and folders, the FBI gave to the engineer to send to Xu as fodder for a future meeting that ultimately led to his arrest.

Ridder said the FBI and GE had parallel investigations into the engineer for more than a year.

Nick Kray, a chief consulting engineer at GE, testified about the technology used in GE’s highly valuable composite fan blades and fan cases used in aircraft engines – that no other company in the world can duplicate.

GE developed the composite technology first used as an engine in a Boeing aircraft in 1995. It is so valuable because it allows aircraft to be lighter, faster and bigger than fan blades built by other companies who use metals such as titanium.

“A single engine test is probably $15 million at least…so you can see how it adds up very quickly,” Kray testified, about the expense GE undergoes to develop and test its composite fan blade technology.

Several government witnesses have testified about how desperately China wants to duplicate U.S. aviation technology.

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