7 charged with stealing trade secrets from Houston company

On Wednesday, the Justice Department charged 7 individuals with conspiring to steal trade secrets from a business in Houston on behalf of a company in China that was engaged in manufacturing a high-performance, naval-grade product for military and civilian use.

6 people living in the Houston area were charged (4 US nationals, 1 Canadian and 1 Chinese) along with a Chinese employee of the manufacturing firm in China.

The Justice Department alleges that Shan Shi, a Chinese national living in Houston, was hired by a Chinese company to steal trade secrets from a company that manufactures syntactic foam, a product that helps with marine buoyancy.  The Houston company is not named, but within two minutes I figured it out to be Trelleborg Offshore, part of a Swedish multi-national.

The affidavit alleges that Shi set up a new company in 2014 and hired two former employees of the target company by offering a combination of cash incentives and high paying positions. In turn the former employees obtained trade secrets from two current employees. The trade secrets were allegedly taken between January and June of 2015.

When the story first broke on Tuesday, the espionage charges had not been filed and it was described as a raid on a house in the Memorial villages area. That piqued my interest as the house is over 6,000 sq ft and appears to have been acquired by Shi in October 2014 for approximately $1.8 million.

I am not sure how long Shi has been in Houston. He was only hired by the Chinese company on a contract basis in March 2014. One wonders if he was engaged in espionage prior to that. A quick search revealed that he also owns a 3,000 sq ft house in West Houston, currently appraised at $485,000.

That house was acquired in June 2013 from two other Chinese individuals in their 50’s who currently own 4 houses in the Houston area worth $2.4 million (including a $1.2 million house in Memorial villages area).


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