Just as important was the fiction created around the technology on which the new company would be built. Investigators would later find on You’s external hard drive a patent license from Coke giving Weihai Jinhong permission to use its BPANI coatings and manufacturing techniques. That license, cited multiple times in her Thousand Talents application, was fake—the relevant technologies weren’t even Coke’s to license. But the application was in all likelihood not read with a critical eye, thanks to an added measure Liu took. In a September WeChat message, Fan claimed that Liu had paid a 10,000-yuan bribe to facilitate the application process. There are hints of other bribes as well.
After You’s presentation in Weihai in August 2017 supporting her application to Shandong’s provincial grant program, Yishi-Yiyi, and then her defense, in a Beijing conference center a month later, of the Thousand Talents application, the early feedback was promising. Liu sent word in October that “reviews for the Yishi-Yiyi scientific and technological investment project were mostly good. Barring something unforeseen, the project should be officially approved.” Fan wrote that they could start preparations for the new company by late fall.
Other members of You’s family, however, began to worry about her venture. A sister in California sent You links to news stories about the FBI targeting Thousand Talents participants. Another, in China, expressed similar concerns: “The Americans are very bad! They are framing Chinese people everywhere!” she said in a WeChat audio message. Nor did she like the sound of her sister’s business associates: “These people are really shady! They are treating you like a fool, thinking you care about the fame, the little bit of money.”
You reassured her siblings, but she didn’t trust her partners, either. Her main concern wasn’t getting caught but getting bilked. In February 2018, Liu received official confirmation that You had won both the Thousand Talents and Yishi-Yiyi awards, entitling her to a total of 5 million yuan over four years. Not all the news was good: Weihai Jinhong had gotten a corporate award, too, but it was a fraction of what Liu had requested. And after the initial jubilation, months went by without You seeing any of the money. “All this excitement,” she said in a WeChat voice message to Liu. “Excitement is useless!” Suspicion came to dominate her correspondence. “If the money is not in my account, I won’t even begin,” she threatened in a series of voice messages to Liu. “I wouldn’t even discuss it. It’s not like I’m starving here like those Chinese people who went back because they couldn’t make it here.” On the contrary, she said, she was doing very well in America. “I’m making a lot of money here. You just want to talk nonsense? To scam me?”
In a text to Fan, Liu defended himself, pointing to his year of work on the falsehood-ridden applications, the risks he had taken by knowingly misrepresenting the terms of You’s employment to the Chinese government, and his drafting of the 29-page fraudulent patent licensing authorization from Coke. After all that, he said, it was You, not he, who got the grant money, a reward that “bears no risk for her, only great fame and wealth.” Fan, for her part, tried to placate her niece: After decades in the US, she had forgotten how things got done in China. “It’s been so many years that people would call you ‘unacclimatized,’ ” Fan told her.
As for the intellectual property You would be bringing with her, there was no hurry with that, either. The plan was for the Weihai Jinhong spinoff to first form a partnership with an overseas supplier—the Italian company Metlac SpA, a major European coatings company, seemed like a good candidate—to legitimately license existing liner formulas to produce for the Chinese market. Then, over a few years, You and her team could quietly incorporate the BPANI formulas she had taken from Coke into their own products, shortcutting years of trial and error. The resulting product wouldn’t be exactly the same as, say, Akzo Nobel’s or Sherwin-Williams’s. “You are not stupid,” Fan said in a voice message in early 2018. “At the most, the technology will have some resemblance at a glance, but no one can prove it.” And there was plenty of precedent for the strategy, Fan said: “The scholars returning from overseas are all doing it this way.”
Less than a month later, You flew to Weihai to sign her employment contract with Weihai Jinhong. Her signature made the new coatings venture official, codifying her 33.5% stake and entitling her to a salary of 600,000 yuan per year. A trio of photos later recovered from You’s iPhone document the signing ceremony. In a coral-colored dress and black lace cardigan, You sits beside Weihai Jinhong’s CEO, Xu Dongguo, whose gray crew cut gives him a military air. They are at a table in a banquet hall, and a white wine rack in the shape of a double bass looms up behind them. In the last photo, You shakes hands with Xu and smiles, her left hand balled at her side.
You’s time at Eastman Chemical would prove shorter and even more tumultuous than her tenure at Coke. Eastman, spun off in 1994 from the once-mighty Eastman Kodak Co. and based in Kingsport, Tennessee, is a major producer of the polymers used by coatings companies. Impressed by You’s research background and experience at Coke, her new employers wanted her to help improve their compounds, not in beverage packaging, where the company had a strong research program, but in food—tuna and soup cans require their own types of polymer liners.
From the start, however, You showed a stubborn focus on drink cans. One of her Eastman supervisors was Deep Bhattacharya, at the time global director of technology for the company’s coatings and inks business. “It was not unusual to find her spending a lot of time trying to figure out what Eastman was doing on the beverage side,” he would later testify.
Nor had You changed her interpersonal style. She would “belittle people,” Bhattacharya said. “She took on a very aggressive and combative approach and also drove hard to indicate that she knew a lot more than the others because of her prior work experience.” She described herself, he recalled, as “very famous.”
That turned out to be true—within coatings chemistry, anyway. When Coke’s suppliers learned of her hiring by Eastman, several reached out to her new employer. Sherwin-Williams sent a letter advising the chemical company of its legal responsibility to ensure that she didn’t use the information from her special Coke NDA. “A lot of our customers actually shared a concern about having Dr. You work on some of those project teams because of the experience they had while she worked at Coke,” Bhattacharya testified.
Her work personality also made her extended absences that much more noticeable. The trip to Beijing to defend her Thousand Talents application came just two and a half weeks into the job. The following spring, in April 2018, she took a business trip to meet members of the company’s technical team in Shanghai and attend an industry conference in Guangzhou. The trip was supposed to last two weeks. While there, You met with prospective customers, ostensibly on behalf of Eastman, but she neglected to include her local Eastman colleagues in the meetings. She met with Weihai Jinhong and signed the partnership paperwork with the company’s CEO, Xu. All the while, she was parrying increasingly exasperated emails from her bosses at Eastman. “Greetings, Shannon,” one began, “quite a few concerns are being raised with this trip.” In the end she stayed for more than a month, then asked to work for an additional week from Atlanta, where she still had a house.
During this time, You was reaching out to the Italian supplier Metlac to set up meetings about collaborating in the Chinese market. She led Metlac to believe that Eastman’s CEO, Mark Costa, would be accompanying her. But then she reported that he regrettably had a conflict. She offered to speak to Metlac CEO Pier Ugo Bocchio herself, not necessarily about Eastman but about a Chinese company that was, as she put it in one text, “very interested in working together with you to get in this field.” Investigators would later find photographs she took with her phone, against company policy, of the specialized equipment in Eastman’s labs. They’d also find emails You sent to vendors from her Eastman email address inquiring about similar equipment for a lab in China. No one at Eastman had asked her to equip a lab there; no one at Eastman had any idea what she was doing.
On June 21, 2018, You received an email invitation for a meeting that afternoon with Bhattacharya, along with another of her supervisors and a human resources representative. A half-hour before the meeting was to start, she spent 11 minutes uploading files from her work computer to the same Google Drive account she’d used to circumvent Coke’s data loss prevention measures 10 months earlier. At the meeting, Bhattacharya handed her a printed list of Eastman’s concerns about her job performance. The conversation quickly deteriorated. “She refused to read through them,” he testified. “She flung it across the table back to me.” Ashley Angles, the HR manager, decided to stop the meeting. She asked You to work from home for the rest of the day to cool off.
What You did instead brought her career at Eastman swiftly to an end. She left the building that houses the company’s technology research division and its labs. Rather than go home, however, she crossed Eastman’s campus to the executive offices, where she spent the next two hours. She badged in and went looking for Bhattacharya’s supervisor. When she couldn’t find him, she demanded to meet with the chief technology officer, one of the most senior people at the 14,000-person company. When informed that the CTO was busy, she attempted to interrupt his meeting. She was asked to leave the building. Eventually, she did.
At that point, Eastman’s HR department decided to fire her, and had events unfolded differently, that might have been that. Despite the trail of alarmed business partners and shell-shocked colleagues behind her, You could have moved on, going down in Eastman office lore just as she had at Coke. But that night, after finally going home, she logged on to the company network and copied the documents she’d saved to her Google Drive to a personal hard drive connected to her work laptop. Eastman’s IT department, growing increasingly concerned about her, was on alert: The next morning a technician was able to reconstruct what she had done by remotely querying the operating system on You’s laptop.
That afternoon, June 22, You was invited to another meeting and informed of her termination. According to Angles, she took the news with surprising equanimity. Then Angles demanded the hard drive with the proprietary data on it. You seemed to grow nervous, Angles would recall at trial, and said the device was back at her condo. Unwilling to let her out of their sight until they had the hard drive, Angles, along with a company security manager and an IT manager, followed You home in an improvised caravan and waited outside her house while she retrieved it.
Back on campus, an Eastman IT security technician examined the hard drive, where he found some of You’s personal files and the Eastman data she’d taken. He also found her Coke documents, organized neatly in folders bearing the names of the chemical companies she’d gotten them from. Eastman’s lead global investigator, a former FBI agent, reached out to his former colleagues there and handed over You’s devices.
In the meantime, You quickly found yet another job, as a principal engineer at XG Sciences, a nanomaterials maker in Lansing, Michigan. (It ceased operations last year.) She traveled again to China, where Liu gave her some cash, and Xu walked her through the process of buying a luxury waterfront apartment so she could have a place in China to park her grant money. And the three of them accompanied Weihai city government officials to Italy to meet with Metlac.
In September 2018, You flew back to the US and was met at the Atlanta airport by agents from Customs and Border Protection. The CBP agents didn’t say so, but they were acting at the behest of the FBI. Agents at the FBI’s Knoxville, Tennessee, field office had obtained a search warrant for the hard drive Eastman had recovered, and they would go on to obtain warrants for You’s Yahoo! and Google accounts. Agents had sent the files they found on You’s devices to the chemical companies whose names appeared on the files; the companies confirmed the information was proprietary. At the Atlanta airport, You was led to a small interview room, while agents down the hall inspected her laptop, two phones and a hard drive. She had more than $10,000 in cash. When a CBP agent began asking her questions from a list he had in front of him, she took it, read it herself, and wrote her answers directly onto the paper. The agent had never had anyone do that, he later testified.
When You got her devices back, she deleted her WeChat history, which the agents had already copied. She pressed on with her plans. In November 2018 she took another trip to Italy with her Chinese partners and Weihai officials to meet again with Metlac. The company had been noncommittal before. This time, it was definitive: It wanted no part of the proposed deal, and it did not want to work with You. Without a partner already established in the industry, the Weihai Jinhong team was at an impasse. They apparently balked at the prospect of building an entire research and development team around You’s expertise and pilfered IP.
There’s another possibility, though, and it’s the one You seems to have come around to: that the fabricated applications were part of a larger, more cynical scam. At some point, Liu and Xu may have realized that, rather than invest their government money in a chancy venture with a volatile personality, they could just pocket it. “The main problem right now is that I don’t know what shenanigans Liu Xiangchen is up to,” You said at one point in a WeChat message to family members. “He just utters nonsense all the time! You know?! All shenanigans!”
You’s aunt had voiced similar concerns. Once Weihai Jinhong had some of its grant money from the government, Fan warned on WeChat, it didn’t need to do anything for the venture. Liu could spend the money on himself and write it all off as the cost of trying to start a business, a palatable explanation should any authorities decide to look. He could, she said, “use it however he wants, like dine-and-wine, buying gifts, work on personal connections, and it will be enough for everyone to submit their invoices.” It would be just one more example of a Chinese government-backed venture failing. Perhaps the whole thing was, indeed, shenanigans.
The evidence uncovered by federal investigators, while suggestive, doesn’t settle the question one way or the other. Attempts by phone and email to reach Liu and Xu were unsuccessful. Weihai Jinhong didn’t reply to a query conveyed via its official website, and calls to the company’s legal office went unanswered. couldn’t find contact information for Fan.
There is evidence, though, that the Chinese government itself has begun to worry about widespread fraud in its tech funding programs. After the failure of several major government-backed chip projects in recent years, Chinese anticorruption authorities announced investigations into a cabinet official in charge of industrial policy and three executives from the National Integrated Circuit Industry Investment Fund Co., China’s main investment vehicle for building domestic chipmaking capabilities. These investigations may be a way to place blame for the disappointments of failed high-profile technology efforts, but they aren’t the only example. There are also allegations of widespread fraud in the electric vehicle market, an industry with extensive government support. Chinese investigators have found that some domestic automakers, to qualify for extra subsidies, were inflating their sales by selling cars to shell companies, then stripping them for parts.
On Feb. 12, 2019, a federal grand jury in Tennessee returned wire fraud and trade secret theft charges against You and Liu. Two days later, the FBI arrested You at her apartment in Lansing. Agents also searched her town house outside Atlanta and interviewed her husband at their home in Massachusetts—he would lose his job after her arrest. The agents noted that You’s Michigan home, where she’d been living for months, was barely furnished, with a mattress on the floor, TV trays for shelving and, in the living room, a bankers box containing a Western Digital hard drive. In a kitchen cabinet was a locked briefcase whose combination she claimed not to know. When agents got it open, they found about $4,000 in Chinese yuan, euros and other foreign currencies. All of her important personal documents were there, too, including her passport, Social Security card, diplomas and marriage certificate, as well as her daughter’s birth certificate. “She was intending to run away,” Assistant US Attorney T.J. Harker said at trial.
Agents took You to the FBI’s Grand Rapids, Michigan, office and spoke with her for a little over two hours. In a video recording of the session, she faces the camera, wearing a pink sweater and glasses. Sitting across the table from her is Bill Leckrone, the lead investigator on the case, and a second agent who speaks little except to mention that he is a chemical engineer. When Leckrone asks You about Weihai Jinhong, she insists at first that she was merely a matchmaker, helping Metlac break into the Chinese market. There was, she says, no money involved. Asked about her aunt’s role, she says that Fan probably wanted to give her niece an excuse to come back to China so they could spend time together.
As Leckrone reveals how much of You’s digital life he has seen, she does admit to a greater and greater role. But the plans for a company were “just talking,” she says. The contract she signed with such fanfare was “just paper” and came to nothing. “I have never had any intention to develop anything,” she says. Nor, she insists, did she have any intent to share her secrets with anyone. It does seem to be the case that she ended up keeping the coatings formulas to herself—one of her refrains to her partners was that they had to pay up before she would deliver anything. The FBI is convinced that there is at least one additional device of hers that they were not able to recover.
In August 2020 a federal grand jury returned a superseding indictment adding economic espionage charges, because You allegedly acted to benefit a foreign government through a business it supported, and adding her aunt as a defendant. (Like Liu, Fan presumably remains in China, beyond the reach of US law enforcement.) At You’s trial, held in Greeneville, Tennessee, in April 2021, her lawyers contested that the coatings formulas she was accused of stealing were trade secrets at all and put a patent attorney named J.D. Harriman on the stand. A reasonably skilled chemist could have come up with the formulas on their own based on publicly available data, he argued, contradicting the coatings company executives whose testimony had preceded his. The defense also put the Coke executive Yu Shi on the stand; You and the company’s broader coating research effort had been under her supervision at the time. Under questioning, she said that Coke had been on a tight deadline to approve the new coatings and that the sensitive files Coke received from its suppliers weren’t always clearly marked as such.
The defense’s other witness was You’s daughter, Linda Xu, a computer scientist at Google. Xu described a frugal, itinerant upbringing, the small family sometimes having to be apart as her parents found and lost work. Once her mom got her job at Coke, her parents fell in love with Atlanta and wanted to retire there. “She doesn’t always express herself well,” Xu would later write to the judge, “but you won’t find anyone as caring.”
At trial, Xu recalled two vacations in Italy, when she was in college and her mom still at Coke. The family was hosted by the Bocchios, the family that owns Metlac. “There were a lot of toasts that I remember,” she said, “where we were celebrating they got some approval for something, and we’re talking excitedly about opening the market somewhere in the US, some places in Europe and Asia.”
On April 22, 2021, the jury returned a verdict of guilty on all counts. In May 2022, You was sentenced to 14 years in federal prison. Coca-Cola and Eastman declined to comment on the case. You’s lawyer, Corey Shipley, didn’t return messages, nor did Metlac representatives.
China’s Ministry of Foreign Affairs declined to comment directly on the case but said the government has instructed the relevant entities to abide by international laws and ethics when participating in overseas talent programs.
“The government completely fabricated my case,” You says. It’s a few minutes before 5 p.m. on Oct. 13, and she is calling from the phone bank of the low-security penitentiary in Aliceville, Alabama, where she’s serving her sentence. She is responding to a letter asking to speak for this story, which she received the night before. She would have called earlier in the day, she says apologetically, but she was at her job in the prison factory.
“It’s profiling,” she says of the case against her. “I’m a naturalized citizen, I’m well educated and well known in the field, and I traveled to China to do business. So that’s the reason that they targeted me.” It was all just political. Tennessee is “a red state,” she adds. “The judge is completely, completely on the government’s side.” And the jury didn’t understand the nuances of trade secrets. “This is not like something like robbery, drugs or murder. I had some files in my home that somebody else sent to me,” she says. “They claim that’s proof.”
The conversation isn’t long—inmate calls at Aliceville are limited to 15 minutes. You proposes a second call the next evening, and perhaps more after that. She has so many arguments to make; she’s working closely on her appeal and mentions that she’s speaking with her lawyer the next day. At the appointed hour the next evening she doesn’t call, though. Months later, responding to a follow-up email, she writes that her lawyer has discouraged her from speaking to the press for the time being. “I will contact you after appeal,” she writes. “I look forward to telling you the truth.”
news–updates“>(updates with comment from China’s Ministry of Foreign Affairs in 63rd paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.