Ex-Ford employee held in data theft

Engineer charged with copying proprietary documents and trying to sell them in China

Bryce G. Hoffman / The Detroit News

The Justice Department charged a former Ford Motor Co. engineer with stealing company secrets and trying to peddle them to Chinese competitors.

Chinese-born Xiang Dong Yu -- also known as Mike Yu -- was arrested Wednesday at Chicago's O'Hare International Airport when he tried to re-enter the country from China. The 47-year-old is charged with five counts of theft of trade secrets, attempted theft of trade secrets and unauthorized access to a protected computer.

According to a federal indictment unsealed Wednesday, Yu was a product engineer for Ford from 1997 to 2007 and had access to Ford trade secrets. Law enforcement officials say that, just prior to leaving the Dearborn automaker, Yu copied thousands of confidential documents, including what they described as "sensitive Ford design documents" and "system design specification documents."

The Justice Department says these documents contained proprietary information about Ford's engine and transmission mounting subsystems, electrical distribution systems, power supplies, electrical subsystems and generic body modules.

Prosecutors allege that Yu began taking documents to China as early as 2005 in a bid to secure employment with a Chinese automotive company.

In late 2006, they say he was hired by PCE Industry Inc., a California-based subsidiary of a Taiwanese electronics company, Foxconn. Before leaving Ford, Yu allegedly copied approximately 4,000 sensitive Ford documents onto a portable hard drive and transported them to Shenzhen, China -- Foxconn's manufacturing hub.

No one could be reached for comment at either PCE or Foxconn.

The government further alleges that, while working at Foxconn in 2008, Yu again tried unsuccessfully to use some of the documents he allegedly stole from Ford to get a job with another Chinese company, the Shanghai Automotive Industry Corp. When that failed, he accepted a job with Chinese automaker Beijing Automotive Corp.

Neither of those companies could be reached for comment.

Ford cooperating with feds

Ford said it was aware of the situation.

"We're fully cooperating with authorities as they pursue the case," said spokeswoman Marcey Evans.

The theft and attempted theft of trade secrets counts each carry a maximum penalty of 10 years in prison and a $250,000 fine. The computer-related charge carries a maximum penalty of five years and a $250,000 fine.

'Serious federal offense'

"Protecting the competitive-edge technology of our companies through vigorous enforcement of our federal trade secret laws is a top priority of this office," said U.S. Attorney Terrence Berg. "Both employees and employers should be aware that stealing proprietary trade secrets to gain an economic advantage is a serious federal offense that will be prosecuted aggressively."

The FBI was in charge of the investigation that led to Yu's arrest.

"Michigan, as well as the rest of the United States, is significantly impacted by the auto industry. Theft of trade secrets is a threat to national security, and investigating allegations involving theft of trade secrets is a priority for the FBI," said FBI chief Andrew Arena. "The FBI will continue to aggressively pursue these cases."

Yu remains in federal custody and is scheduled to have a detention hearing in Chicago on Tuesday.

Analyst Jim Hall of 2953 Analytics LLP in Birmingham said it is hard to know just how damaging the leaking of this information could be for Ford.

"These could be things a competitor could discover simply by buying a car and reverse-engineering it," he said. "It could be something much more sensitive."

bhoffman@detnews.com (313) 222-2443