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Former Employee Stole Ford Secrets Worth $50 Million
chicksdaddy writes "A ten year veteran of US automaker Ford pleaded guilty in federal court on November 17 to charges that he stole company secrets, including design documents, valued at between $50 million and $100 million, and shared them with his new employer: the Chinese division of a US rival of Ford's. Xiang Dong ('Mike') Yu admitted to copying some 4,000 Ford Documents to an external hard drive, including design specifications for key components of Ford automobiles, after surreptitiously taking a job with a China-based competitor in 2006. Yu, who took a job for Beijing Automotive Company in 2008, was arrested during a stopover at Chicago in October, 2009. The FBI seized his Beijing Automotive-issued laptop, and an analysis found 41 stolen Ford specification documents on the hard drive. He faces five to six years in prison and a $150,000 fine (PDF)."
valued at between $50 million and $100 million
That's probably an inflated value. When companies get burned like this, they generally vastly overstate the value of the stolen goods.
and shared them with his new employer: the Chinese division of a US rival of Ford's.
Hello boys and girls. Can you say "tip of the iceberg?" I knew you could.
He faces five to six years in prison and a $150,000 fine (PDF).
Good. And before we judge if that seems too harsh a punishment, I would ask if anyone knows what the Chinese government would do to an American engineer who did the same thing to a Chinese company.
The higher the technology, the sharper that two-edged sword.
Why is this a criminal offense? Seems to me it's an internal problem within Ford that they trusted untrustworthy people. I could understand Ford taking him to court for damages numbering in the millions of dollars, but why is the enforcement agency of the federal government (the FBI) involved in this matter?
Was this one of those times where security steals someone's laptop to look on it randomly, or did they already know what he did and have a warrant for his arrest?
The FBI seized his Beijing Automotive-issued laptop, and an analysis found 41 stolen Ford specification documents on the hard drive.
Dear "Mike",
When you get out, and if you decide to again play industrial spy, try this
The higher the technology, the sharper that two-edged sword.
have bad power steering pumps and short life torque converters from now on?
(sorry, had to go there, the problems I've had to deal with on my own/families/friends Fords the most)
The preceding post was not a Slashvertisement.
Let's see, steal $ 75 million USD worth of stuff. 10% "finders feee" seems reasonable. So, with a 6 year sentence, that's over $ 1 million USD / year. (The fine is of course irrelevant in this scenario.)
I bet a lot of people would sign up for that.
You fools! The CIA spent months trying to get those documents to the Chinese. How are we going to trick them into building shoddy cars that nobody will want to buy now?
or V6 engines that die prematurely due to head gasket failure?
The real "Libtards" are the Libertarians!
... a $150,000 fine is puny compared to what he probably made from the sale. This could be a perfect example of government sponsored corporate terrorism :) aka spying.
Small potatoes
"Lopez was head of purchasing for GM and defected abruptly to VW in 1993. GM accused Lopez of masterminding the theft of more than 20 boxes of documents on research, manufacturing and sales. The world's largest international corporate espionage case officially ended in 1997, when VW admitted no wrongdoing but settled the civil suit by agreeing to pay GM $100 million in cash and spend $1 billion on GM parts over seven years.
Advice: on VPS providers
Of course. Part of the skill of a good engineer is to ensure the parts fail as soon as possible after the warranty expires.
http://michaelsmith.id.au
or V6 engines that die prematurely due to head gasket failure?
Head gaskets are called engine failure now?
http://michaelsmith.id.au
Time to put on our ITSEC/Business hats: How much of this stuff did he need to do his job? And if he didn't need it, why did he have read access to it?
LOL
90's-era Ford's weren't exactly the pinnacle of world-class engineering.
Now if they claimed $100 million dollars in plans to trick consumers into buying three transmissions, two alternators, and four water pumps for every car they sold, I'd maybe believe it...
FORD = Found On Road Dead
RIP America
July 4, 1776 - September 11, 2001
Ford's been doing better. Over the last decade, they've built up some engineer teams in Europe (is it flamebait to say they are better because they are away from US unions?) who really are doing top notch work. The Fusion, for example, ranked #1 in its category for reliability. The Mustang has 300 horsepower at 30 MPG. I own a Honda, but if Ford continues the direction they're going, my next car may well be a Ford. Now if only they would do something about that horrid logo.....
Qxe4
Would have been, what, 40 times as much in fines?
50 million dollars? wall street credit derivatives traders, and management, destroyed their entire companies, and they never had so much as Geraldo knock on their door. they wouldn't wipe their ass with 50 million dollars. they stole --TRILLIONS-- from their own companies, investors, and most of all, the taxpayers of the entire planet, and they got off scott free. they are still working in the same field. and slashdot has not done a story on it.
I guess replacing a head gasket is a normal occurrence on a domestic vehicle. Yes I do consider that an engine failure due to the amount of labor involved.
Only the State obtains its revenue by coercion. - Murray Rothbard
Well, he got his due. Thats about all I can say. For playing this game he gets the slammer where he belongs. Enough jobs have already been lost to China as it is. Ford has greatly improved their products recently and they have a right to protect and prosecute on lost IP like this. This means american jobs and so I am all for what happened. Maybe Chinese will think twice again before trying to steal trade secrets and plans. Go make your own and stop worrying about what ours are.
Come on everybody.
Have all of your professional dialogs and emails and other creative or confidentially secret business files hosted on THE CLOUD.
You can trust all these big corporations who grow larger and larger, monopolizing everything from healthcare to off shoring jobs.
And when these cloud companies secretly lift your creation and sell it to one of their buddies who has more resources than you to get your stolen creation out the door, what are you going to do about it.
Nothing, all you'll say is damn. And then your ruined. Have fun with you patent wars, lawyers and careless cloud habits.
Loose Lips Sink Ships
What do you think Capitalism is?
You wanna earn a living and make a buck, STFU and stay off the cloud, if you know what is good for you.
I swear people have no clue on how to avoid drama.
$150,000 dollar fine for $50,000,000 theft while if you steal a song valued at $.99 you get a $60,000 fine. Seems about right.
Says he was hired in '97. Can't find H1B stats going back that far, but Ford certainly has an affinity for H1B product engineers (http://www.h1bwage.com/employer.php?q=28339&sortby=1). You get whatcha pay for.
Why was the FBI and taxpayer money involved?
This story come right on the heals of that other slashdot story: "Malaysian Indicted After Hacking Federal Reserve."
http://yro.slashdot.org/story/10/11/22/1446256/Malaysian-Indicted-After-Hacking-Federal-Reserve
I guess US companies are saving a bundle by putting so much trust in foreign nationals.
These two stories are hardly unique.
Sure, offshoring jobs has ruined the careers, and lives, of countless Americans, but look at the money that the US companies are saving!
When I was working at a defense contractor, they would tell us in training about industrial espionage being a huge problem. And not just by other companies.
I would surmise that most American companies are blissfully unaware about the threat they face.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
At least their anti-lock breaks will be tip-top.
Why was the FBI and taxpayer money involved?
Because taxes are paid on profit. And profits are earned through technological advantage. And technology that is stolen from the US eliminates that advantage.
Alternately, one of the primary purposes of government is to protect people's rights, like the right not to be robbed. (haha j/k no one actually believes that anymore do they?)
"I assumed blithely that there were no elves out there in the darkness"
When the head gasket failure results in large quantities of coolant going into the oil followed by rapid failure of the main bearings, yes. You will see from the linked page that the repair bills from these failed head gaskets could be up to $4000. It was a common problem on Ford V6s built during the '90s.
The real "Libtards" are the Libertarians!
The government should be giving this guy a medal, not prosecuting him. By sending those designs and documents to China, he single-handedly set their automotive industry back by at lease a decade.
Imagine all the people...
You must be right. Lord knows that corporations never robbed anybody and we have government to thank for that.
Or he'd REALLY get nailed, not the slap on the wrist he's getting1
Like what?
How to make a car that falls apart sitting in your driveway?
Or how to take a 2012 model car and make the interior of it look like a car's interior made in the 80's?
Or how to charge premium prices for sub-standard part's and quality?
Stealing was Job 1.
This is how Chinese companies generally innovate, they steal the information so they don't have to invent it themselves. We were constantly trained to keep eyes out for people stealing confidential and classified information when I worked on some Air-force Systems. Even back then, we were told the greatest threat was people being bought out by the Chinese, the US government were already dealing with tons of them trying to steal military technology. They are so far behind, they would generally do anything to try and close the gap, since they couldn't invent it quick enough themselves.
- hard at work stealing our information and creative processes. People (that includes politicians + CEOs) just tend to forget that China is not some quaint country that has rules of law and enforces those laws. This is a state run government and economy - anything goes to enrich the state and acrue power. We've already sent most of our production machines over there - now they are coming back to collect any intellectual property they can grab as well.
They are starting to eat our lunch and will shortly just take our lunch money
And contrary to some comments -- Ford makes some damn fine vehicles -- I dearly miss my 2001 F-150 4x4 - great truck
Its not the years, its the mileage
well, considering that the workforce in Europe is more unionized than it is here, it probably is.
>>Europe (is it flamebait to say they are better because they are away from US unions?)
Probably yes, because:
1) Workers in good old Europe have stronger unions than the withering joke the U.S. has.
2) European workers enjoy a terrific safety net which looks like the great wall of china compared to the spider web the U.S. wage slaves have. Never underestimate explosion of creativity in a geek who feels safe for economic future of his family.
It's a shame they abandoned the Straight-6. I have one in my '63 Falcon convertible that hasn't been rebuilt since it was put in the car and sat for 22 years. This summer I replaced a few parts (not anywhere CLOSE to a rebuild) and it started up and has run ever since. A rebuild is coming soon, though, and I have a feeling that it will be good for another 48 years at least.
Let me put it this way:
I work in a high technology company that makes a lot of software.
If our source code got into the hands of the competition, it would set them back a few decades.
They would run into so many bugs without knowing the 'workarounds' (or just flat out what to avoid), they wouldn't know what hit them.
Considering the crap that American car companies design, I think the Chinese are probably just trying to figure out what NOT to do.
From the FBI's website
The FBI investigates matters relating to fraud, theft, or embezzlement occurring within or against the national and international financial community. These crimes are characterized by deceit, concealment, or violation of trust and are not dependent upon the application or threat of physical force or violence. Such acts are committed by individuals and organizations to obtain personal or business advantage. The FBI focuses its financial crimes investigations on such criminal activities as corporate fraud, securities and commodities fraud, health care fraud, financial institution fraud, mortgage fraud, insurance fraud, mass marketing fraud, and money laundering. These are the identified priority crime problem areas of the Financial Crimes Section (FCS) of the FBI.
This also explains why Ford was the only one of the big-three not begging for cash handouts from your central government. Not sure whether they actually got any bailout money or so, I didn't follow it well enough.
Anyway. Ford has been selling quite well in Europe for a very long time - many decades. My parents used to own one, and were quite happy with it. They called it the most European American car when it comes to quality, reliability and overall design. American cars have the name to be oversized and overweight expensive gas guzzlers.
Otoh, all the brands that were mentioned in the stories about GM and Chrysler you can barely find on the roads in Europe. Also in Asia I haven't seen them. It does say something about the quality: Japanese are exporting cars worldwide (and even producing worldwide). European manufacturers exporting big time too, mostly US, also Asia. But American brands other than Ford - very little, if at all.
I don't know really what the US automakers are doing worse than the competition, but they really have some catching up to do.
Have you driven the Mustang though? I rented one in Florida a year or two back (V8), and it drove like one of their F150s. Fuel economy doesn't fix other engineering problems.
The problem with US unions, especially in the auto industry, has nothing to do with safety net. It has to do with corruption, with keeping incompetent people from being fired, and making the company inefficient. You can tell they are corrupt because over the last year one of their biggest goals has been to get rid of the secret ballot.
From what I've heard, unions in Europe don't really have these problems. The unions act as a representative of their employees, and do a fairly good job.
Qxe4
What car in that class do you suggest driving? I drove one a few years back, and it did feel a bit heavy, but it certainly beat the GM convertible I tried more recently.
Qxe4
Try a Corvette if possible (I'm aware it's a bit above the Mustang's class). Renting is difficult, but buying one isn't that expensive if bought used (C6, the latest generation, go for about $27-29K at Carmax around here with 20-30K miles on them). I used to own a '99 Targa Top and '01 Convertible (both bought used) and they were awesome. Excellent handling and quite a bit of power.
If that's not your thing, I'd look at the Subaru WRX, a Lexus IS250, a Mini Cooper (++handling), or a Mazda RX-8. I've had great experiences with those vehicles.
"five to six years in prison and a $150,000 fine"
Can you imagine how awfully unbalanced it would seem if people got lesser sentences for causing death by dangerous driving?
Yeah, all our incompetents are in the hundreds of layers of management. The manual workers, because we abolished promotion-from-the-ranks decades ago, get pretty good at the jobs they will do forever (until they get downsized).
They whose government reduces their essential liberties for temporary security, receive neither liberty nor security.
My slant-six would totally kick your ass. Keep yankin' on your three on the tree.
The recitation of facts and circumstances in the press announcement is too tidy and too organized. There must be major undisclosed facts and players associated with this case.
First of all note this is a "plea bargain". It is a plea bargain where only the prosecutor is saying anything. Note that the defendant and his attorney is saying nothing.
That means the deal is not justice in the conventional sense of found guilty in open court by a jury.
Notice, a big feature of this deal is all the punishment falls on one individual. There is no mention of the individual being paid except as in employment wages. The theft claim stops at the individual.
Note that the facts disclosed appear to be very prettily organized. The person flew to the perfect airport, The evidence found should not have been on any laptop. The files shouldn't have been on any business laptop owned by a Chinese company. The files show just the right access times to prove illegal access. The encryption used is just good enough to prevent casual access. The FBI is just good enough to forensically decrypt the files and perfectly identify the files as originating at Ford.
At the local courthouse I saw first hand that a lot of criminal prosecutions appeared to be young people pleading "nolo contendre" and accepting rather harsh punishments. I have seen at close hand punishment and criminalization being implemented by the motor vehicles people strictly as an administrative matter that takes the police officer's ticket as nearly incontestable truth.
One problem is, defence attorneys cost $300 per hour and even some attorneys have a 10 hour minimum.
Instead of justice, what we have here is the Federal criminal punishments are so exorbitantly draconian that 1 thumb drive of files means much more that 6 to 8 years in prison.
The government prosecution probably could have locked this hapless engineer up for 90 years.
The prosecutors negotiated with him to only take away 1/5 of his remaining lifetime in prison.
The concern I feel is our justice system is being short circuited by a triple problem: The criminal justice system destroys entire families without the damage being ever measured. The triple problems are:
1. Defence attorneys are generally un-affordable.
2. The punishments are imperial lockup in duration. There is no penitence and correction philosophy. Simply integer fractions of a lifetime are forfeited for chicken misbehaviors.
All those years of "get tough on crime" have given us a criminal prosecution system that causes problems because of the scope and severity of the punishments now written in the law.
3. Prosecutors are getting quick easy long lasting punishments without actually engaging in trial by jury in an open court.
That person is a hero. He is ethnic chinese and he served the nation of his own blood. Nothing matters, but race and blood allegiance. America wanted to be a melting pot of nations, so all "goy" races can be dissolved in junk culture and the whole mankind placed under the rule of elite jews, but America failed and Russia failed to implement total jewish world rule with gentiles as slaves. China is the major "goy" superpower, a nation-state and race-state of the 21st century.
Head gaskets are called engine failure now?
Shhhh. You might upset the natives.
You are posting on Slashdot, the place where place where gaming skills are equated with programming ability, living in one's parent's basement is equated with owning a house. If this was the 80's, they would be demanding the government buy everyone a Commodore64 because they are afraid of riding the train home from college.
is it flamebait to say they are better because they are away from US unions?
No, it's just moronic, as unions are much stronger in Europe and there are much more rights/protections for workers.
You only come over like a clown parroting anti-union propaganda from FoxNews etc.
Geez, how dumb would you have to be to keep documents like that on any computer you personally had access to?
Come ON, people. If you're going to perform industrial espionage, don't get caught by embarrassing amateur mistakes. No wonder car makers need bailouts if they're hiring sub-par workers like this.
Returning home, outside US jurisdiction? Just wondering.
Gotta love those non-compete agreements. The employer can harass you to the end of the earth for simply trying to get a job after being laid off (even if you have no access to "secrets" at all). Meanwhile, if you take a boatload of top-secret material offshore, all they can do is shrug their shoulders and have the legal department send a few nastygrams.
He stole SPECIFICATIONS, not designs. Designs on their own are pretty worthless (as you can 3d scan and replicate any physical part). You Can't 3d scan the knowledge used for designing that part.
Engineering is not mechanical design. It is properly identifying the REQUIREMENTS, and developing a SPECIFICATION which can then be used to ENGINEER a DESIGN. By Stealing the Specifications, it gives a new OEM a major leg up in the engineering process as they can skip the time consuming phase of understanding the customer (See process mentioned prior).
People need to separate the end product (widgit) from the underlying knowledge to design said widgit
My current car is a ford - a mondeo - and I'm perfectly happy with it, power-wise and l/100km-wise as well. My next car will also be a mondeo (if we get them in SA again).
I'm a minority race. Save your vitriol for white people.
That Ford and its competitors have stolen significantly more information than that from independent inventors, small firms, employees, etc. Call it stealing or not, but making millions-billions on others work is immoral and stealing in my book, even if you make them sign something to let you.
Where is the mod rating for "scary"? Also,
I'll admit that the 90's and most 0x's are crap; poor finishes and ugly designs, poor reliability.
I'm sort of interested in the fact that Consumer Reports has been finding the newer models acceptable. Add in that Ford didn't take/need a bail-out and that the new Taurus and Fiesta actually have some style/fit and finish and I might switch back. I've been driving Honda and Toyota for 10+ years. Considering the Toyota scares along with the Honda ugliness,
Although I haven't driven a Ford lately...
When I worked for BMW, I visited their UK design centre many times during the developement stage of the X5.
:p
There was a workshop, big enough for two cars, and it always held two cars. A team of techs would strip the car, measure and digitise the parts. Anyone in the company could borrow any car part they liked complete with drawings.
I beleive it's called reverse engineering in the game.
Stealing drawings? Laughable.
When I worked for BMW, inbetween leads for new models, we often did work for Renault, Peugeot and Ford. They obviously supplied us with drawings.
This post contains benzene, nitrosamines, formaldehyde and hydrogen cyanide.
Ford engineers are *not* unionized.
--Jim (me)
If you think the US unions are strong then you have not seen the European/German ones! I know somebody who wants VPN access to his company network but the unions would not allow it (they think the company would force him to work from home). This way he has no access to his email on business trips.
Timo's Audio Software http://www.esseraudio.com
Beats constantly having every vehicle recalled over lousy engineering techniques...
They are often involved when someone is being arrested for a Federal crime.
"Corporate espionage": Chinese for "good morning."
This also explains why Ford was the only one of the big-three not begging for cash handouts from your central government. Not sure whether they actually got any bailout money or so, I didn't follow it well enough.
Ford didn't ask for Bailouts because they had just finished mortgaging the company through private sector borrowing because they saw the writing on the wall. They got in just before the available cash in the US tightened up so nothing was being loaned out. Because they had just got a nice cash infusion, Ford was the only company that didn't require a bailout.
I will be buying Ford when I need a car again just because they didn't need a bailout, even if they were having problems, they handled them on their own.
Do you Gentoo!?
If the Chinese had waited a few more years, Ford would have *given* them the documents anyhow as part of an offshoring initiative. And what does China hope to gain from these documents? They are going to ignore them anyhow, as each subcontractor cuts a corner or two to maximize profit.
So you wind up with a car with paper-mache quality steel, that folds the passenger compartment upon impact, with airbags that don't work, and the door handle falls off while still at the dealership.
Seriously, have you *seen* those Wildfire or Chery cars? Deathtrap wouldn't even begin the describe them, but the problem is: That's the Chinese way. They do not care about quality or adherence to standards.
While the Japanese followed the American model of the 50's, and built up quality over time, the Chinese are following the American model of the 80's, where everything was crap, and continues to get crappier. Their "innovations" are about how to put cheaper and cheaper substitutes in for what's supposed to be there. I mean, we're talking about a culture that feeds its own people a diet of cardboard and lead if they think they can make a few bucks more from it.
If telephones are outlawed, then only outlaws will have telephones.
its more like they kept the engineers "people who get shit done" away from the executives "people who do anything to enrich themselves"
Of all of the auto manufacturers their parts are the worst. Don't believe me? google it.
Considering all the issues with bank failures over in Europe and fears over the Euro, they may not be feeling so safe about the future.
The problem with a concrete safety net is that, while concrete is hard, it's also heavy. Add in the weight of everyone sitting on it, and it's liable to collapse, and HARD.
It's a small victory for Ford, but both of them sold out us out to China for short term gains. In order to get into China in the first place they had to share all the IP of the vehicles they make in China with other Chinese auto makers. This gave Chinese auto makers a huge leap, and put them only a couple years behind US and European auto makers. I would guess Beijing Automotive Company got greedy and wanted more. American companies are very short sighted. The Germans understand that if you don't make things your economy is all paper. We're getting to the point in the US that the only thing we make is processed food.
Yeah, okay so this guy worked for Ford... Okay it stole some secrets... Okay he delivered them to some Chinese company... these are the accusations made.
Let's broadly assume he did it for this thought exercise. Let's keep this in mind... Now let's put ourselves in this guys shoes... Even if you thought
Why would you come back into this country with that material on a competitors laptop? Seriously WTF?
Yes Francis, the world has gone crazy.
I like the logo. I put a ford badge on my HZ, I like it so much.
Is 1563649 a prime number?
;-)
you had me at #!
$7.5 million tax free. Not quite enough to retire off of at age 30
You must have a pretty astronomical cost of living. Most people could very comfortably retire on $2 mil cash.
you had me at #!
Good thing it wasn't Dodge he stole stuff from. Chinese vehicles wouldn't have the turn radius capability to navigate their streets, they'd get horrible gas mileage and require heat blankets to start during the winter. And they'd have random things break, like drive shafts.
^ all things I've seen be common on Dodges
Let's not even go there with Toyota.
(I'm a current owner of multiple Fords which have had the most serious problems be break pad, shock, and strut replacement over 360k lifetime miles for an aggregate total of 3 different vehicles.)
Anecdotal evidence is pretty useless.
~/ssh slashdot.org ssh: connect to host slashdot.org port 22: too many beers
Sorry, I lied. I had a '91 Taurus wagon that had the A/C compressor go out around 125k and the water pump around 115k (both on days of negative F temperatures. NOT FUN.)
~/ssh slashdot.org ssh: connect to host slashdot.org port 22: too many beers
That is really lousy. In America, I heard of one guy who couldn't move a box from the front room to the back room because then the box moving person wouldn't have a job. He had to wait until that person came.
The biggest complaint I've heard with unions in the US is that they promote people purely based on seniority, and it's hard to get rid of people no matter how incompetent they are. Thus you end up with incompetent people at top and then the competent people get sick of it and go somewhere else.
Qxe4
I can definately attest to the short life torque converters. I have not bought a ford since they screwed me over on fixing one that was still under warranty.
10: PRINT "Everything old is new again."
20: GOTO 10
In Chinese prison, if your family don't pay, you don't eat. If your family don't pay, you don't get bed sheets and blankets on a cold night. If your family don't pay, you don't get replacement clothing when the one on your back is torn. To the Chinese, as a criminal, your life is worthless and you're worthless. They consider themselves to have a massive surplus of humanity after all, and one less is all the better. Unlike US where your death would cause your relatives to make a fuss that may ended up in the news headline, in China one less criminal will only solicit the comment "good riddance." To the Chinese government, the citizens are a burden to be tolerated, but only barely.
Chinese will continue to steal. Look at what happen to Seimen. There is a patter in Chinese industries that they began by joint venture with foreign companies and once they got enough exposures, trainings, and tech know-how, they will leave and set up their own company. This is a total IPR theft that China has been doing for so many years. This Ford incident is just a tip of the iceberg.
So how's that H-1B visa program working out for ya Ford? Did the labor savings make up for the 50 to 100 large bitch slap that you received from Smith's invisible hand?
Engineering teams usually aren't made up of UAW members. Ford and GM operate some of the most cutting edge auto factories in the world. However, none are in North America due to the UAW work rules.
Maybe GM is correct in its valuation, but it's their engineers who are vastly underpaid on a regular basis.
Good thing they didn't copy like 24 songs or they would be really screwed!
No, but when it fails you will be able to buy perfect copy from china for 1/10 of the original price.