Legal Docket by CourtListener: United States v. Shi (1:17-cr-00110)
On February 11, 2020, the Department of Justice (DOJ) announced that Shan Shi, 55, of Houston, Texas, and the head of a Houston-based company, was sentenced to 16 months in prison and ordered to forfeit more than $330,000. Shi is a naturalized U.S. citizen. This case is listed by DOJ as one of the "China Initiative" cases.
According to DOJ, Shi had previously been found guilty of conspiracy to steal trade secrets by a jury on July 29, 2019. Evidence admitted during a three-week trial showed that Shi had signed an agreement with Taizhou CBM Future New Material Science and Technology Co. Ltd (CBMF), to develop the manufacture of syntactic foam, which is a buoyancy material that aids in offshore oil and gas drilling. The defendant specifically pledged to “digest/absorb” the relevant technology in the United States. The defendant then set up a U.S.-based corporation, CBM International Inc., (CBMI) and hired ex-employees of a victim company that manufactured syntactic foam, located in Houston, Texas. These employees had access to trade secrets developed by the victim company, and the defendant was aware that they had signed agreements with the victim company not to disclose proprietary information. The other employees then transferred proprietary information to CBMI and the defendant, who used the information to create a syntactic foam manufacturing process in China.
According to the Washington Post on July 29, 2019, Shi was convicted of conpiring to steal trade secrets, but acquitted of economic espionage for China.
Shi appealed to the U.S. Court of Appeals for The District of Columbia Circuit. which issued a ruling on March 16, 2021 affirming Shi's conviction. However, Senior Circuit Judge Silberman opined that "I am quite troubled by the Government’s brief; it almost caused me to dissent. When one turns to its argument section, one encounters a number of misrepresentations. At best, some of them are inferences (although characterized as facts) that might be drawn from the record. There are also out and out misstatements of fact—not at all legitimate inferences—and at least one illegitimate argument" that misled the jury. Judge Silberman went on to list seven specific examples of the government's misstatement of facts.
In conclusion, Judge Silberman said, "[a]s an alumnus of the Department of Justice, I regard the Government’s brief as particularly disheartening. That the case was close is no excuse for distorting the facts. This is particularly true in criminal cases and perhaps even more so when dealing with a politically unpopular defendant."
Links and References
2021/03/16 U.S. Court of Appeals for The District of Columbia Circuit: Opinion on Case No. 20-3010 United States of America v. Shan Shi
2020/02/11 DOJ: American Businessman Who Ran Houston-Based Subsidiary of Chinese Company Sentenced to Prison for Theft of Trade Secrets
2019/07/29 DOJ: Texas Man Convicted of Conspiracy to Commit Theft of Trade Secrets
Washington Post: Houston businessman convicted of conspiring to steal trade secrets, acquitted of economic espionage for China
According to DOJ, Shi had previously been found guilty of conspiracy to steal trade secrets by a jury on July 29, 2019. Evidence admitted during a three-week trial showed that Shi had signed an agreement with Taizhou CBM Future New Material Science and Technology Co. Ltd (CBMF), to develop the manufacture of syntactic foam, which is a buoyancy material that aids in offshore oil and gas drilling. The defendant specifically pledged to “digest/absorb” the relevant technology in the United States. The defendant then set up a U.S.-based corporation, CBM International Inc., (CBMI) and hired ex-employees of a victim company that manufactured syntactic foam, located in Houston, Texas. These employees had access to trade secrets developed by the victim company, and the defendant was aware that they had signed agreements with the victim company not to disclose proprietary information. The other employees then transferred proprietary information to CBMI and the defendant, who used the information to create a syntactic foam manufacturing process in China.
According to the Washington Post on July 29, 2019, Shi was convicted of conpiring to steal trade secrets, but acquitted of economic espionage for China.
Shi appealed to the U.S. Court of Appeals for The District of Columbia Circuit. which issued a ruling on March 16, 2021 affirming Shi's conviction. However, Senior Circuit Judge Silberman opined that "I am quite troubled by the Government’s brief; it almost caused me to dissent. When one turns to its argument section, one encounters a number of misrepresentations. At best, some of them are inferences (although characterized as facts) that might be drawn from the record. There are also out and out misstatements of fact—not at all legitimate inferences—and at least one illegitimate argument" that misled the jury. Judge Silberman went on to list seven specific examples of the government's misstatement of facts.
In conclusion, Judge Silberman said, "[a]s an alumnus of the Department of Justice, I regard the Government’s brief as particularly disheartening. That the case was close is no excuse for distorting the facts. This is particularly true in criminal cases and perhaps even more so when dealing with a politically unpopular defendant."
Links and References
2021/03/16 U.S. Court of Appeals for The District of Columbia Circuit: Opinion on Case No. 20-3010 United States of America v. Shan Shi
2020/02/11 DOJ: American Businessman Who Ran Houston-Based Subsidiary of Chinese Company Sentenced to Prison for Theft of Trade Secrets
2019/07/29 DOJ: Texas Man Convicted of Conspiracy to Commit Theft of Trade Secrets
Washington Post: Houston businessman convicted of conspiring to steal trade secrets, acquitted of economic espionage for China