Americans found guilty of stealing secret Oreos chemical for China

By Stefan Van Assche, March 7, 2014

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A US jury has found two men guilty of stealing an American company’s secret recipe for making titanium dioxide, a chemical used to whiten products, and selling it to a competitor controlled by the Chinese government.

Robert Maegerle, 78, and Walter Liew, 56, were found guilty of economic espionage Wednesday in San Francisco. Each could face 15 years or more in prison and hundreds of thousands of dollars in fines. They were accused of stealing Delaware-based Dupont Co’s method for making titanium dioxide. This chemical earns the company around 104 billion yuan ($17 billion) yearly and has a wide range of applications, from car paint to sunscreen to food colouring (E171) such as that used in Oreo cookies.

US District Judge Jeffrey White ordered Liew to be taken into custody immediately, fearing he might flee the country. Liew's lawyer, Stuart Gasner, said he would appeal. "We are very disappointed," Gasner said in a prepared statement. "Walter Liew is a good man in whom we believe and for whom we will continue to fight."

Maegerle remained free on bond, pending his sentencing on June 10. He reportedly declined to comment when leaving court.

According to federal prosecutors, Liew and his wife Christina, who will face trial later this year, launched a company in the 90’s specifically aimed at providing China with a DuPont-like factory to produce the chemical. In order to achieve this goal, they recruited former DuPont scientists like Maegerle. The Chinese Pangang Group reportedly invested over 122 million yuan ($20 million) so Liew could deliver the recipe to China.

Tze Chao, another former DuPont scientist who worked with the Liews, pleaded guilty in 2012 to conspiracy to commit economic espionage and will be sentenced later.

The pair's ploy began unraveling when a disgruntled ex-employee of Liew told DuPont in a letter about the efforts to secure their trade secrets. DuPont then contacted the FBI and filed a lawsuit.

The defendants argued that they had obtained the information from public sources such as expired patents, and stole nothing from DuPont.

China imports more titanium dioxide than it can produce. Testimony and court documents claimed that Chinese leaders had approved obtaining DuPont’s manufacturing method as a national economic and scientific imperative.

[Image via Flickr]

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