From: USDOJ-Office of Public Affairs [mailto:USDOJ-Office.of.Public.Affairs@usdoj.gov]
Sent: Monday, February 11, 2008 12:56 PM
To: USDOJ-Office of Public Affairs
Subject: CHINA: ECONOMIC ESPIONAGE IN THEFT OF SPACE SHUTTLE SECRETS
A copy of the indictment is attached below.

_______________________________________________________________________
FOR IMMEDIATE RELEASE NSD
MONDAY, FEBRUARY 11, 2008 (202) 514-2007
WWW.USDOJ.GOV TDD (202) 514-1888
FORMER BOEING ENGINEER CHARGED WITH ECONOMIC ESPIONAGE
IN THEFT OF SPACE SHUTTLE SECRETS FOR CHINA
WASHINGTON, D.C. — A former Boeing engineer was arrested this morning after being indicted last week on charges of economic espionage and acting as an unregistered foreign agent of the People's Republic of China (PRC), for whom the engineer stole Boeing trade secrets related to several aerospace programs, including the Space Shuttle.
Dongfan "Greg" Chung, 72, of Orange, Calif., who was employed by Rockwell International from 1973 until its defense and space unit was acquired by Boeing in 1996, was arrested without incident at his residence by special agents with the Federal Bureau of Investigation and investigators with NASA. Chung, who is expected to make his initial court appearance here this afternoon, was named in an indictment returned last Wednesday by a federal grand jury.
The indictment accuses Chung of eight counts of economic espionage, one count of conspiracy to commit economic espionage, one count of acting as an unregistered foreign agent without prior notification to the Attorney General, one count of obstruction of justice, and three counts of making false statements to FBI investigators.
Chung, a native of China who is a naturalized United States citizen, held a Secret security clearance when he worked at Rockwell and Boeing on the Space Shuttle program. He retired from the company in 2002, but the next year he returned to Boeing as a contractor, a position he held until September 2006. The indictment alleges that he took and concealed Boeing trade secrets relating to the Space Shuttle, the C-17 military transport aircraft and the Delta IV rocket. Chung allegedly obtained the materials for the benefit of the PRC.
"Certain foreign governments are committed to obtaining the American trade secrets that can advance the development of their military capabilities. Today's case demonstrates that the Justice Department is equally committed to foiling those efforts through the arrest and prosecution of those who conduct economic espionage at the expense of our economic and national security," said Assistant Attorney General for National Security, Kenneth L. Wainstein.
United States Attorney Thomas P. O'Brien stated: "Mr. Chung is accused of stealing restricted technology that had been developed over many years by engineers who were sworn to protect their work product because it represented trade secrets. Disclosure of this information to outside entities like the PRC would compromise our national security."
The case against Chung is related to an investigation into another engineer who worked in the United States and obtained sensitive military information for the PRC. The man, Chi Mak, and several of his family members were convicted last year of providing defense articles to the PRC (see: www.usdoj.gov/usao/cac/pressroom/pr2007/074.html). Mak is scheduled to be sentenced on March 24.
According to the indictment that was unsealed this morning, individuals in the Chinese aviation industry began sending Chung "tasking" letters as early as 1979. Over the years, the letters directed Chung to collect specific technological information, including data related to the Space Shuttle and various military and civilian aircraft. Chung allegedly responded in one letter indicating a desire to contribute to the "motherland."
In various letters to his handlers in the PRC, Chung referenced engineering manuals he had collected and sent to the PRC, including 24 manuals relating to the B-1 Bomber that Rockwell had prohibited from disclosure outside of the company. According to the indictment, between 1985 and 2003, Chung made multiple trips to the PRC to deliver lectures on technology involving the Space Shuttle and other programs, and during those trips he met with officials and agents of the PRC government. The indictment alleges that Chung and PRC officials exchanged letters that discussed cover stories for Chung's travel to China and recommended methods for passing information, including suggestions that Chung use Chi Mak to transmit information.
The indictment describes a May 2, 1987 letter from Gu Weihao, an official in the Ministry of Aviation and China Aviation Industry Corporation, which discussed the possibility of inviting Chung's wife, who is an artist, to visit an art institute so that Chung could use the cover of traveling with his wife as an excuse to travel to the PRC. This same letter suggested that passing information to the PRC through Chi Mak would be "faster and safer" and concluded with the statement: "It is your honor and China's fortune that you are able to realize your wish of dedicating yourself to the service of your country." The indictment describes a second letter from Gu Weihao, dated April 12, 1988, which asked Chung to provide information on "advanced technologies." This letter stated that Rebecca Mak was in the PRC and she had reported that Chung and the Maks had a good relationship.

"The FBI is committed to protecting America's assets from foreign thievery," said Salvador Hernandez, Assistant Director in Charge of the FBI's Los Angeles Field Office. "The arrest and indictment of Mr. Chung should serve as a reminder to those who would compromise the economic and physical security of the United States by stealing proprietary information. The FBI will continue to work with NASA, the defense community and other federal agencies to safeguard our nation's technology."
Each charge of economic espionage carries a maximum possible penalty of 15 years in prison and a $500,000 fine. The charges of acting as an agent of a foreign government without prior notification to the Attorney General and obstruction of justice each carry a maximum penalty of 10 years imprisonment and a $250,000 fine. The charges of conspiracy to commit economic espionage and making a false statement to federal investigators each carry a maximum possible penalty of five years imprisonment and a $250,000 fine.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt
The investigation in this case was conducted jointly by the FBI and NASA Counterintelligence. The case is being prosecuted by Assistant United States Attorneys Greg Staples and Ivy Wang, from the Central District of California.
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Former Boeing engineer charged in spy case
12:54 PM PST on Monday, February 11, 2008
Associated Press
WASHINGTON - A Defense Department analyst and a former engineer for Boeing Co. were charged Monday in separate spy cases for allegedly handing over military secrets to the Chinese government, the Justice Department said.
Additionally, two immigrants from China and Taiwan accused of working with the defense analyst were arrested after an FBI raid Monday morning on a New Orleans home where one of them lived.
The two cases -- based in Alexandria, Va., and Los Angeles -- have no connection, and investigators said it was merely a coincidence that charges would be brought against both on the same day.
The arrests mark China's latest attempts to gain top secret information about U.S. military systems and sales, said Assistant Attorney General Kenneth Wainstein. He described China as "particularly adept, and particularly determined and methodical in their espionage efforts."
"The threat is very simple," Wainstein said at a Justice Department news conference in Washington. "It's a threat to our national security and to our economic position in the world, a threat that is posed by the relentless efforts of foreign intelligence services to penetrate our security systems and steal our most sensitive military technology and information."
An official at the Chinese Embassy did not immediately respond to a request for comment.
In the first case, prosecutors said weapons systems policy analyst Gregg W. Bergersen, 51, of Alexandria, Va., sold classified defense information to a New Orleans furniture salesman. In return, the salesman, a Taiwan native identified as Tai Kuo, a 58-year-old naturalized U.S. citizen, forwarded the information to the Chinese government.
The data outlined every planned U.S. sale of weapons or other military technology to Taiwan for the next five years, prosecutors said.
It's not clear how much money Bergersen received for the classified information, or if he was even aware it was intended for the Chinese government. Court documents portray him as nervous during at least one meeting when he handed over a diskette of documents to be recorded, asking Kuo to keep their deal a secret.
"I'd go to jail, I don't wanna go to jail," Bergersen said in a conversation taped by the FBI.
"I'd probably go to jail too," Kuo responded. Prosecutors described him as chuckling.
A third alleged conspirator in the case, Chinese national Yu Xin Kang, 33, served as the go-between for Kuo and the People's Republic of China, prosecutors say.
Kuo and Bergersen, who worked at the Defense Security Cooperation Agency in Arlington, Va., were arraigned before Magistrate Judge John Anderson at the federal courthouse in Alexandria. Bergersen was charged with conspiracy to deliver national defense information to a person not entitled to receive it. He faces a maximum of 10 years in prison.
Bergersen, who was arrested at his home early Monday, wore a long black T-shirt and blue shorts. His wife, who identified herself only as Ofelia, told reporters Bergersen was innocent and the charges "came out of the blue."
Tai Kuo was charged with conspiracy to deliver national defense information to a foreign government. He faces life in prison if convicted. Kang was to appear in federal court in New Orleans, facing the same charges as Kuo.
In the second, unrelated case, former Boeing engineer Dongfan "Greg" Chung, 72, was arrested on charges of working as an unregistered agent for the Chinese government who stole trade secrets from the defense contractor. The stolen data largely focused on aerospace programs, including the Space Shuttle, prosecutors said.
Chung, a naturalized U.S. citizen, was indicted last week on espionage, conspiracy and obstructing justices charges that were unsealed Monday. He has been the subject of an FBI investigation for nearly a year as part of an inquiry into another Chinese-born engineer who was convicted in 2007 of stealing military data for the Chinese government.
As early as 1979, prosecutors said, Chinese officials were tasking Chung to collect data on U.S. aviation, including the Space Shuttle and various military and civilian aircraft. At one point, Chung responded in a letter that he wanted to "contribute to the motherland," according to the Justice Department.
Over an 18-year span, Chung traveled to China many times to deliver lectures on the Space Shuttle and other programs, and he allegedly met with Chinese government officials there to discuss how to transfer U.S. data.
Chung, who has a security clearance, worked for contractor Rockwell International from 1973 until 1996, when Boeing acquired Rockwell's defense and space firm. He retired from Boeing in 2002 but returned the next year as a contractor. He ultimately left Boeing in 2006.

Links to more on the stories:

CNN http://www.cnn.com/2008/CRIME/02/11/espionage.indictments/index.html

CNN http://www.cnn.com/video/?/video/us/2008/02/11/sot.espionage.justice.cnn

CNN http://www.cnn.com/video/?/video/us/2008/02/07/lklv.todd.chinese.spying.cnn

CNN http://www.cnn.com/2008/CRIME/02/11/espionage.indictments/index.html

Because They Said So

The New York Times | Editorial
Sunday 10 February 2008

Even by the dismal standards of what passes for a national debate on intelligence and civil liberties, last week was a really bad week.

The Senate debated a bill that would make needed updates to the Foreign Intelligence Surveillance Act - while needlessly expanding the president's ability to spy on Americans without a warrant and covering up the unlawful spying that President Bush ordered after 9/11.
The Democrat who heads the Senate Intelligence Committee, John Rockefeller of West Virginia, led the way in killing amendments that would have strengthened requirements for warrants and raised the possibility of at least some accountability for past wrongdoing. Republicans declaimed about protecting America from terrorists - as if anyone was arguing the opposite - and had little to say about protecting Americans' rights.
We saw a ray of hope when the head of the Central Intelligence Agency conceded - finally - that waterboarding was probably illegal. But his boss, the director of national intelligence, insisted it was legal when done to real bad guys. And Vice President Dick Cheney - surprise! - made it clear that President Bush would authorize waterboarding whenever he wanted.
The Catch-22 metaphor is seriously overused, but consider this: Attorney General Michael Mukasey told Congress there would be no criminal investigation into waterboarding. He said the Justice Department decided waterboarding was legal (remember the torture memo?) and told the C.I.A. that.
So, according to Mukaseyan logic, the Justice Department cannot investigate those who may have committed torture, because the Justice Department said it was O.K. and Justice cannot be expected to investigate itself.
As it was with torture, so it was with wiretaps.
After the 2001 terrorist attacks, the president decided to ignore the Foreign Intelligence Surveillance Act, or FISA, and authorized wiretaps without a warrant on electronic communications between people in the United States and people abroad. Administration lawyers ginned up a legal justification and then asked communications companies for vast amounts of data.
According to Mr. Rockefeller, the companies were "sent letters, all of which stated that the relevant activities had been authorized by the president" and that the attorney general - then John Ashcroft - decided the activity was lawful. The legal justification remains secret, but we suspect it was based on the finely developed theory that the president does not have to obey the law, and not on any legitimate interpretation of federal statutes.
When Mr. Bush started his spying program, FISA allowed warrantless eavesdropping for up to a year if the president certified that it was directed at a foreign power, or the agent of a foreign power, and there was no real chance that communications involving United States citizens or residents would be caught up. As we now know, the surveillance included Americans and there was no "foreign power" involved.
The law then, and now, also requires the attorney general to certify "in writing under oath" that the surveillance is legal under FISA, not some fanciful theory of executive power. He is required to inform Congress 30 days in advance, and then periodically report to the House and Senate intelligence panels.
Congress was certainly not informed, and if Mr. Ashcroft or later Alberto Gonzales certified anything under oath, it's a mystery to whom and when. The eavesdropping went on for four years and would probably still be going on if The Times had not revealed it.
So what were the telecommunications companies told? Since the administration is not going to investigate this either, civil actions are the only alternative.
The telecoms, which are facing about 40 pending lawsuits, believe they are protected by a separate law that says companies that give communications data to the government cannot be sued for doing so if they were obeying a warrant - or a certification from the attorney general that a warrant was not needed - and all federal statutes were being obeyed.
To defend themselves, the companies must be able to show they cooperated and produce that certification. But the White House does not want the public to see the documents, since it seems clear that the legal requirements were not met. It is invoking the state secrets privilege - saying that as a matter of national security, it will not confirm that any company cooperated with the wiretapping or permit the documents to be disclosed in court.
So Mr. Rockefeller and other senators want to give the companies immunity even if the administration never admits they were involved. This is short-circuiting the legal system. If it is approved, we will then have to hope that the next president will be willing to reveal the truth.
Mr. Rockefeller argues that companies might balk at future warrantless spying programs. Imagine that!
This whole nightmare was started by Mr. Bush's decision to spy without warrants - not because they are hard to get, but because he decided he was above the law. Discouraging that would be a service to the nation.
This debate is not about whether the United States is going to spy on Al Qaeda, it is about whether it is going to destroy its democratic principles in doing so. Senators who care about that should vote against immunity.
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Bush Keeps War Cost Under Wraps
By Maya Schenwar
t r u t h o u t | Report
Friday 08 February 2008

President Bush's 2009 federal budget, released Monday, does not declare how much funding the administration expects to need for the wars in Iraq and Afghanistan next year. The omission appears to break a law that requires the inclusion of the year's total war funds in the annual budget plan.

The administration's budget includes an "emergency allowance" of $70 billion, but states that more money will be requested once the war's "specific needs" are determined.

Starting with just a partial sum may leave the door open for the largest war price tag yet, according to Pentagon spokesman Geoff Morrell, who said at a press conference last week that the $70 billion would "handle much of the first quarter of '09." A year of such "quarters" would total $280 billion - almost two times the president's original war request for 2008. Defense Secretary Robert Gates named a smaller price - $170 billion - when pressed during a Senate Armed Services Committee hearing on Wednesday, though he quickly qualified the estimate, saying, "I have no confidence in that figure."

Even $170 billion would be the highest initial "global war on terror" (GWOT) budget yet; Bush's annual request last February weighed in at $145 billion. The latest addition would bring the war's total cost so far to about $1 trillion.

Not providing a full-year war budget estimate is technically illegal, according to a provision in the 2007 Defense Authorization Act, although there's no mechanism for enforcing that law. Congress enacted the provision on the recommendation of the Iraq Study Group, which emphasized that funding GWOT through so-called "emergency" requests "reduces transparency and avoids the necessary reexamination of commitments, investment priorities and trade-offs."

Bush's present flaunting of the legislation lets him off the hook on explaining the enormous cost of war to the American people, according to Anita Dancs, research director of the National Priorities Project.

"There has been a lot of public outrage over how much has been spent on the war, and if the administration put a more realistic amount in the budget, it would reinforce that anger," Dancs said. "This way they can say they did account for the wars, but anyone knows that since the administration has signaled its intent to remain in Iraq and Afghanistan indefinitely that $70 billion is nowhere near enough. The administration doesn't yet want to draw attention to the true amount it needs for war next year."

What's more, in its projections for fiscal year 2010 and beyond, the administration has projected zero dollars for the wars. Based on these "projections" and only a thin slice of the funding necessary to continue status quo operations in Iraq, the administration has argued that its 2009 plan will set the government on track to balance the federal budget by 2012.

Withholding Iraq/Afghanistan war funds from the budget estimate not only makes a balanced budget seem possible, it also prevents a clear view of how war spending affects the federal deficit, according to Craig Jennings, federal fiscal policy analyst at OMB Watch, a nonprofit government-watchdog organization. This year's budget slashes funds for health care, education and housing programs in the interest of "balancing the budget," while billions of dollars in war funds, not yet formally requested, are exempt from scrutiny.

Jennings pointed to how the omission of war costs from the annual budget has distorted thinking on the federal deficit in past years.
"In 2006, the administration spent $120 billion on war," Jennings said. "Almost half of the budget deficit was because of war funding, but we never had this conversation nationally, because it wasn't included in the budget. When you have supplemental funding, it looks like free money. It makes it seem like there are no consequences to spending it."

That illusion of debtlessness not only drains federal coffers; it also inhibits us from seeing what's at stake when military operations keep growing, according to Dancs.

Bush's 2009 plan cuts discretionary domestic funding by $2.4 billion. That number may seem like a blip on the radar compared to the colossal level of defense spending in this budget - more than the military spending of all other countries combined. Yet, cutting $2.4 billion means drastically reducing subsidized housing vouchers, federal support for renewable energy initiatives, foster care funding, community development grants and a host of other programs geared toward low- and middle-income families.

With the $170 billion that Gates suggested might be requested for war next year, those programs could be funded 71 times over. But without that war money lined up alongside domestic programs in the budget, Dancs says, Americans can't see the disparity.

The exclusion of war funding from the president's budget also impacts defense policy more directly: it means Congress has less time to consider the war requests when they are released, according to Steven Kosiak, vice president of budget studies at the Center for Strategic and Budgetary Assessments. By the time the administration asks for supplemental war funding, it is billed as an "emergency" necessary to keep troops safe, and Congress is under pressure to approve it quickly.

Such is not the case for nonmilitary security-related spending, which is never termed an "emergency." According to the Task Force on a Unified Security Budget for the United States, almost 90 percent of security funds are spent solely on military force-related activities - and that's before war appropriations are added in. Only 10 percent goes to nonviolent preventative measures such as diplomacy, foreign assistance, arms nonproliferation efforts, homeland security and contributions to international organizations.

Can Americans expect priorities to shift before the 2009 budget is solidified? It depends what happens before Congress tackles that budget: Part of Bush's 2008 war request still has not been approved.
"The administration will be pushing Congress any day now for the remainder of the funding," Dancs said, pointing to late spring as a time frame.

With a new funding vote on the horizon, some Democrats hope to provoke a change in Iraq policy. Over the last several war spending votes, a growing number of Congress members have been pushing to include a timetable - or at least a tentative goal date - for the withdrawal of troops from Iraq. However, despite a rising level of public opposition to the war, as demonstrated by Democratic victories across the board in the 2006 Congressional election, Bush's requests for "no strings attached" money have won out every time. Congress has yet to begin reversing Bush's course on Iraq. According to Kosiak, it won't happen until the Bush administration leaves office.

"My guess at this point is that nothing will be enacted that has any restrictions on it," Kosiak said. "There's not going to be a deal struck with this president on war funding. It looks like that prospect will be up to the next administration."

Maya Schenwar is an assistant editor and reporter for Truthout.
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Standard Intelligence Test

By Stephen Barr
Thursday, January 3, 2008; Page D04

The keepers of the nation's secrets soon will be evaluated against common standards on how well they analyze problems, share information and stand behind their professional judgments.

Those job performance standards and others will apply to all rank-and-file civil service employees in the government's intelligence community, according to a directive issued last month by the director of national intelligence, Mike McConnell.

It marks the first time that the employees, across 16 agencies, will be evaluated according to the same performance requirements.

Intelligence agencies have been faulted in Congress and by independent commissions for missing opportunities to detect the Sept. 11, 2001, terrorists and for a flawed analysis of the threat posed by Iraq under Saddam Hussein. In a bid to pull intelligence agencies closer together, Congress approved a law in 2004 that permits the director of national intelligence to set policies for managing intelligence employees.

The new directive does not create a single personnel system for the intelligence employees but lists a set of factors -- such as collaboration, critical thinking, communication skills, technical expertise and integrity -- that agencies should use in annual job evaluations of non-supervisory personnel.

"This is all about trying to create an institutional culture for the intelligence community," said Ronald Sanders, chief human capital officer for McConnell.

The new job performance standards are to take effect no later than Oct. 1, although some intelligence agencies may implement them sooner. They apply to employees at General Schedule Grade 15 and below. A companion directive on performance standards for senior intelligence officers is nearing completion.

Sanders said the new standards will be critical to the success of a "joint duty" program announced last June that permits intelligence employees to rotate through assignments in various agencies to gain broad experience. The rotations help determine who gets promoted, and having a common set of performance standards will make it easier to compare employees who work in different agencies, Sanders said.

The job standards will not have an immediate bearing on pay raises, but a study is underway on moving intelligence employees into a performance-based, market-oriented compensation system. Changes affecting pay will be phased in, probably over a five-to-six year period, Sanders said.

The directive provides leeway to the agencies on how they implement the standards but envisions they will use a five-level rating system that assumes most employees should be able to meet job expectations and achieve a "successful" rating, the system's midpoint.

Retirements

Rose B. Kaplan, area director for 16 Social Security Administration offices in the Washington area, retires today after more than 40 years with Social Security. She recently received a commissioner's team award for her work on the severely injured Marines and sailors project to expedite the processing of military casualty claims.

Annette Hanopole, a grants management officer and branch chief at the National Institutes of Health, retires today after 32 years of federal service.

John E. O'Brien, an information technology project manager in the Office of the Comptroller of the Currency, retires today after 33 years of federal service.

Kenneth R. Papaj, commissioner of the Treasury Department's Financial Management Service, retires today after more than 34 years of federal service. Before being appointed as commissioner, Papaj served from 1998 to May 2006 as the agency's deputy commissioner.

Brigid Quinn, deputy director for public affairs at the Patent and Trademark Office, retired Dec. 31. Prior to joining the agency, Quinn worked as chief of staff to John A. Wilson when he was on the D.C. Council, as a senior legislative analyst for a House committee and as a speech writer at the Equal Employment Opportunity Commission.

Stephen Barr's e-mail address isbarrs@washpost.com.