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Salesman gets 2 years for industrial spying

 SAN JOSE -- A former Chinese citizen living in Cupertino was sentenced Wednesday to two years in federal prison for stealing military software from a Silicon Valley defense contractor and trying to sell it to the Chinese military, prosecutors said.

Xiaodong Sheldon Meng, 44, now a Canadian citizen, is the first person to be sentenced under a 1996 economic espionage law designed to prevent trade secrets from being handed over to foreign powers.

The prison term was the maximum that prosecutors said they would seek after Meng pleaded guilty in August in U.S. District Court in San Jose to one count of violating the Economic Espionage Act and one count of violating the Arms Export Control Act. Thirty-four other counts he had faced were dropped.

Judge Jeremy Fogel also sentenced Meng to three years of parole after his prison term and a $10,000 fine. Meng agreed to forfeit computer equipment seized in the case.

The defense maintained Meng was not a foreign spy and never stole the software, but rather was provided it while he worked as a sales contractor for the company that owned it, Quantum3D of a San Jose.

Meng was convicted of illegally obtaining a program used for military training from Quantum3D and later using the program in a demonstration to the Chinese navy after he no longer worked for the firm.

The defense maintained that Meng never provided the actual software to the Chinese and said the demonstration was designed to show the capabilities of hardware being sold by Meng's employer at the time, Orad Ltd. of Israel.

"Mr. Meng was not engaged in acts of espionage on behalf of a foreign government," his attorney, Manuel Araujo, wrote in court documents. "He was engaged in the pursuit of making sales on behalf of his employer, Orad Ltd."

Prosecutors also accused Meng of exporting without a license the source code for a Quantum3D simulation software used to train military fighter pilots who use night-vision equipment.

"The United States maintains a military advantage during nighttime operations," Assistant U.S. Attorney Mark Krotoski wrote in his sentencing memorandum. "In the wrong hands, this advantage would be lost."

Araujo countered that although Meng acknowledged having that source code for the program on his computer, he didn't admit to compiling it to create the actual fighter pilot training program.

"While Mr. Meng may have had in his possession the recipe to bake a pie," Araujo wrote in arguing for a lenient sentence, "there is no evidence that he ever attempted to bake a pie."

 

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