'Overheated': How A Chinese-Spy Hunt At DOJ Went Too Far

By Jack Queen | September 28, 2021, 8:13 PM EDT ·

Documents unearthed in botched prosecutions of visiting Chinese scientists show concerns within the government that the cases were thin and lacked any connections to economic espionage.(Law360 illustration from court documents)

Dr. Chen Song awoke early one morning in July 2020 to the sound of fists pounding on the door of her San Francisco apartment. Her aunt, Sulan Wang, answered to two FBI agents with their guns drawn. Another seven agents, some in raid jackets and body armor, were waiting outside.

Song, weary from juggling her epilepsy research at Stanford University with homeschooling her 6-year-old daughter, was hustled outside barefoot in her pajamas while the rest of the agents searched her home. Inside, Song's daughter cowered near a trash can, crying.

Chen Song

"When I saw Chen's daughter, she was crouching in fear," Wang later recalled in a sworn statement, writing that she had feared for her life. "Chen was acting brave for her daughter, but I knew she was very scared."

Song was taken back inside to the bedroom, where two FBI agents grilled her about her visa application and employment history. She was confused, interview transcripts show, sensing that she might need a lawyer, but her answer under two rounds of questioning was unequivocal: she was not a Chinese spy.

In indictments unveiled later that month, prosecutors alleged that Song and four other visiting scientists — all of whom worked at civilian-military research institutions in China — concealed their military service when applying for visas as part of a sprawling plot to steal technology from elite universities. In court papers, the government hinted that more indictments were coming.

Last July, the U.S. Department of Justice abruptly dropped the cases. Prosecutors offered no explanation, but documents unearthed in litigation exposed holes in the government's theory, dissent within the FBI over the wisdom of the prosecutions and internal skepticism about whether the scientists had broken the law.

The cases were brought under the umbrella of the China Initiative, a Trump-era DOJ program intended to root out state-sponsored economic espionage. Nearly two dozen academics have been indicted, including U.S. citizens and longtime residents, and the overwhelming majority have been charged for errors on government paperwork or alleged false statements to investigators. More cases have ended in dismissals than convictions, according to a Law360 analysis, and many defendants have accused investigators of misconduct.

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According to civil rights groups, high-ranking DOJ officials have encouraged racial profiling with their sweeping anti-China rhetoric and claims of a vast spy network lurking within U.S. academia.

"Scientists of Asian heritage are being disproportionately targeted for investigation and prosecution, and a lot of these prosecutions turn out to be based on faulty grounds," Ashley Gorski, a staff attorney for the American Civil Liberties Union, told Law360. "They've fallen apart."

In July, 90 members of Congress demanded an internal DOJ investigation into the "repeated, wrongful targeting of individuals of Asian descent for alleged espionage."

Racial justice and civil liberties groups want the initiative dissolved, but that could prove difficult. President Joe Biden's hawkish China policy is in step with his predecessor's, and Attorney General Merrick Garland has so far shied away from reversing some Trump-era policies. An overhaul of the initiative could also need to wait until the Justice Department's National Security Division has a permanent leader in Matt Olsen, Biden's nominee.

The Justice Department declined to make officials available for interviews or answer a detailed list of questions. A spokesperson said in a statement that the agency takes discrimination concerns seriously.

"As we work to protect the United States against … the sophisticated [People's Republic of China] targeting of our institutions and individuals whose political views pose a challenge to the regime – we are also mindful of our responsibility to combat … the substantial rise in hate crimes and bias targeting the Asian American [and] Pacific Islander community," the agency said.

According to lawyers for defendants charged with making false statements on visa applications, documents unearthed in the cases show politics and pressure from the top propelling bad cases forward, overwhelming skeptics within the government. Two of the visa defendants spent more than a year in jail, even though their cases were ultimately abandoned. Another was locked up nine months, with his fiancée jailed for two months as a possible witness.

Song was one of the lucky ones, spending only four days in jail. But the trauma of the raid rippled across her family. Song's aunt says she now sleeps in her closet out of fear, and that her relationship with her niece is no longer the same.

"Before the raid, I was close with Chen's daughter," Wang said in her sworn statement. "She now has difficulty talking with me and avoids me on video chats."

A Policy Shortcut

Former Attorney General Jeff Sessions unveiled the China Initiative in a November 2018 speech, framing it within the Trump administration's wider efforts to confront Beijing, which Sessions said was "notorious around the world for intellectual property theft."

Trump's trade war with China was heating up. Tit-for-tat tariffs had bruised both economies but failed to yield agreements on what the U.S. said were unfair trade practices, including policies that forced foreign companies to cede intellectual property in exchange for market access.

Disputes over Chinese trade regulations occupied gray areas of international law, but economic espionage appeared to be black-and-white. While the diplomats negotiated, the Justice Department would prosecute.

Some veterans of the initiative now question elements of this approach.

"The Chinese scientist aspect of it was, in my view, a shortcut to coming up with a solution to a tricky policy problem," John Hemann, a Cooley LLP partner and former federal prosecutor who tried early China Initiative cases, told Law360. "The relations between the two governments had gotten so bad, and we were making no headway with the problem through diplomacy or regulation. The political rhetoric started to get overheated."

Early cases targeted the private sector. One of the first, prosecuted by Hemann, targeted a spy ring that passed an Idaho semiconductor manufacturer's trade secrets to China through a Taiwanese intermediary company, which later pled guilty.

In 2019, scientists became frequent targets. The previous year, the National Institutes of Health, which doles out billions of federal grant dollars annually, had warned more than 10,000 institutions of "systematic" infiltration campaigns by foreign entities, urging them to scrutinize their grant applications more closely. It was a sea change in academia's approach to scientific exchanges with China.

"These collaborations abroad by professors and scientists were things that universities had wanted just a few years back," Gisela Kusakawa, a staff attorney for the civil and human rights group Asian Americans Advancing Justice, told Law360. "Now we're seeing a shift where these collaborations are increasingly being criminalized."

Only two of the 23 academics indicted under the China Initiative were accused of economic espionage. But prosecutors often ratcheted up the pressure by also charging the cases as multimillion-dollar frauds against the NIH, premised on the notion that science blemished by an omission on an underlying grant application is useless. This legal theory is hotly contested by academics, but prosecutors have the support of the NIH. The consequences for defendants can be dire.

Dr. Song Guo Zheng was one of the first academics to plead guilty in a China Initiative case, admitting in 2019 to one count of making a false statement on a grant application. In court papers, the former rheumatology professor at The Ohio State University took responsibility for his omission but noted that he had completed his research. Colleagues attested to Zheng's character and the quality of his work over 20 years in the U.S., which had yielded scientific breakthroughs.

At the time he made his guilty plea in November 2020, the 58-year-old had already spent a year in jail, separated from his wife and young daughter. He asked for time served.

On May 14, Zheng was sentenced to more than three years in prison. In his decision, Chief Judge Algenon L. Marbley cited a sworn statement by an NIH official declaring that all of Zheng's research was irrevocably tainted. Zheng's colleagues wrote to the court in vehement disagreement.

"One can debate the specifics of the United States of America v. Song Guo Zheng, but on the subject of the scientific validity of the excellent works produced by this prolific scientist there is no debate," said Dr. David D. Brand.

Zheng is appealing his sentence. His lawyer declined to comment, and he did not respond to letters sent to him in prison.

More defendants are taking their chances at trial, seizing upon alleged misconduct by investigators. Franklin Tao, a University of Kansas chemical engineering professor, accused FBI agents of submitting a search warrant affidavit with at least eight falsehoods or omissions. According to Tao, these included not telling the court that the bureau's informant allegedly harbored a vendetta against Tao and tried to extort him for hundreds of thousands of dollars with threats to report him as a "tech spy."

Anming Hu, a University of Tennessee chemical engineering professor, was charged with fraud and making false statements for allegedly violating the "NASA Restriction," an arcane regulatory snippet that bars the space agency from funding Chinese government institutions. He was initially thought to be a spy based on a Google search by an FBI agent, litigation revealed. A federal judge tossed Hu's case in September after a mistrial, finding no rational jury could convict him.

"More and more Chinese professors are wrongfully losing their careers due to the overzealous FBI Chinese Initiative," Hu, who was fired after being indicted for fraud and false statements, said in a motion to dismiss. "This court has an opportunity and responsibility to set the limits of the FBI's power."

'An Unreliable Indicator'

Dr. Juan Tang was nearly finished packing up the small apartment she shared with her mother and 9-year-old daughter when the FBI arrived.

Juan Tang

Tang, who has a PhD in oncology, had been invited to conduct cancer research at the University of California, Davis, but the pandemic had derailed her work. The trip had otherwise been a success, including sightseeing tours and a trip to Disneyland, but she was ready to rejoin her husband in China. A new tenant was already dropping off items, and Tang's mother and daughter were set to fly back to China that afternoon. Instead, they were made to sit on a bare mattress while a pair of agents grilled Tang for nearly two hours, according to court papers.

"At one point, I stood up because I wanted to go to the bathroom, but the English-speaking agent said something I could not understand," Tang's mother, Xiuying Li, said in a sworn statement translated from Mandarin. "My daughter explained to me that they did not want me to go anywhere and wanted me to sit down. I was in shock and did not know what to do, or what not to do."

After the interview, a search team swept and photographed the mostly barren apartment, and agents left with Tang's passport and visa. Frightened, confused and in a foreign country without documentation, she went to the Chinese Consulate in San Francisco, where she stayed for a month. Prosecutors claimed Tang was being sheltered by consular staff, but her lawyers insist she simply had nowhere else to go.

When she found out she had a warrant out for her arrest, she went into "hysterics" and was taken to a hospital to be treated for an apparent asthma attack, according to court papers. Tang was arrested after being medically cleared. She wouldn't see her daughter for another year.

The apartment Dr. Juan Tang shared with her mother and daughter while at UC Davis, seen on move-out day in a photo taken by an FBI search team. (Court documents)

The Justice Department announced indictments against Tang, Chen Song and two other scientists in July 2020, touting them as part of a wider visa fraud probe spanning 25 U.S. cities. Prosecutors said the defendants, including a fifth who was indicted later, had concealed being active-duty members of the People's Liberation Army.

"This is another part of the Chinese Communist Party's plan to take advantage of our open society and exploit academic institutions," said John Demers, then chief of the Justice Department's National Security Division.

Investigators had made their first arrest the previous month, nabbing visiting toxicology researcher Xin Wang before he could board a flight to China. In addition to visa fraud, he was accused of stealing the design of the lab he worked in at the University of California, San Francisco, though the government's own filings suggest he didn't think this was a crime. Before leaving, Wang told his supervisor at the university that he had replicated the lab in China and looked forward to remote collaborations.

The arrests led to an exodus of visiting Chinese researchers. In December, Demers said roughly 1,000 scientists had fled the U.S. since the visa crackdown began. To rights groups, this was merely a wave of innocent people fearing persecution. But the government believed the PLA had planted untold numbers of agents in American universities, and each departure was another potential spy off the table.

Some in the FBI were skeptical. In an April internal report, two counterintelligence agents noted that many of the thousands of doctors serving in the PLA's civilian cadre wouldn't consider this military service, saying this was a "gray area" when hunting for deception on visa applications. And even if the doctors were stretching the truth, there was little reason to suspect them of economic espionage, the report said.

"China's PLA is not a direct analog to how the U.S. military services are set up, especially regarding the PLA's Civilian Cadre," the analysts noted, concluding that the visa question was an "unreliable indicator of nefarious obfuscation of one's military affiliations, and even less of an indicator of technology transfer activity."

Dr. Juan Tang with her husband and daughter. (Courtesy of Tang's attorneys)

This gray area appeared to undercut the government's theory. Defendants had argued that the visa question couldn't be the basis for a false statement charge because it was ambiguous, and the report showed that some in the FBI agreed with this interpretation. Tang's lawyers didn't obtain the documents until the eve of trial. They demanded a hearing over why the exculpatory material wasn't turned over sooner, but the case was dropped before one could be held.

The prosecution of Lei Guan, a visiting mathematics researcher at UCLA, revealed another internal FBI report on the visa cases that concluded they likely had "minimal impact" on technology transfer. The author of the report, pushing back on a commendation for her role in the probe, noted that only two cases had possible connections to trade secrets, while none raised counterintelligence concerns. Investigators had "likely contributed to the deterioration of the FBI's delicate yet valuable relationship with some U.S. universities by not exercising more caution before approaching PRC students," she said.

"The interviews revealed a consistent pattern: students expressed feeling great distress that the FBI was 'harassing' them, and they were confused when told they failed to disclose their 'military' affiliation because they were in the civilian cadre and not soldiers," the report said.

According to one heavily redacted section, FBI field offices were "strongly advised" not to arrest researchers associated with Tang's university. They did so anyway.

A Familiar Dynamic

Racial disparities in spying investigations have grown dramatically over the past decade. People of Chinese ethnicity accounted for only 16% of defendants charged under the Economic Espionage Act between 1996 and 2009, but they now account for more than half, according to a recent study by Greenberg Traurig LLP attorney Andrew Chongseh Kim and the Committee of 100, a non-profit Chinese-American leadership organization. One in 4 Chinese defendants are ultimately exonerated, and excluding foreign nationals, the ratio rises to 1 in 3. Convicted Chinese defendants are punished twice as severely, Kim found, and people with Asian names are roughly four times as likely to be denied bond. Prosecutors are also far more likely to put out press releases for espionage charges against Asian defendants than non-Asian defendants, according to the study.

"These disparities in reporting risks racializing these crimes even more," Kim told Law360. "Overreporting crimes when they are committed by members of a particular racial minority can paint a distorted image of the actual threats facing our country."

The China Initiative is sowing fear during a fraught time for Asian Americans. The FBI's latest annual report shows an uptick in hate crimes against Asian Americans, and in July, a Senate committee found that a rogue security arm of the U.S. Department of Commerce had opened spurious and intrusive investigations into employees of Chinese descent for more than a decade.

"There's a certain kind of discrimination that some ethnic groups — including Asian Americans — experience, where folks will look at someone like me and assume I'm not American, that I'm a second-class citizen, that I'm a foreigner," Rep. Ted Lieu, D-Calif., told Law360. "And unfortunately, that also plays out in our government."

Prosecutors say that in the fight against Chinese economic aggression, most defendants will inevitably be Chinese. Roughly 80% of all Justice Department economic espionage cases allege conduct that would benefit China, according to the department's China Initiative webpage, while 60% of all trade secrets cases have "at least some nexus to China." This is partly a reflection of the department's focus on China in the first place, but Beijing does pose a unique economic espionage threat, according to Hemann, the Cooley lawyer and former China Initiative prosecutor.

"There is evidence that the Chinese government has cultivated and attempted to cultivate sources of information in the U.S. in order to take advantage of the openness of these research institutions," he said. "This spans both basic science and the private sector."

The Commission on the Theft of American Intellectual Property, a private think tank, estimates that trade secret theft costs the U.S. economy between $180 billion and $540 billion annually. Beijing is believed by the government to have some 90,000 intelligence officers at home and abroad, as well as hundreds of thousands of PLA staff members and scientists. In 2018 Senate testimony, FBI Director Christopher Wray said nearly all agency field offices had received reports of "nontraditional collectors" of information, including academics, operating on China's behalf.

Despite Wray's assertion, only two of the 23 researchers indicted under the China Initiative were charged with economic espionage. Prosecutors described several defendants as spies in public statements, only to reverse themselves in court.

The government's talk of pervasive Chinese infiltration is similar to the FBI's post-9/11 assertion that Muslim communities were teeming with thousands of Al-Qaeda sleeper agents, civil rights groups say. Nearly all of those leads were erroneous, and the hunt for illusory terrorists led to widespread civil rights violations against Muslims, according to government watchdogs and FBI veterans.

"Whenever you have national initiatives, programs and task forces, you run the risk that national supervision overwhelms the good faith of local prosecutors," Tang's attorney, Malcolm Segal of Segal & Associates PC, told Law360.

The Justice Department under former President Barack Obama pledged to make reforms after bringing controversial cases against Chinese-American academics. These included department-wide implicit bias training, though according to Lieu, this was halted under Trump. Then-Attorney General Loretta Lynch also promised to add extra layers of scrutiny to such cases, akin to how Main Justice signs off on indictments for certain national security-related charges.

Critics of the China Initiative say academics should be able to simply correct incomplete disclosures, arguing these are regulatory, not criminal matters. The government could develop better disclosure guidance, bringing order to the morass of red tape around grant funding.

Research institutions also need to improve training on disclosures, according to experts, who say faculty are left to navigate mountains of paperwork largely on their own. Litigation has shown that some university administrators didn't even understand the rules themselves.

Still, some say that racial profiling will inevitably occur under an enforcement initiative dedicated to a single country. Lieu, who is leading the push for an internal DOJ probe of the China Initiative, questions why the Justice Department doesn't also have initiatives for Russian political meddling or North Korean cybercrime.

"We should clearly try to stop people from violating the law, but if you only look at Asian Americans, of course you're going to find some who break the law," Lieu said. "And if you only have a China Initiative and not a Russia initiative, guess what? You're going to find Asian Americans."

'I Will Always Remember'

Lei Guan, the visiting UCLA researcher, had been under surveillance for weeks when FBI agents saw him toss a hard drive into the dumpster outside his apartment.

Lei Guan

Guan was preparing to return home with his fiancée, Zhihui Yang. Tensions between Beijing and Washington were running high, and Chinese officials had advised travelers to bring as few electronics as possible through U.S. customs to avoid undue scrutiny. Guan and Yang consolidated their files, and one morning in August 2020, Guan disposed of a duplicated hard drive.

Agents fished the hard drive out of the trash, believing they had finally found evidence of spying. They arrested Guan a month later, charging him with lying about military service on his visa application and destroying evidence — though prosecutors later conceded Guan had no access to confidential information.

"Guan told FBI personnel that he previously wore Chinese military uniforms and participated in military training (but continued to claim that he had not served in the military)," the U.S. government said in its complaint.

Guan's case received high-level attention from FBI headquarters and other government agencies, according to internal documents. Deemed a flight risk, Guan was jailed for nine months, and his fiancée was detained as a witness for nearly two months. One of Guan's lawyers, Bin Li, had to put up his own $500,000 home as collateral and agree to house Guan to secure his release.

"The entire case is based on the allegations that a Mandarin-speaking defendant lied to an English-speaking government investigator about a nonexistent crime," Guan's lawyers said in a motion for his release. "The government does not understand the difference between being in the military and going to a school which has both a civilian and military component."

Harland Braun, one of Guan's attorneys, said the case was a troubling reminder of longstanding prejudice against Chinese people in the U.S.

"It's really disappointing as an American," he told Law360. "The incompetence and lack of honesty is also embarrassing."

Guan returned to China to marry Yang after his case was dropped without explanation. He could not be reached for comment, but in an unusual move, he voluntarily wrote to the court on Aug. 5 to express disbelief over his ordeal.

"I was put in jail for over 9 months," he said. "It [was] truly a terrible experience for me. I feel that, as a Chinese citizen, I was arbitrarily bullied by the U.S. government. I know that [this is] because China is not as strong as the U.S. now. I will always remember this experience and will contribute [to] building a much stronger China. I hope that, in the near future, nobody dare[s] to bully Chinese citizens anymore."

--Editing by Pamela Wilkinson.

Update: This story has been updated with additional information about a study of economic espionage cases. 

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