In August 2019, federal prosecutors indicted Feng Tao, a Chinese scientist conducting research at the University of Kansas, on fraud charges. The indictment may not appear notable at first glance. But when viewed against the backdrop of the Trump administration’s escalating trade war and the Department of Justice’s “China Initiative,” the facts underlying this prosecution may tell a deeper story.
As part of its China Initiative—a program announced in November 2018 to combat state-sponsored intellectual property theft—the DOJ set out to develop an enforcement strategy concerning universities and research laboratories. These institutions are considered particularly vulnerable targets of Chinese espionage because of their status as recruiters of foreign talent and incubators of state-of-the-art technology. The FBI has since begun scrutinizing universities’ ties to China, reaching out to schools around the country to curb the threat of technology and trade secret theft posed by researchers tapped by the Chinese government.
Interestingly, however, the Tao indictment contains no allegations of trade secret theft or other forms of economic espionage. Rather, Tao stands accused of signing an employment contract with a Chinese university and not disclosing it on a U of K conflict-of-interest form. Prosecutors have not alleged that Tao misappropriated research materials or grant funds, that he worked on projects for the Chinese university on U of K’s time, or—aside from not disclosing the contract on the conflict-of-interest form—that he affirmatively hid his affiliation with the Chinese school. Nonetheless, Tao’s failure to disclose his connections to China resulted in him being charged with one count of wire fraud and four counts of federal program fraud.
The DOJ is evidently taking a hard line stance against researchers suspected of having undisclosed Chinese connections, even where there are no allegations of espionage or trade secret theft. But this aggressive enforcement posture is not necessarily limited to universities and research labs. Indeed, Huawei—a Chinese telecom giant indicted for trade secrets theft earlier this year—has moved to have its indictment dismissed for “selective prosecution,” pointing to the government’s targeting of Chinese companies via the China Initiative.
This shift in the DOJ’s enforcement strategy under the China Initiative will impact the daily business activities of any organization operating in China or partnering with Chinese nationals or Chinese companies. Even mundane activities like completing on-boarding paperwork during the hiring process can have far-reaching effects. The Tao case demonstrates the need for additional caution when identifying, documenting, and disclosing ties to China, even if those contacts are seemingly inconsequential or innocuous.