Owners of China-Based Company Charged with Conspiracy to
Send Trade Secrets Belonging to Leading U.S.-Based Electric Vehicle Company
Office of Public Affairs
Defendants Allegedly Conspired to Send Millions of
Dollars-Worth of Trade Secrets to Undercover Law Enforcement Officers Posing as
Potential Customers
Klaus Pflugbeil, 58, a Canadian national and resident of the
People’s Republic of China (PRC), was arrested today in Nassau County, New
York, for conspiring with co-defendant Yilong Shao, 47, of Ningbo, China, to
send to undercover law enforcement officers trade secrets that belonged to a
leading U.S.-based electric vehicle company (Victim Company-1).
“The defendants stand accused of stealing valuable
proprietary technology from a U.S. electric car manufacturer and using it to
set up a rival business overseas,” said Assistant Attorney General Matthew G.
Olsen of the Justice Department’s National Security Division. “This blatant
theft of advanced trade secrets relating to battery components and assembly
blunts
“As alleged, the defendants set up a company in China,
blatantly stole trade secrets from an American company that are important to
manufacturing electric vehicles, and which cost many millions of dollars in
research and development, and sold products developed with the stolen trade
secrets,” said U.S. Attorney Breon Peace for the Eastern District of New York.
“Rather than invest their own resources into competitive technology, the
defendants looted Victim Company-1’s trade secrets for their own financial
gain. Today’s arrest demonstrates that this office will prosecute those who
engage in theft of trade secrets that places
“Klaus Pflugbeil and Yilong Shao allegedly used stolen
confidential information – developed by their previous employers – to establish
their own Chinese-based competitor,” said Assistant Director in Charge James
Smith of the FBI New York Field Office. “When American economic intelligence is
stolen by foreign businesses, it not only harms the victim companies, but also
threatens our financial infrastructure. The FBI will bring to justice anyone
who steals our proprietary trade secrets in an effort to both safeguard the
American economy and our national security.”
According to court documents, Pflugbeil and Shao are
operators of a PRC-based business (Business-1) that sold technology used for
the manufacture of batteries, including batteries used in electric vehicles.
The defendants built Business-1 using Victim Company-1’s sensitive and
proprietary information, and marketed their business as a replacement for
Victim Company-1’s products. Pflugbeil was arrested this morning after he sent
multiple Victim Company-1 trade secrets to an undercover agent and traveled to
Nassau County for a meeting with who he believed to be Long Island-based
businesspeople, but who in reality were undercover law enforcement agents.
Pflugbeil is scheduled to make his initial appearance today before U.S.
Magistrate Judge Peggy Kuo. His co-defendant Shao remains at large.
Victim Company-1 is a U.S.-based leading manufacturer of
battery-powered electric vehicles and battery energy systems. In 2019, Victim
Company-1 acquired a Canada-based manufacturer of automated, precision
dispensing pumps and battery assembly lines (the Canadian Manufacturer). Prior
to its purchase by Victim Company-1, the Canadian Manufacturer sold battery
assembly lines to customers who manufactured alkaline and lithium-ion batteries
for consumer use. The battery assembly lines contained or utilized a
proprietary technology now owned by Victim Company-1: continuous motion battery
assembly (the
The proprietary technology provided a substantial
competitive advantage to Victim Company-1 in the battery manufacturing process.
Victim Company-1 spent at least $13 million developing the
Both Pflugbeil and Shao are former employes of the Canadian
Manufacturer. The complaint alleges that, by no later than 2019, Pflugbeil and
Shao planned to make use of Victim Company-1 trade secrets for their own
business activities. For example, between October and November 2019, Pflugbeil
and Shao discussed “set[ting] up” a company in
In or about July 2020, Pflugbeil and Shao opened Business-1,
which has since expanded to locations in
In operating Business-1, Pflugbeil and Shao relied upon the
On or about
If convicted, Pfugbeil faces a maximum penalty of 10 years
in prison. A federal district court judge will determine any sentence after
considering the
The FBI is investigating the case. The Criminal Division’s
Computer Crime and Intellectual Property Section provided valuable assistance.
Assistant U.S. Attorneys Ellen H. Sise and Samantha Alessi
for the Eastern District of New York are prosecuting the case, with valuable
assistance from Trial Attorney Scott A. Claffee of the National Security
Division’s Counterintelligence and Export Control Section.
This action was coordinated through the Disruptive
Technology Strike Force, an interagency law enforcement strike force co-led by
the Departments of Justice and Commerce designed to target illicit actors,
protect supply chains, and prevent critical technology from being acquired by
authoritarian regimes and hostile nation-states. Under the leadership of the
Assistant Attorney General for National Security and the Assistant Secretary of
Commerce for Export Enforcement, the Strike Force leverages tools and
authorities across the U.S. government to enhance the criminal and
administrative enforcement of export control laws.
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