The saga of the Chinese spies and the stolen corn seeds: Will it discourage economic espionage?
It was a chilly spring day when an Iowa farmer spotted something odd in his freshly planted cornfield: a short, bald Asian man on his knees, digging up seeds.
Not just any seeds — special inbred seeds, the product of years of secret research and millions of dollars in corporate investment, so confidential that not even the farmer knew exactly what he was growing.
The Iowa resident approached the trespasser, who grew flush and nervous, stammering something about being from a local university. When the farmer diverted his attention briefly to take a phone call, the stranger bolted to a waiting car and sped away.
That curious encounter eventually led to an exhaustive five-year federal investigation and prosecution into one of the most brazen examples of Chinese economic espionage against the U.S., a crime that annually costs American companies at least $150 billion.
The FBI pulled out all the stops to catch the spies. Agents obtained surveillance warrants from the nation’s secret intelligence court, planted GPS-tracking devices on cars, trailed operatives from airplanes and bugged their phones.
Theft of trade secrets is not only promoted by Chinese government policies and state-backed companies, but it also reflects their societal attitude.
Melanie Reid, professor at Lincoln Memorial Universityâs Duncan School of Law
The probe culminated this month with a three-year prison sentence for Mo Hailong, 47, a Chinese citizen and U.S. legal resident who works for a Chinese conglomerate.
Federal officials say the prosecution of Mo, also known as Robert Mo, sent a message to China and others that economic espionage will not go unpunished.
But outside experts say the case also revealed the difficulty, and sometimes futility, of bringing justice to those responsible for feeding China’s ravenous appetite for U.S. intellectual property.
Mo, who is being treated for a rare form of cancer, received a sentence that was even more lenient than the maximum five years laid out in his plea deal. Five others indicted in the plot remain free in China, out of the reach of U.S. law enforcement. And though the FBI suspected the Chinese government was involved in the thefts, it was never able to prove the link.
Worse, even though the scheme was exposed, Chinese companies almost certainly got their hands on some of the lucrative seeds. Five years before his arrest, court records show, Mo was being praised by his superiors for the quality of seeds he already had stolen.
“You have to have some kind of stick to get them to think twice,” said Melanie Reid, professor at Lincoln Memorial University’s Duncan School of Law. “Because these investigations can be quite complicated and many of the players are in other countries and protected from U.S. prosecution, it is unclear whether these types of cases are making a dent. Theft of trade secrets is not only promoted by Chinese government policies and state-backed companies, but it also reflects their societal attitude toward intellectual property. They simply don’t see stealing U.S. trade secrets as a crime.”
Some U.S. law enforcement officials echoed those observations, saying there is no clear evidence on the ground that such prosecutions have slowed China’s quest for U.S. secrets.
But they say doing nothing isn’t an option either, and they note that aggressive prosecutions against other forms of espionage by Chinese, such as cyber hacking, appear to have deterred such acts.
The Mo case highlighted the challenges of such prosecutions, which often span the globe and require the assistance of scientists, analysts, linguists and corporate executives who can be wary about cooperating for fear of disclosing their trade secrets.
According to a review of court filings and interviews with U.S. law enforcement and FBI officials, some of whom spoke about the case for the first time, the investigation got a kick-start because the farmer jotted down the license plate number of the rental car.
He reported the incident to DuPont Pioneer, the global agriculture giant that owned the seeds. The Johnston, Iowa-based company used the rental car license number to identify Mo, and then passed along the information to FBI Special Agent Mark Betten of the bureau’s Des Moines office.
Betten soon learned that a local sheriff’s deputy had spotted Mo and two other men acting suspiciously near a second Iowa seed-testing field, this one used by Monsanto, an agricultural corporation headquartered near St. Louis.
Mo’s appearance in two such testing fields operated by separate companies — more than 85 miles apart — sparked Betten’s curiosity. The agent did some sleuthing and discovered that Mo had recently mailed to his home in Florida 15 heavy packages containing “corn samples.”
Betten also learned that Mo was the U.S.-based director of international business for Beijing Dabeinong Technology Group, also known as DBN, a Chinese conglomerate that sells seeds through a subsidiary called Beijing Kings Nower Seed Science & Technology Co. Both are considered to have close ties to the Chinese government. Mo’s sister was married to DBN’s billionaire chairman.
The interest in Iowa seed was plain: China’s demand for corn is expected to outstrip supply in the next decade. To close that gap, China would benefit from planting better corn seed — like the kind being produced by Pioneer and Monsanto.
Creating robust seeds requires the breeding of two pure “inbred” lines of seed to craft a “hybrid” that is later sold to the public. Developing a single inbred can cost as much as $30 million to $40 million in laboratory testing, field work and trial and error; companies evaluate scores of inbreds to develop a single hybrid.
Though he worried his supervisors would balk at an investigation involving something seemingly as mundane as corn seeds, Betten ramped up the probe. By 2012, agents were trailing Mo as he sped across Iowa, Indiana and Illinois. Following the spy was not easy because he sometimes engaged in counter-surveillance maneuvers, such as driving slowly, then fast, making U-turns and watching traffic for possible tails.
“You have to be careful trailing someone in farm country,” said Betten, a Nebraska native who speaks in a clipped Midwestern accent. “Cars kick up a lot of dust and can be seen from a long way off.”
Betten and other agents watched as Mo visited agriculture supply stores and purchased Pioneer and Monsanto seed, stashing it in a rented storage locker. The store clerks never should have sold the seeds to Mo and his colleagues because they had not signed required contracts with the companies.
A few weeks later, Mo and two Kings Nower employees wheeled five large boxes destined for Hong Kong into a FedEx store in suburban Chicago.
After the men left, agents swept in. They discovered 42 bags of hybrid seeds in the boxes; each bag was marked with its own code, presumably to help identify the contraband. The FBI replaced the seeds with others already commercially available in China and shipped them on their way.
Stepping up their surveillance, the agents listened to secretly recorded conversations of two Kings Nower employees — Lin Yong and Ye Jian, both Chinese citizens who live in China — discussing their crimes as they crisscrossed farm country in search of seeds.
“These are actually very serious offenses,” Lin told Ye, according to Justice Department transcripts of secretly recorded conversations.
“They could treat us as spies,” Ye said.
“That is what we’ve been doing,” Lin replied.
After six weeks of seed gathering, Ye and Kings Nower’s chief operating officer, Li Shaoming, tried to spirit their haul to China. As they were departing Chicago’s O’Hare International Airport on Sept. 30, 2012, customs officers searched the men and their luggage and found thousands of stolen seeds, much of it hidden in resealed boxes of microwave popcorn.
Meanwhile, customs agents stopped another of Mo’s associates trying to cross the border into Canada and found corn seed hidden in his luggage too.
The men were allowed to leave the country, but the seeds were seized.
To bring criminal charges, the FBI first had to genetically test the seeds to prove they were the product of U.S. trade secrets. It took the bureau nine months to iron out the agreements with Pioneer and Monsanto to conduct the tests at an independent lab. “Neither Pioneer nor Monsanto understandably wanted the other to have their secrets,” let alone a Chinese company, Betten said.
The tests revealed that many of the seeds were inbreds belonging to both companies. In December 2013, agents arrested Mo at his home in Boca Raton, Fla. By then, the other defendants were outside the U.S.
Calls to the Chinese embassy in Washington were not returned, nor were messages and emails left with DBN and Kings Nower.
Pioneer declined to comment on the case. Monsanto said in a statement that it fully cooperated with the FBI and is pleased “this matter has been concluded.”
Mo pleaded guilty to conspiring to steal trade secrets. Subdued and apologetic at his Oct. 5 sentencing, Mo removed his wire-rimmed glasses to wipe away tears, saying that he had “destroyed everything I had wanted” in life.
Looking down at Mo, U.S. District Judge Stephanie Rose said she felt bad for the man’s plight but hoped her sentence would send a message to China that it needed to halt its economic espionage. She cited the crime’s cost and reviewed the investigation’s extensive history, the secret warrants, wiretaps and the tens of thousands of pages of court filings she had reviewed.
To think, she said, this “all started with a man in a field.”
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