FBI raids GE engineer’s Niskayuna home

Xiaoqing Zheng leaves court (Photo: Peter R. Barber/The Daily Gazette)Xiaoqing Zheng leaves court (Photo: Peter R. Barber/The Daily Gazette)

ALBANY — A federal judge on Thursday set a $100,000 bond in the case of the General Electric engineer accused of taking company trade secrets.

Xiaoqing Zheng, 55, of 8 Cephalonia Drive, Niskayuna, has been held in custody since his arrest Wednesday morning after a raid on his home by FBI agents. He made an initial appearance in federal court Wednesday afternoon and was ordered held for the detention hearing Thursday.

He is expected to be released on the bond Friday morning from the Rensselaer County Jail, his attorney Kevin Luibrand said. His family offered their Niskayuna home as collateral.

When he is released, he will be tracked by electronic monitoring. No home detention was ordered.

Zheng appeared with Luibrand, who argued that the case should have been resolved in civil court because Zheng was “transferring items to himself.”

Zheng is accused of stealing GE turbine technology trade secrets last month using “an elaborate and sophisticated means to remove electronic files,” authorities said.

“This is not state secrets,” Luibrand said. “This is not espionage … this has nothing to do with the Chinese government.”

Zheng is a naturalized U.S. citizen and renounced his Chinese citizenship when he became a U.S. citizen, the defense said.

Judge Christian Hummel ordered Zheng’s release on bond and monitoring despite prosecutors arguing that Zheng is a flight risk.

Prosecutors said in court that agents found a “go bag” at the family’s home during Wednesday’s search that contained the family’s passports, immunization records and $20,000 in cash tucked in a knapsack.

Zheng’s wife, who was present for the proceedings, audibly scoffed from the gallery at the prosecutor’s description of the alleged “go bag.”

Following his arrest, Zheng admitted taking the secrets and said he used a picture method to take materials belonging to GE on five to 10 prior occasions, according to a federal affidavit filed in court. Agents called Zheng’s actions “uncommon even among trained computer experts.”

He is accused of taking the files by using a system called steganography to hide the data inside an innocuous looking digital picture of a sunset and then emailing that picture and the stolen files to his personal email account, prosecutors said.

He also admitted that companies he owns or works for in China are involved in the same technology as GE, and that his companies are not yet profitable but have received money or funding from the government of China, according to the affidavit.

Zheng’s LinkedIn profile lists 29 patents as accomplishments, most dealing with various kinds of turbine seals. Data he is accused of taking on July 5 is related to those seals, according to the federal affidavit.

The overall investigation relates to suspected thefts dating to 2014 and Zheng’s unlawful use of GE’s secrets, including his “ownership interest in companies that may compete with GE and Zheng’s contacts in China,” the federal affidavit states.

In 2014, Zheng allegedly downloaded more than 19,000 files from the General Electric computer network onto a personal thumb drive.

General Electric early Wednesday afternoon confirmed Zheng worked for GE Power and issued a statement that said in part: “We have been in close cooperation with the FBI for some time on this matter … We won’t have any additional comment at this time as this is an ongoing investigation.”

Zheng’s LinkedIn profile indicates he has worked for GE Power & Water since at least 2008. He initially served as a technical leader and then became a principal engineer in June 2015. The page shows his education at the Massachusetts Institute of Technology and Northwestern Polytechnical University.