A federal grand jury has returned an indictment alleging corporate entities conspired to steal technology from a Houston-area oil and gas manufacturer, U.S. Attorney Ryan K. Patrick and Assistant Attorney General John C. Demers of the Department of Justice’s National Security Division, announced Wednesday.
Jason Energy Technologies Co. (JET) in Yantai, People’s Republic of China; Jason Oil and Gas Equipment LLC (JOG) USA and Chinese national Lei Gao aka Jason Gao, 45, have been charged with conspiracy, theft of trade secrets and attempted theft of trade secrets.
Gao was a resident of Houston but is now believed to be in China because he has allegedly fled the country and a warrant remains outstanding for his arrest.
Also charged in relation to the case is Robert Erford Jr., 41, Dayton, who worked for a Houston-area company. He pleaded guilty to conspiracy to commit theft of trade secrets.
On or about Nov. 7, 2019, Gao allegedly met with Erford at the JOG offices located in Houston, the DOJ reports. According to the indictment, Erford signed a consultancy agreement that Gao provided at that time, indicating Erford would work in China as a consultant to assist JOG in coiled tubing technology. Erford was to be paid $1,000 each day of a 15-day visit, according to the charges.
The agreement also allegedly included a confidentiality provision.
At that meeting, a JET general manager invited Erford to visit in order to have a technical exchange and discussion, according to the charges, in an effort to help “promote the company’s manufacturing efficiency, reduce machine failure and increase production capacity.”
Without authorization, on or about Nov. 22, 2019, Erford allegedly transferred a victim company document that contained a trade secret from the U.S. to the China for JET’s benefit. He allegedly met with Gao between Nov. 25-29, 2019 and with JET officials at JET’s Chinese offices, including its coiled tubing facilities. They allegedly discussed coiled tubing technology, including victim company proprietary technology, practices and procedures, in these meetings.
Authorities allegedly obtained evidence that Erford and Gao used the encrypted messaging app WeChat in December 2019 to obtain, collect, and copy victim company manufacturing information.
The corporate entities could be fined up to $5 million or three times the value of the stolen trade secret, whichever is greater, the DOJ reports. Gao faces a possible prison sentence of up to 10 years and a $250,000 fine or twice the gross gain or loss.
The FBI conducted the investigation. Assistant U.S. Attorneys Carolyn Ferko and S. Mark McIntyre of the Southern District of Texas are prosecuting the case along with Trial Attorney William Mackie from the Department of Justice’s National Security Division’s Counterintelligence and Export Control Section.