Federal trial begins in Cincinnati for first-of-its-kind Chinese spy case; judge closes courtroom

In an order filed after WCPO objected to the closure of the courtroom, Black wrote that there wasn’t enough space to accommodate the public “in light of the ongoing pandemic.”

WCPO had no access to more than three hours of jury selection, either by audio or video, which means the judge kept secret how attorneys chose a jury, who was selected and dismissed, and any basic information about the makeup of the jury that will decide this historic case.

Black’s staff directed the media to a conference room, where two speakers played audio of the judge delivering jury instructions on Monday afternoon. Attorneys will deliver opening statements on Tuesday morning. But the public will not be able to see any part of the courtroom or the trial because video is not available.

Xu, aka Qu Hui and Zhang Hui, is a deputy division director at the Chinese Ministry of State Security.

But to federal prosecutors, he is a spymaster.

“This is espionage. This is real espionage,” said David DeVillers, a former U.S. Attorney for the Southern District of Ohio who briefly oversaw Xu’s case. “We have a real situation where somebody in the intelligence community of the Chinese government is recruiting spies and got extradited for doing it.”

Agents arrested Xu in Belgium in April 2018 and extradited him to the U.S., where a federal grand jury indicted him on charges of conspiring and attempting to commit economic espionage and theft of trade secrets.

He faces up to 15 years in prison if convicted.

“This particular trial will have the biggest impact on our relationship with China of any … criminal case that’s gone to trial of any individual. There’s no doubt about that,” DeVillers said.

Because prosecutors allege that Xu was part of a conspiracy, it is likely that the spies he recruited, or tried to recruit, will testify during the monthlong trial. His case could expose far-ranging connections to other alleged acts of espionage taking place worldwide.

Federal agents may also reveal how they identify and track Chinese spies, and the methods that large companies, such as GE, use to protect themselves against espionage.

“This is really a precedent-setting case,” said Jim Lewis, a former member of the U.S. Foreign Service and Senior Executive Service, who is now a senior vice president and program director at the Center for Strategic and International Studies in Washington, D.C.

“We’ve never been able to extradite … a Ministry of State Security intelligence agent from another country to the United States,” Lewis said. “Getting them on trial is really an important step toward making the Chinese rethink the cost of espionage.”

Xu began targeting aviation companies worldwide in December 2013, and possibly even earlier. He recruited employees, asking them to travel to China to make university presentations. He paid their costs and gave them a stipend, according to the indictment.

“Jet engine technology, aerospace technology is important to China because they don’t have indigenous capabilities,” Lewis said. “Particularly for the jet engines you need for fighter aircraft. They can’t make one. So that’s why they keep trying to steal the technology.”

Prosecutors allege that Xu recruited a GE Aviation engineer who was deeply involved in the design and analysis of new commercial jet engines. He was paid $3,500 and free travel, lodging and meals for a one-hour presentation in China.

That engineer, who no longer works at GE, will likely be a key witness in the government’s case against Xu.

Defense attorneys will likely argue that Xu was simply encouraging the legitimate sharing of ideas and research; that it benefitted both nations and wasn’t espionage.

What jurors believe about the true nature of Xu’s motives will decide his fate.

U.S. District Court Judge Timothy Black will oversee the trial, which pools jurors from largely white, conservative, rural counties stretching to Scioto and Lawrence to the east, and Clinton and Highland counties to the north.

Veteran Cincinnati criminal prosecutors Tim Mangan and Emily Glatfelter will lead the government’s case against Xu. They most recently won a high-profile conviction at trial against Evans Landscaping owner Doug Evans on minority contracting fraud charges in December 2018. He is currently serving a 21-month prison term.

On the defense side, Xu has a large team made up of several former federal prosecutors, including Ralph Kohnen and Bob McBride of Taft Stettinius & Hollister.

Lewis is highly interested not only in the trial, but in China’s reaction should the jury convict Xu.

“That will be one of the things they’ll need to decide is – do they want to raise the stakes by violating the unspoken rules of espionage, to try to get a hostage to get this Chinese agent out of jail,” Lewis said. “If the Chinese can arrest somebody credibly … the Chinese will be looking for an opportunity to see if they can do a swap to trade him out.”

The Southern District of Ohio has been a hotbed for espionage and theft of trade secret prosecutions related to China over the past three years.

China is interested in a broad range of U.S. technology, from biological to engineering, “anything and everything,” DeVillers said.

“It’s everything, it truly is. It’s extremely broad,” DeVillers said. “We have a lot of research in Ohio, particularly the Southern District of Ohio … with GE, with the universities we have here, with Children’s Hospital.”

China is interested in a broad range of U.S. technology from biological to engineering, “anything and everything,” DeVillers said.

In May a federal judge sentenced an Ohio State University professor to 37 months in prison. Song Guo Zheng admitted that he did not disclose his affiliation with a Chinese university when securing grants in what investigators called a scheme to share federally funded medical research with China.

Agents arrested Zheng in May 2020 after he arrived in Anchorage, Alaska, aboard a charter flight and as he prepared to board another charter on his way to China. He was carrying three large bags, one small suitcase and a briefcase containing two laptops, three cell phones, several USB drives, several silver bars, expired Chinese passports for his family, deeds for property in China and other items.

In an unrelated case, also in the Southern District of Ohio, judges recently sentenced two former researchers at Nationwide Children’s Hospital in Columbus to prison time for selling research to China.

Federal judges sentenced Yu Zhou to 33 months in April and his wife, Li Chen, to 30 months in prison in February. They also were ordered to pay $2.6 million in restitution.

The pair conducted research in separate laboratories at the hospital’s research institute from 2008 to 2018. The stolen research was used to treat medical conditions in premature babies, liver fibrosis, and liver cancer.

“It’s a policy, it’s actually a policy, in China to go and get this research. It’s been going on for probably 15 years in earnest, and it needs to stop,” DeVillers said. “The only way to stop it … has to be through prosecution. That’s the only way to stop it.”

Lewis agreed, noting that the very things that make the U.S. unique – freedoms of speech and travel and civil liberties, are what make it vulnerable to exploitation by China.

“There’s already several hundred Chinese intelligence officers operating in the U.S.,” Lewis said. “We aren’t going to be able to deter them, so we’re just going to have to catch more of them.”