DOJ charges five members of Chinese army with hacking US groups

The defendants stole trade secrets from Westinghouse Electric, United States Steel and other companies, the DOJ says

The U.S. Department of Justice has charged five supposed members of the Chinese People's Liberation Army with hacking into computers and stealing trade secrets from six U.S. organizations in the nuclear power, steel and solar industries, the agency announced Monday.

The charges, stemming from grand jury indictments in Pennsylvania, are the first time the DOJ has filed hacking charges against so-called state actors, Attorney General Eric Holder said during a press conference. The computer hacking, targeting Westinghouse Electric, United States Steel, subsidiaries of SolarWorld, and other organizations between 2006 and this year, focused on those organizations in an effort to provide the stolen information to Chinese companies, Holder said.

"The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response," Holder added. "The alleged hacking appears to have been conducted for no reason other than to advantage state-owned companies and other interests in China, at the expense of businesses here in the United States."

The charges should "serve as a notice" that the DOJ takes state-sponsored cybertheft seriously, Holder added. "This administration will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market," he said.

Such hacking leads to lost U.S. jobs, said David Hickton, U.S. attorney for the Western District of Pennsylvania. "The important message is cybertheft impacts real people in real and painful ways," he said. "When these cyberintrusions occur, production slows, workers get laid off and lose their homes. This 21st century burglary has to stop."

Holder said he hopes the Chinese government will honor the indictments and allow the DOJ to bring the defendants to face their charges in U.S. court.

Facing charges in U.S. District Court for the Western District of Pennsylvania are Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui, alleged to have been officers in Unit 61398 of the Third Department of the Chinese People's Liberation Army.A The indictment alleges that Wang, Sun, and Wen, among others, hacked or attempted to hack into U.S. organizations, while Huang and Gu supported their conspiracy by managing infrastructure used for hacking.

The defendants each face 31 charges, including economic espionage, with a maximum sentence of 15 years in prison; conspiring to commit computer fraud and abuse, a 10-year sentence; and trade secret theft, also 10 years.

Other organizations named as victims were Allegheny Technologies, Alcoa, and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), a union representing steelworkers and other trades.

In some cases, the victim companies were involved in trade disputes with China or joint ventures with Chinese companies. The steelworkers' union, in 2012, was involved in public disputes over Chinese trade practices involving two industries. At around the time of the disputes, Wen allegedly stole emails from senior USW employees containing sensitive, nonpublic information about USW strategies, including strategies related to pending trade disputes, the DOJ alleged.

A representative of the Chinese Embassy in Washington, D.C., denied the allegations in the indictment.

The Chinese government and military "have never engaged or participated in cybertheft of trade secrets," embassy representative Geng Shuang said in an email. "The U.S. accusation against Chinese personnel is purely ungrounded and absurd."

The indictment is based on "fabricated facts," Shuang added. The Chinese government urges the DOJ to "immediately correct its mistake and withdraw the indictment," he said.

China is a victim U.S. hacking and surveillance activities, Shuang added. "Large amounts of publicly disclosed information show that relevant U.S. institutions have been conducting cyberintrusion, wiretapping and surveillance activities against Chinese government departments, institutions, companies, universities and individuals," he said.

Heading off potential criticism that the U.S. government also engages in surveillance, Holder denied that it engages in cyberespionage on behalf of U.S. business interests. "This is a tactic that the U.S. government categorically denounces. As President Obama has said on numerous occasions, we do not collect intelligence to provide a competitive advantage to U.S. companies, or U.S. commercial sectors," he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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