Philly’s U.S. attorney pursuing corporate espionage and white collar crime with ‘100 percent support’ from Jeff Sessions

If someone is stealing your company's secrets, U.S. Attorney William M. McSwain wants to hear from you.

In the span of a couple weeks, McSwain's office secured two guilty pleas from two scientists who admitted taking part in a conspiracy to siphon cancer drug research from GlaxoSmithKline's Upper Merion offices, destined for a company that had financial backing from the Chinese government. Prosecutors say this type of research typically costs more than $1 billion.

The case involves the rarefied world of biopharmaceuticals and the quest to develop complicated products, such as a monoclonal antibody, intended to wipe out or slow down cancer. But nearly six months into his tenure, McSwain said the case is also emblematic of his broader focus on theft of trade secrets, and on a white collar crime agenda that has "100 percent support" from Attorney General Jeff Sessions and Deputy Attorney General Rod Rosenstein.

The pilfering of a company's proprietary work comes down to "economic warfare," McSwain said. "It's simply not fair for this information to be stolen and then for people to lose their jobs because of it."

And he doesn't believe GlaxoSmithKline is the only target in the region. "We suspect and the FBI suspects … that there are a lot of cases like this that don't come to our attention and get swept under the rug," McSwain said. He likened research endeavors across universities, the private sector, and other institutions to the "crown jewel of our city and our district."

Prosecutions involving trade secrets theft and economic espionage — in which a foreign power is implicated — ticked up under the Obama administration. And that interest remains strong in the Trump administration, said Perkins Coie partner Barak Cohen, a former prosecutor in the Justice Department's criminal division.

The risk of theft "affects all industries," Cohen said. "If it involves any kind of technology, whether it's biotechnology or nanotechnology, it potentially involves trade secrets theft or economic espionage."

This past March, an investigation by the United States Trade Representative, focused specifically on China, estimated that "Chinese theft of American IP currently costs between $225 billion and $600 billion annually" — a figure that includes industrial espionage, among other practices. The report gave President Trump the justification to put tariffs on about $50 billion worth of Chinese goods.

But trends in prosecutions have also drawn criticism for unfair targeting of Chinese nationals. Here in the Eastern District of Pennsylvania, the U.S. Attorney's Office withdrew a wire fraud case against Temple University physics professor Xiaoxing Xi, who was arrested in 2015. He filed suit last year against the FBI, alleging that he was targeted due to his ethnicity.

McSwain pointed out that the dismissal predated his arrival. He said the two guilty pleas in the theft of GlaxoSmithKline's proprietary information "confirms it's a very strong case."

"We're not going to be deterred or slowed down in any way in going after these kinds of cases, based on any sort of prior history," McSwain said, adding that the cases center on behavior, not ethnicity: "We're not targeting any particular background or ethnicity here. We're only targeting behavior, and we've seen that the behavior has sometimes involved China."

McSwain said the Justice Department has also voiced its support for white collar enforcement, including trade secrets theft. He spent two days in Washington earlier this month for a convening of the Attorney General's Advisory Committee, where he sits on the white-collar subcommittee.

Other subjects get more media attention as enforcement priorities, he said, running through a list: violent crime, opioids and other drugs, immigration, and national security. But during his trip to Washington, McSwain said, "We met with the attorney general and with the deputy attorney general for a long time, separately. And we talked about how white collar crime is a priority for the Department of Justice."

In trade secrets cases, McSwain said prosecutors depend on cooperation with the company that says it's been victimized. The company provides witnesses and helps decode what's going on. Yet it can also be embarrassing for a business to come forward and "expose to the world that your information was stolen," he said.

"The hard question for the company is not, 'Boy, did we have a breach here?' The hard question for the company is, 'Do we go to law enforcement?'"

But he said the deterrence effect — for the company, and as a public service — makes such cases worthwhile. "If they don't get that message out, and they don't try to have this behavior punished, they are going to suffer economically," he said.

Beyond trade secrets, McSwain said he expects his office to bring more securities cases. He feels fortunate to have nearby a "large, active" regional office of the Securities and Exchange Commission, and said he's long known the office's director, Jeffrey Boujoukos.

"We want to do all we can to make the markets fair and to safeguard the integrity of the markets, and protect retail investors and everyday investors," McSwain said. Last month, his office pressed charges against former Eagles player Mychal Kendricks in an insider trading case. Kendricks admitted to the crimes and apologized for them in a statement from his attorney at the time. He pleaded guilty in court earlier this month.

On the opioids front, the Eastern District is also getting more funding, along with three prosecutors from the DOJ, to be embedded here in Philadelphia. They're part of a regional strike force that will be "going after both illegal opioid prescriptions and opioid distribution, as well as traditional health care fraud," McSwain said.

As his office pursues white collar cases, McSwain said jail time is "absolutely" on the table.

"We want to make sure that the executives of companies understand that if they engage in or condone criminal behavior, there's going to be criminal consequences," he said. "If people know that they individually could go to jail, they're going to make sure their company doesn't do anything improper."