Speaker 1: So it's three layers of theft in the story. You've
Speaker 1: got the person stealing the intellectual property, You've got the
Speaker 1: people trying to set up a company based on the
Speaker 1: stolen intellectual property, and then you've got the Chinese government.
Speaker 1: And there is a parent fraud at each of those levels.
Speaker 2: That's Bloomberg's Jordan Robertson. He and fellow reporter Drake Bennett
Speaker 2: spent months chasing an international scheme to make off with
Speaker 2: one of Coca Cola's most closely guarded secrets. And it's
Speaker 2: not the one you're probably thinking of. I'm west Kasova.
Speaker 2: That's today on the big Take, Drake. We all know
Speaker 2: Coca Cola famous League guards its recipe.
Speaker 3: The Coca Cola formula is written on a tiny green rice.
Speaker 3: This grain of rice is inside a shell guarded by
Speaker 3: two primate crabs, which are inside of grandmother's purse. We're
Speaker 3: not going to tell you about formula is in it,
Speaker 3: but we might tell you what. It doesn't have no
Speaker 3: manic preservatives or artificial flavors.
Speaker 2: But in this Business Week story that you and Jordan reported,
Speaker 2: you found a whole other kind of formula that Coke
Speaker 2: is really protective of. And for pretty good reason.
Speaker 4: At the heart of the story is a technology that's
Speaker 4: all but invisible to most of us, but also ubiquitous
Speaker 4: and extraordinarily valuable. And it's this two micron thick polymer
Speaker 4: lining that goes inside every can of coke that the
Speaker 4: Coca Cola company.
Speaker 5: Fills and sells.
Speaker 4: And the reason you need that liner is because otherwise coke,
Speaker 4: which is this sugary, acidic brew, would devour the aluminum
Speaker 4: can that it's put into. You'd also have issues about
Speaker 4: the taste of these very minutely calibrated things like Topo
Speaker 4: Chico hard Seltzer being somehow corrupted as it sits on
Speaker 4: supermarket shelves. So it's a very important but very little
Speaker 4: known technology.
Speaker 2: And developing those liners is really difficult.
Speaker 4: Yes, there's this whole world of liners and membranes and
Speaker 4: coatings that basically cover all of the surfaces around us,
Speaker 4: whether it's a key on a keyboard or a touchscreen.
Speaker 4: There are special paints that protect bridges from corroding and
Speaker 4: salty air. There are special paints that keep stealth bombers stealthy.
Speaker 4: There are special paints that go on ships and kill
Speaker 4: all the barnacles that would otherwise totally cover those shiphulls.
Speaker 4: There's a lot of really interesting technologies out of sight
Speaker 4: of most consumers, and can liners are a particularly tricky
Speaker 4: problem because it's got to not mess with the chemistry
Speaker 4: of the drink itself or the food. You know, there's
Speaker 4: also tuna can liners, soup can liners. But also these
Speaker 4: things have to be applied in seconds in these gigantic
Speaker 4: can factories that are producing you know, millions of cans
Speaker 4: a day, so they get sprayed on. They have to
Speaker 4: drive perfectly in this perfect layer around these very irregularly
Speaker 4: shaped objects. So it's a real chemistry engineering problem and
Speaker 4: there's a lot of research and money that goes into
Speaker 4: developing it.
Speaker 1: And as the world's biggest carbonated soft drink maker, Coke
Speaker 1: occupies a really unique position in this ecosystem. Coke is
Speaker 1: the king maker. One of the things that we found
Speaker 1: interesting is that, you know, Coke has to have a
Speaker 1: department that evaluates these technologies. Coke actually doesn't make these liners.
Speaker 1: You know, Coke evaluates these liners. Coke sets the standards
Speaker 1: for these liners, and then companies compete for their business.
Speaker 1: You know what, Coting's company wouldn't want to be inside
Speaker 1: hundreds of millions of Coke cans.
Speaker 4: And to that point, part of the reason and that
Speaker 4: this particular formulation we're talking about was so valuable is
Speaker 4: because there was a moment several years ago when research
Speaker 4: started coming out about this one ingredient that was ubiquitous
Speaker 4: in these liners, which was something called disciphonnel a or BPA,
Speaker 4: and there are these worries about the health effects of it.
Speaker 4: It seems to do things to your inderconsystem, might give
Speaker 4: you diabetes, might alter when kids go into puberty. So
Speaker 4: countries and states started banning this ingredient. And BPA turns
Speaker 4: out to be an extremely valuable molecule for making these
Speaker 4: high tech liners, and so it was very difficult and
Speaker 4: very time consuming to figure out how to reformulate them
Speaker 4: without BPA. So a lot of what Coke was doing
Speaker 4: a few years ago was trying to figure out whether
Speaker 4: these new BPA free liners were okay to put in
Speaker 4: their products.
Speaker 2: And at Coke Jordan, the person who was in charge
Speaker 2: of figuring out what kind of liner to use and
Speaker 2: what was the best formula was someone named Shannon Yo.
Speaker 1: Shannon Yo was an employee of the Coca Cola company.
Speaker 1: She worked at their Atlanta headquarters. She is a chemist
Speaker 1: chemical engineer. She understands complex chemical molecules, and her job
Speaker 1: was to help evaluate the BPA free codings that Coke's
Speaker 1: suppliers were developing. She alone didn't get to decide whether
Speaker 1: those codings won the contract with Coke or not, but
Speaker 1: she occupied a very important position in that supply chain
Speaker 1: because she got to decide which of these companies' codings
Speaker 1: went up the chain for further review. So she had
Speaker 1: a lot of power, even though she was not an executive.
Speaker 1: There's no indication she managed anybody. You know, she had
Speaker 1: this innocuous title. Shannon Yo's title was principal engineer in
Speaker 1: the Global Research Division. She's not an executive, she's not
Speaker 1: sea level like, She's not somebody you would think would
Speaker 1: have this power. She was kind of an individual contributor,
Speaker 1: if you will, and she had a lot of say
Speaker 1: over whether these companies BPA free codings would be successful
Speaker 1: or not.
Speaker 4: She was born and raised in China, went to college there,
Speaker 4: came to the US for her graduate studies, got a
Speaker 4: PhD in materials chemistry, and had a pretty impressive career.
Speaker 4: She invented some pretty cool sort of abrasive technologies, some coatings,
Speaker 4: this one laser proof coating that went on safety goggles.
Speaker 4: She was hired in twenty twelve by Coke in Atlanta
Speaker 4: to be this kind of gatekeeper to their scientific and
Speaker 4: regulatory Affairs committee, and as it turns out, that's an
Speaker 4: extremely powerful perch because Coke is such an important company
Speaker 4: for these coding suppliers. Pretty early on, if not immediately,
Speaker 4: the relationship between Coke and those suppliers' changes. She starts
Speaker 4: demanding a lot more information than those companies had previously
Speaker 4: had to give Coke, very specific recipe type information about
Speaker 4: exactly what went into these codings. So she wasn't interested
Speaker 4: just in how these coatings performed when they were in
Speaker 4: a Coke can, which is her job, but these other
Speaker 4: sort of questions that would be more relevant if, for example,
Speaker 4: you're trying to create your own codings. The relationship got
Speaker 4: bad enough that these very senior executives at these coding
Speaker 4: companies were having to intervene and figure out how to
Speaker 4: manage this relationship. So not only that, but she was
Speaker 4: extremely abrasive in her dealings with these coding companies and
Speaker 4: basically would strong arm them into sending her these extremely
Speaker 4: valuable proprietary formulas and strong armed them into signing these
Speaker 4: special non disclosure agreements that covered just her, so which
Speaker 4: is extremely unusual. Over time, she developed this collection of
Speaker 4: these formulas and basically her computer at Coke was the
Speaker 4: only place on the planet where all of these companies
Speaker 4: extremely highly protected proprietary information co existed and she.
Speaker 2: Had sole control over all of.
Speaker 4: These Some of these decisions did involve a supervisor, but
Speaker 4: it seems like she was running her own shop within Coke,
Speaker 4: using Coke's leverage as this giant partner for these Codings companies.
Speaker 2: Jordan, why was she collecting all of these codings into
Speaker 2: kind of a personal library.
Speaker 1: You could make the argument, and Shannon Yo did make
Speaker 1: this argument that she needed to know exactly what was
Speaker 1: in these formulations because they were going to go into
Speaker 1: products that were going to be consumed by people, and
Speaker 1: these were novel chemistries involved here. These Codings companies we learned,
Speaker 1: you know, through the reporting, they already shared a lot
Speaker 1: of information with Coke. They really very badly wanted Coke
Speaker 1: to use their products.
Speaker 4: One answer to that question is that the whole time
Speaker 4: she was at Coke taking this information, she was also
Speaker 4: thinking and talking to partners about going off on her
Speaker 4: own and starting her own coding company in China. What
Speaker 4: emerges she has an aunt in China who seems to
Speaker 4: be maybe the person who came up with this idea,
Speaker 4: but very much a partner in it, and their plan
Speaker 4: is There are these Chinese government programs, provincial level programs,
Speaker 4: national level programs. The best known program is called the
Speaker 4: Thousand Talents Program. It's a national program and the purported
Speaker 4: purpose of it is to incentivize Chinese scientists, Chinese engineers
Speaker 4: who have gone abroad to get an education to work
Speaker 4: at tech firms, engineering firms, to get those people to
Speaker 4: come back to China and start companies there to bring
Speaker 4: back some of this knowledge and experience and help China's
Speaker 4: economy grow. What critics of the program, including a lot
Speaker 4: of folks in the FBI and the American counterintelligence community,
Speaker 4: what those critics would say is that the other thing
Speaker 4: these programs do is they basically work as bounties to
Speaker 4: get people to steal ip from non Chinese companies and
Speaker 4: use those as the crown jewels of Chinese competitors. Shannon
Speaker 4: Yo and her aunt, Fan Hung Mei were very interested
Speaker 4: in getting that money to start their codings company in China,
Speaker 4: and so a lot of their correspondence while Shannon is
Speaker 4: at Coke, while she is taking this material that belongs
Speaker 4: to Coke's partners, they're talking about getting thousand talents program
Speaker 4: money and how they're going to set up this company
Speaker 4: to compete against the codings companies that Coke works with.
Speaker 2: After the break, Shannon Yo gets creative with her resume.
Speaker 6: Copy in the one.
Speaker 1: That there's billions of dollars available in China for all
Speaker 1: kinds of investment opportunities for companies, and this was central
Speaker 1: to the desired creation of a Chinese you know, coding's company.
Speaker 1: So essentially, the first order of business was for Shannon
Speaker 1: Yo and her partners in China to create applications for
Speaker 1: these government programs to convince both the national and the
Speaker 1: provincial governments to give her and her partners potentially millions
Speaker 1: of dollars.
Speaker 4: It is exactly the sort of industry that these grants
Speaker 4: are meant for, in that it's a big market. There
Speaker 4: isn't a Chinese company making these codings, and they all
Speaker 4: have to buy them from overseas, from these giant global
Speaker 4: corporations and so her purport adventure would be filling this need.
Speaker 1: Shannon Yo and her partners knew that they had something
Speaker 1: really valuable, which was a market that was difficult to penetrate,
Speaker 1: difficult to replicate, and somebody who now had access to
Speaker 1: the actual chemistries, the most cutting edge chemistries for some
Speaker 1: of the world's biggest coding companies. She had that and
Speaker 1: her job. The first order of business was to pitch
Speaker 1: the Chinese government at the national and the provincial level.
Speaker 4: Shannon's aunt connects her pretty early on in this process
Speaker 4: with a gentleman named lu Juan Chen who works at
Speaker 4: a Chinese chemical company. He becomes their kind of guide
Speaker 4: to not only setting up the new company, but also
Speaker 4: getting as much money as possible out of the Chinese
Speaker 4: government for that purpose. And one of the things he
Speaker 4: seems to specialize in is application fraud. Basically, some of
Speaker 4: what he does is these kind of tweaks. You know,
Speaker 4: he wants me to take a flattering photograph of herself
Speaker 4: for the application other things. Basically like he asks her
Speaker 4: of say that she's the chief technology officer of a
Speaker 4: fortune five hundred company, which is very very far from
Speaker 4: what she is. He crafts this fake patent agreement that
Speaker 4: would give the liner technology that Coke uses to the
Speaker 4: Chinese company he works for and the company that would
Speaker 4: be partnering with the new Chinese company. But it's not
Speaker 4: only fraudulent, it's nonsensical because these aren't really Cokes formulas
Speaker 4: in the first place to give. So this kind of
Speaker 4: bundle of true and made up stuff becomes the application
Speaker 4: for these programs, and it's successful. A combination of Shannon's
Speaker 4: real resume and the kind of wild exaggerations get them
Speaker 4: to sail through the process and they get not only
Speaker 4: the provincial money but the national money, and things kind
Speaker 4: of proceed from there.
Speaker 2: And you write that Shannon Yo was awarded a total
Speaker 2: of five million yuan in grants about seven hundred and
Speaker 2: twenty thousand US dollars, and the company was also awarded grants,
Speaker 2: and she believed about eight hundred thousand US dollars worth
Speaker 2: of that was paid up front.
Speaker 4: So meanwhile, back at her day job at Coke, things
Speaker 4: are not going great. One of the things about Shannon
Speaker 4: that's really striking is that, especially for someone who is
Speaker 4: trying to do something under the table at her job,
Speaker 4: is that all of her co workers remember her as
Speaker 4: this extremely loud, fairly abrasive personality. So everyone who worked
Speaker 4: with her kind of had these stories about how loud
Speaker 4: she was on the phone, how clearly unpleasant all the
Speaker 4: conversations she had with these coding companies always were.
Speaker 5: She was basically unforgettable.
Speaker 4: At the same time, she's basically trying to spirit away
Speaker 4: this stuff that was the proprietory information of these partners
Speaker 4: of Cokes. So eventually at Coke, this starts to catch
Speaker 4: up with her, and she's laid off and it's part
Speaker 4: of this larger restructuring, but she's laid off and then
Speaker 4: realizes that she's going to have to take this ip
Speaker 4: with her. There's this period of time before she leaves Coke,
Speaker 4: but after she knows she's going to have to leave Coke,
Speaker 4: where she keeps trying to get this stuff off of
Speaker 4: the Coke system onto various hard drives, and she's thwarted
Speaker 4: up to a point by these security measures that Coke
Speaker 4: has sort of put in place. She eventually gets around them.
Speaker 4: The way she does it is not particularly high tech.
Speaker 4: She just has these files open on her work computer
Speaker 4: and takes pictures of them with her phone.
Speaker 2: Jordan what he'd Coke say about Shannon Yo and all
Speaker 2: of this.
Speaker 1: Coke declined to comment about detailed questions about this case.
Speaker 4: And she immediately gets a job at another chemical company
Speaker 4: that supplies Coke called Eastman Chemical.
Speaker 1: Unfortunately for Shannon, she's no longer in the can coatings business.
Speaker 1: She's now in the food packaging side of the house.
Speaker 1: The reason that's important is as unforgettable as Shannon was
Speaker 1: at Coke, she almost immediately makes herself unforgettable and Eastman
Speaker 1: as well because she's on the food packaging side of
Speaker 1: the house. But she's constantly wandering around and poking her
Speaker 1: nose into the can side of the house where she
Speaker 1: has no business working. Her boss has noticed this. It's
Speaker 1: just kind of odd behavior. There are some complaints from
Speaker 1: team members about her personality. So again, she's not starting
Speaker 1: on a great footing, but she was hired as an
Speaker 1: expert in some of these chemistries.
Speaker 4: And these former partners of Cokes, when they get wind
Speaker 4: that she's moved to Eastman, immediately fire off these panicked
Speaker 4: letters to Eastman, reminding the company that Shannon cannot use
Speaker 4: any of the proprietary information that she had strong armed
Speaker 4: them into giving her. When she was at Coke, so
Speaker 4: there's this sense that her reputation comes along with her.
Speaker 1: It's the worst way to start a new job. I mean,
Speaker 1: the people she worked with at Coke are now all
Speaker 1: calling Eastman and telling them like, this is a very
Speaker 1: challenging person to work with and we don't want to
Speaker 1: work with her. She's not going to be part of
Speaker 1: any of our accounts. But yet Eastman continued to send
Speaker 1: her on assignments. But as this is happening, the project
Speaker 1: in China is kind of coming undone a little bit.
Speaker 1: The grant money from the Chinese government was approved, but
Speaker 1: not at the levels that Shannon and her partners in
Speaker 1: China expected it to be, and that all kinds of
Speaker 1: divisions and frictions start happening between Shannon and her partners
Speaker 1: at China. So she's still trying to salvage it though.
Speaker 1: She's still trying to hit the finish line get the
Speaker 1: money into her account while navigating this new job where
Speaker 1: she's just not where she feels she needs to be.
Speaker 1: So Shannon gets approved for a ten day trip to
Speaker 1: China for her day job for Eastman. On that trip,
Speaker 1: that's when Shannon Yo signs the contract that she needs
Speaker 1: to to get her money and get her Chinese business
Speaker 1: up and running. US notice because she's gone for a month,
Speaker 1: she's been authorized a trip for under two weeks, she's
Speaker 1: gone for several weeks. After that, they start raising questions
Speaker 1: about what she's doing in China, and then her new
Speaker 1: bosses at Eastman really start to have some concerns about
Speaker 1: what this employee is doing. But she still has her job.
Speaker 1: She's not fired over it. In fact, she's questioned about it,
Speaker 1: and that's when things for Shannon really start to take
Speaker 1: a turn.
Speaker 4: What gets her in trouble at Eastman isn't really the
Speaker 4: intellectual property issues so much as there are these vague
Speaker 4: concerns about her taking this long trip and what's she doing,
Speaker 4: and when they're raised with her, she basically gets extraordinarily
Speaker 4: angry but rates her supervisor.
Speaker 5: And then there's this.
Speaker 4: Meeting to kind of like check in with Shannon, how's
Speaker 4: she doing in her first year? It goes extremely badly,
Speaker 4: and this HR representative, as HR representatives do, kind of
Speaker 4: tries the cool things down and says, Shannon, why don't
Speaker 4: you go work from home for the US to the day.
Speaker 4: And Shannon leaves the building and instead of going home,
Speaker 4: she goes to the executive offices of Eastman, which is
Speaker 4: a fourteen thousand person company. She badges into that building
Speaker 4: and goes looking for her supervisor supervisor so she can
Speaker 4: presumably make the case to that person, can't find them,
Speaker 4: and then decides to just take her case to the
Speaker 4: chief technology officer of the company. Is informed that that
Speaker 4: person is in a meeting, tries to interrupt the meeting,
Speaker 4: and finally is told to leave the building by security,
Speaker 4: and then does.
Speaker 1: She's wandering the executive building for two hours, knocking on doors,
Speaker 1: looking for the CTO, looking for her boss's boss, like
Speaker 1: trying to find anybody she could make her case to.
Speaker 4: I mean, she's making a spectacle of herself, which I
Speaker 4: mean again, it's like this person that's sort of doing
Speaker 4: this thing that relies very much on sort of like
Speaker 4: stealth and not making a spectacle of herself, and yet
Speaker 4: she on some level seems not to be able to
Speaker 4: help herself.
Speaker 1: And Shannon Yo had so many moments. There are multiple
Speaker 1: moments in her story where she could have done a
Speaker 1: different thing and we wouldn't be having this conversation. This
Speaker 1: was a moment where she could have done a very
Speaker 1: easy other thing and gone home. They weren't going to
Speaker 1: fire Shannon Yoe over this China trip that went weeks
Speaker 1: longer than it should have where she was unaccounted for.
Speaker 1: They weren't even going to fire her for her outbursts
Speaker 1: at her supervisor. Like apparently she was valued enough for
Speaker 1: whatever she brought to the table that she would still
Speaker 1: have her job. But her decision to leave that contentious
Speaker 1: HR meeting march over to the executive offices, wander the
Speaker 1: halls for two hours looking for her boss's boss's bosses
Speaker 1: to make her case. That's what did her in right,
Speaker 1: And it was at that point that Eastman HR decided,
Speaker 1: we need to fire her. We need to fire her immediately.
Speaker 1: Let's lock down her accounts, and let's get this done
Speaker 1: with Drake.
Speaker 2: What did Eastman say about Shan and Yoe.
Speaker 4: Eastman didn't respond to detailed questions about the case, but
Speaker 4: did issue a statement that they take intellectual property theft seriously.
Speaker 4: One thing that Eastman did that Coke had not done,
Speaker 4: which proves important, is that at this point the IT
Speaker 4: department starts to keep tabs on her. So she goes
Speaker 4: home and then Eastman is able to see that she
Speaker 4: plugs an external hard drive into her work computer and
Speaker 4: puts something on there, and so when she goes in
Speaker 4: the next day to be fired, they make a point
Speaker 4: of asking for that removable storage device, which after some
Speaker 4: haming and hawing, she agrees to give them. And that
Speaker 4: removable storage device, when examined, turns out to have all
Speaker 4: of these can Liner formulas on it.
Speaker 5: And at this.
Speaker 4: Point Eastman's security department, which is run by a former
Speaker 4: FBI agent, decides to involve law enforcement.
Speaker 2: When we come back, the scheme starts to unravel, so
Speaker 2: Eastman calls in the FBI. What happens.
Speaker 4: Then Shannon Yo has been fired, and so now she
Speaker 4: has all sorts of time to devote to her new
Speaker 4: Lining's venture in China, and so she takes a couple
Speaker 4: more trips, keeps trying to figure out why she hasn't
Speaker 4: seen more of the grant money. And then at the
Speaker 4: same time the FBI is starting to take a look
Speaker 4: at this. They get search warrants on the external hard
Speaker 4: drive that Shannon had to return to Eastman. They get
Speaker 4: a search horn on her company phone that she also
Speaker 4: returned to Eastman, and what they find on there are
Speaker 4: these formulas, They find photographs on her phone that she
Speaker 4: took of this specialized lab equipment in the Eastman labs,
Speaker 4: and so the FBI starts piecing together what she's been doing.
Speaker 1: When Eastman seesed that hard drive, they were looking for
Speaker 1: Eastman intellectual property. They were not investigating anything that they
Speaker 1: suspected to be a corporate espionage, you know. Matter they
Speaker 1: were looking for, did Shannon Yo take any of are
Speaker 1: intellectual property? But what they found were folders upon folders
Speaker 1: of what seemed to be pretty valuable chemical formulas with
Speaker 1: names of other chemical companies, and that's what they gave
Speaker 1: to the FBI. And what the FBI was doing is
Speaker 1: all of this was happening. The FBI was taking that
Speaker 1: data to those companies and saying, what is this?
Speaker 5: Is this valuable?
Speaker 1: Those companies were coming back and saying, absolutely, those are
Speaker 1: our trade secrets. Nobody should have that information. So at
Speaker 1: that point the FBI knew shan and Yo has taken
Speaker 1: some very valuable intellectual property and is also going overseas.
Speaker 1: And as they reviewed her communications, they started to piece together, oh,
Speaker 1: this was about creating a company in China.
Speaker 4: In February of twenty nineteen, chen and Yo was arrested
Speaker 4: by the FBI.
Speaker 1: She was taken in for an interview with the FBI
Speaker 1: in their Grand Rapids, Michigan office. Agreeing to give an
Speaker 1: interview is it's a pretty risky thing, right because anything
Speaker 1: you say that's not true, you could be criminally charged with.
Speaker 1: And Shannon begins with a very adamant denial that she
Speaker 1: she didn't do anything wrong, she didn't share any information,
Speaker 1: she doesn't know why she's there.
Speaker 2: And you obtained the recording of this FBI interview with
Speaker 2: Shannon Yo. Here's part of it.
Speaker 7: How are they going to get into this?
Speaker 6: That's that's the reason.
Speaker 1: Okay.
Speaker 7: I try to bring the bringing them mac let in
Speaker 7: basic help and build a factory. But because they don't
Speaker 7: have as partise, I thought I would be able to
Speaker 7: help revite some consultant, okay, because I do know all
Speaker 7: the not just the secret but in general how to
Speaker 7: build a factory things have.
Speaker 6: You've been working with this stuff.
Speaker 7: For a long time.
Speaker 6: That's trying.
Speaker 7: But I have never had any intention to develop anything
Speaker 7: other than just help them to set to said.
Speaker 3: Jinhong has an intention to develop? Can I going? Yes?
Speaker 7: They have They have to write that in order to
Speaker 7: get bunding for the government. If they say they just
Speaker 7: as a recitable night lie that they're now going to
Speaker 7: get bombing, and so that's the reason.
Speaker 6: They write this way.
Speaker 1: But as the FBI agents kind of lay out this
Speaker 1: evidence that they had collected over the preceding months, you know,
Speaker 1: it just becomes very clear that she wasn't telling the
Speaker 1: truth and that they had the goods on her, and
Speaker 1: that interview winds up proving really pivotal because they catch
Speaker 1: her in kind of lie after lie after lie. She
Speaker 1: didn't deny that she took the information. She just said
Speaker 1: she didn't share it with anybody.
Speaker 7: But I never shared this with anybody, but you took it.
Speaker 5: That's the problem, okay, And that's where we're at right now. Okay,
Speaker 5: their stuff was on your device, Okay, Okay.
Speaker 1: Ultimately that doesn't matter for the charges against her, because
Speaker 1: what the emails and the messages showed was the intent
Speaker 1: to steal and the intent to use this data to
Speaker 1: create this Chinese company.
Speaker 2: Jordan Drake, we're hearing you recount all of these details
Speaker 2: about Shan and Yo and her work life and what
Speaker 2: she was trying to do in China. How do you
Speaker 2: know all of these details that you've reported.
Speaker 1: Most of what we know about this case comes through
Speaker 1: transcripts of Shannanyo's trial and also you know voluminous communications
Speaker 1: records that were submitted as evidence in her trial. These
Speaker 1: are really lengthy we chat, voice message and text message
Speaker 1: exchanges that Shannanio had with her aunt and her Chinese
Speaker 1: business partners.
Speaker 7: The thing is, okay, I do not have any path
Speaker 7: for the for PP in that cold team though.
Speaker 3: No, but you do have you had it on your
Speaker 3: heart drive.
Speaker 5: You will get and put it on your hard drive directly.
Speaker 7: I have you signed the EGE award, that's the patent
Speaker 7: that is public available. There's some messages in there that
Speaker 7: are pretty damned, but I'll do it.
Speaker 5: You did not transfer the trade secrets, is what you're telling.
Speaker 5: But you have the trade secrets that you are not
Speaker 5: supposed to have.
Speaker 7: Okay, that is a problem.
Speaker 3: You know.
Speaker 1: It's hundreds and hundreds of pages of documents that Drake
Speaker 1: and I went through. There's also a two hour interrogation
Speaker 1: video when Shannon Yo is interviewed by the FBI, which
Speaker 1: we've also obtained.
Speaker 3: Joe says, unlike other TTP winners who are loss overseas.
Speaker 3: She is doing well in the United States.
Speaker 1: She is the one taking the rest during the current
Speaker 1: and friendly period between US Chinese relations.
Speaker 7: And she won't give her technology away easily until she
Speaker 7: sees money.
Speaker 3: For ree as a voiceman.
Speaker 7: Let you think about that, well, I d not do it, okay,
Speaker 7: and the ID now received any money from Cardinal worry
Speaker 7: on the is.
Speaker 1: If all you read is the press release about these cases,
Speaker 1: what you'll see is on IP theft case involving China,
Speaker 1: Like there are lots of those. But if you read
Speaker 1: the transcripts and look at the evidence, that's when those
Speaker 1: documents lay out this fuller picture of not just an
Speaker 1: IP theft involved in China, but of multiple layers of
Speaker 1: scamming and fraud and deceit.
Speaker 4: Shannon went on trial in Tennessee in April twenty twenty one.
Speaker 4: She was convicted of wire fraud, possessing and conspiring to
Speaker 4: steal trade secrets, and economic espionage, and she was sentenced
Speaker 4: to fourteen years in federal prison and she's serving it
Speaker 4: in Aliceville in Alabama. I actually spoke with her by
Speaker 4: phone several months ago. I sent her a letter. She
Speaker 4: got right back to me. Actually and we had a
Speaker 4: fifteen minute phone conversation, which is the longest you're allowed
Speaker 4: to have in federal prison. And she argued that she
Speaker 4: was innocent and that basically her case was an example
Speaker 4: of a kind of xenophobic overreach, that basically she was
Speaker 4: prosecuted because she was Chinese. She's a Chinese scientist. The
Speaker 4: prosecution had confused the jury about some of these technologies.
Speaker 5: And we made plans to talk again.
Speaker 4: But the next day, as she mentioned to me, she
Speaker 4: was speaking with her lawyer, and I think her lawyer
Speaker 4: suggested we not have any further conversations because she didn't
Speaker 4: call back. We had an email exchange more recently where
Speaker 4: she made some of the same arguments, but we weren't
Speaker 4: able to speak again.
Speaker 2: And Jordan therey is one more twist to this story.
Speaker 1: Yeah, as we looked into this case, what we found
Speaker 1: was that a central question was what was ever done?
Speaker 3: Did she get paid?
Speaker 1: What was revealed was that as this money just was
Speaker 1: increasingly not hitting her account, she was not getting paid
Speaker 1: in China, she got very suspicious of her partners there.
Speaker 1: She believed that they were withholding on her. She believed
Speaker 1: they were lying to her. In fact, her Chinese partners
Speaker 1: did receive about eight hundred thousand US dollars in kind
Speaker 1: of advance money to build this factory. That was corporate
Speaker 1: money that they received from the government in China, and
Speaker 1: she suspected that she was being scammed as well. And
Speaker 1: ultimately what happened before she was arrested, she became increasing
Speaker 1: a hostile to her Chinese business partners, accusing them of lying,
Speaker 1: accusing them of stealing from her, and eventually they decide
Speaker 1: to just walk away, and Shannon Yo walks away with
Speaker 1: little more than some kind of token payments that she
Speaker 1: was given.
Speaker 4: The context for this is that these grant programs that
Speaker 4: the Chinese government has used to try to jumpstart everything
Speaker 4: from chip production to electric vehicle manufacturing our rife with fraud.
Speaker 5: There are lots of cases of people basically.
Speaker 4: Taking the money and running, which is something that happens
Speaker 4: in the United States as well with grant programs. And
Speaker 4: so there's a very real possibility and some evidence that
Speaker 4: suggests that there never really was a plan to start
Speaker 4: this business, which makes a certain kind of sense. I mean,
Speaker 4: it would have been quite a volatile experience to go
Speaker 4: into business with Shan and Yo, and it would have
Speaker 4: been hard to set up this business and compete in
Speaker 4: this global industry. It might have just been easier to
Speaker 4: take the eight hundred thousand dollars and call it a day.
Speaker 1: And when she doesn't see any money except some token
Speaker 1: amounts that were given to her, you know, she becomes
Speaker 1: deeply suspicious and posits at one point like maybe I'm
Speaker 1: the mark here.
Speaker 4: And the irony in that, of course, is that there
Speaker 4: was another victim in this scam. If there never was
Speaker 4: a plan to do anything with this ip, then basically
Speaker 4: the Chinese government itself was being ripped off, just like
Speaker 4: the companies, and just like potentially Shannon herself.
Speaker 2: Did you try to reach Shanan Yo's and and this
Speaker 2: business partner in China?
Speaker 1: We tried multiple ways to reach En and Yo's aunt
Speaker 1: as well as lu Xiang Chen in China through emails,
Speaker 1: phone calls, faxes, and we weren't able to connect with
Speaker 1: either of them.
Speaker 2: What are we to take away from this?
Speaker 4: What I think this case shows is that if what
Speaker 4: the Chinese government has tried to do is create an
Speaker 4: incentive system for bringing this valuable information back to China,
Speaker 4: it's one that doesn't work perfectly. And I think human beings,
Speaker 4: when you incentivize them to do things, don't always do
Speaker 4: exactly the thing you want them to do. And in
Speaker 4: this case, sometimes what they might do is simply take
Speaker 4: the money you're giving them to do something and just
Speaker 4: run away.
Speaker 1: I mean, I think my takeaway is very similar, which
Speaker 1: is we got a really incredible and unusually detailed view
Speaker 1: into what the negotiations look like between people who are
Speaker 1: stealing intellectual property to take advantage of these Chinese grant programs.
Speaker 1: The way these grant programs are portrayed typically are as
Speaker 1: this kind of monolith, this machine for stealing intellectual property, which,
Speaker 1: according to many national security officials, you know it is.
Speaker 1: And this case shows that those incentives are very very powerful.
Speaker 1: But what this case also shows is that it's equally
Speaker 1: powerful to just not do anything at all if you
Speaker 1: can get your hands on even just a little bit
Speaker 1: of that money. A little bit of that money is
Speaker 1: life changing for many people, So you don't necessarily have
Speaker 1: to create the world beating competitor to the American technology company.
Speaker 1: You might want to just take a little bit of
Speaker 1: that money off the table for yourself.
Speaker 4: Another way to put it is just that if you
Speaker 4: set up a system to incentivize people to do something,
Speaker 4: whatever it is, including steel ip.
Speaker 5: People are going to figure out ways to work that system.
Speaker 2: Drake Jordan, thanks so much for coming.
Speaker 5: On the show. Thanks a lotles, Thank you for interest.
Speaker 2: Thanks for listening to us here at The Big Take.
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