Ex-scientist pleads guilty in solar trade-secrets case

Tung Pham faces up to 140 years in prison on wire fraud charge

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A former scientist at a solar cell manufacturing company has pleaded guilty to several counts of wire fraud after he was charged under the Economic Espionage Act with stealing trade secrets with the intent of using them in China.

Tung Pham, who worked on developing improved chemical components in the competitive field of photovoltaic cell technology, was arrested shortly after quitting his job at Heraeus Materials Technology in Conshohocken, Pa.

The FBI had searched his home and found thousands of company documents on his personal computer, including a valuable formula for a new kind of lead-free silver paste, according to the plea agreement filed last week in the Eastern District of Pennsylvania. Mr. Pham had altered the formula that was left on his company computer, according to the plea agreement.

Federal prosecutors agreed to drop the charges related to the theft of trade secrets, but those allegations will be considered when calculating the sentencing guidelines, according to the plea deal.

Mr. Pham pleaded guilty to seven counts of wire fraud for the emails that he sent to the Chinese company that he was planning to begin working for, in violation of the one-year noncompete clause in the employment contract he had with Heraeus.

Heraeus, which isn't named in the suit, alerted the government to the case and filed its own civil suit in the Eastern District of Pennsylvania against Mr. Pham. That case has been on hold while the criminal case proceeded.

The two suits are being handled by different judges -- U.S. District Judge Anita Brody is presiding over the criminal case and U.S. District Judge Juan Sanchez is presiding over the civil suit.

Burton Rose, who represented Mr. Pham, stressed that the government was satisfied that Mr. Pham hadn't actually distributed any of the trade secrets and that those charges would be dropped. That circumstance makes the case unique, he said.

Michael Levy, the assistant U.S. attorney who handled the case, agreed that it's likely the trade secrets didn't get out and attributed the plugged leak to the fast action of the government, which has at its disposal the ability to execute search warrants, an avenue not available in civil litigation, he noted.

The FBI searched Mr. Pham's house and seized his electronics within a week of Heraeus' disclosure.

It was clearly a serious case that involved a trade secret, Mr. Levy said.

"Once we make a decision to go, we go full bore," he said.

Mr. Levy estimated that his office gets roughly two or three calls a year from companies reporting situations similar to this one, but they don't all proceed. Some don't qualify and sometimes the company will reconsider. He attributed the small number of cases to a reluctance on the part of companies to get involved and the fact that the statute is relatively new -- it was passed in 1996.

Prosecutors offered to the court two loss estimates, one based on the cost of developing the trade secrets and another based on actual expenditures for legal fees and investigation. The first is $22.7 million and the second is $1.26 million.

Both figures include costs incurred by two companies, since the FBI found on Mr. Pham's personal computer thousands of documents from his previous employer, referred to only as Company B. Company B made up the lion's share of the first estimate, $17.9 million, while Company A, Heraeus, had the larger share of the second estimate, $875,000.

Mr. Pham is currently living in California with his family and he is scheduled to be sentenced Nov. 6. He faces a maximum of 140 years in prison and a $1.75 million fine, according to the plea agreement.

The emails tied to the wire fraud charges detail Mr. Pham's agreement with a Chinese startup company called Jiangsu Yuxing Photovoltaic Technology Materials Co. to work in the same field of silver-paste development that he worked in at Heraeus, in violation of his noncompete agreement with the company, which he realized after taking the job.

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Saranac Hale Spencer: sspencer@alm.com or 215-557-2449. To read more articles like this, visit www.thelegalintelligencer.com.


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