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Lilly scientists stole $55 million in trade secrets, indictment alleges

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Three former employees of Eli Lilly and Co. allegedly transferred trade secrets that Lilly values at more than $55 million to a competing Chinese drug company, according to an indictment unsealed Tuesday in federal court.

The indictment charges two Carmel residents, Guoqing Cao and Shuyu Li, with seven counts of theft and conspiracy to commit theft. It also describes the actions of a third man, referred to only as Individual #1, who also played a part in the alleged crime.

According to the indictment, Cao and Li, both of whom are scientists with doctoral degrees, e-mailed sensitive information about nine experimental drug research programs at Lilly to Individual #1, who is employed by Jiangsu Hengrui Medicine Co. Ltd., based in China.

U.S. Attorney Joe Hogsett and his deputy, Cynthia Ridgeway, characterized the alleged theft as a crime against the nation.

“If the superseding indictment in this case could be wrapped up in one word, that word would be ‘traitor,’” Ridgeway argued before Magistrate Judge Mark J. Dinsmore on Tuesday.

“Stolen trade secrets account for billions of losses for American companies throughout our nation,” Hogsett told reporters outside the federal courthouse downtown.

Cao and Li were arrested Oct. 1 in Indianapolis and appeared Tuesday in U.S. District Court in Indianapolis—handcuffed and dressed in striped jail uniforms.

The U.S. Attorney’s Office in Indianapolis sought a judge’s order to continue detaining the two men, arguing that they were flight risks and a “financial danger” to Lilly.

Bill Heath, the head of global product development for Indianapolis-based Lilly, testified at the hearing that the men’s knowledge could help Hengrui duplicate Lilly’s research. Those trade secrets involve drugs being developed to treat cardiovascular disease, diabetes and cancer.

“Because of their know-how and their continued access to the information, they would be in a position to direct others how to use the information,” Heath said.

Attorneys for each of the men argued that they should be let go, and that they would surrender their passports while the case against them proceded.

Scott Newman, a former Marion County prosecutor who is representing Li, said the U.S. Attorney’s office had failed to prove its case that the two men needed to be detained further.

“No, the word is not treason; the word is overreach,” Newman said.

Dinsmore eventually ruled that the two men would remain in custody until trial.

Lilly assisted the FBI and the U.S. Attorney’s office in the investigation of Cao, Li and Individual #1. Individual #1 is still under investigation, according to FBI agents, and has not been arrested.

In a statement, Lilly General Counsel Michael Harrington said the trade secrets allegedly stolen all involve early-stage research, and so their alleged theft does “not significantly jeopardize our overall research and development pipeline.”

“Lilly will aggressively pursue every legal remedy to protect and safeguard its scientific discoveries,” Harrington added. “This includes assisting law enforcement in prosecuting and holding accountable those attempting to steal Lilly’s valuable research.”
 

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  • 10 years lead to a conclusion over a nation?
    I think what you said is over. If so, after 500 years, Americans should monitor every other nationals other than itself, or maybe include?
  • not racist
    I have to tell you that these types of crimes happen all over the world but I have to say something in defense of the USA. I have lived and worked in China for over 10 years. It should be obvious that ANY chinese person who is in the USA for work, living or study should be: 1. Closely watched 2. Have their financial records tracked and scanned 3. Be monitored closely by those around them Why? Because that is how they work. And I wouldn't think that all Chinese are doing illegal things but there is an old saying "You can take the person or company out of China but you can't take China out of the them" Here in China if you are too honest people will walk all over you. If you do not have some level of deceit and dishonesty in your daily business, people will not respect you. The entire nation is built on corruption and from the smallest child to the biggest leader, this is their mindset. Personally speaking, this is only the fault of ????Chinese people) because they don't know much about how to behave in the outside world. Don't be fooled by their smiles, friendly overtures and big bank accounts. They are out to rip you off in some way or another. - two cents from an American who has lived with them for more than 10 years.
    • Law Firm Connect
      Seems to be like the US Lawyer does not see these people having around for evaluate. I think there is no actual dedication and respect among globally developed researchers who use on with US Organizations, just lengthy enough to get The united states Styles and The united states Improvements. I am considering that Lilly and other medication companies will begin managing having having accessibility business methods. Law Firm Connect
    • A crime "against our nation"? Really?
      If I remember correctly, didn't NAFTA "account for billions of losses for American companies throughout our nation"? (Hogsett's comment regarding stolen trade secrets.) That was more of a "crime against our nation" than a couple new meds if you ask me... But what do I know? ;-)
    • Actually....
      If the fact that they were Chinese was completely left out to the public, would you still think the same thing?? Does race have anything to do with it? That's how you know if what you're thinking about these two is racist.
    • Globalization
      American companies wanted to dump American workers for cheaper foreign ones. Oh well, I guess this is part of the downside of that strategy! Serves Lilly right.
    • Huh?
      Where was there any racism mentioned? The Chinese are more distinguishable due to their communist nation or origin and the concommitant lack of ingenuity due to lack of risk/reward philosophy. Crying "racism!!!" where none exists is quite simple-minded and tells me you are a gullible servant of the popular leftist media. There is indeed a Chinese nationalism strain present in many of these scientists- I have worked beside them and have witnesed it first hand.
    • Lilly Retaliation
      The rubes at Lilly are probably retaliating for China cracking down on their bribery operations in their country. Hopefully these individuals will get a fair trial, OUTSIDE the state Indiana. BTW...didn't know Lilly's research was all that valuable considering their pathetic attempts at bringing new drugs to market. I can't wait for China to slap them back, and hard!
    • Chinese theft
      Wondering if every Chinese person working in the US is here to secure secrets and gets bonuses from govt? Conspiracy theory, I don't think so. All spies in one way or another. Hopefully, we are doing the same abroad but what can we steal? US technology being used overseas? Maybe ban Chinese drugs that have trait of US drugs developed here?
    • oh, and one more thing...
      I liken that little gem in the Affordable Care Act that requires pharma to pay to protect thier market more to extortion than bribes. Do the research, it was the Obummer administration that came up with that deal, not the pharma companies.
      • Ignorance
        The reason prescription drugs cost so much in the US, is because all those other countires where Terry says drugs are 40-60% cheaper have price controls (read: Socialized Medicine) imposed on pharma companies. Does Terry (or anyone else) really understand the amount of money it takes before a drug can be taken to market? Or, how many compounds a company will spend hundreds of millions of dolars and 10+ years developing but they don't end up panning out? How about all MILLIONS per year that Lilly pays out in frivolous lawsuits? The majority of which they settle because its cheaper than fighting it. People love the benefits and quality of life all the new drugs provide them, but hate the pharma comapny for making a profit. Thank GOD there is profit in selling meds, because without it pharma wouldnt have been able to develope the medicines I take to everyday and helps me fight a desease that is trying to kill me. BACK OFF PHARMA. Wanna complain about high drug prices, fine, but lets have an intelligent debate about the facts and stop spreading hyperbole. Don't even get me started about Banks. The public loves the bank when they get that car loan, or that mortgage, but hates them when they attempt to get repaid. No industry is perfect, but I'm sooooo tired of hearing bank and pharma company bashing. What ever happen to the good ol' days when lawyers were the focus of our disdain?
      • Chinese Nationals
        I'm afraid there was a great deal of information left out of this article - see the Star for details: http://www.indystar.com/article/20131008/BUSINESS/310080078/2-former-Eli-Lilly-scientists-indicted-charges-stealing-trade-secrets Both were reportedly Chinese nationals working longterm at Lilly (HB1 visas anyone?) and one of the accused reportedly left Lilly in 2012 to work at a Chinese pharmaceutical while the second accused was tasked with IP security in Chinese markets for Lilly. Unfortunately this IP theft by foreign nationals has been going on for some time, aided in large part by the H1B visa program.
      • Here is a thought
        The Affordable Care Act has a section set aside for the $8 Billion per year, for the next ten years, whereby American Pharmaceutical Companies will pay the Federal Government, and in return the US House of Representatives will pass a law that restricts the reimportation of American Pharmaceuticals from foreign pharmacies. Stop for a moment and think about the fact that pharmaceutical companies, like Lilly, are willing to pay the US Government Healthcare System $80 Billion Dollars to block American Citizens from ordering prescription drugs from foreign pharmacies, where those high priced, name brand, drugs cost 40% to 60% less than people currently pay at Walgreens, CVS, Walmart, Costco and/or the corner pharmacy here at home. Who is kidding who? While this theft of technology and trade secrets is real and of course a crime, $55 Million is minor when compared to the real crimes associated with over-charging for prescription drugs, and then blocking people from seeking more affordable pricing overseas. Next will come the counterfeit claims and precautions, but no denials regarding over-pricing for the same name brand drugs sold offshore.
      • Chinese? Really?
        All these Chinese? Really? I guess that explains Madoff, Enron, and the plethora of US bank bonuses during the financial crisis. Can we raise the level of the discussion beyond simplistic and callous racism?
        • $55M...
          Are Guoqing Cao and Shuyu Li citizens, Green Card holders or HB1?
        • Hire US Citizens Next Time
          Sounds like the US Attorney does not see these guys hanging around for trial. I guess there is no real commitment and honor among foreign born scientists who hire on with US Companies, just long enough to steal American Designs and American Developments. I am guessing that Lilly and other drug companies will start controlling access to trade secrets.

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