FBI Arrests Chinese Official for Visa Fraud: Arrest marks first legal counterattack on Beijing’s ‘Thousand Talents’ technology theft plan

The FBI has arrested a Chinese government official as part of China’s massive scheme to illegally obtain American technology by recruiting experts in high-tech fields. by Bill Gertz

Zhongsan Liu was arrested after a lengthy investigation into his role in directing a Chinese government front group in New Jersey called the China Association for International Exchange of Personnel (CAIEP), the Justice Department said in a statement.

A criminal complaint in the case dated Sept. 13 also linked the visa fraud charges to a Chinese government-funded Confucius Institute at a U.S. university.

The more than 100 Confucius Institutes have become a major focus of several members of Congress who have sought to have the institutes shut down in response to their role in furthering pro-Beijing propaganda activities.

From 2017 to this month Liu conspired to fraudulently procure U.S. visas for Chinese officials, according to a criminal complaint unsealed in a New York court.

Visas were obtained with the help of six universities in Massachusetts, Georgia, New Jersey, and elsewhere that were not identified by name.

Liu, 57, resides in Fort Lee, New Jersey, and is charged with a single count of conspiracy to commit visa fraud. If convicted, he faces a maximum sentence of five years in prison.

The front group is engaged in recruiting U.S. scientists, academics, engineers, and other experts to support China’s large-scale program of developing high-technology in China. Liu has led the front group for 26 years.

In the visa fraud, Liu arranged for J-1 research visas at U.S. universities ostensibly to support Chinese “research scholars” at those schools.

In reality, according to prosecutors, Liu made the arrangements “with the knowledge that, once in the United States, the CAIEP employees would not in fact principally conduct research on behalf of their sponsoring universities but rather would work full time for CAIEP.”

The criminal complaint quoted one Chinese official in an intercepted phone call stating that “if he/she is in a college or university and has a PhD degree, it will be very easy for us to give him/her a J-1 [visa].”

The Beijing recruitment effort is part of the Beijing-directed “Thousand Talents Plan” that recruits Chinese-Americans and others to sign contracts outlining specific research in China.

“That contractual obligation often resembles or even replicates the work the recruit performs or performed for his or her U.S.-based, or other overseas employer, thereby leveraging the recruit’s knowledge and access to intellectual property obtained from U.S. and foreign businesses and government laboratories,” the complaint says.

The program is directed by the Chinese government’s State Administration of Foreign Experts Affairs.

Liu is a senior official of that agency, according to the complaint and an FBI agent said in the complaint that he infiltrated a meeting attended by Liu when he was identified as part of China’s Ministry of Science and Technology, which recently merged with the State Administration of Foreign Experts Affairs.

Liu worked with the Chinese embassy in Washington and consulate in New York during the recruitment scheme.

Since 2017, Liu traveled to major U.S. universities seeking “high-caliber experts,” professors, and students to work for China.

The complaint included details of intercepted telephone calls and emails between Liu and Chinese officials.

Investigators produced portions of an intercepted email revealing that a Chinese official traveled to Boston to meet the president of a Confucius Institute at the Massachusetts university. Their conversation involved helping a Chinese recruiter become a researcher at the school.

The White House stated in a report on Chinese “economic aggression” made public in 2018 that the Thousand Talents Plan was launched in 2008 and targets scholars who are leaders in their respective fields on high-level research institutes. The targeted scholars “may hold intellectual property rights, key technologies, or patents in technological fields desired by China,” the report said.

“Chinese government sources claim over 44,000 highly skilled Chinese personnel have returned to China since 2009 through talent plans,” the report said. “As noted by China Daily, which is owned by the Chinese Communist Party: ‘China has more than 300 entrepreneurial parks for students returned from overseas. More than 24,500 enterprises have been set up in the parks by over 67,000 overseas returnees.'”

According to the Pentagon’s latest annual report on the Chinese military, the Thousand Talents Plan is used to bolster the People’s Liberation Army military buildup.

“China uses various incentive strategies to attract foreign personnel to work on and manage strategic programs and fill technical knowledge gaps, including the ‘Thousand Talents Program,’ which prioritizes recruiting people of Chinese descent or recent Chinese emigrants whose recruitment the Chinese government views as necessary to Chinese scientific and technical modernization, especially with regard to defense technology,” the report said.

Michael Wessel, a commissioner with the congressional U.S.-China Economic and Security Review Commission, said the arrest was deeply troubling.

“It is another startling example of the lengths to which China will go to acquire our research through illicit means,” Wessel told the Washington Free Beacon.

“In the middle of trade negotiations that are focused on addressing China’s theft of our intellectual property, it raises serious questions as to whether China will ever negotiate in good faith on this issue. China has made clear that it wants to acquire our key technology by whatever means are necessary—licit or illicit. We can no longer afford to accept empty promises and worthless agreements.”

Former CIA deputy director for counterintelligence Mark Kelton said the Thousand Talents Program is part of a major Chinese assault on U.S. business and industry.

“Pilfering of U.S. technology, much of it embargoed military and defense equipment stolen by China and Russia, has reached Cold War levels,” Kelton said.

“At the same time, in accord with its so-called Thousand Talents Plan begun in 2008, Beijing is also drawing on the skills of its citizens educated or employed in the U.S. to ‘transfer, replicate and eventually overtake U.S. military and commercial technology.'”

Kelton said the overall loss of U.S. technology and knowledge to China “endangers our national security.”

The former CIA counterspy said the Chinese technology collection is stealing American wealth, American jobs, and American competitive advantage.

A November 2018 report by the Office of the U.S. Trade Representative on China’s illicit trade practices identified a Chinese government-linked company, Oriza Holdings, as a funding source for Thousand Talents.

“Oriza Holdings claims to have established a ‘Thousand Talents’ Venture Capital Center, which has 96 equity investment management teams that manage 152 funds exceeding over CNY 131 billion ($20 billion) in value as well as seven debt financing service organizations which have serviced over 4,200 enterprises,” the report said.

A Chinese embassy spokesman did not return an email seeking comment.

Assistant Attorney General John C. Demers, head of the National Security Section, said the United States welcomes foreign students and researchers but not government-backed visa fraud.

“We will continue to confront Chinese government attempts to subvert American law to advance its own interests in diverting U.S. research and know-how to China,” he said.

OFFICIAL FBI release:

Chinese Government Employee Charged in Manhattan Federal Court with Participating in Conspiracy to Fraudulently Obtain U.S. Visas

The Department announced today the arrest of Zhongsan Liu, who was charged by complaint for his involvement in a conspiracy to fraudulently obtain U.S. visas for Chinese government employees.  Liu was arrested today in Fort Lee, New Jersey, and presented this afternoon in Manhattan federal court before the U.S. Magistrate Judge Ona T. Wang. 

“We welcome foreign students and researchers, including from China, but we do not welcome visa fraud – especially on behalf of a government,” said Assistant Attorney General John C. Demers of National Security.  “We will continue to confront Chinese government attempts to subvert American law to advance its own interests in diverting U.S. research and know-how to China.”

“As alleged Zhongsan Liu conspired to obtain research scholar visas fraudulently for people whose actual purpose was not research but recruitment,” said U.S. Attorney Geoffrey S. Berman.  “Rather than helping to bring students to the U.S., Liu allegedly conspired to defraud this country’s visa system to advance his efforts to attract U.S. experts to China.  Thanks to the FBI, this alleged abuse of the visa system has been halted.”

“Zhongsan Liu broke the law by seeking visas for employees of the government of The People’s Republic of China to enter the United States under false pretenses.  Individuals obtained visas under the guise of research scholars, but in reality their assignment was to recruit top U.S. talent to benefit the government of China,” said Assistant Director John Brown of the FBI’s Counterintelligence Division. “The FBI recognizes the immense benefit of academic freedom in our open society, and we will investigate those who break our laws in an effort to take advantage of that freedom.”

“The allegation that an employee of a foreign government has worked to mask the true purpose of an individual’s presence in the United States isn’t news to the FBI,” said FBI Assistant Director William F. Sweeney Jr.  “This alleged behavior should be another alarm bell that foreign governments are constantly working to exploit research work being conducted throughout the United States.  Not everyone shares the honest goal of conducting open research to benefit society as a whole.  This case is another example of the pervasive and organized effort, in this instance an allegedly flat-out illegal one, to fulfill a top priority of collecting information to advantage a foreign adversary.  Putting a halt to Mr. Liu’s alleged actions are an important and significant step to highlighting these activities.  The FBI New York, along with our intelligence community partners, will continue to disrupt the behavior when it is detected.”

According to the allegations in the Complaint unsealed in Manhattan federal court:

From approximately 2017, up to and including September 2019, Liu participated in a conspiracy to fraudulently procure U.S. visas for employees of the government of the People’s Republic of China (PRC Government).  Liu operates the New York office of the China Association for International Exchange of Personnel (CAIEP-NY).  CAIEP-NY is a PRC Government agency that, among other things, recruits U.S. scientists, academics, engineers and other experts to work in China.

Liu worked with others, including other PRC Government employees in the United States, to fraudulently procure J-1 Research Scholar visas for a CAIEP-NY employee (CC-1) and a prospective CAIEP-NY employee (the CAIEP-NY Hire).  The J-1 Research Scholar visa program permits foreign nationals to come to the United States for the primary purpose of conducting research at a corporate research facility, museum, library, university or other research institution.

In or about April 2018, CC-1 applied for and received a J-1 visa to conduct research at a particular U.S. university (University-1) located outside of New York.  Although CC-1 represented to the U.S. Government that she was entering the United States for the primary purpose of conducting research at University-1, CC-1’s actual purpose in the United States consisted of performing full-time talent-recruitment work at CAIEP-NY.  Liu helped CC-1 take measures to enhance her false appearance as a Research Scholar at University-1 by, among other things, directing CC-1 to report to University-1 upon her arrival in the United States; ensuring that CC-1 obtained a driver’s license in the state where University-1 is located; and instructing CC-1 to periodically visit University-1 while working full-time at CAIEP-NY.

In addition, Liu attempted to enable the CAIEP-NY Hire to obtain a J-1 Research Scholar visa under false pretenses.  In particular, Liu reached out to contacts at multiple U.S. universities in order to arrange for a university to invite the CAIEP-NY Hire to come to the United States as a J-1 Research Scholar.  In truth and in fact, however, Liu intended that the CAIEP-NY Hire’s primary purpose in the United States would consist of engaging full-time in the talent-recruitment work of CAIEP-NY.

Liu, 57, of Fort Lee, New Jersey, is charged with one count of conspiracy to commit visa fraud, which carries a maximum sentence of five years.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Assistant Attorney General Demers and U.S. Attorney Berman praised the outstanding investigative work of the FBI, and thanked the U.S. Department of State, Department of Homeland Security, Homeland Security Investigations, and the Counterintelligence and Export Control Section of the U.S. Department of Justice’s National Security Division for their assistance. 

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorney Gillian Grossman is in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Bill is the author of seven books, four of which were national bestsellers. His most recent book was iWar: War and Peace in the Information Age, a look at information warfare in its many forms and the enemies that are waging it. Bill has an international reputation. Vyachaslav Trubnikov, head of the Russian Foreign Intelligence Service, once called him a “tool of the CIA” after he wrote an article exposing Russian intelligence operations in the Balkans. A senior CIA official once threatened to have a cruise missile fired at his desk after he wrote a column critical of the CIA’s analysis of China. And China’s communist government has criticized him for news reports exposing China’s weapons and missile sales to rogue states. The state-run Xinhua news agency in 2006 identified Bill as the No. 1 “anti-China expert” in the world. Bill insists he is very much pro-China—pro-Chinese people and opposed to the communist system. Former Defense Secretary Donald H. Rumsfeld once told him: “You are drilling holes in the Pentagon and sucking out information.” His Twitter handle is @BillGertz.