SALT LAKE CITY—Two individuals and two
companies are charged with theft of trade secrets, wire fraud, and conspiracy
to commit wire fraud in connection with the alleged theft of trade secrets from
Orbit Irrigation Products Inc., a sprinkler and irrigation company
headquartered in Utah, in an indictment unsealed Monday.
Charged in the indictment are Janice
Kuang Capener, age 32, and Luo Jun, age 36, citizens of the People’s Republic
of China; Sunhills International LLC, a California company established by
Capener; and Zhejiang Hongchen Irrigation Equipment Co. LTD, a Chinese
manufacturer of irrigation equipment that had a contractual relationship with Orbit
to manufacture some of its products. The indictment was returned by a federal
grand jury in Salt Lake City in late April.
Capener, who is a lawful permanent
resident of the United States, was employed by Orbit Irrigation Products from
about June 16, 2003 until about November 1, 2009. From about March 14, 2005
until about May 13, 2009, Capener was in charge of operations at an Orbit
manufacturing plant in Ningbo, Zhejiang Province, China. She was notified of
her termination in May 2009 and worked as a paid consultant for the company
until her termination was finalized in November of that year.
Luo Jun was the chief executive officer
and owner of Zhejiang Hongchen Irrigation Equipment Co. LTD.
The first five counts of the indictment
charge Capener with theft of trade secrets. The indictment alleges that she
took information related to customers and the pricing and sales of sprinkler
and irrigation products without authorization from secure Orbit databases and
used that information for herself and others to the economic detriment of
Orbit.
The sixth count of the indictment
charges Capener, Luo Jun, Sunhills International and Zhejiang Hongchen
Irrigation Equipment with conspiracy to commit wire fraud. The indictment
alleges the defendants devised a scheme to begin undermining Orbit’s position
in the marketplace using illegally obtained proprietary pricing information.
As a part of the alleged scheme, the
defendants used Sunhills International to market and distribute products. Luo
Jun’s company, Hongchen, would “float” or provide upfront free irrigation and
sprinkler products to Sunhills to market to U.S. retailers, the indictment
alleges. The defendants also, according to the indictment, took other steps to
begin undermining Orbit’s position in the marketplace, including an anonymous
complaint to Walmart about conditions at Orbit’s factory in Ningbo, and,
despite their agreements to the contrary, Hongchen increased the manufacturing
costs for the products it was manufacturing for Orbit.
The indictment alleges the defendants
used manufacturing, cost, customer, and pricing information in contravention of
confidentiality agreements with Orbit to begin pricing Orbit out of the market.
The indictment references e-mails between defendants and others establishing business
relationships in furtherance of the scheme; sharing proprietary cost, customer,
and pricing information of Orbit; and arranging to undercut Orbit’s prices by
marketing products to Orbit customers at lower prices than Orbit’s.
The final 12 counts of the indictment
charge Capener, Luo Jun, and the two companies with wire fraud in connection
with the scheme.
The case is being investigated by the
FBI Salt Lake Field Office and prosecuted by Assistant U.S. Attorneys in Salt
Lake City. The Office of International Affairs in the Justice Department’s
Criminal Division also provided assistance.
Capener and Luo Jun were arrested in Las
Vegas Friday morning. They had initial appearances Friday in federal court in
Las Vegas. Luo Jun was detained and is scheduled for an identity hearing late
Monday afternoon in Las Vegas. Capener was released following her appearance in
Las Vegas. She appeared for an arraignment Monday afternoon in Salt Lake City.
She entered a plea of not guilty to the charges. She will continue on her
pre-trial release status which includes GPS monitoring and a curfew.
Each charge of theft of trade secrets
carries a maximum sentence of 10 years and a fine of $250,000. The conspiracy
to commit wire fraud count and each count of wire fraud carry maximum sentences
of 30 years and fines of $1 million.
Indictments are allegations and are not
findings of guilt. Individuals and businesses charged in indictments are
presumed innocent unless or until proven guilty in court.
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