Bloomberg News

Man Accused of Drug Theft for China Pleads Not Guilty

April 11, 2013

A Medical College of Wisconsin researcher accused of stealing a developmental cancer drug to deliver it to a Chinese university pleaded not guilty to charges of computer tampering and lying to federal agents.

Hua Jun Zhao, who was indicted by a federal grand jury on April 9, entered his plea today before U.S. Magistrate Judge Patricia Gorence in Milwaukee. He’s being held without bail.

Zhao, 42, was accused of economic espionage in a criminal complaint filed on March 29. Gerald Shinneman of the Federal Bureau of Investigation said in an accompanying affidavit that surveillance cameras showed Zhao to be the only person to enter and leave a medical college office at the time three vials of the medicinal compound vanished in February.

Assistant U.S. Attorney Stephen Ingraham today asked Gorence to dismiss the criminal complaint while leaving prosecutors with permission to refile those allegations at a later date.

“This is an ongoing investigation,” Ingraham said in court. Gorence didn’t rule on the dismissal request.

The indictment relates to Zhao’s efforts to obstruct a probe into the theft of the compound by lying to FBI agents and by gaining covert access to the medical college’s computer server and trying to delete proprietary information including research data related to the compound, Milwaukee U.S. Attorney James L. Santelle said in a statement.

10 Years

The computer tampering charge carries a maximum sentence of 10 years imprisonment, while the charge of lying to a federal agent is punishable by as long as five years in prison.

“I did not expect to see different charges than contained in the criminal complaint, but we’re not privy to what happened in the grand jury,” Zhao’s defense lawyer, Juval Scott, said today in a phone interview. “We’re looking forward to getting information from the government and starting our own investigation.”

The missing vials, containing a powdery substance identified only as C-25, had a value of about $8,000 according to Shinneman’s FBI affidavit.

“The investigation has revealed that Zhao may have used his employment and position at MCoW to illegally acquire patented research material and taken steps to provide that material to Zhejiang University,” Shinneman had said.

The case is U.S. v. Zhao, 13-cr-00058, U.S. District Court, Eastern District of Wisconsin (Milwaukee).

To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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