Klaus Pflugbeil, 58, a Canadian living in China, pleaded guilty to conspiring to steal trade secrets from a leading U.S. electric vehicle company (Victim Company).
Pflugbeil and his co-defendant, Yilong Shao, who is still at large, own a China-based business (Business-1) that sells battery-making technology.
Pflugbeil, a former employee of a business that an unnamed Victim Company acquired, stole trade secrets and used them to create Business-1, promoting it as a replacement for Victim Company’s goods.
“Pflugbeil stole sensitive technology and took it to China, seeking an illegal advantage,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division.
Court documents show that Victim Company is a leading U.S. manufacturer of electric vehicles and battery energy systems.
According to federal officials, this is what happened:
In 2019, it acquired a Canadian manufacturer of precision dispensing pumps and battery assembly lines (the Canadian Manufacturer), which used a proprietary technology now owned by Victim Company.
This technology gave Victim Company a competitive edge.
Pflugbeil and Shao, former employees of the Canadian manufacturer, planned to use Victim Company’s trade secrets for their business by 2019.
Pflugbeil had many original documents and sought more drawings of the trade secrets, while Shao confirmed they had all the original assembly drawings.
The conspirators tried to hide their theft. Pflugbeil created a document based on a stolen one, saying it looked original and not like a copy.
In July 2020, Pflugbeil joined Business-1, established by Shao, which expanded to China, Canada, Germany, and Brazil. Business-1 makes the same products as the Canadian Manufacturer and was marketed as an alternative source for Victim Company’s products, with ads on Google, YouTube, and LinkedIn.
Pflugbeil’s Google ads for Business-1 promoted their products as replacements for the Canadian Manufacturer’s parts and were shown tens of thousands of times weekly.
Pflugbeil also sent LinkedIn messages saying, “Hello [name], I used to work at [Canadian Manufacturer], and after [Victim Company] purchased and closed the company, I am now part of a company providing similar products and services.”
On September 11, 2023, undercover FBI agents attended a packaging and processing trade show in Las Vegas, posing as businesspeople interested in buying a battery assembly line from Business-1 for a facility in Long Island, New York.
They met Shao at the trade show and were later introduced to Pflugbeil via email.
On November 17, 2023, Pflugbeil emailed an undercover agent a detailed 66-page technical proposal.
The proposal, labeled as containing “Business-1 proprietary information,” actually included trade secrets belonging to Victim Company.
Several drawings in the proposal were Victim Company’s proprietary information related to their Battery Assembly Trade Secret.
Pflugbeil pleaded guilty to conspiring to send trade secrets. He is scheduled to be sentenced on October 9 and faces up to 10 years in prison.
The FBI is investigating the case.