Federal officials have charged Yudong Zhu, Xing Yang and Ye Li, three researchers who worked on improving MRI technology at the New York University School of Medicine, but who also had undisclosed affiliations with a Chinese company performing the same type of research. The research at the university was funded by a multi-million dollar federal grant from the National Institutes of Health.

The defendants are each charged with one count of commercial bribery in connection with a conspiracy to receive payments from the Chinese company and a Chinese government-supported research institution in exchange for providing non-public information about research they conducted at the university. Zhu is also charged with lying about conflicts of interest in connection with the federal research grant. Zhu and Yang were arrested at their residences in New York yesterday, and Li is believed to have flown to China before charges were brought.

“As alleged, this is a case of inviting and paying for foxes in the henhouse,” said Manhattan U.S. Attorney Preet Bharara in a press release. “These defendants allegedly colluded with representatives from a Chinese governmental entity and a direct competitor of the university for which they worked to illegally acquire NIH-funded research for the benefit of those entities, as described in the complaint. The defendants also allegedly deceived the university and others about their professional allegiances to competing Chinese interests. The acquisition of federally funded research for the benefit of these Chinese entities is a serious crime and will not be tolerated by this Office.”

FBI Assistant Director-in-Charge George Venizelos said: “Instead of working exclusively for a New York research institution, the defendants took bribes to acquire research for the benefit of both a Chinese competitor and a Chinese government institution. Protecting our nation’s technology and intellectual property against these types of thefts remains one of the FBI’s top priorities.”

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

In 2008, NYU hired Zhu, an accomplished researcher and innovator in the field of magnetic resonance imaging (“MRI”) technology, to teach and conduct research related to innovations in MRI technology. Zhu came to the University, in large part, to use a specific university laboratory that possessed highly specialized equipment to test MRI innovations.

In 2010, Zhu caused the University to apply for and receive a grant from the NIH that provided millions of dollars in funding over a five-year period for Zhu’s research relating to improving the imaging capability of MRI equipment (the “NIH Grant”). After he started his research pursuant to the NIH Grant, he arranged for Yang and Li to move to New York from China to work with him in 2011 and 2012, respectively.

While working for the University, Zhu, Yang, and Li each had undisclosed affiliations with United Imaging Healthcare (“United Imaging”), a Chinese medical imaging company, and the Shenzen Institute of Advanced Technology (“SIAT”), a Chinese government-sponsored research institute. When Zhu arranged for Yang and Li to work with him at the university, Zhu also arranged for them to receive certain financial benefits from a co-conspirator (“CC-1”) who was an executive with United Imaging and who was also affiliated with SIAT. For example, Zhu arranged for CC-1 to pay for Yang’s tuition at a graduate school in New York that was affiliated with the university, and Li’s rental apartment. CC-1 also paid for Yang and Li’s travel between China and New York while they worked at the university.

In addition, the university recently discovered that during their employment, Zhu, Yang, and Li each maintained an e-mail address that included the domain “united-imaging.com”. The university also obtained a United Imaging employee registration for Li, which included his signature dated September 27, 2012. Zhu, Yang, and Li concealed from, and failed to disclose, these payments from and relationships with competing research entities in China.

Yang has stated that while working on the NIH Grant at the university, he also shared with individuals at United Imaging the research results from his and Zhu’s work at the university that was conducted pursuant to the NIH Grant. Through an examination of university e-mail accounts, the university learned that from August 2011 through January 2013, individuals with e-mail addresses that included the “united-imaging.com” domain corresponded with Zhu and Yang regarding issues related to MRI equipment prototypes, experiments, and project updates. These e-mails were sent to and/or from accounts including Zhu’s personal Gmail account, his United Imaging email address, and Yang’s Hotmail account.

Zhu also had other material conflicts of interest that he concealed from the University. He owned a patent related to MRI technology, the value of which would be directly impacted by his NIH Grant research. In addition, at the same time that he was leading the research for the NIH Grant, he, along with CC-1, was leading a similar research project in China related to MRI technology that was funded by a grant from the Chinese government. Zhu and CC-1 were also part of the same research team at SIAT. The 2011-2012 annual report for a certain division of SIAT included photographs of Zhu and CC-1 as members of its MRI Research Team. In financial interest disclosure forms that the University required ZHU to complete in connection with the NIH Grant, Zhu failed to disclose, and falsely answered, questions regarding these outside affiliations and financial conflicts of interest.

Read the full story.

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