By Nate Raymond and Jonathan Stempel
NEW YORK (Reuters) - U.S. authorities brought criminal charges against three New York University researchers on Monday, alleging they conspired to take bribes from Chinese medical and research outfits for details about NYU research into magnetic resonance imaging technology.
A criminal complaint filed in the U.S. District Court in Manhattan charged Yudong Zhu, 44, Xing Yang, 31, and Ye Li, 31, with commercial bribery conspiracy in connection with NYU research financed by the U.S. government.
Federal prosecutors and the FBI said the three conspired to receive payments from a Chinese medical imaging company, United Imaging Healthcare, and a research institution supported by the Chinese government.
In exchange, prosecutors said, the defendants turned over confidential information about NYU research into MRI technology, which provides detailed views of the human body.
"As alleged, this is a case of inviting and paying for foxes in the henhouse," Manhattan U.S. Attorney Preet Bharara said in a statement. The alleged theft of research "is a serious crime and will not be tolerated by this office."
In addition to the bribery conspiracy count, Zhu was also charged with falsifying records in connection with a grant from the National Institutes of Health that a prosecutor said was worth $4 million.
Prosecutors said Zhu and Yang were arrested at their homes in New York on Sunday, while they said Li is believed to have flown to China on May 10 before charges were brought. Li could not immediately be located for comment.
NYU was not named in the complaint, which says the three individuals worked at a New York-based university research medical center. But a spokeswoman for the university confirmed the three defendants worked at the NYU Langone Medical Center.
"NYULMC is deeply disappointed by the news of the alleged conduct by its employees," Kathy Lewis, a university spokeswoman, said in a statement.
All three individuals have been suspended from NYU, Lewis said. The university is cooperating with the investigation, she said.
The case comes amid heightened concern of Chinese theft of U.S. trade secrets. Prosecutors have brought several criminal cases against defendants accused of stealing trade secrets from the likes of Motorola Inc, General Motors Co and Dow Chemical Co and then providing them to Chinese companies.
Zhu, a Chinese citizen, was an associate professor in radiology at NYU; he was hired to teach about innovations in the MRI field in 2008, according to the complaint.
Richard Baum, a lawyer for Zhu, said at a hearing on Monday that by the time he joined NYU from General Electric Co, he was already "one of the world's renowned experts in MRI technology."
In 2010, Zhu applied for a grant from the National Institutes of Health. After starting research under the multimillion-dollar grant, prosecutors said Zhu recruited Yang and Li to work with him.
At that time, Zhu also arranged to receive financial benefits from an unnamed executive with United Imaging Healthcare, the complaint said.
The executive agreed to pay for Yang's graduate school tuition and Li's rent for his apartment, the complaint said. The executive also agreed to pay for their travel between China and New York, the complaint said.
Prosecutors said Yang also shared research results of his work with individuals at United Imaging.
Zhu, meanwhile, had been working with the United Imaging executive leading a similar MRI research project funded by the Chinese government, the complaint said.
Some of the defendants also had undisclosed connections to Shenzhen Institute of Advanced Technology (SAIT), a Chinese government-backed research institute also studying MRI technology, according to the complaint.
As part of an internal investigation NYU launched in connection with the case, Li allegedly told the university he had as of January 2013 been a research associate professor at SAIT.
Zhu, meanwhile, had worked with the unidentified United Imaging executive as part of the same MRI research team at the institute, the complaint said.
At a hearing to determine the defendants' bail, a U.S. prosecutor said the government had also since learned even more details about the crime not described in the complaint.
Zachary Feingold, an assistant U.S. attorney, said Zhu had told investigators that he received at least $400,000 from the Chinese company. The money was deposited in a bank account in the name of a company owned by his mother, Feingold said.
A call to United Imaging after business hours in China was not answered, nor was an email to the company. SAIT did not immediately respond to an email seeking comment.
PATENT AT ISSUE
Beyond the money from the Chinese company, the complaint also accused Zhu of intentionally failing to disclose an October 2008 patent application he filed for technology related to radio frequency coils used in MRI scanners.
The U.S. Patent and Trademark Office issued the patent in November 2012. Prosecutors said the patent's value would be affected by the NIH grant research.
At Monday's hearing, Baum, Zhu's lawyer, disputed that NYU didn't know about the patent, which he applied for before joining the university. He already had several other patents at the time, Baum said.
"Whether it's a conflict instead of a crime is a different issue," he said.
Zhu was released on $200,000 bond to be secured by $20,000 cash. Yang was released on $100,000 bond to be secured by $5,000 cash and will be subject to home confinement.
(Reporting by Nate Raymond and Jonathan Stempel in New York; Editing by Martha Graybow, David Gregorio and Jan Paschal)