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Sinovel Wind Group Found Guilty of Trade-Secret Theft; Fined $1.5 Million

A jury convicted Sinovel in 2018 over AMSC turbine-control software. The $1.5 million maximum statutory fine was separate from restitution and the court’s loss finding.
From TheFinanceBase Team2 min to read
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A federal jury found Sinovel Wind Group guilty on January 24, 2018, of conspiracy to commit trade-secret theft, theft of trade secrets and wire fraud. On July 6, 2018, the court imposed a $1.5 million fine—the maximum statutory fine—and one year of probation tied to restitution. The fine was separate from the court’s finding that AMSC’s losses exceeded $550 million.

What did Sinovel take from AMSC?

The case involved software that regulates the flow of electricity from wind turbines to electrical grids. The U.S. Department of Justice said trial evidence showed Sinovel arranged for Dejan Karabasevic, a former employee of AMSC Windtec, to secretly download source code on March 7, 2011. The code was transferred from an AMSC computer in Wisconsin to a computer in Klagenfurt, Austria. DOJ said Sinovel later commissioned several Massachusetts turbines and copied software compiled from the stolen source code into them. DOJ’s sentencing account

According to DOJ’s account of the trial evidence, Sinovel had contracted to buy more than $800 million in AMSC products and services at the time of the theft. DOJ said the evidence showed it sought to produce turbines and retrofit existing ones using AMSC technology without paying the amounts it had promised. That description is DOJ’s account of the evidence, not a finding about every commercial agreement between the companies.

How did the case proceed?

Date Event
March 7, 2011 DOJ says the source code was secretly downloaded from Wisconsin to a computer in Austria.
June 27, 2013 Sinovel and three individuals were charged. The DOJ release described the charges as allegations and stated that defendants were presumed innocent unless and until proven guilty. 2013 charging announcement
January 24, 2018 A jury convicted Sinovel after an 11-day trial. DOJ’s verdict announcement
July 6, 2018 The court imposed the fine and probation and announced a restitution schedule.
July 9, 2018 AMSC issued a statement about the sentencing. AMSC’s statement

Why was the fine only $1.5 million?

DOJ described the $1.5 million fine as the maximum statutory fine. It was not the court’s valuation of AMSC’s loss, nor was it the entire amount Sinovel was ordered to pay. The sentence also included one year of probation tied to payment of restitution.

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DOJ said the court found AMSC’s losses from the theft exceeded $550 million. DOJ separately reported that evidence presented at trial showed AMSC lost more than $1 billion in shareholder equity and almost 700 jobs. Those latter figures describe broader consequences cited from trial evidence; they are not the fine, restitution total, or the court’s stated loss finding.

What restitution did Sinovel owe?

DOJ’s July 6, 2018 announcement described these payments:

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DOJ said Sinovel would pay the full settled restitution amount. The announcement gives the schedule as of sentencing; it does not establish that the later installments were ultimately paid. The available statements cited here do not verify completion of those payments.

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What the verdict established

The 2013 charging release contained allegations. After the 11-day trial, the jury returned its guilty verdict on three offenses: conspiracy to commit trade-secret theft, theft of trade secrets and wire fraud. At sentencing, U.S. Attorney Scott C. Blader said, “This case is about protecting American ideas and ingenuity.”

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