June 24, 2022

Volume XII, Number 175

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DOJ Ends “China Initiative” Targeting Economic Espionage

On February 23, 2022, the U.S. Department of Justice (“DOJ”) announced the end of an initiative to prioritize suspected Chinese economic espionage. The intent of the initiative was to prevent China’s intelligence apparatus from stealing U.S. technology, specifically from research institutions and universities. However, DOJ National Security Division Chief Matthew Olsen stated the initiative “fueled a narrative of intolerance and bias” and had a chilling effect on scientific collaboration and recruitment by U.S. research institutions. Olsen’s comments and the policy change concludes a review that Olsen ordered shortly after his confirmation by the Senate.

Since the initiative’s inception, the DOJ’s enforcement efforts were mixed.  While the DOJ has credited the initiative with some major prosecutorial victories, one study found that cases against academics more often resulted in dismissals rather than convictions. Many prosecutions under the initiative involved alleged grant fraud by researchers working at U.S. universities stemming from alleged failures to disclose ties to the Chinese government. Critics cited the lack of success as proof of racial bias and government overreach. As a result of the policy change, the DOJ’s national security prosecutors are expected to more closely supervise grant fraud cases, and the DOJ may seek civil or administrative sanctions instead of criminal prosecutions.

Although the DOJ will likely remain vigilant in monitoring threats posed by China, Olsen indicated the DOJ will also expand its focus to include threats posed by North Korea, Iran, and Russia.  In light of the new conflict in Ukraine, Russia specifically may find itself under increased scrutiny. Nevertheless, individuals and companies with connections to China and other foreign governments should remain diligent in their disclosures and expect the DOJ to continue to scrutinize their activities for possible economic espionage.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XII, Number 58
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About this Author

Nic Gunton Cleveland Associate Attorney Ohio Government Investigations White Collar Law Squire Patton Boggs, LLP
Associate

Nic Gunton is an associate in the Government Investigations & White Collar Practice. He represents companies in internal investigations and enforcement actions, as well as helps create compliance policies and protocols for US and international corporations. He has assisted in representing clients in investigations by the U.S. Department of Justice and various states’ attorneys general.

216-479-8733
Ally Rich Cleveland Ohio Counsel Government Investigation Law Compliance Law Squire Patton Boggs LLP Law Firm
Of Counsel

Ally Rich focuses her practice on government and internal investigations, regulatory compliance and governance issues. She frequently represents individuals and corporate clients in matters before the Department of Justice, the Securities & Exchange Commission, FINRA and numerous state Attorney General offices. She is experienced in all aspects of litigation, arbitration and alternative dispute resolution.

216-479-8704
Colin R. Jennings Government Investigations & White Collar Attorney Squire Patton Boggs Cleveland, OH
Partner

Colin R. Jennings has been selected as primary outside counsel for global compliance work by more than 35 public and privately held global companies, and regularly provides guidance and counseling in connection with these companies’ ongoing compliance efforts for both their domestic and international operations, including, when necessary, investigation and defense of compliance-related concerns.

Colin’s experience includes conducting independent reviews of the structure, operation and performance of established compliance programs. Colin regularly conducts compliance reviews and...

216-479-8420
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