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US charges two men with stealing Tesla trade secrets

A Canadian living in China was arrested Tuesday and detained in New York after he and a business partner were accused of trying to sell secret battery manufacturing technology owned by Tesla.

Federal prosecutors in Brooklyn have asked a judge to hold Klaus Pflugbeil without bail on charges of theft of trade secrets. He was arrested after meeting with undercover agents Tuesday on Long Island and trying to sell them technology used to produce battery parts, the U.S. Attorney's Office for the Eastern District of New York said in a statement.

The second man, Yilong Shao, 47, a Chinese citizen, remains at large, prosecutors said. A public defender representing Mr. Pflugbeil, 58, did not respond to requests for comment Tuesday evening.

Court documents identified the company whose secrets were stolen only as “a leading U.S. manufacturer of battery-powered electric vehicles and battery energy systems.” That description and other details in court documents match Tesla.

Mr. Pflugbeil and Mr. Shao are both former employees of Hibar Systems, a Canadian company that sold technology for manufacturing batteries that Tesla acquired in 2019. They had access to drawings and other documents that allowed others to copy the manufacturing process, according to prosecutors.

After selling Hibar, the men created a company that attempted to sell the company's technology through Google ads, LinkedIn posts and a YouTube video, according to court documents. They knew the technology was proprietary, prosecutors said.

Undercover agents met Mr. Shao at a trade show in Las Vegas in September and expressed interest in purchasing the information, which Tesla had confirmed was secret. The agents persuaded Mr. Pflugbeil to go to New York by telling him they wanted to make a deal.

The arrest demonstrates that the government will “pursue those who engage in trade secret theft that places American businesses at a competitive disadvantage, undermines innovation, and creates a potential national security risk,” Breon said Peace, United States Attorney for the Eastern District of New York. , said in a statement.

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