Mechanical engineering professor Gang Chen arrested on grant fraud charge
Chen’s lawyers seek sanctions against Massachusetts US Attorney
MIT Mechanical engineering professor Gang Chen was arrested on allegations of federal grant fraud, President L. Rafael Reif wrote in an email to the MIT community Jan. 14. Chen was charged by criminal complaint with wire fraud, failing to file a foreign bank account report (FBAR), and making a false statement in a tax return, according to Massachusetts U.S. Attorney Andrew Lelling's Office.
Chen has held various appointments with the Peoples’ Republic of China (PRC) since 2012, “often in exchange for financial compensation,” according to the Attorney’s Office. These appointments included acting as an “overseas expert” for the PRC government “at the request of the PRC Consulate Office in New York” and serving as a member of “at least two PRC Talent Programs.”
The Office pointed to a February 2016 email Chen sent to himself from his MIT account, alleging that it “partially detailed” his “efforts to promote the PRC’s scientific and economic development.”
According to the Attorney’s Office, excerpts from the email read “‘1. promote chinese collaboration… 3. our economy is no. 2, but from technology (structure of economy) and human resources, we are far from no. 2… 4. we are paying big price in environment, not sustainable, as well as from labor cost … We must count on technology, cannot grow as past … We realize not just independent innovation; but also internationalize to plan for and facilitate.’”
Chen’s lawyers say that this email contained notes of somebody else’s statements at a lecture he attended, not his own thoughts, and that the press release omitted the conclusion of the email, which made it clear that he was summarizing the comments.
Many of Chen’s appointments from PRC government officials, as well as numerous undisclosed contracts, are “expressly intended to further the PRC’s scientific and technological goals,” said Matthew McCarthy, one of the Homeland Security Investigations Special Agents assigned to Chen’s case, in an affidavit.
McCarthy stated that he was “aware that the general subject matter of Chen’s research at MIT — nanotechnology — was specifically identified” as an “area of interest to the PRC government.” Lelling also said that he thought it was no coincidence the Chinese government publicly identified nanotechnology as a priority.
McCarthy identified several contracts that “entitled Chen to receive hundreds of thousands of dollars in direct payments and millions of dollars in funding” for his research from the PRC. Among these were a five-year contract with the Zhongguancun Development Group (“ZDG”), a PRC state-owned enterprise funded by the Beijing Municipal Government; a consultant position for the “Outstanding Talent Plan” at a state-owned school managed by local PRC officials, for which Chen agreed to “identify and recommend students for admission to top-tier universities” in the U.S; and an appointment to the Southern University of Science and Technology (SUSTech) Advisory Board, for which Chen and his research group “benefitted from approximately $19 million in funding.”
MIT established a collaboration with SUSTech in 2018, and while “Chen is its inaugural MIT faculty director, this is not an individual collaboration; it is a departmental one, supported by the Institute,” Reif clarified in a second email to the MIT community Jan. 22.
U.S. Customs and Border Protection (CBP) conducted a border search of Chen and his baggage upon his return from a trip to the PRC in January 2020. When CBP asked about the purpose of Chen’s trip, he responded that his meetings in China “were ‘a collaboration,’” and when asked what the focus of the collaboration was, Chen replied “‘a collaboration is a collaboration,’ or words to that effect,” according to McCarthy.
When CBP asked if Chen “did any research or just held meetings during these collaborations,” Chen responded that all of his “‘research is conducted in the [U.S.],’ or words to that effect.” McCarthy noted that the CBP officers who questioned Chen claimed his answers were “short and curt, and he appeared evasive.”
Chen “failed to disclose” that he was an advisor to SUSTech and four other PRC appointments on a grant renewal proposal to the Department of Energy (DOE) in March 2017, McCarthy wrote; McCarthy “confirmed with DOE officials that, at a minimum, Chen was required to disclose these activities” in the appendices of the proposal. McCarthy added that “Chen failed to disclose the above-listed PRC appointments and activities” in a March 2019 progress report.
Chen also failed to file an FBAR for the 2018 Tax Year, and “answered ‘no’ to the question of whether he had” a financial interest in or authority over a financial account in a foreign country, which McCarthy believes is “false” because “Chen appears to have owned or had an interest in multiple bank accounts at the Bank of China in 2017 and 2018.”
Lelling told reporters that it “is not illegal to collaborate with foreign researchers. It is illegal to lie about it.”
Chen’s lawyers asked a federal judge to sanction Lelling Feb. 4 for his “attempt to gin up Chen’s charges” and making his activity sound “far more nefarious” than the reality. Lawyers Brian Kelly and Robert Fisher said that the charges “represent the dying gasp of blatant anti-Chinese bias in ‘the waning hours of the Trump Administration’” and that Lelling’s public statements would interfere with a fair trial.
In their request for sanctions, Kelly and Fisher argue that Lelling held a press conference a few hours after the complaint was unsealed, in which he made “numerous false, highly inflammatory statements,” claiming that the allegations were “not just about greed, but loyalty to China”; they stated that there is “nothing in the Complaint to suggest that Chen is not loyal” to the U.S.
Over 170 MIT professors signed a Jan. 21 letter defending Chen against the allegations. “We stand in solidarity with our colleague … We feel that he deserves full support and commitment from MIT,” the letter wrote.
It added that the professors were “baffled” by many parts of the official complaint and public statements against Chen, stating that the complaint “represents a deep misunderstanding of how research is conducted or funded” at MIT.
The letter addresses various allegations in the complaint, suggesting that the complaints are “flawed and misleading.” In response to the wire fraud allegation, the letter states that “Chen’s scientific collaborations and broader connections to China are a matter of extensive disclosure and public record,” and are “anything but hidden” from DOE grant reviewers.
Chen’s arrest comes nearly a year after the arrest of Harvard Professor Charles Lieber, who was a “contractual participant in China’s Thousand Talents Plan” from 2012 to 2017; the Thousand Talents Plan is a prominent talent program that “seeks to lure Chinese overseas talent and foreign experts to bring their knowledge and experience to China and reward individuals for stealing proprietary information,” according to the Department of Justice’s Office of Public Affairs.
While Harvard did not pay for Lieber’s legal defense, MIT will fund Chen’s legal defense. An independent GoFundMe, organized by Chen’s daughter to cover “expenses beyond this agreement” raised $401,387 as of Jan. 25.