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Third Circuit Rules in Favor of Post & Schell Client, Rejecting Government's Claim of $1 Billion Loss from GSK Trade Theft

Philadelphia, PA – August 16, 2022 – On August 2, 2022, a Third Circuit Court of Appeals three-judge panel ruled in favor of Post & Schell client, researcher Tao Li, rejecting the U.S. Department of Justice’s assertion that a theft of trade secrets from GSK caused a $1 billion loss which should control for sentencing.  Mr. Li had pled guilty to conspiracy to steal trade secrets on September 14, 2018 and was sentenced to time served – for a total of 59 days in custody – by the U.S. District Court for the Eastern District of Pennsylvania.

In its argument before the Third Circuit, the Government maintained that in sentencing, the District Court had “committed a procedural error by failing to calculate the value of the stolen trade secrets,” which the Government estimated at $1 billion. They sought a 7-year sentence based on this valuation. The defense argued that the District Court was correct to find that the Government had failed to establish that Mr. Li intended to cause any pecuniary loss at all.  In fact, as the District Court found, the GSK material – much of which was already of public record – was not intended to be used to produce competing products or inflict financial harm on GSK.

In a precedential decision in USA v. Xue et al., the Third Circuit panel affirmed the District Court’s ruling. Mr. Li’s 59-day sentence was left undisturbed.

John N. Joseph, the former and retired Chair of Post & Schell’s Internal Investigations and White Collar Defense Practice Group defended Tao Li in the case. The legal team also included Principal Abraham J. Rein, Senior Counsel Ronald H. Levine, Associate Laily Sheybani, and former Associate Yune D. Emeritz.

Speaking on behalf of Mr. Li and the Post & Schell legal team, Senior Counsel Ronald H. Levine commented:

“The Government alleged an intended $1 billion loss from day one in this case – however, in our criminal justice system, allegations are simply not enough. Our team’s role as defense counsel was to vigorously press the government’s allegations and challenge them to support their allegations with actual evidence. As the Third Circuit ruled, the Government failed to prove its case.”

The full decision is available here.

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