Justice Department drops China spy initiative as past target speaks out

The Justice Department is ending a controversial program, launched under the Trump administration, to hunt down Chinese spies. The "China Initiative" was designed to tackle a top national security priority: identifying and prosecuting those responsible for China's widespread theft of hundreds of billions of dollars a year in American trade secrets and intellectual property. 

The announcement Wednesday by the Biden administration to shut down the program came on the heels of an exclusive interview broadcast Wednesday on "CBS Mornings" with a man who was the target of one of the initiative's most high-profile prosecutions, MIT professor Gang Chen. 

Chen says the case against him, which was dropped, highlighted the potential for bias to infect an effort to thwart Chinese espionage inside American universities. 

On the morning of January 14, 2021, more than 10 federal agents arrived at Chen's home in Cambridge, Massachusetts, blocking off surrounding streets and making their way up to the narrow corridor to his front door. 

"The way they came through the corridor, I know they were here for me," Chen told CBS News chief investigative correspondent Jim Axelrod in his first television interview. "They said, 'Are you Gang Chen?' I said, 'Yes.' They say, 'Don't move'." 

Chen, a U.S. citizen was handcuffed and jailed. A world-renowned professor of mechanical engineering, he was one of more than two dozen researchers charged under the program, according to a CBS News analysis of court records. If convicted, he faced up to 20 years in prison.

"Today, we see Chinese espionage not just taking place against traditional targets like our defense and intelligence agencies, but against targets like research labs and universities," said former Attorney General Jeff Sessions when he announced the China Initiative in 2018. 

Former Justice Department officials tell CBS News the prosecutions were meant to send a message: to deter the academic community from hiding research ties that China could then exploit to gain access to cutting-edge technology. Yet the cases drew criticisms of racial profiling, and according to MIT president Rafael Reif, sent a chill through the scientific community.

"It is scaring the best talent in the world, which we need in this country, from coming into this country," Reif told CBS News.

In the criminal complaint, Chen was accused of failing to disclose various ties to China in a 2017 Energy Department grant application as well as failing to disclose a foreign bank account on a 2018 tax document. 

"We thought we had achieved the American Dream," Chen said. "Until this nightmare happened."

He was placed on academic leave for nearly a year as the federal charges hung over him. Documents reviewed by CBS News reveal that in January an Energy Department official told prosecutors they had gotten it wrong, and Chen was not required to disclose any of the affiliations he was accused of hiding. 

Two weeks later, prosecutors dismissed the indictment against Chen. It is one of eight cases the department has dropped against Chinese-born researchers in the past year.   

The Justice Department has denied bias in its China Initiative cases.

"We never investigate or prosecute based on ethnic identity, what country a person is from," Attorney General Merrick Garland told lawmakers in October. 

After CBS News reached out to the department last week, a spokesperson told CBS News it had concluded an internal review of the China Initiative. 

On Wednesday, Matt Olsen, who leads DOJ's national security division, told reporters an internal review of China Initiative prosecutions found no indication of racial bias or prejudice. Still, he said the Initiative was "myopic", chilled scientific research, and created the perception the department applied different standards to people with Chinese ethnicity.

"Anything that creates the impression that the Department of Justice applies different standards based on race or ethnicity harms the departments and our efforts and it harms the public," Olsen said.

Loyalty questioned

The complaint prosecutors filed against Chen did not accuse him of espionage, but on the morning of his arrest, he was treated like a national security threat. At 6:30 a.m., agents in his house told him to stand in a corner while they went to wake up his wife and daughter. 

"My wife was in her sleep," said Chen. "And she told me when she heard the man yell, 'Police! Police!', she thought she was in a dream."

In a press conference following Chen's arrest, then-U.S. Attorney Andrew Lelling made plain how the government viewed the stakes of the case.

"The allegations of the complaint imply that this was not just about greed, but about loyalty to China," Lelling said. 

Chen called Lelling's comments "an insult."

"They paint me as disloyal to U.S. and loyal to China," Chen said. "There's no facts in what they said."

Chen, who became a U.S. citizen in 2000, denied he was a Chinese spy and said he has never supplied China with any proprietary research or technology.  

"During the course of my graduate study I fell in love with this country," said Chen, who studies heat transfer. "My wife fell in love with this country and we decided to stay and build our family here."

"A massive jolt"

At MIT, Reif said Chen's arrest came as a "a massive jolt." Believing Chen had done nothing wrong, Reif decided the school would pay his legal fees. 

"I felt it was an attack on all Chinese Americans in America, particularly in academia," Reif said. "I felt it was to some extent an attack on every foreign-born person in America, who is being told, 'We don't really trust you.'"

Chen first learned he was under federal investigation in January 2020, nearly a year before his arrest. He had been stopped by Homeland Security agents at Boston's Logan Airport while returning home from a trip to China, Egypt and Morocco with his wife and two children.  

"I was very uneasy," Chen said. "They brought my entire family to a separate area, and we sat there for a few hours. Couldn't even go to the restroom." 

An agent demanded he turn over his cellphone and computer and questioned him about the nature of his visit to China. He said he was there on business for MIT, taking meetings on a partnership the university had formed with SusTech, a Chinese university in Shenzhen. 

Prosecutors accused Chen of hiding his position as an adviser to SusTech and personally collecting $19 million from the collaboration. 

Reif said that's the moment he knew the Justice Department made a mistake. While Chen worked on the collaboration, the money went to MIT. The collaboration was even advertised on MIT's website. 

"He was doing that as part of his job," Reif said. "Professors here search, and seek money, and write proposals to do things, and receive the money, and work with students to advance science." 

Reif agreed China poses a risk when it comes to misappropriating American intellectual property, but said the Justice Department's approach was akin to using hammer when the problem called for a scalpel.

"We do have a problem with China," Reif said. "We are not playing by the same rules. All I'm saying is, just going to universities and looking for Chinese Americans and doubting their loyalty to this nation is not the right approach."

The case falls apart 

On January 4, Justice Department prosecutors interviewed Dr. Anthony Schwartz, an official with the Energy Department's Office of Science, which oversees grant applications. 

According to a memo assembled by the Energy Department Inspector General and reviewed by CBS News, prosecutors asked Schwartz about seven different affiliations Chen allegedly hid on a 2017 grant application and a follow-up progress report in 2019. 

Schwartz told prosecutors he did not believe Chen was required to disclose any of the seven affiliations on either the application itself or the follow-up progress report. 

"He never hid anything he did from anybody," Chen's attorney, Rob Fisher, told CBS News.

Within weeks, prosecutors called Fisher to tell him they had dropped all charges and his client was a free man. Fisher said a full and outright dismissal is "very rare" and "indicates a major mistake was made."

In a statement announcing the dismissal of charges against Chen, the Biden-appointed U.S. Attorney for Massachusetts Rachael Rollins said her office obtained new information and concluded they could no longer meet their burden of proof at trial.

"As prosecutors, we have an obligation in every matter we pursue to continually examine the facts while being open to receiving and uncovering new information," Rollins wrote. "We understand our charging decisions deeply impact people's lives."

The Justice Department has since initiated an internal review of the entire program — with results expected to be announced Wednesday. Lelling, who has left for private practice, declined an interview, but wrote in a recent social media post the China Initiative had "drifted" and "DOJ should revamp, and shut down, parts of the program, to avoid needlessly chilling scientific and business collaborations with Chinese partners." 

Olsen said the Justice Department would continue China-related cases under the banner of a "broader approach" to fighting foreign threats, not just from China, but from nationals like Russia and Iran too. 

He said the Department will take "an active supervisory role" going forward in research integrity cases to make sure there is "intent and materiality." In some cases, he said "civil or administrative remedies" may be more appropriate. Chen said he felt relief when the charges were dropped, but believes he should never have been accused in the first place.

A CBS News analysis found six China Initiative cases still pending against researchers, three of whom are American citizens of Chinese ethnicity. Olsen did not comment on the pending cases, but said the Department continues to stand behind the cases it is currently prosecuting  that were brought as part of the now-retired program.

Chen still worries about the damage the whole episode has done to his reputation. He has returned to teaching at MIT this semester, but said he is still haunted by the arrest.

"I am no longer the Gang Chen I was before," he said. "From my family, the trauma we experience, the fear we still have, to my professional career. My research group is gone. I will no longer be the same person I was before."