A Canadian individual accused of utilizing Tesla technology to establish a company in China has been granted bail in the United States

A Canadian entrepreneur embroiled in a legal battle over allegations of stealing battery manufacturing technology from Tesla while residing in China has been granted bail in the United States.

Klaus Pflugbeil, a Canadian citizen based in Ningbo, China, underwent a bond hearing on March 22 and was subsequently released on bail on March 28, as confirmed by Danielle Hass, the spokesperson for the United States Attorney’s Office for the Eastern District of New York, in correspondence with CTVNews.ca on Monday.

The court stipulated a bail amount of US$1 million, requiring two properties to be posted as collateral along with a cash deposit of US$150,000 to be held by the clerk of the court.

In a statement issued last month, Breon Peace, the U.S. attorney for the Eastern District of New York, denounced the defendants’ actions, accusing them of establishing a company in China to unlawfully appropriate trade secrets from an American corporation crucial to the manufacturing of electric vehicles. Peace emphasized the significant financial investments made in research and development by the victim company.

Pflugbeil’s arrest on March 19 in Long Island, N.Y., stemmed from allegations of transmitting multiple trade secrets to an undercover agent. According to U.S. prosecutors, he purportedly traveled to Nassau County, N.Y., under the belief of engaging with potential business associates, who were, in fact, undercover federal law enforcement agents.

Pflugbeil, alongside Yilong Shao, a Chinese national, faces charges of conspiring to transmit trade secrets belonging to a prominent U.S.-based electric vehicle company, according to the United States Attorney’s Office for the Eastern District of New York. The duo could face a maximum prison sentence of 10 years if convicted.

Shao, hailing from Ningbo, China, remains at large, as confirmed by U.S. authorities.

Although the prosecutors did not explicitly name the company involved, media reports, including from The Associated Press, suggest it to be Tesla. However, Hass refrained from confirming Tesla’s involvement, stating that she could only comment within the scope of the indictment and public record. Additionally, no trial date has been set yet.

Court documents reveal that Pflugbeil and Shao operated a business in China specializing in battery technology, including applications for electric vehicles, allegedly utilizing sensitive and proprietary information obtained from their previous employer, a Canadian company. This company was later acquired by a leading U.S. manufacturer of battery-powered electric vehicles and energy systems in 2019.

Although the companies involved were not explicitly named, Tesla’s acquisition of Hibar Systems, a battery manufacturing firm in Richmond Hill, Ont., in 2019, aligns with the timeline and details presented in the court documents.