Why China is stealing America's corn seeds

HONG KONG (CNNMoney)

Challenged by the guard, Mo Hailong claimed to be an employee of the University of Iowa who was traveling to a nearby conference. He jumped back in his car and sped away.

U.S. authorities would later accuse Hailong, and five other Chinese nationals, of stealing corn seeds and attempting to smuggle them back to China.

A seventh defendant, Mo Yun, was arrested and charged Wednesday with stealing trade secrets for her husband's seed company -- the Beijing Dabeinong Technology Group Company.

The details of the case, laid out by prosecutors, underscore the difficulty of safeguarding U.S. intellectual property, and the determination of some foreign rivals to acquire technology by illicit means.

For six years, the Chinese nationals hopscotched across rural Iowa and Illinois, stealing valuable inbred corn seed from Pioneer, Monsanto (MON) and LG Seeds, prosecutors said in an updated indictment. The group rented storage facilities, bought their own testing field and concocted elaborate cover stories.

"These are actually very serious offenses," one of the accused said during a recorded conversation reproduced in the indictment. "They could treat us as spies," his colleague replied.

Three members of the group tried to smuggle the stolen goods out of the U.S. in 2012, concealing hundreds of seeds in Orville Redenbacher popcorn boxes and Subway napkins. One tried to reach Canada; the others boarded aircraft bound for Beijing.

Related: Russia attacks U.S. oil and gas companies in massive hack

The Chinese nationals weren't risking imprisonment for just any corn -- they were after inbred seeds used to create the hybrids that are then sold to farmers.

Inbreds are closely guarded secrets. Companies spend tens of millions of dollars on research to produce strains that boost yields and are resistant to drought and insects.

China has become a major corn importer in recent years, and the stolen technology could have played a role in boosting domestic production.

The case is the latest in a series of incidents involving Chinese nationals working in the U.S. Some are accused of stealing rice technology and aerospace secrets for China.

"Identifying and deterring those focused on stealing trade secrets, propriety and confidential information or national security information is the number two priority for the FBI second only to terrorism," FBI special agent Thomas Metz said in a statement.

Beijing Dabeinong Technology Group Company, and its subsidiary, Beijing Kings Nower Seed, did not respond to requests for comment.

Analysts say that Beijing's use of economic espionage can be attributed in part to its drive to modernize the country in recent decades.

The illicit acquisition of technology has helped China accelerate the process, bypassing problems that would otherwise require years of research to resolve. It's an issue that has drawn the attention of the White House.

Related: China's long history of spying on business

President Obama has raised the issue with his Chinese counterpart, Xi Jinping. But his arguments have carried less weight following revelations by Edward Snowden that U.S. agencies were attempting to monitor Chinese telecommunications company Huawei.

Chinese officials have been quick to levy charges of hypocrisy against the U.S. An official at the Ministry of Foreign Affairs said in May that the U.S. was engaged in theft of secrets and snooping on companies, politicians and others.

-- CNN's Vivian Kam contributed reporting.

First Published: July 3, 2014: 6:13 AM ET

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'Smart' luggage will text you when it gets lost

"Help, I'm in Vladivostok!"

NEW YORK (CNNMoney)

That's the promise of "smart luggage," in which GPS tracking chips are embedded in bags capable of transmitting their locations to travelers and even contacting airlines directly when they get lost.

The jumbo jet maker Airbus introduced a concept design for smart luggage at the Paris Air Show last year. The product, known as Bag2Go, can be tracked via a smartphone app. It also allows for self-service check-ins and can weigh itself to ensure that it meets airline requirements.

Related: Booking a flight? Save by leaving on a Tuesday

AT&T (T, Tech30) unveiled a similar concept at a demonstration of its "next-generation technologies" in May. The company envisions integrating the product with standard suitcases and bags -- perhaps through an attachable tag -- though it could also be built into suitcases directly.

The ultimate plan is to for the luggage to work with airlines' IT systems, contacting the carriers directly and arranging for delivery to your home or hotel.

These products are still in the developmental stage and will need approval from federal regulators, but they're sure to find some grateful customers: U.S. airlines mishandled over 141,000 bags in April, according to government statistics, or about three bags for every 1,000 passengers.

First Published: July 3, 2014: 6:15 AM ET

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How to buy luxury clothes without losing your shirt

NEW YORK (CNNMoney)

Consignment and resale shopping is a growing business, made even easier by new technology.

"Everyone wants a deal," said Julie Wainwright, founder of The RealReal, an online consignment shop specializing in luxury goods.

The RealReal has a new app that's like a Kelley Blue Book-type service for high-end products. Customers can shop from thousands of items, and can also use it to find the market value for a designer piece lurking in the back of their closet.

Brands like Cartier, Chanel and David Yurman hold their value the longest, according to The RealReal, which sees David Yurman products snapped up for nearly half the retail price, and Hermès accessories for up to 30% off retail.

The RealReal has several warehouses across the country, including this one in San Francisco.

While the retail sector took a beating in the recession and has only just started to recover, the resale industry has grown in recent years.

New stores have opened to keep up with the demand. According to the NARTS, a resale professionals association, enough shops have opened their doors to grow the industry by 7% over the last two years. There are about 18,000 used merchandise stores in the U.S., with a combined annual revenue of about $12 billion, according to First Research, a market analysis company.

Related: Why these sunglasses cost $150

Overall retail sales only increased by 3.7% in 2013, according to the National Retail Federation. That's far below the potential for the resale industry, say reports from NARTS and eMarketer.

Based on that data, online consignment shop thredUP said the resale sector will grow 16.4% through 2016. It's found that luxury brands like Theory and Diane von Furstenburg were the best to buy secondhand, raking in the largest number of dollars saved per item and the highest discount.

Luxury brands proved to be so popular on thredUp that the company launched "X Collection" earlier this year, which offers designer pieces exclusively. Recent highlights included a Diane Von Furstenberg silk dress for about $200 (retail price $550) and a Gucci handbag for a little less than $400, a huge markdown from its retail price of $985.

Related: Why rich families are losing money

For those looking to sell luxury items, both TheRealReal and thredUp offer payouts between 60% and 80% of the sale price.

"This means people can monetize what they have in their home," said Wainwright. Though secondhand selling might sound a little like eBay (EBAY, Tech30), there's a difference.

"[eBay] provides a valuable way to connect buyers and sellers, but they can't authenticate, and they can't ensure consumers are getting a good value," she said.

The women behind the Women's Closet Exchange in St. Louis, Mo., recently parlayed their several decades of experience into a reality show called "Resale Royalty" on the Style Network. The exposure convinced the owners to launch a website last year, which has been "wildly successful," according to Laura Maurice, who owns the business with her mom and sister.

Laura Maurice, Sue McCarthy and Diana Ford make up the team behind designer resale shop Women's Closet Exchange in St. Louis, Mo.

Brands in hot demand are Hermès, Chanel and Louis Vuitton. The company buys from 15,000 different suppliers, and sometimes just from people's closets. They mine everyone from "a soccer mom who's got some fabulous Lululemons," to "a celebrity stylist in Soho." The good deals for her turn into great deals for customers, and keeps luxury brands accessible.

"We still sell $2,000 and $3,000 handbags even though they're gently used," Maurice said. She goes on buying trips to Los Angeles and New York, and "Resale Royalty" is currently being shopped around to other networks.

"We've always thought we were bigger than just a resale shop," she said.

First Published: July 3, 2014: 6:22 AM ET

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Facebook still won't say 'sorry' for mind games experiment

NEW YORK (CNNMoney)

In her first public statement on the matter, Facebook Chief Operating Officer Sheryl Sandberg said that the outrage over the company's controversial study was all a big misunderstanding.

"This was part of ongoing research companies do to test different products, and that was what it was. It was poorly communicated," said Sandberg at an Indian Chambers of Commerce event in New Delhi on Wednesday. "And for that communication we apologize. We never meant to upset you."

Internet users were angry earlier this week when Facebook (FB, Tech30) revealed that it intentionally made a subset of its users less happy during a week in 2012. As part of the study, Facebook changed the mix in the News Feeds of almost 690,000 users. Some people were shown more positive posts, while others were shown more negative posts.

In an interview with India's NDTV Wednesday, Sandberg reiterated that the company was sorry for the lack of transparency -- but not for the study itself.

"We clearly communicated really badly about this, and that we really regret," Sandberg said.

Related: Facebook treats you like a lab rat

When pressed if Facebook plans on apologizing, Sandberg came closer to offering a mea-culpa, but still didn't quite get there.

"Facebook has apologized, and certainly never wants to do anything that upsets users -- and particularly for communicating really badly."

But has Facebook really apologized for conducting the mood manipulation study itself? Not quite.

The Facebook researcher who designed the experiment, Adam D. I. Kramer, said in a post Sunday that he was sorry for the way the study was presented and for the uproar it caused.

"I can tell you that our goal was never to upset anyone," Kramer wrote. "I can understand why some people have concerns about it, and my coauthors and I are very sorry for the way the paper described the research and any anxiety it caused. In hindsight, the research benefits of the paper may not have justified all of this anxiety."

Related: Internet outraged by Facebook's 'creepy' mood experiment

Facebook's official statement didn't come close to apologizing. In fact, the company defended the study as a way to "improve our services and to make the content people see on Facebook as relevant and engaging as possible."

"We carefully consider what research we do and have a strong internal review process," a Facebook spokesman said in a statement. "There is no unnecessary collection of people's data in connection with these research initiatives and all data is stored securely."

Facebook did not respond to a request for a comment on whether the company plans on apologizing for the study itself.

First Published: July 2, 2014: 3:48 PM ET

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20 million watch final USA World Cup match

The popularity of soccer on TV underscores the sport's growing popularity among Americans.

NEW YORK (CNNMoney)

Nielsen ratings released on Wednesday showed that ESPN's telecast of the match averaged 16.5 million viewers in the United States, which was second only to the USA-Portugal match on June 22. That earlier match holds the distinction of being the most-watched men's soccer match in the United States ever.

Univision's Spanish-language telecast of USA-Belgium averaged 5.1 million viewers.

Related: The future of media

The viewership totals are incomplete because Nielsen does not measure any viewing at bars, restaurants, offices, or other out-of-home locations.

The totals are impressive nonetheless, and they reflect soccer's growing popularity among the American people.

Online streaming also adds to the totals. ESPN said that its live stream via the WatchESPN app averaged 1.1 million viewers during the match. "WatchESPN also averaged 3,500,000 unique viewers and 190,200,000 minutes viewed during the match, both records for the platform," the network said in a press release.

Overall, the 56 World Cup broadcasts to date on ESPN and its sibling channels have averaged 4.1 million viewers a piece, up 44 percent from the 2010 cup and up 122 percent from the 2006 cup, the network said.

First Published: July 2, 2014: 5:45 PM ET

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Best markets to become a landlord

While rising home prices have dampened returns for landlords in some markets, other markets still offer plenty of profits.

NEW YORK (CNNMoney)

And while rising home prices have dampened returns for landlords in some markets, other markets still offer plenty of profits, according to RealtyTrac which analyzed rental market conditions in 370 major U.S. counties, including median home prices, average rents and unemployment rates.

Top housing markets for investors in rental proiperties

Anderson, S.C.	15.3%	$893	$69,900	4.3%
Woodbury, Iowa	13%	$914	$84,250	4%
Pickens, S.C.	13%	$975	$90,000	4.3%
Alachua, Fla.	12%	$1,161	$115,950	4.3%
Spotsylvania, Va.	11.9%	$1,966	$199,000	4.3%
Lexington, S.C.	11.3%	$1,046	$111,500	3.9%
Allegheny, Pa.	11.3%	$991	$105,700	4.5%
Franklin, Ohio	10%	$1,039	$125,000	4.3%
Dorchester, S.C.	10%	$1,180	$139,900	4.2%
Douglas, Neb.	9.9%	$1,059	$128,000	3.7%

Source: Home prices from RealtyTrac sales deed data and local Multiple Listing Services; fair market rents from U.S. Department of Housing and Urban development; unemployment data is from U.S. Labor Department's Bureau of Labor Statistics.

Landlords in Anderson County, S.C., for example, who rent out a median priced three-bedroom home would average returns of 15.3% -- well above the national average of 10%, RealtyTrac found. That's because homes here are cheap at a median of less than $70,000, while rents average $900 a month.

Home to a university and several auto parts makers for BMW, Anderson is part of the Greeneville metro area and has a low 4.3% unemployment rate, meaning demand should continue to strengthen and help add to future profits.

Related: Buy vs. rent: What you'll pay in 10 big cities

Other areas that offer landlords more bang for their buck include Woodbury County, Iowa. Median home prices in the area, which includes the Sioux City metro area, were a low $84,250 while rents averaged $914 a month. That translates into a rental return of about 13% for landlords.

While low unemployment is one factor landlords should look for while assessing a market, RealtyTrac also suggested that investors take the demographics of an area into account as well, particularly when it comes to baby boomers and millennials.

"Many individuals in both of those demographic groups are in the midst of major life changes that will often involve changes in housing, something that smart real estate investors should take into consideration when deciding when and where to buy or sell," said Daren Blomquist, vice president at RealtyTrac.

Markets where these populations are growing rapidly should produce strong returns for investors going forward, he said.

Related: Dream beach houses for sale

For boomers, who were born between 1945 and 1964, retirement-friendly markets in Florida are predictably hot, RealtyTrac found. Some local markets have seen their boomer populations grow by 20% or more since 2007.

The Tampa-St. Petersburg-Clearwater, Fla. metro area topped the list among markets where rentals to boomers are... well, booming.

Millennial markets, on the other hand, were scattered throughout the nation. RealtyTrac cited the Baltimore, Philadelphia, Jacksonville, Fla. and Atlanta metro areas as leading rental markets for this age group.

Several smaller markets are also good Millennial bets such as Fayetteville, N.C. and Virginia Beach/Newport News City, Va.

First Published: July 3, 2014: 3:41 AM ET

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Jamie Dimon diagnosed with cancer

NEW YORK (CNNMoney)

The prognosis from doctors is "excellent" and it was caught quickly, he wrote in a memo to colleagues and shareholders.

Dimon, 58, will receive radiation and chemotherapy treatment over the next eight weeks at Memorial Sloan Kettering Hospital in New York. Although he will curtail his traveling, the bank CEO expects to be actively working during that period.

He made the announcement just before he was about to leave on a previously scheduled trip to five European countries, said spokesman Joe Evangelisti. That trip is now canceled.

"I feel very good now and will let all of you know if my health situation changes," Dimon wrote.

Related: JPMorgan earns $5.3 billion despite legal woes

Dimon previously was president of Citigroup, then chairman and CEO of Bank One Corporation. He joined JPMorgan (JPM) in 2004 through a merger and was named CEO and president in 2006. He successfully steered the bank through the economic downturn.

He was criticized for his handling of the $6 billion London Whale trading loss. The bank had to pay about $1 billion in fines to U.S. and UK regulators for not properly overseeing its traders related to that loss.

JPMorgan also reached a massive $13 billion settlement last fall over allegations it, and two banks it purchased, misrepresented mortgage-backed securities, which played a major role in triggering the crisis.

Dimon saw a pay cut in 2012 because of that issue, but his pay was bumped up again last year. He received $18.5 million worth of restricted stock on top of his $1.5 million base salary.

--CNNMoney's Poppy Harlow contributed to this report

First Published: July 1, 2014: 7:13 PM ET

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The world's worst tax return?

HONG KONG (CNNMoney)

As they crisscross the globe, IRS rules require expat American pilots to record exactly how long they're flying over the U.S., foreign countries and international waters. Once they land, the pilots have to track exactly when they're working, and when they're off the clock.

Here's why: If they ever face an IRS audit, the pilots will have to prove -- using flight plans or other documents -- exactly how much money they've earned in each jurisdiction, on land or in the air.

For this small slice of the American population, following the IRS rules to the letter means a tax headache that lasts 365 days a year.

"It's insane," said a Hong Kong-based airline pilot, who asked to remain anonymous over fears he would lose his job. "On every flight, I have to log the time I'm over foreign countries, and the time I'm over international waters and the U.S."

In fact, anyone who works abroad on a plane or a ship -- flight attendant, merchant mariner or cruise ship dancer -- can be required to produce those records.

"The IRS wants to see how much of the pilot's time was spent over international waters and in the U.S.," said Sue Folkringa, an accountant at Wolcott & Associates, a firm that specializes in aviation taxes. "Typically, the pilot will have to go through their flight records -- not a welcome task."

Related story: U.S. expats cry foul over tax system

Unlike most countries, the U.S. requires its citizens living abroad to file and pay taxes each year. Since expats already pay local taxes, the IRS grants an exemption on the first $97,600 earned in a foreign country.

But here's the catch -- the U.S. government says money made working in or over international waters doesn't count as foreign income.

Take the example of an American expat pilot who flies a 13-hour direct route from Hong Kong to Los Angeles.

Money made during the three flying hours over Asia qualifies as foreign income, but payment earned during the remaining 10 hours over the Pacific Ocean does not. This means the pilot is liable for U.S. tax on about 77% of earnings during that flight.

"Every flight I go on, 12 months a year, I have to sit there and take notes," the Hong Kong-based pilot said. "It just doesn't make sense."

The pilot said he pays an accountant $1,300 a year to prepare his 60-page tax return, because the laws are just too complex.

Related story: 3,000 Americans ditch their passports

Folkringa said that while it's up to the pilots to keep records, many don't know they have to until they're targeted by an IRS audit.

The regulations are so obscure that some tax professionals don't even know they exist. Even for specialists, there are plenty of gray areas.

Accountants, for example, say that the U.S. definition of "international waters" is far too vague -- and even contradictory.

Lack of clarity leads some accountants to conclude that international waters begin three miles off the coast, while others say the boundary starts 200 miles offshore. The pilots, meanwhile, are expected to keep track of every entry and exit with pinpoint accuracy.

Related story: Banks lock out Americans over new tax law

The IRS did not respond to a request for comment, but the agency website does have some tips. One guide encourages individuals to obtain flight or ship plans in order "to plot the geographical points and determine the actual planned time spent flying over foreign countries."

"Who has that kind of calculation capability at their fingertips?" asked Folkringa.

Vincenzo Villamena, managing partner of Online Taxman, recalled one particularly difficult IRS audit -- his client was working on a Maersk cargo ship hijacked in 2009 by Somali pirates.

Needless to say, the kidnapping made it hard to prove when the sailor was in international waters. (The incident was later turned into a movie called Captain Phillips, starring Tom Hanks).

"It was like, 'Come on, don't you have any sympathy?'" Villamena said. "He was working, and then he wasn't working -- he was kidnapped."

First Published: July 1, 2014: 10:54 PM ET

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Stocks: 5 things to know before the open

Click chart for in-depth premarket data.

LONDON (CNNMoney)

Here are the five things you need to know before the opening bell rings in New York.

1. More records in sight: U.S. stock futures were looking steady Wednesday, leaving investors guessing whether the Dow Jones Industrial Average and S&P 500 could move on to new all-time highs.

U.S. stocks were on fire Tuesday. Both the Dow and S&P 500 broke records while the Nasdaq closed 1.1% higher.

The CNNMoney Fear & Greed index is currently pointing to 'extreme greed'.

Related: The 5 top performing stocks from the first half of 2014

2. Economic data to watch: There's a handful of economic data releases due Wednesday morning. The most influential could be the ADP employment report for June due at 8:15 a.m. ET, providing a preview to Thursday's jobs figures.

"While the report's ability to foreshadow non-farm payrolls readings are highly inconsistent from month to month, traders still look to the print to set the tone ahead of the official jobs figures' publication," said Ilya Spivak, a currency strategist at DailyFX.

Then at 10 a.m., the U.S. government will report the monthly change in factory orders for May.

3. Yellen speaks, markets listen: The head of the Federal Reserve, Janet Yellen, will be speaking at the International Monetary Fund at 11 a.m. Investors will be watching for clues as to how long the Fed will wait to raise interest rates once its bond-buying program ends later this year.

4. Potential stock movers -- JPMorgan, AbbVie: Investors will be watching JPMorgan (JPM) shares after CEO Jamie Dimon announced he was diagnosed with a curable throat cancer. He will continue working as he undergoes treatment.

Shares in the pharmaceutical firm AbbVie (ABBV) were volatile in premarket trading. The company has been looking to take over rival Shire (SHPG) in the U.K. but has faced continued resistance from Shire's management.

Related: The 5 worst performing stocks from the first half of 2014

5. International markets overview: European markets were mixed in early trading.

All the major Asian markets ended with gains, taking their cue from Wall Street's record-setting run Tuesday.

First Published: July 2, 2014: 5:03 AM ET

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Hobby Lobby ruling won't actually impact small biz

NEW YORK (CNNMoney)

On Monday, the Supreme Court ruled that "closely-held" for-profit corporations (those that are majority owned by five or fewer people) can be granted religious exemptions from certain contraceptive coverage (such as IUDs and the morning-after pill) required under the Affordable Care Act.

Hobby Lobby is by no means a small business -- it has nearly 600 stores and some 13,000 employees. But the Supreme Court's description of "closely held" companies calls into question how far the ruling might extend.

Seventy-eight percent of small businesses are family-owned, according to LIMRA, an insurance trade research firm -- but only 2% of small businesses have 50 or more employees. This is key to the Hobby Lobby decision because any business with fewer than fifty employees is already exempted from the health insurance mandate under the Affordable Healthcare Act.

Of that 2%, businesses would have to prove a "sincere" religious belief in order to be exempt. While it's unclear how the sincerity will be tested (or how many businesses might make this claim), it's unlikely to be in most companies' best interests to go that route.

Related: Hobby Lobby does invest in birth control

The actual cost of the contraception to employers is relatively minimal. According to 2011 report from the Actuarial Research Corporation (which used data from 2010) the corporation's estimated annual cost, as part of an insurance plan, is $26 per enrolled female. This amount includes all contraception, like standard birth control pills, which was not disputed in the Hobby Lobby case.

"From a purely economic perspective, [unintended pregnancies are] going to cost me and my insurance provider a lot more than birth control costs," said Jim Houser, owner of Hawthorne Auto Clinic in Portland, Ore., and executive board member of the Main Street Alliance.

He employs eleven workers -- four of whom are women -- and provides them with complete coverage despite not being legally obligated to do so.

"But, that's not my decision to make," added Houser. "Businesses have absolutely no business being involved in the personal relationships of any employee -- especially with a woman and her doctor."

Related: Who will be affected by Hobby Lobby ruling?

Houser isn't the only one questioning the Supreme Court's decision. Laurie Sobel, senior policy analyst with the Kaiser Family Foundation, said there are still a lot of questions that need to be answered by the Department of Health & Human Services: How will the new exemption be enforced? Will companies self-certify (as nonprofits do) or will there be some sort of test to determine the sincerity of a company's religious beliefs?

There are also serious concerns about what this might mean for businesses that object to other aspects of health coverage. Justice Ruth Bader Ginsberg raised many of them in her vehement opposition.

"Would the exemption...extend to employers with religiously grounded objections to blood transfusions (Jehovah's Witnesses); antidepressants (Scientologists); medications derived from pigs, including anesthesia, intravenous fluids, and pills coated with gelatin (certain Muslims, Jews, and Hindus); and vaccinations ?" she wrote.

"The court, I fear, has ventured into a minefield," Ginsberg added.

Correction: An earlier version of this article misstated the contraceptive coverage allowed under religions exemptions.

First Published: July 1, 2014: 6:37 PM ET

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