The Trade Secrets Homepage - Espionage Act of 1996

Patrick Worthing worked at PPG Industries, Inc. under a contract with Affiliated Building Services as the supervisor of a maintenance crew at one of PPG's research and development facilities. Patrick Worthing, with access to every office, surreptitiously collected diskettes, blueprints and other types of confidential research information from PPG Industries. The indictment was based on an FBI sting operation prompted by a letter Patrick Worthing wrote to Owens-Corning, a PPG rival attempting to sell the proprietary PPG information.

Patrick Worthing and his brother, Daniel Worthing, were indicted under the Economic Espionage Act, 18 U.S.C. Sections 1832(a)(1), (3) and (5). Patrick Worthing pled guilty on 2/27/97 to theft of trade secrets and was sentenced on June 5, 1997 to 15 months in jail, 36 months supervised release.

Daniel Worthing, who reportedly agreed to help his brother the night before for $100,000 pled guilty on 1/31/97 to conspiracy to possess and deliver trade secrets and was sentenced on 4/18/97 to 60 months probation and 6 months home confinement.

2. United States of America v. Kai-Lo Hsu, et al., Criminal No. 97-CR-323,97- 1965 (E.D. Pa. July 10, 1997).

This case involved the alleged theft of trade secrets relating to Bristol-Myers' anti-cancer drug Taxol. Specifically, the trade secrets related to a new process for the production of Taxol by genetic engineering. According to published reports, Kai-Lo Hsu (a technical director for Taiwan's Yuen Foong Paper Co.) and Chester S. Ho (a biochemist and professor at a Taiwan university) were arrested on June 14 during an FBI sting operation at the posh Four Seasons Hotel in Philadelphia. The secret meeting was arranged by a "technology information broker" who was accompanied by a person posing as a corrupt Bristol-Myers' scientist.

The indictment alleged that Kai-Lo Hsu and Jessica Chou agreed to initially pay $400,000 for the Taxol technology. Chester S. Ho was apparently at the June 14 secret meeting to verify the value of the secret Taxol technology. According to published reports, Jessica Chou is believed to be in Taiwan which does not have an extradition treaty with the United States. Yuen Foong Paper Co. reportedly called the charges "completely groundless and untrue" and the company is still under investigation for possible indictment under the Economic Espionage Act of 1996.

According to the U.S. Attorney's Office in Philadelphia, the case originated with an FBI sting operation set up in 1994 to act as a "technological information broker."

The indictment involves 18 U.S.C. Section 1832(a)(4) (attempted theft of trade secrets) and 18 U.S.C. Section 1832(a)(5) (conspiracy to steal trade secrets). On July 10, 1997, FBI Director Louis J. Freeh issued a press release after the indictments were returned in Philadelphia commending Bristol-Myers Squibb for their commitment to work with the FBI and the U.S. Attorney's Office to successfully thwart attempts by foreign business interests to steal these extraordinarily valuable trade secrets:

"Economic espionage is estimated to be a multi-billion dollar threat to American business and industry, costing significant losses of jobs and competitiveness as a result of sophisticated efforts to steal trade secrets and other proprietary information. Congress wisely created a powerful new statute that allows the FBI and industry to form strong alliances against economic theft and international economic espionage. This Act, enacted last year by Congress, significantly strengthens our ability to work with industry to safeguard valuable information and prosecute those, either domestic or foreign, who steal valuable trade secrets."

"The unflinching pursuit of this investigation by the U.S. Attorney's Office and the Philadelphia FBI signals FBI's commitment to use this new law to help industry protect against ruthless predators, both domestic and foreign, who steal trade secrets to the great detriment of American businesses and jobs." On March 31, 1999, Kai-Lo Hsu pled guilty to one count of conspiracy to commit trade secret theft; sentenced 7/13/99 (Time served plus probation; $10,000 fine). All other counts against him were dismissed. The government dropped all charges against Chester S. Ho.

3. United States of America v. Pin Yen Yang et. al., Criminal No. 97 CR 288 (N.D. Ohio September 4, 1997).

Pin Yen (P.Y.) "Pat" Yang, 70, and his daughter, Hwei Chen "Sally" Yang, 39, were arrested by FBI agents on September 4, 1997 at Cleveland Hopkins International Airport. They were traveling to New York to see the U.S. Open tennis championship. According to published reports, hours earlier, closed-circuit television recorded Pin Yen Yang taking out a small pocket knife and cutting off a portion of the cover page marked "confidential" and "Property of Avery Dennison Corp." from documents he had just been given at the Westlake Holiday Inn.

Both defendants are charged with mail and wire fraud, conspiracy to steal trade secrets, money laundering and receipt of stolen goods from the Avery Dennison Corporation facility in Concord, Ohio. 18 U.S.C. Section 1832. Also 18 U.S.C. Sections 1341, 1343, 1956, 2315. P.Y. Yang is the president of Four Pillars Enterprise Company, LTD, of Taiwan which has more than 900 employees and annual revenues of more than $150 million. Four Pillars manufactures and sells pressure-sensitive products mainly in Taiwan, Malaysia, Singapore, the United States and the Peoples Republic of China.

Hwei Chen Yang is a corporate officer involved with research and development at Four Pillars. She is believed to hold dual citizenship in the United States and Taiwan.

Avery Dennison, based in Pasadena, California, is one of the nation's largest manufacturers of adhesive products which include postage stamps and mailing labels. The company employs some 16,000 people world-wide.

According to published reports, Ten Hong Lee, an Avery Denison researcher at Avery's manufacturing complex in Concord Township, Ohio confessed to giving Four Pillars "highly sensitive and valuable proprietary manufacturing information and research data" since 1989 and reportedly was paid over $150,000 (over eight years) by Four Pillars as a "consultant." To conceal the scheme, arrangements for payment were made through Lee family members in Taiwan.

The Cleveland Plain Dealer reported on October 12, 1997, that in an earlier FBI sting operation, Ten Hong "Victor" Lee attended a meeting at Avery Denison in January, 1997 where he and others were told of a binder containing confidential information on Avery's plans for the Far East. Closed-circuit TV later showed Lee three times gaining access to the file drawer where the binder was kept, once wearing gloves when he removed it from the office for a few minutes. Confronted by FBI agents in March 1997, Lee admitted he had been providing confidential information to Four Pillars. Thereafter, Lee pleaded guilty to wire fraud, turned over to the FBI a "trove" of Avery Denison documents, and cooperated in an undercover capacity with the FBI leading to the arrest of the Yangs on September 4, 1997.

Federal prosecutors estimate that the research and development costs expended by Avery Dennison to develop the information obtained by the defendants could exceed between $50 million and $60 million.

The case has been tried to a jury in Federal District Court in Cleveland. Closing arguments were had on Friday, April 23, 1999. U. S. Assistant Attorney Marc Zwillinger argued to the jury in closing arguments that P.Y. Yang, chief executive of Taiwan-based Four Pillars Ltd. and his daughter, Hwei Chang "Sally" Yang "knew Avery Dennison was a world leader in the adhesive industry" and paid an Avery Dennison Corp. employee (Ten Hong "Victor" Lee) to steal Avery Dennison's confidential and proprietary information.

According to the Plain Dealer (Saturday April 24, 1999), to bolster arguments that the Yangs and their company intentionally stole Avery Dennison's proprietary information, prosecutors replayed portions of a tape showing the Yangs clipping confidential stamps and Avery Dennison logos off papers delivered by Lee to the hotel room in September 1997.

The Yangs did not testify at the trial and the Yangs' lawyers argued that their clients never asked Lee to steal his employer's trade secrets and that the engineer took them on his own.

Deliberations in the case were scheduled to begin on Monday, April 26, 1999. Jurors in Federal court in Youngstown deliberated for about 18 hours over three days before finding P. Y. Yang, chief executive of the Taiwan-based Four Pillars Ltd., and his daughter, Hwei Chang Yang, guilty of economic espionage. Four Pillars itself was also convicted on the espionage charges. The Yangs were acquitted of mail fraud charges.

According to Asianet (April 29, 1999), Avery Dennison issued a statement after the guilty verdict: "There was never any doubt in our minds that the evidence of illegal activity by Four Pillars was overwhelming."

U.S. District Judge Peter C. Economus fined Four Pillars Enterprises Ltd. $5 million and sentenced Pin Yen Yang, 73, the company's former chief executive, to six months of home confinement and a $250,000 fine. His daughter, Hwei-Chen ``Sally'' Yang, 41, a former Four Pillars executive, was fined $5,000 and received one year of probation.

Pin Yen Yang apologized at his sentencing and said it was not his intention to steal trade secrets. `I'm deeply sorry for what I've done,'' Yang said. Federal prosecutors objected that no prison time was imposed. "Is the message, If you steal information from your competitor, you'll be given a probationary term?" Assistant U.S. Attorney David Green said.

Attorneys for both companies declined to comment because Avery Dennison's civil lawsuit against Four Pillars is scheduled for trial Monday (January 10, 2000) in U.S. District Court in Cleveland.

According to published reports, on February 4, 2000, a Cleveland jury in the civil trial returned a verdict awarding Avery Dennison $10 million for trade secret misappropriation, $10 million for RICO violations, $10 million for conversion, and $30 million in punitive damages. The Sixth Circuit Court of Appeals on Wednesday, February 20, 2002, ruled that Judge Peter C. Economus failed to explain why he gave the two executives (Pin Yen Yang, former chief executive of Four Pillars and his daughter, Hwai-Chen "Sally" Yang) relatively light sentences while fining the company (Four Pillars Enterprises Co. Ltd.) the maximum amount allowed by law ($5 million). The case was remanded for resentencing.

4. United States of America v. Steven Louis Davis, Criminal No. 97-00124 (M.D. Tenn. 1997).

Steven L. Davis was a process control engineer for Wright Industries, Inc. in Nashville, Tennessee. In the summer of 1996, the Gillette Company retained Wright Industries, Inc. to assist in the development of Gillette's next generation of razor systems. Davis was assigned to be the lead process control engineer on the Gillette Project and he executed a Confidentiality Agreement. According to the grand jury indictment, Wright Industries, Inc., at Gillette's request, removed Davis as the lead process control design engineer in late September, 1996.

Thereafter, according to the grand jury indictment, Davis sent highly confidential engineering drawings relating to the Gillette Project to Gillette's competitors, including Bic Corporation, American Safety Razor, and Warner Lambert, in violation of 18 U.S.C. Sections 1832 (a)(2) and (3).

Davis contacted Gillette's competitors by facsimile and E-Mail using anonymous names "Melinda Ivy" and "Carl Brown" and the computer handles "PSDUMC" and "carl.brown." Davis also represented, in soliciting further interest, that he had 600 "megs" of Gillette's product drawings, equipment drawings and assembly drawings relating to Gillette's next generation of razor systems. In addition to violation of the EEA, Davis was also charged with wire fraud pursuant to 18 U.S.C. Section 1343.

Davis pled guilty on January 26, 1998 to all five counts and was sentenced on April 17, 1998 to 27 months imprisonment, 3 years supervised release. In addition, David was ordered to pay restitution of $508,575 to Gillette and $726,576 to Wright Industries.

5. United States of America v. Mayra Justine Trujillo-Cohen, Criminal No. H- 97-251S (S.D. Texas 11/14/97).

The U. S. Attorney's Office in Houston, Texas brought a two-count indictment under the EEA alleging the theft of trade secrets against Mayra Justine Trujillo-Cohen, a former employee of Deloitte & Touche. Ms. Trujillo-Cohen was a former consultant for Deloitte & Touche.

According to the grand jury charges, when she left Deloitte & Touche, Ms. Trujillo-Cohen took a proprietary software program called the "AFRONT for SAP" program. Apparently, Ms. Trujillo-Cohen thereafter allegedly deleted references to Deloitte & Touche and resold the program (or portions of the program) to a third-party company for profit. The third-party company was not indicted. Mayra Justine Trujillo-Cohen pled guilty to one count of theft of trade secrets and one count of wire fraud on July 30, 1998.

Ms. Trujillo-Cohen was sentenced on 10/26/98 to 48 months imprisonment, 3 years supervised release, $337,000.00 in restitution and a $200.00 special assessment.

6. United States of America v. Carroll Lee Campbell, Jr. ("Athena"), 98-CR- 059 (N.D. Georgia 2/25/98).

Carroll Lee Campbell, Jr., former Circulation Manager of the Gwinette Daily Post, his wife Susan Campbell, and Paul Edward Soucy, former District Circulation Manager of its sister paper, The Rockdale Citizen, were arrested by FBI agents on February 6, 1998 after they allegedly offered to sell marketing plans and subscription lists to the Atlanta Journal-Constitution for the sum of $150,000.

In September 1997, there was ongoing litigation between the Atlanta Journal-Constitution and the Gwinnett Daily Post newspaper relating to a dispute involving the legality of 34,000 paid newspaper subscriptions relating to a contract between the Gwinnett Daily Post newspaper and a cable TV operator. Carroll Lee Campbell, Jr. was a circulation manager for the Gwinnett Daily Post newspaper. Using the alias -- "Athena" --Campbell sent a letter to the attorneys representing the Atlanta Journal-Constitution (and to business representatives of the Atlanta Journal-Constitution) in September, 1997 offering to provide the Cable Equities Agreement and other proprietary financial and business information to the Atlanta Journal-Constitution's lawyers to assist them in the lawsuit against the Gwinnett Daily Post newspaper. The offering price for this information was $150,000.

If the Atlanta Journal-Constitution was interested, "Athena" instructed the newspaper to place an ad in the "Personals" section of the newspaper. The FBI was contacted and a sting operation was set up. In December, 1997 the Atlanta Journal-Constitution's lawyers, in cooperation with the FBI, placed and ad in the "Personals" section entitled "Message to Athena." Thereafter, there were further communications with "Athena" who demanded that the Atlanta Journal-Constitution's lawyers "show me the money." Arrangements were made with an undercover FBI agent to meet "Athena" at a local shopping center to exchange an initial payment of $5000 (delivered in $100 bills) in exchange for an initial sample of the proprietary information. The rest of the money would then be paid later in exchange for the rest of the proprietary information.

After Carroll Lee Campbell obtained the $5000, Susan Campbell allegedly gave $1500 of the money in $100 bills to Paul Edward Soucy (a circulation manager for the sister Rockwell Citizen newspaper). Carroll Lee Campbell also allegedly attempted to obtain additional trade secret information including a circulation list that he offered another employee $300 to obtain. Published reports also indicate that Soucy was acting as a "lookout" for "Athena" at the local shopping center meetings.

Mr. Campbell pled guilty on 5/27/98 to conspiracy to steal trade secrets and was sentenced on 8/25/98 to 3 months imprisonment, home confinement for 4 months with electronic monitoring detention, 3 years supervised release, $2800 restitution, $100 special assessment. Apparently, the charges against Susan Campbell were dismissed.

Prologue: (The following E-mail was received from Carroll Lee Campbell, Jr. on April 30, 2002.

"Although my ex wife Susan Campbell was indeed indicted on conspiracy charges (mainly to get myself to cooperate with the Feds) those charges were eventually dropped because Susan did not know the source of the $1500 she gave to Paul Soucey. She thought it was a personal loan from me to Paul for "home improvements". Paul Soucey (becoming a federal witness) had only told the FBI that he was paid $1500 by Susan. Therefore implicating her. She was an innocent party. Also... as a final follow up I was sentenced to 3 months (90 days) in the Federal Penitentiary in Atlanta and 4 months on "in house" electronic monitored arrest with 3 years supervised probation in which I was released early after serving only 2 years. While the federal judge was mandated by sentencing guidelines... I won most of my presentencing motions as the judge saw that my reason for "theft of trade" secrets was not motivated by greed as the government tried to indicate but rather it was to hire professional help for my autistic twins (re: Speech therapists, occupational therapists etc.) I found Federal Judge Orinda Evans an island of reason after dealing with the tumultuous sea of FBI and prosecutors, and Judge Evans was sympathetic while following the mandatory sentencing guidelines. Since my release from prison, Susan and I have divorced, I have become a publisher of a newspaper in Oklahoma and own my own newspaper consulting company specializing in 3rd party paid newspaper circulation. I have raised thousands of dollars for the Oklahoma National Memorial on behalf of the Oklahoma Press Association and sat next to then President Bill Clinton at its dedication in 2000, and I received the Habitat For Humanity Award in Atlanta for getting large corporate sponsors to support inner city reading programs through Project Read, and raised thousands of dollars for the victims of the May 3rd tornado that ravaged Oklahoma City in 1999. The irony of the whole incident is that had I not asked for money... I would have been a hero for exposing the Gwinnett Daily News' fraudulent "paid" circulation. But since I asked for remuneration....(for whatever reason)….I became a "corporate spy". It is my understanding that Gray Inc., (parent company of the Gwinnett Daily News) had to purchase the cable company or else they would've been prosecuted of defrauding advertisers. In conclusion... A mistake does not define me as a human being. It was just a mistake. Thank you for allowing me to sound off. C. Lee Campbell II."

7. United States of America v. Huang Dao Pei, Criminal No. 98-CR-4090 (D. N.J. July 27, 1998).

The FBI arrested a former scientist at Roche Diagnostics in August, 1998 in New Jersey on charges he tried to steal trade secrets for a hepatitis monitoring kit he hoped to sell in China.

Huang Dao Pei, a Chinese-born naturalized U.S. citizen living in Piscataway, N.J., allegedly tried to buy information from a scientist who worked for Roche. The scientist was cooperating with the FBI in a sting operation and secretly tape-recorded Huang.

Huang told the Roche scientist that he needed to get information about Roche's hepatitis C diagnostic testing kit so his firm, LCC Enterprises, could develop a similar kit and sell it in China, prosecutors say. Huang worked for Roche from 1992 to 1995.

Huang Dao Pei was released on a $100,000 bond pending trial.

8. United States of America v. David T. Krumrei, 98-80943, 98-00300 (D. Hawaii 5/14/98).

Indictment filed on May 14, 1998. Wilsonart International, Inc., located in Temple, Texas, produces laminates used to manufacture furniture, kitchen and bathroom countertops, residential floors and other items used in the construction of residential and commercial buildings throughout the world. In 1995, Wilsonart retained the services of Vactec Coatings, Inc/Robert Amis to use a planar magnetron sputter coating machine to conduct certain R&D tests for Wilsonart. In turn, Vactec retained another Michigan company (Federal Industrial Services, Inc.) to assist Mr. Amis with the planar magetron sputter coating machine tests. David Krumrei was hired by Federal Industrial Services and in this position obtained access to Wilsonart's trade secret technology. Wilsonart then worked with the FBI to set up a sting operation by arranging a meeting with Krumrei in Hawaii to exchange he information and money. Krumrei was arrested at that meeting and charged under the EEA. The case has since been transferred to the U.S. District Court for the Eastern District of Michigan.

Thereafter, David Krumrei telephoned a Wilsonart competitor in Australia (CSR Limited)--apparently from Hawaii--and advised CSR Limited that-- in return for employment in Australia--that he could provide CSR Limited with the unique formula for surface coating that Wilsonart had developed. Thereafter, CSR Limited (Henry Pens--Executive General Manager) contacted Wilsonart and offered to do everything possible to assist Wilsonart in protecting their trade secrets. David Krumrei pled guilty on July 27, 1999. The Rule 11 Plea Agreement provided that any sentence of incarceration would not exceed 30 months. On November 18, 1999, David Krumrei was sentenced to two years imprisonment, $10,000 restitution, $100 special assessment.

9. United States of America v. Caryn L. Camp and Stephen R. Martin, 98-48-P- H (D. Maine 9/16/98).

Caryn L. Camp, 31, of Portland, Maine developed a relationship on the Internet with Stephen R. Martin of Sonoma, California according to published reports. An E-mail note from Camp to Martin was inadvertently misdirected to a Idexx co-worker and stated as follows: "They know I've been stealing, so-to-speak, from the company and sending information to someone. Can I go to jail for this? I am so scared." According to prosecutors, Camp used E-mail, the postal service and commercial carriers to send proprietary Idexx documents, including laboratory notebooks, customer lists, sales reports, and other information to Stephen Martin.

The two initially became acquainted when Martin applied to Camp for a job via the Internet. Thereafter, an Internet relationship developed, and according to published reports, Martin told Camp she was the type of person he would like to hire, that her efforts would be "richly rewarded" and that "you may become CEO yourself."

Martin wrote further to Camp that if his company were successful in marketing a veterinary diagnostic test similar to the one marketed by Idexx that "we'll give you enough bonus money to buy your own house in cash. Maybe on a lake." Both have been indicted and pled innocent. Martin's two companies, Dna Vaccine and Maverck Technologies, had no employees or assets. No Idexx trade secrets ever reached Idexx competitors. According to published reports, Caryn was "a very lonely and isolated person." Apparently the two met just shortly before they were arrested in Denver, Colorado. Camp allegedly realized then that Martin was not a successful businessman -- but a dreamer -- when he showed up with a long beard, in tie-died clothes, driving a VW van.

Caryn L. Camp, 33, pled guilty to 15 counts on July 22, 1999 and agreed to testify on behalf of the government against Martin. Camp was sentenced on 12/17/99 to 3 years probation, $7,500 restitution, $1,500 special assessment. On August 16, 1999, after a day and a half of deliberations, the jury returned a guilty verdict on 8 of 15 counts, including mail fraud, wire fraud, conspiracy to steal trade secrets and conspiracy to transport stolen property.

Stephen Martin of stealing trade secrets from Idexx Laboratories. The Associated Press (8/17/99) reported that the panel of eight women and four men found Martin guilty of four counts of wire fraud, two counts of mail fraud, and one count each of conspiracy to steal trade secrets and conspiracy to transport stolen goods. (Martin was acquitted of six counts of wire fraud and one count of interstate transportation of stolen goods). Martin, 52, said he was shocked by the verdict but would not elaborate.

The evidence at trial portrayed Martin manipulating Caryn Camp to send him secrets about Ivexx to start a competing company and Caryn Camp would be rewarded for her spying. In separate E-Mails, he promised her a position in the new company...and later wrote "you may become the CEO yourself." In contrast, defense lawyer William Schaffer portrayed Stephen Martin and Caryn Camp as "two lonely people" alleging that no real trade secrets ever changed hands.

Assistant U.S. Attorney Toby Dilworth showed jurors a notebook with 250 e- mails most of which passed between Camp and Martin. In one E-Mail, Martin wrote: "I never had a spy before. We are going to be in the veterinary business big time." The relationship between Camp and Martin ended after Camp accidentally sent an E-Mail intended for Martin to a co-worker. She was fired shortly afterward. Later she learned that Martin was not a successful entrepreneur but a dreamer who lived with his mother and drove a VW van.

According to the Associated Press (July 23, 1999), Camp wrote in a July, 1998 e-mail to Martin: "Aren't I awful? I like this spying business way too much." "They know I have been stealing, so to speak, from the company and sending info to someone. Can I go to jail for this? I'm so scared" reads the e-mail that was mis-directed to a co-worker the day Camp was planning to resign from Idexx. Camp had worked there three years as a chemist and technical service representative. Camp first came in contact with Martin when she e-mailed her resume to the website of Wyoming Dna Vaccine, a fledging business in which Martin had no ownership interest.

Court records show that Martin asked about Idexx's prices, the nature of Idexx's test kits and other questions about the proprietary aspects of Idexx's business. Camp's attorney, Thomas Connolly, stated that Camp decided to change her plea to guilty based upon more that 200 e-mail messages found in her computer. Martin's attorney argued that Martin and Camp were Pen-pals" and the e-mails were taken out of context. For example, Martin's attorney argued that the e-mail ("I never had a spy before") should not be taken literally and "merely reflects the playful hyperbolic communication style of both Camp and Martin."

Martin had been living with his mother at a mobile home retirement community when he was arrested and all of his "research" was impounded last year. "I didn't think about the use of certain terms in my e-mail...we were pen-pals." Martin said. However, the Associated Press reports that box loads of documents and e-mails changed hands including pages from laboratory notebooks, an internal Idexx product study, customer lists, and documents about Idexx's competitors in the business of making diagnostic equipment for veterinarians.

The Associated Press (December 22, 1999) reports that Martin had five college degrees including a doctorate in immunology from the University of California at Berkeley but has earned his living with occasional logging, roofing and woodworking jobs. He has applied for several patents but has not come up with the cash necessary for clinical tests on his theories. "I'm a bio-nerd," Martin says. "I am not a freak, I am not crazy, my heart is in the right place." Martin must report to prison on January 20, 2000, according to Assistant U.S. Attorney Toby Dilworth.

On December 20, 1999, Martin was sentenced to 366 days imprisonment, 3 years supervised release, $7,500 restitution, $800 special assessment.

On March 18, 2002, the San Francisco Chronicle reported that Stephen Martin is not angry about being only the second person brought to trial under the Economic Espionage Act of 1996 and he is not pleased about the year he spent in federal prison as a convicted industrial spy. However, the thing that "gets Martin's bacon sizzling" is that people still have a totally cavalier attitude about E-mail. "They think they can say anything in an e-mail," he told (reporter David Lazurus). "People don't realize the horrible things that can happen."

10. United States of America v. Steven Hallsted and Brian Pringle, Criminal Case No. 4: 98M37 (E.D. Texas 2/26/98).

Using an Internet ad, Pringle and Hallstead allegedly advertised the availability of these five prototype Intel CPUs. Working with the FBI, Cyrix and Intel arranged for Pringle and Hallstead to being the CPUs to the Cyrix location in Texas for Cyrix personnel to inspect and hopefully purchase. One of the CPUs were identified as the five stolen from Intel in California, Hallstead and Pringle were arrested.

Pringle pled guilty on 6/2/98 to conspiracy to commit theft of trade secrets. On July 15, 1998, Hallsted pled guilty to conspiracy to commit theft of trade secrets.

On December 4, 1998, U.S. District Judge Paul Brown sentenced Steven Craig Hallstead, 29, to 77 months imprisonment and $10,000 restitution. Brian Russell Pringle, 34, was sentenced to 60 months imprisonment and $50,000 restitution.

11. United States of America v. John Fulton, Criminal Case no. 98-059 (W.D. Penn. 1998).

John Fulton, a former employee of Joy Mining Machinery Inc., was charged with attempting to buy proprietary schematic designs for an MS-14 model of a chock interface unit, an electronic switchbox that operates of a coal mining machine known as a longwall shearer, produced by Joy Mining.

Fulton pled guilty on 4/17/98 to theft of trade secrets. Before sentencing Fulton on November 13, 1998, U.S. District Judge Donetta W. Ambrose noted that Fulton had tried to recruit a Joy employee as an industrial spy. In his guilty plea, Fulton admitted to offering the worker $1500 for proprietary information. Fulton was sentenced to 12 months home detention and 5 years probation.

12. United States v. David Sindelar Criminal Case No. 98-2000-70-01-EEO (District of Kansas 10/16/98.)

Theft of proprietary information from employer (Preco). Information filed on 10/16/98. The Defendant pled guilty on 10/16/98 to one count of theft of international trade secrets and was sentenced on March 1, 1999 to 5 years probation; $16,618.35 restitution, $10,000 fine, $100 special assessment.

13. United States v. David B. Kern 99 CR 15 DFL (E. D. Calif. 3/5/99).

The indictment was filed on March 5, 1999. The indictment alleges that David Kern copied proprietary information from a laptop computer inadvertently left by a service technician for Varian Medical Systems, Inc. at a hospital where Mr. Kern serviced the million-dollar cancer treatment Varian machines for a competitor (Sacramento-based Radiological Associates). "In the course of misappropriating Varian's trade secret, the defendant copied files from the Varian service technician's laptop after hooking it up to his own desktop computer using a Laplink program." David Kern commenced a wrongful termination suit against Radiological Associates after he was fired (June 1995) and then Varian entered its appearance and filed a cross-complaint against Kern for trade secret misappropriation (which occurred in October 1996).

Further details of the case were provided by Russ Atkinson (now Senior Manager for Netscape, AOL West) at the recent High Technology Crime Investigation Association (HTCIA) International Conference in Chicago.

David Kern's deposition was taken in the civil action. During the deposition, Kern admitted that the Varian files which he copied to his desktop computer were proprietary. When then asked whether he had permission to copy the files, his lawyer in the civil case advised Kern to "take the Fifth Amendment." and he refused to answer the question. The civil deposition was videotaped under oath and the transcript was subsequently turned over to the FBI. Apparently, Kern had also obstructed civil discovery by refusing to turn over his computer files for inspection and copying.

The FBI then commenced an investigation and grand jury subpoenas were issued for David Kern's computer. Thereafter, Varian's technicians, at the request of the FBI, reviewed the contents of the recovered files, identified the theft of proprietary information, and provided original copies to the FBI. Thereafter, in the civil suit, the trial court awarded sanctions barring Kern's testimony and evidence for failure to comply with civil discovery requests and entered summary judgment awarding Varian $3.5 million in damages. In the criminal action, a pre-indictment plea agreement was worked out, but Kern reneged, his attorney was fired, and Kern was thereafter indicted on March 5, 1999.

On October 25, 1999, the Los Angeles Times quoted Russ Atkinson, a former FBI special agent and legal advisor who was second in command of the FBI's high-tech task force in San Jose, California. Atkinson cited the $3.5 million civil judgment stating that the man might never have been caught if he hadn't bragged of his deed to associates who notified Varian. The engineer is now awaiting criminal trial which would be the first criminal prosecution under the EEA in California.

Ms. Kathy Dunlap, a Radiological director, has acknowledged in the press that "We did contact Varian because we had questions about the information we had." On January 13, 2000, David Kern pled guilty to one count of theft of trade secrets. On April 4, 2000, David Kern was sentenced to 1 year imprisonment and 3 years supervised release.

14. United States v. Robin Carl Tampoe H-99-158 (S. D. Texas 3/24/99).

Indictment filed 3/24/99. The alleged EEA violations involved an employee (Tampoe) and IBM proprietary technology. The case was assigned to Judge David Hittner.

The Defendant pled guilty to Count 2 (attempted theft of trade secrets) and Count 3 (forfeiture) of the superseding indictment. Count 1 (theft of trade secrets) of the superseding indictment and both counts of the original indictment were dismissed at sentencing.

Tampoe was sentenced on 10/25/99 to 15 months imprisonment followed by 2 years' supervised release. Judge Hittner made a finding of no ability to pay and did not assess a fine. Defendant ordered to forfeit $5000 in cash and special assessment of $100.

15. United States v. Eon Joong Kim 99-CR-481 (N. D. Illinois July 1999).

Complaint filed July 1999. Alleged EEA violation involved a 3COM employee (Kim). Complaint dismissed without prejudice on October 1, 1999.

16. United States v. Matthew R. Lange (Eastern District of Wisconsin 9/7/99).

The indictment filed 9/7/99 alleges that Matthew Lange, 24, tried selling engineering drawings of aircraft parts belonging to Replacement Aircraft Part Co. Inc. (RAPCO) to a RAPCO competitor. According to published reports, prosecutors assert that Lange (a draftsman) altered proprietary warnings on the RAPCO drawings making them look like his own. Using an alias and dummy e-mail account, Lange then contacted and executive at the RAPCO competitor saying "you must admit it is nice to have an $8 million company handed to you (I see a smile on your face)."

The executive at the RAPCO competitor called RAPCO and told them about the security breach. "The cooperating informant took the high road" and is not a co-defendant reported U.S. Assistant Attorney Eric Klumb who filed the case in the U.S. District Court in Milwaukee.

Matthew Lange was convicted on December 12, 1999 of violating the EEA, copyright infringement and wire fraud. Lange was sentenced on 3/2/00 to 30 months imprisonment, 3 years supervised release, $2500 fine and $525 special assessment.

17. United States v. Jack Shearer/Tejas et.al. 3:99-CR-43-3-D (Northern District of Texas 1999).

Jack Shearer, 53, the owner of two Conroe, Texas energy parts companies, has admitted to corporate spying and has pled guilty under the Economic Espionage Act. Conroy admitted that he built an $8 million business using information stolen from Caterpillar, Inc. From 1995 to 1998, Jack Shearer paid more than $100,000 to three employees at Caterpillar's Solar Turbines subsidiary in San Diego, California to steal plans used to make parts for oil field and pipeline machinery, said Paul E. Coggins, U.S. Attorney for the Northern District of Texas.

According to a Press Release by the Justice Department, Shearer admitted that he stole proprietary trade secrets from his former employer, Solar Turbines, Inc. (Solar) headquartered in San Diego, California. Solar designs and manufactures industrial gas turbine engines and turbo machinery systems for the production and transmission of crude oil, petroleum products and natural gas; thermal energy and generating electricity for a wide variety of industrial applications and the fast ferry marine market. Solar, with approximately 5100 employees worldwide, is a wholly owned subsidiary of Caterpillar, Inc., the world's largest manufacturer of construction and mining equipment, diesel and natural gas and industrial gas turbines.

Shearer worked for Solar for 26 years until his employment was terminated in 1992. While he was employed at Shearer, Shearer lived overseas and serviced a sales territory that included Libya, Jordan, Syria, Lebanon, Iraq, Iran and Saudi Arabia. When Shearer was terminated from Solar, he started Tejas Compressor Systems, Inc. and Tejas Procurement Services, Inc., headquartered in Conroe, Texas, in order to compete with his former employer.

Shearer obtained Solar's trade secret information and used that information to manufacture counterfeit Solar parts through Tejas. Shearer obtained this confidential trade secret information through at least three individuals, defendant William Robert Humes and defendant Jack Edward Nafus, as well as a third individual. Tejas, at Shearer's direction, paid each of these Solar employees to provide Solar drawings, plans and schematics that included confidential specifications describing the dimensions and manufacturing details of Solar parts. One of Shearer's main customers was an Iranian businessman who operated an oil and gas parts broker business in Uppsala, Sweden. This businessman placed millions of dollars of orders per year with Tejas and orders he placed were designed for oil field applications.

Tejas and a number of its employees became suspicious that the parts ordered by this Iranian national businessman were going to prohibited countries, such as Iran. One of Tejas's suppliers, in fact, refused to manufacture parts for Tejas because it determined, based on the type of gear sought to be manufactured, that it was a proprietary Solar part of a Solar turbine engine located in Iran. Two Solar employees, William Robert Humes, 59, and Jack Edward Nafus, 50, have also agreed to plead guilty under the Economic Espionage Act to stealing plans for Shearer, United States Attorney Paul Coggins said in a prepared statement. The third employee has not yet been charged.

"This is certainly shocking news for all of the honest and hardworking Solar Turbines employees who are committed to the success of our company," Solar Turbines President, Gary Stoup said. Stroup said his company sought a federal investigation after it found out its plans were being stolen. Company spokesperson, Wendy Swanson, said management received a tip about a year ago from a source she declined to reveal.

Three corporations founded by Shearer also agreed to plead guilty to conspiracy to steal trade secrets: Tejas Procurement Services, Tejas Compression Systems and Procurement Solutions International. Coggins said that Shearer instructed his employees to remove warnings stating the plans were owned by Solar before transferring them to third-party machine shops where counterfeits were made.

All the defendants pled guilty on 12/9/99 to conspiracy to steal trade secrets. The San Diego Union (12/14/99) reports that U. S. Attorney, Paul E. Coggins, stated that this was the first EEA case in which the defendants agreed to plead guilty to taking trade secret information and actually converting the stolen information into manufactured products that were actually placed in the stream of interstate commerce. On June 15, 2000, United States District Judge Sidney A. Fitzwater sentenced.

Jack Shearer to 54 months imprisonment and ordered him to pay $7,655,155.00 in restitution. William Robert Humes of Arlington, Texas was sentenced to 27 months imprisonment and ordered to pay $3.8 million in restitution. Nafus was sentenced to 21 months imprisonment; 3 years supervised release; $3,800,000.00 in restitution.

The three corporations founded by Jack Shearer--Tejas Procurement Services, Inc., Tejas Compressor Systems, Inc., and Procurement Solutions International, L.L.C.--pled guilty, by their duly appointed representative, and were each sentenced to five years probation and ordered, jointly and severally, to pay $7,655,155.00 in restitution.

United States Attorney Paul E. Coggins stated: "This is the first EEA case in which the defendants pled guilty to taking trade secret information and actually converting the stolen information into manufactured products that were placed in the stream of commerce. The sentences handed down today (June 15, 2000) are among the longest sentences ever imposed in an Economic Espionage case."

18. United States v. Costello, H-99-623 (S. D. Texas 1999).

Charges filed 10/28/99. One count of theft of trade secrets. This EEA indictment involves an alleged EEA violation by an employee (Costello) relating to proprietary information involving oil and gas logs manufactured by Fina. Defendant pled guilty on 2/25/00 to theft of trade secrets. Defendant was sentenced on 6/5/00 to three years probation.

19. United States v. Corgnati, CR-99-6268 (Southern District of Florida 1999).

This indictment involves an alleged EEA violation relating to the theft and use of proprietary information relating to Motorola systems for 2-way radios. The Defendant pled guilty to one count of economic espionage and was sentenced on 6/12/00 to 5 years probation and $120,000 in restitution.

20. United States v. Say Lye Ow, CR-00-21110 (San Jose California 3/29/00).

A federal grand jury returned an indictment on 3/29/00 against Say Lye Ow, a 29-year-old Malaysian national and former Intel engineer, who has been accused of stealing Intel trade secrets relating to Intel's upcoming "Itanium" processor before he left the company in 1998. A trial has been set for January 2001.

On December 11, 2001, The United States Attorney's Office for the Northern District of California announced that Say Lye Ow was sentenced today by U.S. District Judge Jeremy Fogel in San Jose, California, on his guilty plea to a felony charge of copying a trade secret in violation of the Economic Espionage Act of 1996. Judge Fogel sentenced Mr. Ow to a term of imprisonment of 24 months and a term of supervised of release of two years to follow the prison term. Mr. Ow was ordered to surrender himself to begin serving his prison sentence on January 15, 2002. Judge Fogel previously issued a preliminary order of forfeiture regarding the criminal forfeiture of Mr. Ow's interest in the computer system which he used to commit and facilitate the commission of the copying a trade secret offense. A final order of forfeiture will be issued in the near future.
Mr. Ow, 31 a resident of Sunnyvale, California, and a citizen of Malaysia, was originally indicted by a federal Grand Jury on March 29, 2000. A superseding indictment was filed on March 14, 2001, which charged him with three counts of theft of trade secrets in violation of Title 18, United States Code, Sections 1832(a)(2) and (a)(3), one count of computer fraud in violation of Title 18, United States Code, Sections 1030(a)(4), and one count alleging the criminal forfeiture pursuant to Title 18, United States Code, Section 1834(a)(2). He pled guilty on September 14, 2001, to a superseding information charging him with copying of a trade secret in violation of Title 18, United States Code, Section 1832(a)(2) and admitted to the criminal forfeiture.

According to the superseding information and plea agreement, Mr. Ow copied without authorization computer files relating to the design and testing of the Merced microprocessor (now known as the Itanium microprocessor). At the time, Mr. Ow knew that the materials contained trade secrets belonging to Intel Corporation. He copied the trade secret information with intent to convert it to his own economic benefit by using it at his then new employment at Sun Microsystems. He also knew at the time that his act would injure Intel Corporation, in that he - as a former employee of Intel - possessed Intel's extremely valuable trade secret information without its knowledge. He also agreed that the information he copied was in fact a trade secret and that it was related to a product that was produced for and later placed in interstate and foreign commerce. The Itanium microprocessor was under joint development by Intel and Hewlett-Packard Co. since 1994 and was released earlier this year.

Mr. Ow also agreed to the criminal forfeiture of his interest in the computer system which was located at his residence and which he used to commit and facilitate the commission of the copying a trade secret offense.

Prior to imposing the two-year prison sentence, Judge Fogel stated that the key point in a case such as this is the gravity of what happens when people steal intellectual property of such enormous value.

U.S. Attorney David W. Shapiro said, "People and companies who steal intellectual property are thieves just as bank robbers are thieves. In this case, the Itanium microprocessor is an extremely valuable product that took Intel and HP years to develop. These cases should send the message throughout Silicon Valley and the Northern District that the U.S. Attorney's Office takes seriously the theft of intellectual property and will prosecute these cases to the full extent of the law."

The prosecution is the result of an investigation by the High Tech Squad of the San Jose Resident Agency of the Federal Bureau of Investigation and the Computer Hacking and Intellectual Property ("CHIP") Unit of the United States Attorney's Office. Ross W. Nadel, the Chief of the CHIP Unit, is the Assistant U.S. Attorney who prosecuted the case, with the assistance of Lauri Gomez. Sun Microsystems, the new employer to which Mr. Ow took the trade secret information, and Intel Corporation were fully cooperative in assisting the authorities in investigating and prosecuting this case.

This is the second case within a week in San Jose in which a defendant was sentenced to a term of imprisonment for a violation of the Economic Espionage Act. Last week, on December 4, 2001, Mihakel K. Chang was sentenced in a separate case to a term of imprisonment of 12 months on his guilty plea to a theft of trade secrets in violation of the Economic Espionage Act of 1996. A copy of the press release regarding the sentencing in that case is attached. These cases highlight the importance of investigations of and prosecutions for violations of the federal laws protecting intellectual property rights.

A copy of this press release and related court documents may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can (http://www.usdoj.gov/usao/can).

21. United States v. Mark Everheart, CR-00-56 (W.D. Pa. 2000).

This EEA indictment involved an alleged EEA violation relating to sales and pricing data from Werner Ladder by an employee (Everheart). Defendant pled guilty on 3/30/00 and was sentenced on 3/30/00 to 1 year probation, $100 special assessment.

22. United States v. Mikahel Chang and Daniel Park, CR-00-20203 (N.D. California 2000).

This indictment involves an alleged EEA violation relating to a customer list/database involving Chang and a third-party buyer.

Mr. Change, 32, and Mr. Park, 33, both of San Jose, California were indicted by a federal grand jury on June 14, 2000. Both defendants were charged with one count of theft of a trade secret in violation of Title 18, United States Code, Sections 1832(a)(1) and (a)(3). Mr. Chang was charged with two counts of criminal forfeiture pursuant to Title 18, United States Code, Sections 1834(a)(1) and (a)(2). Mr. Park was charged with one count of criminal forfeiture pursuant to Title 18, Untied States Code, Section 1834(a)(2). Under the plea agreements, Mr. Chang pled guilty to all three counts and Mr. Park pled guilty to a superseding information charging the criminal copyright infringement violation.

In pleading guilty, Mr. Chang admitted to having received, possessed and without authorization appropriated stolen trade secret information belonging to Mr. Chang’s former employer, Semi-Supply, Inc. of Livermore, California, knowing such information to have been stolen, obtained and converted without authorization, Specifically, Mr. Chang admitted to having received, possessed and appropriated without authorization customer and order information in databases relating to Semi Supply’s sales.

In pleading guilty, Mr. Park admitted to having aided and abetted the willful infringement of a copyright for purposes of commercial advantages and private financial gain. Mr. Park admitted to having aided and abetted the willful infringement of a copyright by accessing a FoxPro database program, which he knew had been copied without authorization and which had been infringed for the purposes of commercial advantage and private financial gain. Specifically, Mr. Park admitted that the FoxPro database program was used to access the stolen trade secret information belonging to Semi Supply.

The sentencing of Mr. Chang is scheduled for July 10, 2001 at 9:00a.m. before Judge Fogel in San Jose. The maximum statutory penalty for this violation of the criminal copyright statute is 1 year imprisonment, and a fine of $100,000, plus restitution if appropriate. Again, the actual sentence will be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed in the discretion of the Court.

The prosecution is the result of an investigation by agents of the High Tech Squad of the Federal Bureau of Investigation which was overseen by the Computer Hacking and Intellectual Property ("CHIP") Unit of the U.S. Attorney’s Office.

23. United States v. Jolene Neat-Rector and Steven Snyder, CR-123-T-24C (M.D. Fla. 2000).

Prior to August 20, 1999, Johene Hilda Neat-Rector ("Rector") obtained proprietary documents and data owned by R.P. Schorer, Inc. (RPS) from a friend(s) in Florida.

The proprietary information