A Very Weird Tale of Corporate Espionage and Murder and More Corporate Espionage

Apotex claims longtime chemist went rogue and stole drug secrets...

Apotex Inc., the generic-drug giant founded by murdered billionaire Barry Sherman, has been waging a year-long court battle against an ex-employee who was fired for allegedly stealing millions of dollars’ worth of pharmaceutical trade secrets from a laboratory computer—in the hopes of launching a rival company in his native Pakistan...

Barry Sherman, 75, and his wife, Honey Sherman, 70, were discovered strangled inside their North York mansion nearly three months ago, the victims of what police have labeled a “targeted” double homicide. Since then, detectives have said little else about the high-profile murders...

News of the lawsuit comes at the same time as Apotex tries to defend itself against similar allegations of corporate espionage. In a court action launched last July in the United States, Sherman’s company is accused of using sex, lies and USB drives to illegally obtain valuable trade secrets from the world’s largest generic drug-maker, Israel’s Teva Pharmaceutical Industries Ltd. As Maclean’s reported last month, a Pennsylvania judge denied Apotex’s attempt to throw out the sensational lawsuit, which accuses a former Teva executive of leaking confidential information to her boyfriend—then-Apotex CEO Jeremy Desai. Desai abruptly resigned in January, six weeks after the Shermans were killed, “to pursue other opportunities.” more

Further insights... Business Espionage: The Employee Competitor… and what to do about it.

The Employee Competitor: Spy in the Yogurt

Click here.

The American yogurt market has remained pretty steady over the past few years, yet the yogurt areas in all my go-to grocery stores keep expanding, meaning it’s an increasingly competitive industry, and this fosters the sort of tense environment that sometimes can lead to suspicions of corporate espionage.

On Wednesday, Bloomberg reported that Dannon Co. sued its former senior vice president, Federico Muyshondt, alleging he divulged trade secrets to colleagues at his new job, which is with Chobani LLC. Both of these companies, obviously, are renowned for their yogurt.

According to the complaint—filed in a federal court in White Plains, New York—Muyshondt stands accused of pilfering details of Dannon’s business strategy, plans for forthcoming products, and lists of customers before he left the company in January to take a job with Chobani, which was not named as a defendant in the lawsuit. more

Letter Accuses Uber of Corporate Espionage and Wiretapping

The legal battle between Uber the ride-hailing behemoth and Waymo the self-driving unit of Alphabet reached a pivotal point this week as the Judge presiding over the case released a letter based on the account of a former employee at Uber.

The letter alleged that a division with Uber has been responsible for carrying out acts such as theft of trade secrets, corporate espionage, bribery of officials in foreign countries, and different types of unlawful surveillance.

The letter, given the name “Jacobs Letter,” was authored by an attorney who represents Richard Jacobs, a former employee at Uber who held the position of global intelligence manager prior to his firing last April.

In the highly detailed account accusations are leveled of systematic illegal activities inside the Strategic Services Group (SSG) of Uber, which allegedly sought out the trade secrets of other companies through data collection and eavesdropping. more

Quote from the letter...
Uber’s Marketplace Analytics team…fraudulently impersonates riders and drivers on competitor platforms, hacks into competitor networks, and conducts unlawful wiretapping. more 

Another version of the story...
Uber illegally recorded phone calls and wiretapped the phones of executives at rival companies in a global “intelligence gathering” operation that went on for years, a former employee has alleged.

In a 37-page letter made public in federal court on Friday, Richard Jacobs, a former security employee with the ride-hailing service, alleges Uber set up internal teams whose sole purpose was to spy on competitors. “Uber has engaged, and continues to engage, in illegal intelligence gathering on a global scale,” Jacobs wrote, according to The New York Times.

The teams allegedly infiltrated chat rooms, impersonated drivers of rival companies, and placed surveillance on executives of those companies, including by illegally recording phone calls, the letter claims.

Jacobs’ allegations stem from a trade secrets case against Uber filed by Waymo, Alphabet’s self-driving unit, which says Uber stole information about autonomous driving technology. more

Corporate Espionage Fail - WeWork Staffers Caught

NYC - The battle in the red-hot co-working space business is heating up.

WeWork, the No. 1 player in the sector, allegedly sent two spies to infiltrate rival Knotel — to steal info and some customers, Knotel claimed.

The spies showed up at seven Knotel properties in Manhattan last month in a “systematic attempt to pilfer Knotel’s proprietary information and trade secrets,” according to a cease-and-desist letter the smaller company sent to WeWork...

The corporate espionage rookies might have pulled off the caper — except, in a totally random happening, a Knotel employee recognized one of them as a friend of a friend, according to sources close to Knotel.

While the pair used fake names to gain entry, according to the letter, a call to the Knotel worker’s pal got the spy’s real name — and a couple of social media inquiries turned up the fact that he worked for rival WeWork, sources said. more

Siemens Employee Arrested in Netherlands for Business Espionage

Siemens said on Friday that an employee had been arrested in the Netherlands in a case which the country's financial crimes prosecutor said involved suspected espionage for a Chinese competitor...

He did not disclose which department the employee worked for or whether it was known if secrets had been leaked.

Click to enlarge.

Investigators said the man was detained on a train station platform as he was about to travel to China.

In addition to searching his baggage, they raided his home and workplace, seizing several digital memory devices.

Corporate espionage cases rarely come to light in the Netherlands. more

Ticketmaster Allegedly Hacked Start-up to Steal Trade Secrets

A startup ticketing company alleged in a legal filing that Live Nation Entertainment Inc., the country’s biggest concert promoter, hacked into its computer systems and stole trade secrets.

The allegations, included in an amended antitrust lawsuit that was originally filed by Brooklyn-based Songkick in 2015, are based on information that the company said came to light in the discovery process.

Filed in U.S. District Court in Los Angeles Wednesday, the complaint alleges that Live Nation’s Ticketmaster unit obtained unauthorized access to Songkick’s computers with the help of an executive who has worked at both companies. more

Spybuster Tip #512 — Change all passwords whenever an employee is terminated or quits. ~Kevin

Technical Surveillance Countermeasures To Prevent Corporate Espionage

via Veteran Investigation Services
You're at an important company board meeting discussing a top secret product development project. If this unique product idea gets leaked to your competitors, the consequences could be dire. The key stakeholders are in the conference room or participating via conference call. The meeting goes well and later you find out your competitor has beat you to market with the same product idea. How could this have happened?

Your business or organization could be the victim of corporate espionage. Someone could be collecting competitive intelligence through unethical means, such as listening devices, video surveillance, or even something as basic as rummaging through your trash. Whether the threat comes from bugging devices at a one-time event, or ongoing surveillance at your corporate site, make sure you are aware of surveillance techniques, find the threats, determine who is behind the intelligence gathering and put systems in place to prevent future breaches.

COMPETITIVE INTELLIGENCE GATHERING
Your competitors and corporate enemies want to know what is said at meetings with shareholders, new business partners or clients or new product development teams. They may be seeking information about your financial outlook, or access to your intellectual property. Some companies will stop at nothing to gain that information and for many reasons, it's easier than ever for them to get it.

Today, surveillance is easier than ever. Advanced wireless devices such as covert listening devices, miniature cameras, concealed, wearable recording devices or hidden micro-cameras are just a click away online and can be very inexpensive. Employees or someone on the cleaning crew could be paid to place a device in a conference room or collect paper trash afterwards, or look for computer passwords left on desks or taped under keyboards. Safeguarding your company secrets requires a preventative approach.

The most common surveillance targets are CEO offices, their private conference rooms, and assistant's work area, since these spaces are the most likely locations for strategic meetings where valuable company information is discussed. These areas should be swept for bugging devices before critical meetings and at regular intervals, based on the level of risk.

TECHNICAL SURVEILLANCE COUNTERMEASURES
If you suspect that someone is obtaining company secrets or you've already experienced a damaging leak of information, we recommend screening for potential threats to prevent further leaks. A TSCM (technical surveillance countermeasure) examination can be performed to look for surveillance equipment or detect other risks. These can be done before an important meeting, at an off-site event, or at your site at regular intervals.

A TSCM examination may include such counter surveillance tactics as:

• Full Radio Frequency (RF) Spectrum Analysis
• Infrared Spectrum Analysis (IR)
• Detecting transmitting devices in the electrical system/wiring
• Computer forensics (for example, searching for emails that mention a sensitive topic after a meeting has taken place to look for leaks).
• Disrupting laser frequencies with static "white noise" and or window coatings to prevent laser listening systems from gathering micro-vibrations from the surface of a window to listen in on conversations from outside of a room.
• Conducting a physical search looking for:
  • Idle surveillance equipment that may be turned off or out of batteries.
  • Cameras or microphones in the ceiling.
  • Reflections from camera lenses.
  • Radio transmitters that could broadcast to an external radio.
  • Bugged telephones. Polycom phone systems are easy to turn into listening devices.
  • Easily found passwords left on desks or under keyboards.
  • Computers left on and logged in.
  • Document disposal and inadequate document shredders.

COUNTER SURVEILLANCE TECHNIQUES OFF-SITE
Important business meetings held off-site at hotel convention centers can be easy opportunities for surveillance. Sweeps of the meeting rooms, guest rooms, or bathrooms can be done, and then security staff should maintain custody of the room to ensure the room stays free of bugs until after the meeting. Executive cars can be targeted and especially at risk if using valet parking, as well as executive phones which are susceptible to Trojan horse software that can allow someone to listen in on all the conversations or steal data from email or text messaging.

AFTER THE TSCM EXAMINATION
What happens if listening devices are found during a sweep? If surveillance equipment is found during the TSCM examination, it should not be removed immediately because it can be used as a trap to find out who put it there. The TSCM examination is just the stepping off point for a full analysis and investigation. Suspects need to be interviewed. A full security assessment may be necessary if many problems are found. Systems should be established to prevent this kind of activity. Embedded and dedicated security personnel may be needed to keep security at the forefront of executives' minds, staff who can be there to watch, learn, listen and report on surveillance threats. Everyone in the organization can contribute to prevent leaks. Policies and procedures should be developed and communicated to employees regarding the handling of passwords, access, and confidentiality agreements.

ARE YOU AT RISK OF CORPORATE SURVEILLANCE?
Companies are hungry for that competitive edge that will help crush their competition. They may hire corporate surveillance companies to gather company secrets from their competitors, often through unethical means. Low level employees with low moral or low paid personnel from external maintenance services can be paid off to gather intelligence or plant bugs. Most companies are naive and feel that industrial espionage and surveillance does not happen in real life, it only happens in the movies and "cannot happen here." They feel they can trust all of their employees like family. But all it takes is a hungry competitor and a disgruntled employee passed over for a promotion to initiate the leaking of your company secrets that could be devastating to your business. Then, with the preponderance of equipment easily available, your company's most important information and conversations could get into competitors hands in an instant.

What proprietary business information could cause damage to your company if your competitor was able to listen in on your meetings? Have you done all that you can to protect that information?  more

Business Espionage: A Brief History

by Daniel Corbett and Michael Disotell
...another early example of industrial espionage came about in the late eighteenth century, when France found itself attempting to compete with the emerging industrial strength of Great Britain. The French government surreptitiously placed apprentices in English iron and steel yards to abscond with production formulas. To maintain its market dominance, Britain became the first country to pass legislation aimed at preventing industrial espionage.

In the United States, American businesses employed former Pinkerton detectives to uncover employee theft after the Civil War. And during the 1920s, anxiety over Communist and unionist upheaval caused companies to hire double agents to expose internal threats. According to a report by the U.S. Senate Committee on Education and Labor, a majority of American companies had placed labor spies in their plants and unions around that time.

As labor-management tensions started to ease after World War II, American companies shifted their focus away from themselves and began spying on competitors. Industrial espionage began to follow one of two familiar patterns: (1) a former employee would misappropriate confidential information before departing for a competitor, or (2) a competitor would place a “mole” inside an organization to gain access to corporate secrets.

Industrial espionage became a global affair during the Cold War, as U.S. businesses faced threats from Soviet spies and multinational competitors alike. For example, in 1982 six executives from the Japanese firms Hitachi and Mitsubishi were arrested in Santa Clara, California, for allegedly trying to steal computer parts from IBM. Companies also became increasingly worried about executives overseas defecting to competitors. A dispute between General Motors and Volkswagen arose when a group of GM executives in Germany left GM to join VW. Upon seeing similar designs in VW’s car models, GM accused VW of using proprietary information gained from its former executives. In one of the largest industrial espionage cases ever, VW settled with GM for $100 million and agreed to buy at least $1 billion worth of car parts from the company. more

Chinese Spy Sentenced to Death... by China

A Chinese man has been sentenced to death for leaking more than 150,000 classified documents to an unidentified foreign power, state television said on Tuesday, offering unusual details of a kind of case rarely mentioned in public.

The man, a computer technician from Sichuan named as Huang Yu, worked for a government department which handled state secrets, but he was a bad employee and was sacked, the report said. more

Business Espionage: Employee's Steal Bends Steel Company With Her Bare Hands

Australia - On the day long-serving BlueScope software development manager Chinnari Sridevi "Sri" Somanchi was to be made redundant in June 2015, she was suddenly busy on the phone.

For the next two hours her redundancy meeting was delayed while Ms Somanchi was locked on the lengthy call, as her manager circled her desk trying to get her attention.

What the company did not know at the time, and now alleges, was Ms Somanchi was spending those precious hours downloading a cache of company secrets so financially important to BlueScope it has launched emergency legal action in the Federal Court of Australia and Singapore, where she is now based, to stop the information falling into the hands of its competitors.

The case of alleged international espionage has left the company reeling.

Ms Somanchi has been accused this week of downloading a trove of company documents – about 40 gigabytes – over a four-year period, including the codes she allegedly downloaded just before her redundancy meeting.

BlueScope is now trying desperately to retrieve "highly sensitive and commercially valuable" information allegedly stolen by Ms Somanchi, who it describes as a disgruntled former employee...

The case of alleged international espionage has left the company reeling and urgently seeking a judge's help to find and destroy trade secrets before they fall into the hands of competitors.

Losing its customized software to a rival firm would so badly damage BlueScope that it was not seeking penalties because "it is difficult to see how damages could adequately compensate BlueScope for the loss", a senior manager's affidavit said. The business unit at risk generates $US45 million in turnover each year. more

Two Spies Out This Week

Ronald Pelton, former National Security Agency employee convicted of selling defense and communication secrets he gained during his career has been released from federal custody 30 years after his arrest. more
 
Jonathan J. Pollard was released on parole from federal prison on Friday after serving 30 years of a life sentence for violations of the Espionage Act. more

Secrets: Managing Information Assets in the Age of Cyberespionage

The following is from Jim Pooley’s new book on trade secrets — Secrets: Managing Information Assets in the Age of Cyberespionage.

Bankrupt networking giant Nortel reveals that its key executives’ email passwords were stolen and the company’s network hacked for a decade.

Boeing, hiring away Lockheed employees who bring documents to their new employer, pays $615 million to avoid criminal prosecution, while two of its former managers are indicted.

Apple scrambles to recover a sample of its unreleased new model iPhone that was left by an employee in a bar – a year after the same thing happened in a different bar.

Starwood employees leave to join Hilton, taking with them ideas for a new kind of hotel.

And the owner of Thomas’ English Muffins goes to court to protect its “nooks and crannies” recipe from being used by a competitor.

What do these corporate crises all have in common? Trade secrets. They reflect the enormous value of – and threats to – the most important assets of modern business...

Reading my new book — Secrets: Managing Information Assets in the Age of Cyberespionage — will give you a deeper understanding of how your business differentiates itself from the competition, and how it must work to keep its edge. As an executive or manager or small-business owner you will come away armed to protect and exploit your company’s advantages. As an individual you will have a greater appreciation for what intellectually belongs to you and how to use it to advance your career without being sued. And whatever your interest or line of work, you will have a much better understanding of how information has become the global currency of the 21st century.

You Like Business Class. Trade Secrets Like USB Class.

TX - A state district judge has dismissed a lawsuit brought by Houston-based Schlumberger Ltd. against a former employee who had left the company for a vice president job at a rival oilfield services company, Baker Hughes Inc.

Schlumberger had accused former employee Humair Shaikh of allegedly stealing trade secrets, but the two parties have reached a settlement...

The initial lawsuit alleged that Shaikh had violated confidentiality and noncompete agreements by taking trade secrets on four different USB drives when he left. (more) 

Business espionage goes undiscovered, ignored, swept under the carpet, and settled out of court all the time. 

Espionage is difficult to stop without a real commitment to protection. 

The common thread is that the stolen digital data often travels via USB memory sticks, and this is preventable. We can show you how.

Business Espionage: Invisibility & Examples of Tactics

There are three primary reasons that we don't hear more about corporate espionage:

1. Because businesses often don’t realize they’ve been compromised. 
2. If they do find out, a public announcement would be counterproductive, eroding investor confidence. 
3. Finally, industrial espionage works both ways — companies may keep compromises quiet to preserve their own business intelligence gathering activities.

Five recent court cases highlighting business espionage tactics...

• Buying Trade Secrets
• Digging Up Dirt, Literally
• Employee Poaching
• Classified Ads
• Cyber Theft

Click on more for all the details. (more)

Former Microsoft Employee Arrested for Allegedly Stealing Windows 8 Trade Secrets

Alex Kibkalo, a former senior architect at Microsoft who most recently served as a Director of Product Management in 5nine Software (according to his LinkedIn profile), has been arrested for allegedly stealing Windows-related trade secrets while working for Microsoft.

Kibkalo was arrested on Wednesday, according to a report in the Seattle Post-Intelligencer.

According to a complaint filed on March 17 in the U.S. District Court for the Western District of Washington, Kibkalo -- a Russian national and former Microsoft employee based in Lebanon -- passed on trade secrets involving Windows 8 to an unnamed technology blogger in France. (more)

Business Espionage: Rival CEO Posed as Exec to Get Secrets

The CEO of a sporting goods chain who once appeared on the TV show "Undercover Boss" pretended to be an executive from a rival company in an effort to get confidential information, according to a lawsuit.

Artist's conception. Not a real executive spying.

Dick's Sporting Goods claims in a lawsuit filed Feb. 20 in Mercer County Court that Mitchell Modell, CEO of Modell's Sporting Goods, showed up at a Dick's store in Princeton in February saying he was a Dick's senior vice president.

Dick's alleges Modell told employees he was to meet the Dick's CEO there and persuaded workers to show him the backroom of the store and to answer questions about the business. Modell gathered information about online sales, including a "ship from store" program that gets products to customers' doors quickly, the lawsuit said. (more)

Security Director Alert: Like electronic eavesdropping, business espionage via social engineering is one of the more common spy tricks. In addition to TSCM, make employee awareness about social engineering part of your counterespionage strategy. This story makes an excellent talking point.

Business Eavesdropping: Bugged Bra Company Employee Going for Bust

Scotland - A former employee of Ultimo bra tycoon Michelle Mone's company is suing for constructive dismissal after claiming the resignation of a director left him with an increased workload and some of his conversations were bugged.

Hugh McGinley is demanding compensation at a Glasgow employment tribunal for loss of earnings after he resigned from MJM International in March last year.

Mr Kilday's bugging has been accepted by MJM, which is now known as Ultimo Brands International, but lawyers claim they were recording his conversations with operations director Scott Kilday because they feared he was betraying company secrets. (more)

Economic Espionage: Competing For Trade By Stealing Industrial Secrets

In September 2012 FBI agents in Kansas City, Missouri, arrested two Chinese nationals, Huang Ji Li and Qi Xiao Guang, after they paid $25,000 in cash for stolen trade secrets pertaining to an American company’s manufacture of cellular-glass insulation, or foam glass.

Huang trespassed onto the company’s flagship plant in Sedalia, Missouri, 3 months prior and asked suspiciously detailed questions about the facility’s manufacturing process for the insulation. It also is believed he approached an employee at the company’s corporate headquarters in Pittsburgh, Pennsylvania, just days before seeking to build a foam-glass factory in China.

A judge sentenced Huang to 18 months in prison and a $250,000 fine in January 2013 and Qi, Huang’s interpreter, to time served, a $20,000 fine, and deportation. During sentencing, company officials estimated the value of the targeted trade secrets at $272 million. 

The threat of economic espionage and theft of trade secrets to U.S.-based companies is persistent and requires constant vigilance. Even after Huang was arrested, pled guilty, and was sentenced, investigators believed the company’s trade secrets still were at risk for targeting by would-be competitors. (more)

Business Espionage - Sentences Short - Fines Small

MO - A Chinese business owner and one of his employees have pleaded guilty in Missouri to conspiring to steal trade secrets from a U.S. company, in what one expert called a rare example of foreign business people being successfully prosecuted for corporate spying.

Ji Li Huang, 45, and Xiao Guang Qi, 32, admitted Friday, Jan 25 in federal court that they tried to buy Pittsburgh Corning Corp.’s proprietary formula for cellular glass insulation by bribing an employee of the company’s Sedalia plant.

U.S. District Judge Brian Wimes sentenced Huang to 18 months in federal prison and fined him $250,000. Qi — Huang’s employee at a plastic novelties manufacturer called Ningbo Oriental Crafts Ltd. — was sentenced to time served and fined $20,000, with the understanding that he would leave the United States immediately. Both men paid their fines Friday, The Kansas City Star reported. (more)

Hello Moto - Ex-employee Sentenced for Spying

IL - A federal judge sentenced a Chinese-born American to four years in prison for stealing millions of dollars in trade secrets from Motorola, describing her as a soft-spoken, unassuming woman who carried out a ‘‘very purposeful raid’’ on the company in the dead of night.

In a barely audible voice and heavily accented English, 41-year-old Hanjuan Jin told the judge she was ‘‘so sorry for what happened’’ and pleaded for a second chance. Her lawyers had argued that she took the files merely to refresh her knowledge after a long absence from work and was not spying for China. They appealed for leniency and asked that Jin receive probation, in part because of her poor health. ( more)

But before you pull out your hankerchef...
Jin, who worked as a software engineer for Motorola Inc. for nine years, was stopped during a random security search at Chicago’s O'Hare International Airport on Feb. 28, 2007, before she could board a flight to China. Prosecutors say she was carrying $31,000 and more than 1,000 confidential Motorola documents, many stored on a laptop, four external hard drives, thumb drives and other devices.