This Week in Business Espionage

Plano, TX - There are plenty of questions involving the Plano woman accused of trying to smuggle military grade equipment to Russia...

What was the west Plano "girl next door", who happens to be a Latvian expatriate, doing with the high-tech scopes? Immigration and customs agents seized Fermanova's luggage, and found at least one Raptor Night Vision 4x Scope. The scopes, which are on the federal no-export munitions list, cost about $13,000 each.

Catherine Smit is a security expert with 20 years experience and she agrees that Fermanova's story doesn't add up. "Anyone who has been asked to carry something with removed serial numbers you know that you're not supposed to have them in your possession," she explained. "She [Fermanova] was more likely a patsy for someone who's involved in industrial espionage." (more)

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MI - Former General Motors (GM) employee Shanshan Du and her husband Yu Qin have been indicted in Michigan for allegedly stealing hybrid car technology information from GM. They have both been charged with conspiracy to possess trade secrets without authorization, unauthorized possession of trade secrets and wire fraud; one of them has also been charged with obstruction of justice. (more)

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Huawei has denied being involved in a plan by former Motorola staff to steal confidential information and use it to set up their own company in competition with Motorola. Last week, a modified lawsuit by Motorola alleged that former employee Shaowei Pan secretly reported to Ren Zhengfei, Huawei's founder and chairman, while he was working at the US company. Motorola claims that the defendants were developing a microcell base station, and later passed technical details over to Huawei. (more)

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 Toyota is said to be planning a U.S. production date for the fourth-generation Prius, but it won't arrive here until 2016. And would you be curious to know that the first Prius lost $28,000 per copy? That's what you learn through industrial espionage, says Kinder Essington over on PoliticsAndCars. (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

Spy Fail: Alleged Huawei Spy Caught Disguised as 'Weihua' Employee

If you're going to steal trade secrets for your employer, you might want to do a little more to hide your identity than simply rearrange the letters of your company's name.

That's apparently all one Huawei employee spy did to disguise himself during a late-night attempt to steal technology from a U.S. competitor.

Needless to say, it wasn't exactly successful.

This hilarious new detail emerged as part of the United States government's indictment of the Chinese firm on charges of racketeering and conspiracy to steal trade secrets. The indictment lays out how the company sought to steal the intellectual property of six different U.S. tech companies — though not every attempt was particularly sophisticated. more

Ex Coke Employee Convicted in Trade Secrets Case

GA - A federal jury found a former Coca-Cola Co. employee guilty Friday of conspiring to steal trade secrets of the beverage giant and trying to sell them to rival PepsiCo Inc. for as much as $1.5 million.

Joya Williams, a former assistant to the director of global brands at Coca-Cola, could get a prison sentence of up to 10 years.

Williams, 41, showed no emotion as the verdict was read. "She's holding her own," said defense attorney Janice Singer, who said an appeal was planned. "She seems pretty strong." (more)

The rest of the story...
(1:48 PM) About an hour after Williams left court Friday, a fire broke out in the apartment building where she lived. The lawyer added, "This is not a good day for Joya."

(9:00+ PM) Williams was taken away from the Hunters Pointe apartment complex by authorities from the Gwinnett Fire Department and Alcohol, Fire and Tobacco agents. Williams was not in handcuffs and did not appear to be under arrest, but she was questioned for three hours inside the apartment manager's office. (more)

Electronic Surveillance Detection Audits

Not having an Electronic Surveillance Detection Audit program can cripple your company.

Just ask...
• Société Générale, who last January, revealed that unauthorised dealing by Jérôme Kerviel, a futures trader in Paris, resulted in losses of €4.9 billion ($6.6 billion) for the French bank. This is the biggest rogue trading scandal in history. (more)

Tool of choice: A tiny cell phone, using text messaging!

Preventable? Yes.

How? We would have pointed out this vulnerability during a regular Electronic Surveillance Detection Audit (TSCM sweep). The solution... a special 24/7 radio-monitoring system. The system would have nailed the very first unauthorized text message from the trading floor. Via computerized triangulation mapping, a big red dot would have popped up, right over Mr. Kerviel's desk – indicating he was the culprit!

Total Solution Cost? Less than .000016 % of this loss (or about $100,000.00).
Status: Until a solution is put into place, this type of loss can happen again! Smart money protects... before the problem occurs. They use Electronic Surveillance Detection Audits to uncover hidden vulnerabilities.

Other cases, this year, where Electronic Surveillance Detection Audits could have prevented the loss...
• Jim Damman thought somebody was looking over his shoulder for months. Little did he know that his office was routinely broken into and more than 150-million dollars worth of trade secrets were stolen without a visible trace according to a federal lawsuit. The President of Exel Transportation Services says his suspicion grew so strong that he took the unusual step of sweeping the company's Addison offices for electronic bugs. (Had the "step" not been "unusual" the problem would not have turned into a 150-million dollar loss.)
Preventable? Yes.

• The BexarMet Board of Directors voted Thursday evening to terminate the contract of its embattled general manager, Gil Olivares. Olivares was suspended in August days after a Bexar County jury indicted him on charges of official oppression and illegal wiretapping, among other charges. (The cost: of attorney's fees, lost productivity and employee moral easily makes periodic inspections a no-brainer.)
Preventable? Yes.

• A federal judge denied a motion by a group of ex-securities brokers and former A.B. Watley Inc. executives to dismiss a criminal case against them in an alleged scheme to misuse brokerage firm "squawk" boxes. Prosecutors have alleged that three ex-brokers placed open telephone lines next to the internal speaker systems at their companies so that Watley day traders could secretly eavesdrop on block orders by institutional clients. (The costs here include: stockholder suits, public relations, company attorney fees, lost productivity and employee.)
Preventable? Yes.

• A state lawmaker said Thursday night he attached a digital recorder under an aide’s desk as “just a prank,”... (he) recalled setting the device up on Tuesday, said he forgot about putting the recorder there until Thursday. (Just having an Electronic Surveillance Detection Audit program would have been a deterrent in this case.)
Preventable? Yes.

• Bechtel National has taken disciplinary action against four managers at the Hanford vitrification plant for reportedly eavesdropping on a meeting between safety representatives and the Department of Energy.Preventable? Yes.

• 15 new GSM bugs - eavesdropping devices which can be listened to from anywhere in the world by simply dialing their cell phone number - are featured here, and on ebay here.
(Letting you know about new problems like this is the job of your Electronic Surveillance Detection Audit consultant. This person should also have solutions, too.)
Preventable? Yes.

The list goes on, but the point remains the same.Electronic Surveillance Detection Audits are cheap insurance, only better!
Insurance can't prevent the disaster.

Corporate Espionage Heats Up as “Made in China 2025” Nears

Corporate espionage is an extremely serious charge in the American technology market. There have been several prominent occasions in which AMD and Intel or AMD and Nvidia have cooperated when an employee was suspected to have engaged in IP theft, precisely because the consequences of bringing a product to market that’s tainted by another company’s IP rights could be so catastrophic.

But in China, there’s a very different system in place — and the way this has played out could be driving China’s investigation of Micron and Samsung’s DRAM pricing.

Here’s what we know. Micron alleges that the United Microelectronics Corporation (UMC), a Taiwanese foundry, cooperated with Fujian Jinhua Integrated Circuit Company to steal Micron secrets.

Jinhua may have been attempting to steal secrets from Micron in a manner similar to that used by the Yangtze Memory Technology Company, or YMTC, which is now building chips that the New York Times reports look suspiciously like Samsung devices.

The Chinese companies are collectively under tremendous pressure to deliver on an initiative China calls “Made in China 2025.”

Made in China 2025 is a comprehensive Chinese effort to increase domestic production of core materials by up to 40 percent by 2020 and 70 percent in 2025.

The impact this would have on existing semiconductor manufacturing can only be described as seismic. more

Important... Made in China 2025 should be a red flag to ALL businesses in the U.S. 
Make sure you understand the impact of this initiative. Make sure you get a competent Technical Information Security Consultant on your team, soon. There won't be enough to go around once the penny drops.

Massive Corporate Espionage Attack: 'One million pages stolen'

Australian blood giant CSL has been rocked by an alleged corporate espionage attack, with a former "high level" employee accused of stealing tens of thousands of its documents - including trade secrets - in order to land a job at a key competitor...
CSL’s allegations are expected to reverberate through the highly competitive global drug making industry where trade secrets are the most prized possession of the companies. more

It's never this obvious.

Any pharmaceutical company without: 

• a robust Information Security Policy, 
• Recording in the Workplace Policy, 
• IT Compliance and Surveillance program, 
• regularly scheduled Technical Surveillance Countermeasures (TSCM) inspections (with an Information Security Survey component)

is an easy target. Sadly, they won't even know they have had their brains picked until the damage is done.

CSL had protection measures in place. Thus, this discovery, and recovery. ~Kevin

Business Espionage: Spy Who Stole DuPont's Secrets Pleads Guilty

A former DuPont Corp. scientist has pleaded guilty to conspiring to commit economic espionage for a company controlled by the Chinese government and agreed to testify against others charged with stealing secrets of a manufacturing process sought by China.

Tze Chao, 77, a DuPont employee from 1966 to 2002, admitted Thursday in a San Francisco federal court that he had provided confidential information about DuPont's titanium dioxide process to the Chinese-controlled Pangang Group Co. (more)

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)

Trident sues former employee over trade secrets

Trident Systems is suing a former executive for $9.2 million, alleging he recruited away staff and customers for a new company before he quit and that he took trade secrets with him when he left. (more)

Many companies this size have a yearly program to detect espionage warning signs. Detection keeps problems from reaching this stage. Cost... less than 1/100th of the cost of this lawsuit, much less. (see for yourself)

Tough Week for Spies

• Bulgaria expels 10 Russian diplomats on allegations of spying. more
  
  
• U.S. accuses five of spying and harassing China’s critics, effort to smear congressional candidate. more
  
  
• Norwegian photographer arrested in Greece on spying charges. more
  
  
• Reported Detention of Russian Spy Boss Shows Tension Over Stalled Ukraine Invasion more
  
  
• Submarine Spy Couple Tried to Sell Nuclear Secrets to Brazil more
  
  
• Russian spy captain killed on 'top secret' operation in Ukraine. more
  
  
• Spy agencies' leaks of Russian plans point to the future of information warfare. more
  
  
• Slovakia expels 3 Russian diplomats after spy services info. more
  
  
• The long-haul fight over police spying allegations is on. more
  
  
• Muslims Continue Battling FBI For Spying on OC Mosques After Supreme Court Ruling more
  
  
• Russian spy chiefs ‘under house arrest’ as Putin turns on his security chiefs over invasion setback. more
  
  
• New FBI documents link Saudi spy in California to 9/11 attacks. more
  
  
• Cyberspace making Canadian secrets more vulnerable, spy service official warns. more
  
  
• Why 78% Of Employers Are Sacrificing Employee Trust By Spying On Them more
  
  
• Neighbour fed up with spying child: 'I'm entitled to privacy in my own garden'. 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

$1 Billion Trade Secrets Theft - Employee Charged

CA - A former Intel Corp. engineer has been charged with stealing trade secrets worth $1 billion from the chip maker while he worked for its main rival, Advanced Micro Devices Inc.

Federal prosecutors in Massachusetts alleged this week in a five-count indictment that Biswamohan Pani, 33, illegally downloaded more than a dozen confidential documents from Intel's computer system in California during a four-day stretch in June. He had already resigned from Santa Clara, Calif.-based Intel, but remained on the payroll and still had access to the company's computers while he burned unused vacation days.

What Pani's supervisors didn't know then is that instead of taking the time to investigate a hedge fund job Pani claimed he was considering, he had actually started working for AMD and for a brief period was on both companies' payrolls. (more)

Ex-Monsanto Employee Pleads Guilty to Corporate Spying

A former Monsanto employee pleaded guilty to espionage charges Thursday for stealing trade secrets from the U.S. agriculture behemoth for the benefit of China, prosecutors said.

Xiang Haitao, 44, a Chinese national who resided in Chesterfield, Mo., worked as an imaging scientist for Monsanto and its subsidiary The Climate Corporation from 2008, and was arrested a day after leaving his company in June of 2017 while awaiting to board a flight to China in possession of a one-way ticket and electronic devices...

The Justice Department has said that Xiang had applied for and was ultimately recruited into a Chinese government program that seeks to enlist Chinese academics and scientists working abroad to illegally transfer technology and intellectual property to Beijing. 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

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)

Business Espionage: Fish Settlement Flounders

National Fish & Seafood and Kathleen A. Scanlon, the former employee the seafood processor is suing for allegedly stealing trade secrets for her new employer, had appeared to be heading for a settlement.

Now, not so much.

The Gloucester-based seafood processor last week amended its complaint against Scanlon, its former head of research and development and quality assurance, and her new employer, Tampa Bay Fisheries, by adding more defendants and more details of the alleged conspiracy and corporate theft.

The complaint accuses Scanlon of spending most of her final days at NFS feverishly downloading company trade secrets and emails onto two portable storage devices, video-recording the clam processing line and "granting Tampa Bay's IT director unauthorized access to NFS' computers through remote access software."

The filing includes screen grabs of text conversations from Scanlon's company-issued smart phone, including one from Scanlon to Paterson that read: "I am on my way will be there in 30 minutes. Feel like I need to go to confession. More like a hypocrite."

It also states that on July 10, Scanlon was observed on video surveillance and by other NFS employees "taking video and photographic recordings of the clam production process, including the machinery and ingredient-mixing processes used in producing NFS' clam products, including its Matlaw's Stuffed Clams."

The next day, according to NFS, Scanlon resigned after more than 20 years with the company. more

Business Espionage - Bristol-Myers Squibb Co.

A former employee of Bristol-Myers Squibb Co. is being charged with stealing trade secrets from the pharmaceutical firm in an attempt to create a competing company in India, according to the federal government. 

U.S. Attorney Richard S. Hartunian and the Federal Bureau of Investigation said in a statement that Shalin Jhaveri, who worked at Bristol-Myers from November 2007 until Tuesday, stole numerous trade secrets from the company. If convicted, he faces up to 10 years in prison and a $250,000 fine. 

It's unclear what sort of information Jhaveri is alleged to have taken from the company. He worked as a technical operations associate at the company, according to a press release. (more) (FBI press release)

Mountie surveillance expert charged with selling secrets to the Mob

Canada - An RCMP expert in electronic surveillance has been arrested in Montreal and charged with selling police secrets to organized crime, Sun Media has learned.

Angelo Cecere, a 50-year-old visually impaired civilian employee, has worked for decades for the RCMP, listening to sensitive police wiretaps, translating them from Italian, and interpreting them for police. (more)

Cree CEO: 'All technology companies' face espionage

Cree CEO Gregg Lowe said Tuesday that “all technology companies face the same thing” when it comes to the need to protect trade secrets.

“Every day, they are making changes to help protect and secure their technology and I think we’re no different than anybody else,” he said at Triangle Business Journal's Power Breakfast at PNC Arena.

“I think all companies face these challenges. You’ve got technology, you’ve got capability and people want to come after it.”

A former Cree employee, Coy Bell, is alleged to have stolen trade secrets worth millions by downloading classified files onto an SD card, according to a report. more