Economic Espionage News - October 2007 to April 2008

Economic Espionage News

October 2007 to April 2008

Private Eyes Jailed for Industrial Espionage Involving Spyware

A team of Israeili private investigators has been jailed on industrial espionage charges for their use of spyware to steal commercial secrets. Four members of the Israeli Modi’in Ezrahi private investigation firm have been found guilty of using a Trojan to fleece commercial information. Asaf Zlotovsky, a manager at the firm was jailed for 19 months, with two other employees given 18 and 9 month sentences. The Trojan Horse itself was traced back to London-based couple Michael and Ruth Haephrati who were jailed over their involvement in the case in 2006…..(IDM, 30 Apr 08)

Israeli Private Eyes Stole Corporate Secrets

A private investigation firm made use of spyware to pilfer secrets from companies in Israel; four of their staffers received criminal sentences. The Trojan horse of Greek lore proved the vehicle of choice for a quartet of corporate spies in Israel. Members of the Modi'in Ezrahi private eye business in Israel allegedly dropped malware on several companies, including a PR agency with ties to the country's second-biggest mobile carrier… While security pros worry, justifiably so, about espionage against government networks and systems, the threat to commercial interests with military ties makes us more uneasy. Attackers like the usual gang of provocateurs from a certain Olympics-hosting country we won't name gain just as much value from grabbing plans for technology used in a military application as they do from taking the application plans……(Security Pro, 30 Apr 08)

Israeli detectives jailed for Trojan hack

The long-running and notorious case of the Israeli private detectives accused of trying to carry out industrial espionage using specially-crafted Trojans has reached a conclusion of sorts – three members of the agency have been put behind bars… The case was underreported when it came to light three years ago, but deserves a place as one of the most revealing in recent security history for the way it alerted the world to the ease with which targeted Trojans could be used to steal sensitive information from unprotected companies…Extraordinarily, the case would not have come to light had it not been for a mistake made by the creator of the Trojan, Michael Haephrati, who used the program in a private capacity to infect the PC of his estranged father-in-law, writer Amnon Jacont……(TechWorld, 29 Apr 08)

House calls for inquiry into U.S. lab

Members of the House of Representatives have moved to establish a special task force to investigate U.S. Naval Medical Research Unit No. 2 (Namru-2). The Indonesian Democratic Party of Struggle (PDI-P) proposed the interfaction fact-finding team because of allegations the U.S. laboratory is engaging in espionage and the lack of apparent benefits to Indonesia from their research, said senior PDI-P lawmaker Sidarto Danusubroto… Indonesia and the United States are now negotiating a new memorandum of understanding (MOU) to extend the operation of Namru-2. The previous agreement expired in 2005. Indonesia offered last week to grant diplomatic immunity to only two U.S. officials at Namru-2 and demanded the laboratory become more transparent……(Jakarta Post, 29 Apr 08)

Private Eyes Jailed in Industrial Espionage Spyware Case

Experts at SophosLabs(TM), Sophos's global network of virus, spyware and spam analysis centers, have warned businesses to be on their guard against agencies who offer them information on their competitors, following the jailing of a team of private investigators who used spyware to steal information on behalf of legitimate companies. According to media reports, four members of the Israeli Modi'in Ezrahi private investigation firm have been sentenced after they were found guilty of using a Trojan horse to steal commercial information…..(Infozine, 29 Apr 08)

Four Modi'in Ezrahi employees convicted in Trojan Horse case

The Tel Aviv District Court sentenced four additional defendants in the Trojan Horse affair, Monday.

All convicts are employees of Modi'in Ezrahi, a private security firm. The four were convicted of using Internet spyware for the purpose of industrial espionage. Asaf Zlotovsky, who served as the business department's manager in the firm, was sentenced for 19 months in prison. Haim Zissman, another senior employee, was sentenced for 18 months in jail. Ron Barhoum will serve nine months in prison. Former Modi'in Ezrahi CEO Yitzhak Rett was leniently sentenced for 10 months on parole. Rett admitted to the allegations under a plea bargain and will also pay a fine of NIS 250,000……(Jerusalem Post, 28 Apr 08)

'Muslims' hack into Bank of Israel site

The Bank of Israel took down its Web site on Friday night after it was sabotaged by hackers, apparently from Algeria…The hacking constitutes a severe security breach, and it marks the first time in some time that an Israeli national information Web site has fallen victim to such a practice. In addition, the hackers deleted Bank of Israel notices that were posted on the site up to last October. The hacker called himself "The Moorish," apparently in reference to the Islamic conquers of the Middle Ages…..(Jerusalem Post, 28 Apr 08)

Porsche files complaint over suspected spy attempt on CEO

German luxury carmaker Porsche SE has filed a criminal complaint with authorities regarding a suspected attempt to eavesdrop on chief executive Wendelin Wiedeking… The German weekly Der Spiegel reported that the complaint came after the microphone end of a baby-monitoring system was discovered behind a sofa in a hotel suite a day before last year's meeting of the supervisory board of Volkswagen AG. Porsche holds 31 percent of the shares of Volkswagen AG and is seeking a majority stake…..(AP, 27 Apr 08)

Warning against computer espionage

The Norwegian National Security Authority (NSM) has issued a warning against increased attempts at industrial espionage through e-mail against Norwegian firms. These are made through so-called Trojan horses, hidden in e-mail attachments. These data programs then take control over the computer without the knowledge of the owner, and collects sensitive information about the company. The motive may be both economic and political, NSM states…..(Norway Post, 27 Apr 08)

Hacker hired by News Corp. to damage DISH Network?

…Giving his testimony in a corporate spying lawsuit brought against News Corp.’s NDS Group by EchoStar Corp. (which has since split into EchoStar and DISH), Tarnovsky insisted that, while he was hired specifically to create pirating software, he did not use it to attack the DISH Network in any way. NDS Group, which delivers security solutions for a global satellite network, has strenuously denied allegations that it used Tarnovsky’s talents to penetrate the DISH Network security system….(Tech Herald, 25 Apr 08)

DISH Says News Corp Hired Hacker for Corporate Espionage

News Corp claims hackers only assisted in internal network security. The world’s “second best hacker” says he was hired under the table by media conglomerate News Corp, which owns the Wall Street Journal, MySpace, Fox News, and DirecTV. Christopher Tarnovsky, testifying in Echostar v. NDS, says he was paid $20,000 -- mailed inside electronics sent from Canada -- to break into DISH Network’s satellite system and steal security codes necessary for pirating DISH Network’s satellite signals….(Daily Tech, 24 Apr 08)

Hacker testifies News Corp unit hired him

A computer hacker testified on Wednesday that a News Corp unit hired him to develop pirating software, but denied using it to penetrate the security system of a rival satellite television service. Christopher Tarnovsky -- who said his first payment was $20,000 in cash hidden in electronic devices mailed from Canada -- testified in a corporate-spying lawsuit brought against News Corp's NDS Group by DISH Network Corp. The trial could result in hundreds of millions of dollars in damage awards…..(Reuters, 24 Apr 08)

Nations look to gain edge by pilfering gov't data

Newspapers around the world regularly cover the leveling of the global playing field, often called "the global marketplace," and highlight the entrance of vibrant, new cultures and economies into the entrepreneurial mix. In effect, more and more of our fellow citizens around the world are developing increasing amounts of new and exciting intellectual property and applying this intellect in ways never before imagined…In a level playing field, these entrepreneurs compete with the ideas and capabilities of others, not locally, but globally. That's the good news. Unfortunately, not a month passed in 2007 without a reference to intellectual property theft or a revelation that IP theft was being sponsored by a nation-state. More frequently, we hear of yet another government condoning, encouraging and creating a mandate for its national intelligence and security resources to steal intellectual property for competitive and national advantage…..(Computer World, 23 Apr 08)

TNK-BP Field Investigation Extended

…The swirl of activity at TNK-BP, including visa issues for foreign employees that arose last month, masks an internal struggle among shareholders over when and for how much to sell part of the firm to state-owned Gazprom, sources have said…The FSB has made no further statements about the case against TNK-BP employee Ilya Zaslavsky and his brother Alexander, an independent energy consultant who heads the British Council's Alumni Club. The Oxford-educated brothers hold dual U.S. and Russian citizenship. The FSB charged the brothers with industrial espionage in mid-March…..(Moscow Times, 23 Apr 08)

Nation States' Espionage and Counterespionage

An overview of the 2007 Global Economic Espionage Landscape

…Unfortunately, not a month passed in 2007 without a reference to intellectual property theft or a revelation that IP theft was being sponsored by a nation-state. More frequently, we hear of yet another government condoning, encouraging and creating a mandate for its national intelligence and security resources to steal intellectual property for competitive and national advantage. At the same time, numerous governments have struck alarm bells, warning their citizens to protect themselves—"The thieves are coming!" they say. These warnings of nation-state-sponsored activities in the realm of industrial espionage have truly reached critical levels within the developed world, and the warnings are applicable to all nations, industrial sectors and companies, not just those that have stepped forward and accepted the political risk of calling out the unsavory activities taking place in the marketplace…..(CSO Online, 21 Apr 08)

Rupert Murdoch Firm Goes on Trial for Alleged Tech Sabotage

Did a Rupert Murdoch company go too far and hire hackers to sabotage rivals and gain the top spot in the global pay-TV war? … The case involves a colorful cast of characters that includes former intelligence agents, Canadian TV pirates, Bulgarian and German hackers, stolen e-mails and the mysterious suicide of a Berlin hacker who had been courted by the Murdoch company not long before his death…..(Wired, 21 Apr 08)

Grads charged with espionage

Two Oxford graduates are facing jail sentences after being charged with industrial espionage by Russian security services. Alexander Zaslavsky, 33, and IIya Zaslavsky, 29, were charged on March 20 after allegedly attempting to obtain classified information from a Russian employee of a “national hydrocarbon institution.” The Russian Federal Security Service (FSB), whose predecessor was the KGB, said the accused “were illegally collecting classified commercial information for a number of foreign oil and gas companies to gain advantages over Russian competitors.” The case is connected to an investigation by the Russian Government into the Russian-British oil firm TNK-BP, whose premises were raided on March 19. FSB said, “The search produced material evidence of industrial espionage . . . and business cards of representatives of foreign defense departments and the Central Intelligence Agency”.....(Cherwell, 22 Apr 08)

BAA denies link to Wadham spy

A former Oxford student, Toby Kendall, has been uncovered as a spy working undercover in an anti-aviation group. The 24 year old graduate, who studied Oriental Studies at Wadham College, aroused the suspicions of activists in the group Plane Stupid and was exposed as a spy working for C2i International, a private investigation agency… Kendall told fellow group members that his name was ‘Ken Tobias’ and became a committed activist, allegedly always being the first to arrive at meetings and constantly pushing for more direct action. Kendall’s excessive enthusiasm and expensive dress sense raised suspicions amongst activists…..(Cherwell, 19 Apr 08)

Ukraine - industrial and common espionage

…Since achieving independence in 1991, Ukraine has been plagued by security leaks. From 1999 until 2002, the president's office was bugged by his political opponents. The release of recordings of conversations between President Leonid Kuchma and high government officials created an international scandal that eventually doomed Kuchma and led to the Orange Revolution in 2004. So far, the only reported incident linking Ukraine to espionage in Russia took place in April 2008 when Russian Federal Security Service (Federalnaya Sluzhba Bezopasnosti: FSB) agents arrested brothers Illya and Alexander Zaslavsky for allegedly stealing Gazprom documents and turning them over to Ukraine, the Russian website NewsRu.com reported. ….(Jane’s 17 Apr 08)

Accused German Linked to Spy Flap

A German man charged with selling sensitive technology information to Russia is a key figure in a mysterious spy case involving a former Federal Space Agency official that jarred Russian-Austrian relations last year.
German prosecutors said in a statement last week that they had charged a 44-year-old native of Bavaria with passing sensitive documents to “a member of a Russian intelligence service.” The statement gave few specifics, but interviews with officials familiar with the case made it clear that the Russian intelligence officer referred to by German prosecutors is former Federal Space Agency official Vladimir Vozhzhov, who was arrested on spy charges in Austria last year and released after it turned out he had diplomatic immunity. Vozhzhov’s arrest in June disrupted otherwise cordial ties between Vienna and Moscow, prompting the Foreign Ministry to accuse Austria of violating international law. At the time of his arrest for purportedly trying to buy classified information, Vozhzhov was in Vienna for a United Nations conference on the peaceful use of outer space…..(Moscow Times, 17 Apr 08)

Chinese Grad Student's Work Leads to Criminal Case

An unusual criminal prosecution concerning a professor's assignment of a Chinese graduate student to work on an Air Force unmanned drone technology project is part of an ongoing federal crackdown on China's efforts to gain American technology through academic exchanges, business deals, and old-fashioned espionage…The Justice Department's latest case, which originated at the University of Tennessee, is unprecedented, according to several analysts, because it rests on the notion that academic researchers effectively exported sensitive technical information by letting a foreign student have access to it… In Knoxville, Tenn., on Tuesday, Daniel Sherman, 37, entered a guilty plea to conspiring to violate the Arms Export Control Act while he served as the director of plasma research at Atmospheric Glow Technologies, Inc. Sherman and prosecutors said the conspiracy also involved a professor emeritus of electrical engineering who ran the plasma laboratory at the University of Tennessee, J. Reece Roth. In court papers, prosecutors said Sherman and Mr. Roth agreed to assign a Chinese graduate student, Xin Dai, to the military project without advising the Air Force or seeking a special export license…Xin Dai reportedly left the university in 2006. He could not be reached for this article.…..(New York Sun 17 Apr 08)

Roth says he will retire at end of semester

J. Reece Roth, a University of Tennessee professor emeritus in the department of electrical and computer engineering, won't be back for the fall semester…His comments came after a guilty plea in U.S. District Court from 37-year-old Daniel Max Sherman, former director of Plasma Sciences for Atmospheric Glow Technologies Inc. in Knoxville. Sherman said that he conspired with Roth, 69, to provide data about technology used in the manufacture of an unmanned air vehicle - a drone - to graduate assistant Xin Dai… Roth has several patents for plasma technologies, and AGT has sublicensed six of those from the University of Tennessee Research Foundation… Roth has not yet been charged in the case. Almost two years ago federal authorities seized Roth's laptop when he arrived in Knoxville from a two-week lecture series in China. ……(Knox News, 16 Apr 08)

Physicist pleads guilty, implicates UT professor

A Colorado physicist admitted Tuesday he and University of Tennessee professor emeritus J. Reece Roth gave a Chinese graduate research assistant access to sensitive military arms information and lied about it. Daniel Max Sherman, 37, pleaded guilty before U.S. District Judge Tom Varlan to charges he conspired with Roth and Knoxville firm Atmospheric Glow Technologies Inc. to violate the Arms Export Control Act, which bars the transfer of sensitive technology to foreign countries. The plea, in which Sherman agreed to skip a grand jury review of the case against him, bodes ill for Roth as its terms require Sherman to cooperate with federal prosecutors Will Mackie and Jeff Theodore in an ongoing probe of Roth and AGT. It also stands in stark contrast to denials by Roth and UT last year of any violations of the act. "Both the science and the regulations are complex, but at this point we do not believe the university has violated the act,'' Tom Milligan, vice chancellor for communications at UT Knoxville….(Knox News, 16 Apr 08)

Work by Chinese Grad Student Leads To Deemed Export Conviction

Max Sherman, a former employee of Knoxville-based Atmospheric Glow Technologies, entered a guilty plea today in federal court to a conspiracy with a former University of Tennessee professor to provide controlled technical data to a Chinese student research assistant in violation of the Arms Export Control Act. AGT had given a subcontract relating to its research on a military drone aircraft to UT’s Plasma Sciences Laboratory, and the professor and the Chinese research assistant were working on the project…..(Export Law Blog, 16 Apr 08)

U.S. physicist guilty of arms-export violation

…Daniel Max Sherman, a former employee of Knoxville, Tennessee-based Atmospheric Glow Technologies, entered his plea as part of an agreement with prosecutors. It said Sherman, the Atmospheric Glow company and a retired University of Tennessee professor conspired to transmit the data, which related to a U.S. Air Force contract to develop "plasma actuators" that improve a plane's aerodynamics. The data was given to a Chinese national who was a graduate research assistant at the university….(Reuters, 15 Apr 08)

Retired UT professor implicated in passing secrets

A Colorado physicist has pleaded guilty to conspiring with University of Tennessee professor emeritus J. Reece Roth to provide sensitive military data to a Chinese citizen. Daniel Max Sherman pleaded guilty in federal court on Tuesday to violating the Arms Export Control Act by allowing Chinese graduate student Xin Dai (shin-die) to work on a military contract……(AP, 15 Apr 08)

UT prof won't explain connection to illegal work for Chinese

A Colorado physicist admitted in federal court today to conspiring with retired University of Tennessee professor J. Reece Roth to provide sensitive technical data to a Chinese citizen. Daniel Max Sherman, 37, pleaded guilty before U.S. District Judge Tom Varlan to conspiracy to violate the Arms Export Control Act, which bars the transfer of sensitive technology to other countries. Sherman admitted he conspired with Roth, 69, a professor emeritus in electrical and computer engineering, to provide technical data about the inner workings of technology used in the manufacture of an unmanned air vehicle - a drone - to graduate research assistant Xin Dai. Dai was a citizen of the Republic of China who was attending UT in 2006 on a student visa and was employed by a Knoxville-based company, Atmospheric Glow Technologies Inc., which also is accused in the conspiracy……(Knox News, 15 Apr 08)

DOJ Press Release:Physicist Pleads Guilty to Conspiracy to Violate the Arms Export Control Act

How to spot -- and stop -- a spy

Corporations are woefully unprepared to counter attempts at corporate espionage, say experts who perform vulnerability assessments designed to uncover security weaknesses. U.S. corporations lose as much as $300 billion a year to hacking, cracking, physical security breaches and other criminal activity, according to Ira Winkler, author of Spies Among Us (Wiley, 2005) and president of the Internet Security Advisors Group, which performs espionage simulations and provides other services…Any company can be a target, says Peter Wood, chief of operations at First Base Technologies, a U.K.-based consultancy that performs ethical hacking services. Spies are interested in anything from financial data to intellectual property and customer data. They might steal information for blackmail purposes, but "the most common motive for physical intrusion is industrial espionage," he says. Here are several of the most common ploys and the countermeasures you can put into place to spot -- and possibly even stop -- the work of a spy…….(Computer World, 14 Apr 08)

4 things your administrative staff should know about your company's data security

Administrative staffers may not have their fingers on the pulse of business-critical operations, but they do get their hands on a lot of sensitive company information. Executives often grant administrative assistants and record-keepers access to strategic data and correspondence to make their own lives easier. As a result, these well-meaning assistants are often targets of hackers, scammers and even espionage…..(Computer World, 14 Apr 08)

Czechs ask Germany for Liechtenstein accounts data

The Czech Finance Ministry has asked Germany for data on savings in a Liechtenstein bank to check whether any Czechs may be hiding untaxed funds there...Liechtenstein is now investigating a man called Heinrich Kieber for industrial espionage, saying he had been convicted in 2002 after stealing data from Liechtenstein's LGT bank -- owned by the country's ruling family.....(Reuters, 14 Apr 08)

New Accusations Lobbed at Former Siemens Chief

A former Siemens executive is once again in the hot seat in an ongoing bribery case. The company was also struck by spying accusations…..(Deutsche Welle, 13 Apr 08)

Bribery and spying claims dog Siemens

New allegations that Siemens worked for Germany’s top spy agency for over a decade and that top managers knew of a bribery scandal as early as 2003 are creating problems for Europe’s largest engineering company. Former Siemens managers claim Germany’s Federal Intelligence Service (BND) had a representative on the company’s management board, and that Siemens provided the BND with both technology and technical support for espionage purposes….(Local, 13 Apr 08)

CMU team zeros in on electronic thieves

Identity and other types of information theft conjure images of sophisticated, high-tech gurus reaching deep into an organization electronically to extract data they sell to the highest bidder. Not necessarily, says Dawn Cappelli, insider-threat team lead within Carnegie Mellon University's Software Engineering Institute's Computer Emergency Readiness Team program. "In one case, a woman who was a low-level, data entry clerk for a company simply inserted her husband's name into payroll. He would get paid and she would erase his name and there was no trace of him," Cappelli said. She did it again and again.......(Tribune Review, 10 Apr 08)

DOD contractor pleads guilty to plot to defraud U.S.

A contractor pleaded guilty today to plotting to steal competitive information about contracts to provide fuel to Defense Department aircraft worldwide, the Justice Department said. Matthew W. Bittenbender of Baltimore was charged in January; his guilty plea was filed in U.S. District Court. In the plea agreement, Bittenbender agreed to cooperate in the government investigation. According to the plea agreement, Bittenbender conspired to steal trade secrets from his employer, Avcard, a division of Kropp Holdings LLC, and sell that information to his competitors, Far East Russia Aircraft Services Inc. (FERAS) and Aerocontrol. In exchange, Bittenbender received cash and part of the profit earned on the resulting fuel supply contracts. According to court documents, Christopher Cartwright, Paul Wilkinson, FERAS and Aerocontrol, allegedly used that information to underbid Avcard at every location where the companies were bidding against each other. Avcard lost each of the contested bids. Trials are set in July for Cartwright, Wilkinson and their companies. Bittenbender pleaded guilty to conspiring to defraud the United States; conspiring to commit wire fraud; and conspiring to steal trade secrets……(AP, 9 Apr 08)

Indictment: US v. Bittenbender

Department of Defense Contractor Pleads Guilty to Conspiracies to Steal Information Related to Fuel Supply Contracts (DOJ)

Commercial Espionage: Travelers Beware

…Cities around the world, such as Paris, San Francisco and Philadelphia, provide free wireless access in many areas. Other cities, including Beijing, the home of the 2008 Olympic Games, provide wireless access in various public locations. This all sounds appealing to technologically savvy business travelers, but it is important to be aware of the limitless and ever-adapting abilities of hackers who conduct "commercial espionage" to obtain our personal and business information. Commercial espionage involves the theft of trade secrets, bribery, blackmail and technological surveillance. This type of espionage is a threat to any business whose livelihood depends on information and to all businessmen and women who remain "connected" while traveling. Competitors who commit commercial espionage seek information in various forms, such as client lists, research documents, prototype plans for new products or services and personnel records……(Forbes, 8 Apr 08)

2 Charged in LAX Infrared Cameras Case

…Beijing residents Zhi Yong Guo, 49, and Tah Wei Chao, 52, were named in a criminal complaint alleging they knowingly exported or attempted to export restricted items without a license, the U.S. attorney's office said.

Prosecutors said both men were a flight risk and asked that they be held without bail. Both were scheduled to be arraigned on April 28……(AP, 8 Apr 08)

Two Chinese charged after hi-tech cameras found in luggage

…Chao Tai Wei, 52, and Guo Zhiyong, 49, have both been charged with attempting to export a restricted item without a license, a Justice Department statement said. The cameras are export-controlled for national security, nuclear proliferation and regional stability reasons…Chao and Guo were detained after a search of their luggage as they prepared to board a flight to China on Saturday. US authorities have recently accused China of "aggressively" trying to steal sensitive US military technology and information. US engineer Chi Mak was jailed for 24 years last month for conspiring to smuggle Navy submarine technology to China….(AP, 7 Apr 08)

Men Accused of Illegal Technology Export Attempt

Two Chinese residents, arrested at Los Angeles International Airport over the weekend, face charges for allegedly attempting to export sensitive thermal imaging technology to China. Authorities arrested Zhi Yong Guo and Tah Wei Chao as they were about to board an Air China flight to Beijing early Saturday morning, after investigators found 10 of the cameras in their luggage. Justice Department officials noted that the thermal cameras could be used for military purposes; according to the affidavit, Chao purchased three cameras last fall and arranged for them to be sent to China…The men worked for a company, Printing Plus Graphics, in San Gabriel, Calif. After warning Chao several times that the cameras could not be moved outside the U.S. without an export license, a representative from the FLIR Systems corporation — which manufactures the devices — alerted Commerce Department officials last fall about several "red flags," according to court documents reviewed in the case. One noted that "A print shop is not what I would consider an ordinary customer," the company representative told investigators in a September 2007 e-mail……(ABC, 7 Apr 08)

Chinese Residents Charged With Attempting To Bring Export-Controlled Thermal Imaging Cameras To PRC

…Tah Wei Chao, 52, and Zhi Yong Guo, 49, both of whom live in Beijing, were named today in a criminal complaint filed in United States District Court in Los Angeles. The complaint accuses the men of violating the International Emergency Economic Powers Act and Export Administration Regulations by knowingly exporting and attempting to export restricted items without a license…This case is the product of an investigation by the newly created Export and Anti-proliferation Global Law Enforcement (EAGLE) Task Force. The counter-proliferation task force was recently created by the United States Attorney’s Office for the Central District of California in conjunction with federal law enforcement agencies to jointly investigate and combat the illegal exports of arms and sensitive technologies…..(Lawfuel, 7 Apr 08)

Two Chinese Charged Over Hi-Tech Cameras

The two men -- a Chinese national and a naturalized US citizen -- were arrested on Saturday at Los Angeles International Airport after the cameras which have potential military use were found in their luggage.

Chao Tai Wei, 52, and Guo Zhiyong, 49, have both been charged with attempting to export a restricted item without a license, a Justice Department statement said. The cameras are export-controlled for national security, nuclear proliferation and regional stability reasons, the statement said. According to court documents, Chao bought three cameras last year and shipped them to China……(AFP, 7 Apr 08)

Random Search Stops $600 Million In Trade Secrets Bound For China

A former software engineer for a telecommunications company based near Chicago was indicted for allegedly stealing trade secrets worth an estimated $600 million and trying to take the documents to China.

The FBI said Wednesday that Hanjuan Jin of Schaumburg, Ill., a naturalized U.S. citizen who was born in China, was stopped at Chicago's O'Hare International Airport on Feb. 28, 2007, in a random search. According to an affidavit filed by FBI special agent Michael R. Diekmann, Jin was traveling on a one-way ticket to Beijing at the time. She declared that she had $10,000 in U.S. currency in her carry-on luggage. Customs and Border Protection officers found about $30,000 in cash. According to Diekmann, this prompted officers to further inspect Jin's luggage, whereupon they found several technical documents labeled "[Company A] Confidential Property," Chinese documents, a European company's product catalog of military technology written in English, a personal laptop computer, a thumb drive, four external hard drives, 29 recordable compact discs, and one videotape…..(Information Week, 3 Apr 08)

Press Release: Suburban Chicago Woman Indicted for Alledgedly Stealing Employer’s Trade Secrets Bound for China (FBI)

Worker accused of stealing secrets

…The release of the classified engineering information on three computer networking products would have cost the suburban telecommunications firm that employed Jin $600 million over the next three years, officials said. Court documents identify the firm only as "Company A." Hanjuan Jin posted a $50,000 bond and is to be arraigned on a future date. She was arrested March 7. According to authorities, Jin, a U.S. citizen born in China, began working for "Company A" in 1998. The firm granted her medical leave in February 2006. Later that year -- without telling "Company A" -- she began working for a Chinese company in telecommunications software development, court documents state…..(Daily Herald, 3 Apr 08)

Schaumburg woman indicted in theft of business secrets intended for China

…Hanjuan Jin, 37, was charged with three counts of theft of trade secrets, authorities said. An indictment was returned Tuesday by a federal grand jury in Chicago…Authorities said Jin began working for a telecommunications company based in the Chicago suburbs in 1998. In February 2006, she took a medical leave of absence. Between June and November of that year, she accepted employment with a company in China where she was to work on developing communications software. On Feb. 23, 2007, Jin told the Chicago-area company that she was ready to return from medical leave. But one day later, she purchased a one-way ticket to China for a flight Feb. 28, 2007, officials said. When Jin reported to work on Feb. 26, she allegedly downloaded more than 200 technical documents from the company's secure internal computer network……(Chicago Tribune, 2 Apr 08)

Corporate espionage in the A/V and automation business

The prosecutor's office last week issued a news release (see news release, scroll down to March 28, 2008 entry) that it had arrested a vice president of AMX Corporation for allegedly committing corporate espionage. AMX Corporation, which was acquired by Duchossois Industries in 2005, provides a variety of automation systems and voice/video/networking solutions for building and room controls. Goldenberg faces charges of "Unlawful Access of a Computer System/Network"; "Unlawful Access of Computer Data/Theft of Data"; and "Conducting an Illegal Wiretap"……(Security Info Watch, 2 Apr 08)

Corporate espionage Bergen County Press Release

Bergen County Prosecutor John L. Molinelli announced the arrest of Leonardo V. Zayas, D.O.B. 09/14/1972 of 247 5th Street, Jersey City, NJ, on March 31, 2008 at 9:50 am, on charges of Attempted Sexual Assault (2C:5-1/2C:14-2(C)(4)) (11 counts), Luring (2C:13-6) (1 count), Attempted Endangering the Welfare of a Child (2C:5-1/2C:24-4A)(17 counts), and Attempted Criminal Sexual Contact (2C:5-1/2C:14-3B) (6 counts). The arrest came about as a result of an investigation conducted by members of the Bergen County Prosecutor’s Office, Computer Crimes Unit, under the direction of Chief Joseph Macellaro and members of the Bogota Police Department, under the direction of Chief Frank Gurnari…..(Bergen County Prosecutor Office, 31 Mar 08)

March 2008

Weapons Trader Allegedly Tied to China, Iran

A weapons trader wanted by multiple federal agencies for allegedly selling sensitive technology to Iran was arrested late last month, court documents and a U.S. government official confirm to ABC News.

On Dec. 24, Laura Wang-Woodford entered the United States to visit her elderly mother for the holidays -- but Customs agents at San Francisco International Airport were waiting to arrest her upon her arrival from Singapore. Wang-Woodford, who was wanted by the FBI, Immigration and Customs Enforcement and other U.S. authorities, runs a firm in Singapore called Monarch Aviation……(ABC, 31 Jan 08)

FBI hunts British millionaire in Iran jets probe

A British millionaire is being sought by the FBI on charges of illegally exporting military aircraft parts to Iran.

Brian Woodford, 77, and his Chinese-American wife Laura, 63, face 20 counts, including money-laundering and illegally exporting parts from commercial aircraft and military helicopters. According to the US Justice Department, the couple, who own 17th Century Chalmington Manor in Evershot, Dorset, shipped the pieces through their Singapore-based company, Monarch Aviation, to Tehran. Under US law, it is illegal to sell American aircraft parts to Iran without a special license, which the Woodfords did not have……(Daily Mail, 31 Mar 08)

Couple accused in Iran case had dark secret, officials say

Brian and Laura Woodford owned a nearly $1 million home in Fort Worth, a $4.5 million chalet in Colorado and a 17th-century manor on a 100-acre estate in England… But the lavish lifestyle came crashing down Dec. 23, when Laura Woodford was met by customs agents at San Francisco International Airport as she entered the country from Hong Kong to visit her elderly mother in Dallas. The arrest likely came as a surprise because the 20-count indictment, accusing the Woodfords of an international criminal enterprise that hinges on terrorism, had been sealed for nearly five years -- with several federal agencies just waiting for one, or both of them, to step back onto American soil. The Woodfords, through a company they owned and operated in Singapore, worked with "others" to sell restricted military and commercial aircraft parts to Iran, considered a serious crime because Iran has been designated as a sponsor for terrorists by the U.S. government, the indictment alleges…….( Star-Telegraph, 31 Mar 08)

Dorset man smuggling parts to Iran, says US

A British pensioner is at the centre of a worldwide police hunt after being accused by United States authorities of smuggling military parts to Iran…His wife Laura was arrested after arriving at San Francisco on a flight from Hong Kong with two catalogues from a Chinese company that has been described by America as a distributor of "weapons of mass destruction". The catalogues included details of surface-to-air missile systems and rocket launchers. Mrs Woodford, 63, remains in custody in New York after being refused bail at a court hearing, during which she was described as a "serious flight risk". Her wealthy businessman husband, who is said by investigators to be travelling under the name Abdullah, is being hunted across the globe by US law enforcement agencies…..(Telegraph, 31 Mar 08)

China spy ring eyes UK secrets

Thousands of Chinese spies are infiltrating Britain in the run-up to the Beijing Olympics.

They are hellbent on stealing scientific, military and industrial secrets in a bid to make China the world's No1 superpower. The spies are recruited from the 90,000 Chinese who visit Britain each year. Forty per cent of them are on business and a third are students. A Whitehall source said: "They are told to ‘hoover’ up everything they can get their hands on. "It can be anything from the results of university lab experiments to secret industrial technology." ….(People, 30 Mar 08)

Ex-Worker Charged In Industrial Espionage

A former Lubrizol Corp. research and development employee is charged with selling trade secrets to a South Korean company. Assistant U.S. Attorney Justin Roberts says 62-year-old Kyung Kim of Broadview Heights was charged Wednesday with theft of trade secrets and conspiracy. Kim's lawyer, Richard Lillie, says he has no comment about the charges but says that Kim has been cooperating with authorities. The federal charges are based on evidence from an internal investigation last year at the northeast Ohio-based specialty chemicals company…..(AP, 28 Mar 08)

Lubrizol employee Kyung Kim accused of selling company trade secrets

A one-time Lubrizol Corp. employee is accused of selling company trade secrets to a South Korean competitor - meeting officials 17 times over a seven-year period. Kyung Kim is charged with conspiracy and theft of trade secrets, according to criminal information papers filed Wednesday in U.S. District Court. Kim, 62, a senior research and development associate at Lubrizol's research facility in Brecksville, pocketed at least $170,000 in exchange for trade secrets from 2001 to 2007, according to the information. Wickliffe-based Lubrizol is a multibillion-dollar firm that produces and sells specialty chemicals internationally…..(Plain Dealer, 27 Mar 08)

Liechtenstein Issues Warrant for Tax Informant

Liechtenstein has issued an international arrest warrant for a man suspected of selling stolen banking data to German authorities that formed the basis of a vast tax evasion scandal…The warrant, citing news media reports, said that Mr. Kieber might have been supplied with a new identity and travel documents by the German intelligence service… The CD-ROM purchased by Germany has information on 1,400 clients, 600 of whom are German, according to officials. More than 150 people have turned themselves in after the highly visible arrest last month of the chief executive of the German postal service, Klaus Zumwinkel. In the United States, the Internal Revenue Service is investigating more than 100 American taxpayers on suspicion that they may have used Liechtenstein as a tax haven…..(New York Times, 13 Mar 08)

Corporate espionage: Not if, but when

…Corporate espionage is defined as the theft of commercially valuable information. This may be the secret formulation of a new product, but equally it could be the names and salaries of senior executives or simply the date of your next marketing initiative. This type of corporate crime costs the world's 1,000 largest companies in excess of $45bn (£22.4bn) every year, according to research from consulting firm PricewaterhouseCoopers. Some of the world's largest corporations have been targeted…Corporate espionage has increased rapidly in the past decade, as more information is put onto corporate networks — and potentially within the reach of hackers, Dirro explains. Certainly, PricewaterhouseCoopers reported that corporate espionage losses doubled between 1990 and 2000. Knowing whether you're at risk of corporate espionage isn't easy, admits Paul King, a senior security advisor with Cisco UK. In fact, you could be a victim of corporate espionage and never even realize it…..(ZDNet, 13 Mar 08)

Silicon Spies

In the United States, the FBI has got a scary new problem on their hands. It's the increasing sale of counterfeit computer equipment to military organizations. But it's not the selling of cheap knock offs at premium prices that worries, the feds, but the espionage potential of this sort of thing. The most vulnerable equipment is network cards… The intel angle enters the equation when you realize that these cards could have special versions of chips that are hard wired to either allow foreign hackers access to U.S. networks, or "call home" to enable the foreign Cyber Warriors to know where their fake cards have ended up. There have been plenty of counterfeit cards uncovered, but none yet with the spy chips installed. What's worrisome is that U.S. Cyber War units have apparently already created such spy chips, as these can be installed in legit equipment as well……(Strategy Page, 13 Mar 08)

The Surge in Economic Espionage

Within the very first year of the birth of our nation, Congress passed the laws that established our patent system and the U.S. Patent Office. By this action, Congress was making it clear that a viable patent system and the protection of individual’s intellectual property were the key to the new nation’s future economic health and wealth. The president, the secretary of state, the attorney general and the secretary of war all signed the early patents……(Gene Poteat/Charleston Mercury, 7 Mar 08)

SKorea Alleges Factory Design Espionage

South Korean prosecutors said Thursday they have arrested and indicted a former LG Electronics employee on charges of illegally providing plasma display manufacturing technology to a Chinese company. LG Electronics Inc., the world's third-largest seller of plasma televisions and panels, said the suspected industrial espionage could cost it $1.4 billion in lost sales. The employee, a man prosecutors identified only by the surname Jung, allegedly gave the technology to COC, a company based in the Chinese province of Sichuan, said a prosecutor on the case. He spoke on condition of anonymity because he was not authorized to speak to media. The prosecutor said Jung, who was arrested last month, indicted Wednesday and remains in custody, held onto a computer hard drive that contained designs and other information about an LG plasma display panel factory after he quit the company in 2005. Jung joined COC in February 2007 as a technology adviser and is accused of sharing proprietary information that belonged to LG with his new company, the prosecutor said. Also indicted were another former LG employee and a current employee, who both allegedly assisted Jung after he joined the Chinese company, he said……(AP, 7 Mar 08)

Korea's Tech Prowess Threatened by Industrial Espionage

It is no longer shocking that former and current employees of South Korean makers of electronics, cars, steel and ships have stolen their companies' technologies and handed them over to foreign competitors. It goes without saying that such actions constitute industrial espionage, which inevitably erodes the nation's international competitiveness…….(Korea Times, 7 Mar 08)

SKorea indicts man for allegedly passing plasma technology to Chinese company

South Korean prosecutors said Thursday they have arrested and indicted a former LG Electronics employee on charges of illegally providing plasma display technology to a Chinese company. LG Electronics Inc., the world's third-largest seller of plasma televisions and panels, said the suspected industrial espionage could cost it 1.3 trillion won (US$1.4 billion; euro900 million) in lost sales. State prosecutors allege that the employee, identified only by his surname Jung, gave the technology to COC, a company based in the Chinese province of Sichuan, said a prosecutor working on the case…….The prosecutor said Jung, who was arrested last month and indicted Wednesday, took a portable computer hard drive that contained designs and other information about an LG plasma display panel factory before quitting the company in 2005. Jung later joined COC in February 2007 as a technology adviser and is accused of sharing the proprietary information with his new company, the prosecutor said. Also indicted were another former LG employee and and current employee, who both allegedly assisted Jung after he joined the Chinese company, he said…….(The Age, 6 Mar 08)

Cutting-edge PDP Tech Leaked to Chinese Firm; loss of $1.4 billion

A new plasma display panel technology developed by LG Electronics has been leaked to a Chinese company, dealing a loss of one trillion won, or more than one billion dollars, to the Korean economy. Seoul prosecutors indicted yesterday a former LG manager for corporate espionage. The 49-year-old man, identified only by his last name Jeong, allegedly leaked the new technology to Changhong-Orion PDP-Chaihong of China. Two other LG employees also face charges of corporate espionage. Sources said Jeong copied 1,182 files on his portable hard disk in July 2005 just before leaving LG. The files contained key pieces of the PDP technology, including information on equipment arrangement and setup in the plant and what types of equipment were used. The Chinese company hired Jeong in February last year, giving him an annual salary of 300,000 dollars, an apartment and a vehicle. In return, he handed over secret information on LG. Between March and September last year, the other two suspects collaborated with Jeong and provided him with sensitive information via e-mail and CD-ROM on the plant’s power structure and construction blueprints. Upon receipt, Jeong gave the information to the Chinese company……(Dong-A Ilbo, 6 Mar 08)

Former LG Electronics man charged with spying for China

Prosecutors were investigating a former LG Electronics technician Thursday for allegedly spying and providing a Chinese firm with South Korea's leading plasma display technology. If the Chinese firm goes ahead with production later this year, LG Electronics, a leading South Korean player in the global flat panel display market, will suffer up to 1.3 trillion won (US$1.4 billion) in sales damage over the next three years, the Seoul Southern District Prosecutors' Office said…..(Yonhap News Agency, 6 Mar 08)

China’s Espionage for Display Technology Shocked Korea

China’s trial to steal the essential technology from the Korean display industry shocked the nation as a whole. Furthermore, considering China’s desire for the OLED industry, the leakage of the PDP technology will have the ramifications in various fields……(Korea IT News, 6 Mar 08)

Spy saga taught Formula One a lesson

Last year's spying controversy, as well as costing McLaren a record $100-million fine and the constructors' title, taught Formula One a lesson it will never forget.…..The consequences are clear and nobody wants to go down that road again. "I think it's a wake-up call for everybody that we have to respect the normal laws and normal ethics of any business," was the verdict of Honda's new team principal Ross Brawn, the former Ferrari technical director……(Reuters, 6 Mar 08)

Is 3Com Selling Out the U.S. to Chinese Spies?

The Pentagon is worried that 3Com’s pending deal to sell itself to Bain Capital and China’s Huawei Technologies is a real threat to national security. Now, the Department of Defense has slammed Huawei in its annual report to Congress on the Military Power of the People’s Republic of China. You can read the report here. Here is what the report says: The People’s Liberation Army (PLA) is pursuing comprehensive transformation from a mass army designed for protracted wars of attrition on its territory to one capable of fighting and winning short duration, high intensity conflicts along its periphery against high-tech adversaries – an approach that China refers to as preparing for “local wars under conditions of informatization…..(Wall Street Journal, 4 Mar 08)

Nation States' Espionage and Counterespionage

Should you be concerned by shrill warnings of nation-based economic espionage? 30-year CIA veteran Christopher Burgess looks at the current landscape of "the second-oldest profession" and what the corporate world needs from the government.......(CSO, 19 Feb 08)