July 2008

Ex-HP exec won't contest trade-secret theft charges

A former Hewlett-Packard executive has agreed not to contest federal charges that he stole trade secrets from his previous employer, IBM, and attempted to pass the information to colleagues at HP. Atul Malhotra was a vice president for printing services at IBM when he obtained confidential pricing information in March 2006, according to charges filed Friday in San Jose's U.S. District Court. Prosecutors said Malhotra went to work for HP's printing division that May, and in July 2006, he sent e-mails to other HP executives with the confidential IBM information, marked "for your eyes only."…..(Mercury News, 2 Jul 08)

Feds obtain spyware records in Tony Trout investigation

The maker of Remote Spy software has turned over a CD to federal investigators in connection with their investigation of county Councilman Tony Trout’s alleged use of spyware on the county administrator’s computer, according to federal court documents obtained by GreenvilleOnline.com. An FBI agent sought a search warrant because he said there was "probable cause to believe" that the software maker had evidence of the crime of intentionally accessing a protected computer without authorization and obtaining information from a computer using "interstate or international communication," according to the agent’s affidavit…..(Greenville Online, 1 Jul 08)

June 2008

KGB accused US citizens Joseph Kay and Emanuel Zeltser of “economic espionage”

The KGB investigatory department instituted a criminal case against US citizen Joseph Kay over an article “economic espionage”… As Interfax learnt from the KGB Center of Information and Public Relations, Emanuel Zeltser is accused of coming crimes over part 2 of article 380 (using fake documents, giving rights, by a group of people by previous concert), part 2 of article 228 (narcotic substances smuggling), part 1 of article 328 (trafficking of narcotics, psychotropic substances and precursors), and part 1 of article 254 (commercial espionage) of the Criminal Code of Belarus.  Moreover, as the agency has learnt, detained with Zeltser Russia’s citizen Vladlena Bruskova was charged with committing of crimes over part 2 of article 380 (using fake documents, giving rights, by a group of people by previous concert) and part 1 of article 254 (commercial espionage) of the Criminal Code of Belarus.  The KGB investigatory department also instigated a criminal case against US citizen Joseph Kay on the facts provided by part 1 of article 254 (commercial espionage) of the Criminal Code of Belarus, the KGB press service informs…..(Charter 97, 27 Jun 08)

Foreign Spies Infiltrating US Businesses

The foreign intelligence threat within the United States is far more complex than it has ever been historically. The threat is increasingly asymmetrical insofar as it comes not only from traditional foreign intelligence services but also from nontraditional, non-state actors who operate from decentralized organizations.  Intelligence collection is no longer limited to classified national defense information but now includes targeting of the elements of national power, including our national economic interests. Moreover, foreign intelligence tradecraft is increasingly sophisticated and takes full advantage of advances in communications security and the general openness of US society…..(American Chronicle, 25 Jun 09)

Woman accused of spying for China at Motorola

A Chinese spy was caught "red-handed," according to federal authorities, as she was about to board a plane at O'Hare bound for Beijing. Hanjuan Jin says she worked as a computer engineer for Schaumburg-based Motorola, a global leader in communications technology. Federal agents say Jin was also working as a spy for a Chinese company, and she has been charged in a corporate espionage case that reflects a growing national security problem.....On its Web site, Motorola touts the company's internal security but declined an invitation from the I-Team to explain how an employee just off medical leave could nearly board a plane to Beijing with $600 million in corporate secrets. That is Motorola's own estimate quoted by the FBI........(ABC/WLS-TV News Chicago, 25 Jun 08)  VIDEO

Corporate Espionage Detailed in Documents

They scavenged through trash and tailed people for hours. They used undercover operatives to infiltrate private meetings. The targets were not agents of foreign powers but advocacy groups that had been critical of corporations. In the 1990s, a Maryland-based private detective agency composed of former CIA agents and law enforcement officers spied on such activist groups as Greenpeace, the firm's records show…Beckett Brown International, which was founded in 1995, disbanded in 2000, and the activists might never have learned they were spied on. But a disgruntled BBI investor began digging through company records two years ago and has been contacting the former targets. He also gave The Washington Post access to the records, which provide an unusually.....(Washington Post, 21 Jun 08)

Warrant seeks spyware records, prosecutor says; firm cooperating, official says

Federal investigators are looking for records from the Florida-based maker of Remote Spy software related to County Councilman Tony Trout’s accounts allegedly used to access the county administrator’s computer, First Assistant U.S. Attorney Kevin McDonald said Thursday.  McDonald said an affidavit by an FBI agent supporting a federal search warrant states that a Remote Spy logo appeared on documents already obtained in the federal investigation. The affidavit chronicles the investigation to date, including Trout’s alleged statements to the media, he said…..(Greenville Online, 19 Jun 08)

Economic Espionage, Military Source Code, Sentencing

Xiaodong Sheldon Meng, 44, a software engineer born in China and currently a resident of Cupertino, Calif., was sentenced today to a term of 24 months by the Honorable Jeremy Fogel, U.S. District Court Judge in San Jose and was also ordered to serve a three-year term of supervised release following his prison term; pay a fine of $10,000, and forfeit computer equipment seized in the case…On August 1, 2007, Meng pleaded guilty to two national security violations: one count of violating the Economic Espionage Act and one count of violating the Arms Export Control Act and the International Traffic in Arms Regulations. Meng’s conviction was the first involving military source code under the Arms Export Control Act and marked the second case in which there was a conviction under the Economic Espionage Act for misappropriating a trade secret with the intent to benefit a foreign government. According to court records, Meng committed economic espionage by misappropriating a trade secret, known as "Mantis 1.5.5," from his former employer, Quantum3D Inc., with the intent to benefit a foreign government, specifically the People’s Republic of China (PRC) Navy Research Center in Beijing… Defendant Meng was ordered to surrender for this prison term on August 18, 2008. He has been out of custody after a $500,000 bond, secured by cash and real property, was posted at the beginning of the case.…….(Technology News Daily, 19 Jun 08)

Russian Spies Go For The Money

A manager at Eurocopter recently received a suspended sentence after admitting he spied for Russian intelligence (SVR) between 2004-6. He received $20,000 from the Russians, and supplied them with unclassified documents. He received such lenient treatment because he cooperated with police, and that led to several other arrests, and severe damage to Russian spying operations in Germany…..(Strategy Page, 19 Jun 08)

Canadian Citizen Gets Two Years in Night-Vision Espionage Case

This summer, we could see several people of Chinese descent prosecuted in the U.S. for economic espionage. Yesterday, district judge Jeremy Fogel became the first judge to sentence a defendant convicted under economic espionage laws since Congress passed them in the 90’s. Xiaodong Sheldon Meng received 24-months, the maximum under a plea deal in which he reportedly admitted to possessing night vision software for pilots, and using the software to benefit the Chinese Navy. According to The Recorder and the AP, here’s what happened: Meng, 44, a Canadian citizen, left software company Quantum3D in 2004 to work for Orad, an Israeli competitor. However, Meng allegedly kept some of Quantum3D’s trade secrets on his computer, including a software program called Mantis which he then used in a demonstration to Chinese naval officials. Meng reportedly altered Quantum3D’s brand to make it seem like the software secrets regarding the space shuttle, a military transport plane and a rocket belonged to Orad…According to the AP, two other Silicon Valley engineers — a U.S. citizen from China, and a permanent resident of the U.S. from China — have pleaded guilty to economic espionage for stealing microchip blueprints from their employers and attempting to smuggle them to China. Their sentencing is set June 23. In a separate case, two other Silicon Valley engineers of Chinese descent were indicted in September on charges they stole chip designs and tried to launch a microprocessor startup with a Chinese VC firm. Their trial hasn’t been set…….(Wall Street Journal, 19 Jun 08)

Engineer jailed for theft of U.S. secrets

…Mr. Meng, who held Canadian citizenship and had two degrees from McGill University, had just arrived in the United States from China to attend an event that only a computer geek could love: the Interservice Industry Training, Simulation and Education Conference. Unknown to Mr. Meng, he was also delivering himself into the hands of the FBI, who had spent months on a high-tech investigation that led from California to China. And now the FBI had the smoking gun: On Mr. Meng's laptop and hard drive were thousands of files that officers said proved he had stolen advanced military technology from his former U.S. employer and taken them to China, the world's newest superpower…..(Globe & Mail, 19 Jun 08)

Judge Takes Hard Line in First Economic Espionage Sentence

…Xiaodong Sheldon Meng, 44, was hit with a 24-month sentence, the maximum under a plea deal in which he admitted possessing night vision software for pilots, material that belonged to Quantum3D, a San Jose, Calif., company. He then used that software to benefit the Chinese government. Meng also admitted breaking American arms export-control laws. With the hearing Wednesday in San Jose, Fogel became the first judge in the country to sentence a defendant convicted under economic espionage statutes since Congress passed them in the 1990s…..(Law, 19 Jun 08)

Salesman gets 2 years for industrial spying

Xiaodong Sheldon Meng, 44, now a Canadian citizen, is the first person to be sentenced under a 1996 economic espionage law designed to prevent trade secrets from being handed over to foreign powers. The prison term was the maximum that prosecutors said they would seek after Meng pleaded guilty in August in U.S. District Court in San Jose to one count of violating the Economic Espionage Act and one count of violating the Arms Export Control Act. Thirty-four other counts he had faced were dropped……(SF Chronicle, 19 Jun 08)

China’s Secret War

Cyber warfare officially arrived on Capitol Hill last week. Two Republican congressmen, Rep. Frank Wolf of Virginia and Rep. Christopher Smith of New Jersey, went public last Wednesday with the news that in 2006 and 2007 their office computer networks had been breached by Chinese hackers… China’s largest cyber-raid in the United States occurred in 2004. The assault was so massive that American security authorities gave it a code name, “Titan Rain.”… to the biggest Chinese espionage program directed against the United States and the West. It is known as the “thousand grains of sand” strategy. In this approach, the agents are all amateurs. They consist of Chinese who are either going overseas, such as students, or those who already live abroad… By some estimates, the “thousand grains of sand” program involves 100,000 people – a testament both to the importance that China attaches to the program as well as to its extent. And it has been going on for a long time. “For nearly two decades, Beijing has mobilized the Chinese-American community to penetrate US military corporations that are working on defense contracts,”…….(FrontPage, 19 Jun 08)

Engineer is first sentenced for economic espionage

…Meng left the courthouse without commenting to reporters. Released on a $500,000 bond, he has until August 18 to begin serving his sentence. Prosecutors described him as a low flight risk. Two other Silicon Valley engineers — Fei Ye, a U.S. citizen from China, and Ming Zhong, a permanent resident of the U.S. from China — have pleaded guilty of economic espionage for stealing microchip blueprints from their employers and attempting to smuggle them to China. Their sentencing is set June 23. In a separate case, Silicon Valley engineers Lan Lee and Yuefei Ge were indicted in September on charge they stole chip designs and tried to launch a microprocessor startup with a Chinese venture capital firm. Their trial hasn‘t been set. In Southern California, Chinese-American engineer Dongfan "Greg" Chung, who worked at Boeing Co. and space shuttle-builder Rockwell International, has pleaded not guilty of charges he stole secrets regarding the space shuttle, a military transport plane and a rocket on behalf of China……(AP, 18 Jun 08)

US links India with arms conspiracy 

In a shocking case of international espionage involving arms, the US has linked India with an arms conspiracy claiming that the Indian government agencies have  conspired with Sudarshan Parthasarathy, CEO of Cirrus Electronics, to obtain secret weapons technology for its missile program. However, the Indian embassy in Washington, has denied this by saying that Cirrus Electronics, Singapore had responded to the requirement of Indian organizations through a transparent, public and open tendering process. The CEO of Cirrus Electronics, Parthasarathy Sudarshan is said to have hatched this conspiracy. Cirrus Electronics has offices in Simpsonville, South Carolina, Singapore, and Bangalore, India. Forty-seven year old Sudarshan was sentenced to 35 months in jail and slapped a USD 60,000 fine by a US court for shipping restricted military technology to Indian government entities engaged in missiles and fighter jet production and space program…..(Times Now, 17 Jun 08)

DOJ Press Release: Businessman Parthasarathy Sudarshan Sentenced for Supplying Indian Government with Controlled Technology  

German Convicted of Spying for Russia

A former engineer with the German Eurocopter company has been convicted by a Munich court of committing industrial espionage for Russia. He was sentenced to an 11-month suspended prison sentence. The court ruled that there was sufficient evidence to show that 44-year-old Werner G. had provided information on civilian Eurocopter helicopters to Russian special services in the course of two years. The defendant was not involved in military espionage, however. The punishment for military spying is much more severe. According to the accusations against him, Werner G. gave secret documents to representatives of the Russian Foreign Intelligence Service between 2004 and 2006 in exchange for €13,000. His defense argued that Werner G. provided comparatively insignificant information on technical details of the German civilian helicopters…….(Kommersant, 17 Jun 08)

3 indicted for stealing list of high rollers

A high-level casino marketing executive and two former colleagues were indicted on charges they stole a list of more than 20,000 top gamblers from the Tropicana Hotel and Casino, said Attorney General Anne Milgram and Criminal Justice Director Gregory Paw. John Conklin, 47, of Galloway, vice president of relationship marketing at the Borgata Hotel and Casino, Justin Litterelle, 26, of Las Vegas and James DiMarco, 59, of Ocean City, were charged with second-degree counts of theft by unlawful taking, computer theft, and conspiracy. In addition, Conklin and Litterelle were charged with second-degree receiving stolen property, and DiMarco was charged with second-degree attempted receiving stolen property. Conklin also was charged with witness tampering, a third-degree offense. The list of top-level casino patrons - including addresses, phone numbers and ratings - was proprietary information of the Tropicana that had an assessed value of more than $108 million….(Star-Ledger, 16 Jun 08)

German engineer sold helicopter secrets to Russia

A Munich court sentenced a German engineer to 11 months probation on Monday for passing industrial secrets from helicopter maker Eurocopter to the Russian secret service. The court said there was sufficient evidence to show that the 44-year-old engineer, who admitted passing on information, had provided the Russian foreign intelligence agency with details about the helicopters for more than two years. However, the judge ruled that the accused, named only as Werner G., had not crossed the line into military espionage which would have led to a tougher sentence. The case has highlighted growing worries about Russian industrial espionage activity which Germans worry could hurt business in Europe's biggest economy…..(Reuter, 16 Jun 08)

Algeria subject to economic espionage

All participants in the international conference on Institution Governance and Economic Intelligence held in UFC University in Algiers agreed on the fact that economic intelligence issue is not clear in Algeria.  The director of Human Skills Development Institute, expert Mohamed Bahloul said the strategic concept of homeland security is no more restricted to the military circle, as economy has become, nowadays, a paramount factor in terms of security effort. Bahloul further mentioned that economic espionage has become a reality, while stressing that information and economic security are the cornerstone of national defense system….(El Khabar, 15 Jun 08)

Dam Data Leakage at Source

…Losing data damages a company's reputation, puts them in breach of the Data Protection Act and may by very costly, including the possibility of being fined. If sensitive information, such as financial details, is lost, it may leave customers or staff exposed to identify theft. Currently, the protection of data is mainly inadequate. Because of the rapidly changing structure of computer networks, companies should review the way they protect the security of data. The highest risk areas for losing data are through email, through remote access and through laptop use…….(Compliance and Privacy, 12 Jun 08)

Eurocopter Engineer Confessed to Spying for Russia

Ex-engineer of the German company Eurocopter has confessed to industrial spying for Russia. The 44-year-old German citizen acknowledged the facts of selling technical information about civil Eurocopter helicopters to Russian special services. Next week the court will render a verdict. According to the prosecutors, in 2004-2006 the Eurocopter's ex-worker several times forwarded secret documentation to a representative of the Foreign Intelligence Service of the RF on the territory of Germany, Austria and Croatia and received 13.000 EUR for his “help”.  The defence claims that the engineer gave Russia only considerably unimportant information about technical details of the German civil helicopters….(Russia IC, 12 Jun 08)

Finnish state and armaments industry targeted by online espionage

Viruses sent in e-mails from Chinese server. The Finnish state and companies operating in the weapons industry have been targeted by online espionage.  The snooping has involved concentrated attacks, in which one or more employees have been sent an e-mail message containing a computer virus, which has allowed the attacker to use the Internet connection to download information that the employee has access to from the infected computer. The virus has also given the cyber-spies access to networks protected by passwords…..(Helsingin Sanomat,  11 Jun 08)

Targets of Spying Get Smart

Tiny electronic-surveillance gadgets that James Bond could only dream of are increasingly turning up in boardrooms, bedrooms and bathrooms.  Crooks are parking vans outside people's homes to steal bank-account passwords and credit-card numbers, using programs that tap into Wi-Fi connections. Paparazzi hide cameras and microphones in private jets, hoping to record embarrassing celebrity video. Corporate spies plant keystroke-recording software in executives' laptops and listen in on phone conversations as they travel…The growing availability and affordability of digital surveillance equipment -- even primitive stuff such as baby monitors -- has caused mounting worries about spying, Mr. Murray says. Devices "that used to be super-duper a few years ago are ordinary now," he says. "There was a time when you had to know somebody or pay a lot of money to get the equipment. Now you can get a wireless camera for under $100 -- tiny ones, too."  Indeed, for less than $350 at spy shops and over the Internet, snoops can purchase a GPS-tracking device that is smaller than a pack of matches and includes a microphone. But because many telephones and computers are tied into network servers these days, some of the greatest threats come from malicious software and hacker attacks that reroute phone calls and steal computer passwords….(Wall Street Journal, 11 Jun 08)

The Spy Who Loves Us: Pay no mind to the Mossad agent on the line

After Israeli spy Jonathan Pollard was sentenced to life in prison in 1986, the U.S. negotiated an understanding with Israel—a “gentlemen’s agreement” —stipulating that neither nation would thenceforth conduct espionage operations in the other’s territory without consent. But the agreement was a sham from the beginning… Two Israeli companies in particular—Amdocs and Comverse Infosys, both of which are headquartered in Israel—do significant business in the United States. Amdocs, which has contracts with the 25 largest telephone companies in the U.S. that together handle 90 percent of all calls made, logs all calls that go out and come in on the system. It does not record the conversations themselves, but the records provide patterns, referred to as “traffic analysis,” that can provide intelligence leads. In 1999, the National Security Agency warned that records of calls made in the United States were winding up in Israel. Amdocs also has an apparent relationship with some of the art students who were arrested in 2001. Several were provided with bond money by an Amdocs executive. Comverse Infosys provides wiretapping equipment to law enforcement throughout the United States and also has large contracts with the Israeli government, which reimburses up to 50 percent of the company’s research and development costs. Because equipment used to tap phones for law enforcement is integrated into the networks that phone companies operate, it cannot be detected. Phone calls are intercepted, recorded, stored, and transmitted to investigators by Comverse, which claims that it has to be “hands on” with its equipment to maintain the system. Many experts believe that it is relatively easy to create a so-called “back door” that permits the recording to be sent to a second party, unknown to the authorized law-enforcement recipient. And Comverse equipment has never been inspected by FBI or NSA experts to determine whether the information it collects can be leaked, reportedly because senior government managers block such inquiries……(American Conservative, 11 Jun 08)

Industrial Espionage at Eurocopter

As Ferrari racing fans are very aware these days, industrial espionage that goes far beyond the bounds of ethical competitive intelligence is alive and kicking. This is even more true in the aerospace industry, whose national security implications often feature national intelligence organizations undertaking industrial espionage – in some cases, even against allied countries. China is most frequently mentioned in this context, with good reason, but Russia and France have also built reputations in this area.

A recent case in Europe shines a brief light on some of these goings on – and on some classic techniques used in the field. Deutsche Welle reports that former Eurocopter executive “Werner G.” allegedly met with a Russian SVR intelligence agent several times between 2004 and 2006 in Germany, Austria and Croatia, handing over unclassified technical manuals, files and CD-ROMs in exchange for EUR 13,000 euros (about $20,500). In a modern twist, classic techniques like dead drops and visual signals were bypassed in favor of anonymous webmail accounts to arrange meetings…..(Defense Industry Daily, 10 Jun 08)

Arms-Control Group Tied to Kremlin Paid Wife of Weldon Aide

A former congressional aide admitted in court proceedings that his wife received unreported payments from an arms-control group with ties to top security officials in the Russian government, according to several people involved in an inquiry of a former congressman. The aide worked as chief of staff for former Rep. Curt Weldon, a Pennsylvania Republican. Rep. Weldon had sought a federal grant for the Russian organization, known as International Exchange Group, according to the people familiar with the inquiry. Rep. Weldon's former aide, Russell Caso, pleaded guilty in December to failing to disclose payments made to his wife, but the origin of the funds wasn't identified. Rep. Weldon is embroiled in a federal corruption probe that contributed to his loss in the 2006 election. The Weldon inquiry is significant in part because it is an element of a broader U.S. Justice Department probe into what officials suspect are efforts by Russian-backed firms to gain influence or gather information in Washington. Prosecutors also are looking into Mr. Weldon's involvement with a Russian-owned natural-gas company with alleged ties to organized crime. Attorney General Michael Mukasey in April said the government has reconvened its long-dormant federal Organized Crime Council to combat what he called a new "hybrid criminal problem" involving alliances between foreign intelligence agencies and criminal groups. In a speech before the Center for Strategic and International Studies in Washington on April 23, Mr. Mukasey said law-enforcement officials have "grave concern" about "so-called 'iron triangles' of corrupt business leaders, corrupt government officials and organized criminals."… The firm paid Mr. Caso's wife $19,000 for editing work, much of which wasn't performed, Mr. Caso admitted in his court statement, and he failed to disclose the payments as required by law. Mr. Caso is cooperating with the investigation, court filings state. Attorneys for Mr. Caso and Mr. Weldon declined to comment on International Exchange. International Exchange was founded by Vladimir Petrosyan, who claimed to have ties to the Kremlin, according to Louisiana lawyer Claude Kelly, who also was involved with the firm. Mr. Kelly said in an interview that Mr. Petrosyan introduced him to top Russian officials including Alexei Alexandrov, a member of the Russian Parliament. Mr. Petrosyan, who left the U.S. in 2006, couldn't be located for comment. In his 20 years in Congress, Rep. Weldon, who speaks Russian and made many trips to Russia, often sought to strengthen relations between the U.S. and Eastern Bloc nations. One person who dealt with Mr. Petrosyan said he used a business card with the House of Representatives seal that identified him as an adviser to Mr. Weldon.….(Wall Street Journal, 10 Jun 08)

German on trial for selling secrets to Russia

A German helicopter engineer has gone on trial in Munich charged with spying for Russia. Franz G.Werner, who worked for EADS's Eurocopter unit, is accused of selling industrial secrets to a Russian secret agent. According to German prosecutors, the mechanical engineer was paid 13,000 euros for documents, handbooks and other technical information. Werner admits giving data to the man but denies espionage. He said the helicopters were intended for export to Russia anyway and that he didn’t know he was divulging secret information…..(Russia Today, 10 Jun 08)

Eurocopter Engineer Admits Espionage

The trial of a former Eurocopter employee accused of spying for Russia began in Germany on Monday. According to investigators, the 44-year-old engineer, identified in the case as Werner Franz G., gave the Russian Foreign Intelligence Service secret documentation on the helicopters produced by Eurocopter. The suspect does not deny giving the Russian service the documents, but he denies that it constituted espionage, insisting that he gave out information only about civilian helicopters, the export of which to Russia is not prohibited. …..(Kommersant, 10 Jun 08)

German Eurocopter worker admits spying for Russia

A German engineer admitted at his espionage trial on Monday that he had passed information from the helicopter maker Eurocopter to the Russian secret service. Prosecutors say the 44-year-old Werner G. took documents from Eurocopter, a division of the European aerospace group EADS, and passed them to a Russian intelligence agent whom he met several times between 2004 and 2006 in Germany, Austria and Croatia… He said such technical documents were highly valuable because they could allow another manufacturer to save development costs and offer its own product at cheaper prices. Prosecutors say the defendant passed on manuals, files and CD-ROMs with technical details of various Eurocopter helicopters, and received some 13,000 euros ($20,500) in return…….(Reuters, 9 Jun 08)

Softscape Charges Espionage Attempt in Court Suit

With the Clinton-Obama fight over, Softscape and SuccessFactors (profile; site) have stepped up to fill the void with the two HR software companies in court for the second time this year. This time the allegations include claims of corporate espionage, unfair competition and interference with contract. The latest volley was fired today by Softscape, which claims in court papers filed in Massachusetts, where it is headquartered, that SuccessFactors hired its employees in order to learn company secrets, then used that information in the design of the latest release of its Performance and Talent Management Suite, ULTRA……(ERE, 5 Jun 08)

May 2008

FTC settles with investigators in HP spy scheme

The Federal Trade Commission said Wednesday it agreed to $600,000 in settlements and judgments against several private investigators involved in the Hewlett-Packard Co. boardroom spying case. The FTC last year filed a complaint against those investigators for allegedly obtaining consumers' private phone records without their knowledge and consent and selling them to third parties. Palo Alto, Calif.-based HP hired the investigators in 2005 to secretly examine the private telephone logs of journalists, board members and HP employees to identify the source of leaks to the media……(AP, 29 May 08)

Germany's Corporate Spying Scandal

Bristling with code names like "Clipper" and "Rheingold," Germany's latest corporate scandal seems like the stuff of a Cold War espionage novel. But as merely the latest in a series of corporate shenanigans, it may actually reflect the newly sordid style of business at Germany Inc. The story begins in 2005, when Deutsche Telekom, the former German phone monopoly, was rapidly losing ground to new competitors. Management was under fire and sensitive information was showing up in a steady stream of embarrassing newspaper headlines. Telekom's management was determined to find out who was talking to the press and stop the leaks……(Time Magazine, 27 May 08)

Fairfax Tech Firms Settle Software Suit

A Fairfax County technology company has agreed to pay a rival $4.5 million to settle a lawsuit accusing it of stealing computer software. Razorsight also agreed to stop using the intellectual property from Teoco, a Fairfax County company that had developed software to process and audit billing among telecommunications carriers.

Teoco filed suit last September, claiming that Razorsight had stolen source code for software that loads and processes telecom invoices. Razorsight founder Sundeep Sanghavi worked for Teoco before launching the company….(Washington Post, 21 May 08)

Government offices target of cyber criminals

The federal police have opened an investigation into suspected espionage following an attack by hackers of the computer system of two government departments. A spokeswoman said the foreign ministry and State Secretariat for Economic Affairs (Seco) were the target of professional hackers at the end of last year. A cyber crime expert said the case was unique since employees in particular departments of the federal administration were singled out for the attack….(Swiss Info, 21 May 08)

SAS likely to appeal Norwegian Air court ruling

Scandinavian airline SAS is likely to appeal against a Norway court verdict ordering it to pay rival Norwegian Air Shuttle 132 million crowns ($26.33 million) in compensation, SAS said on Tuesday…Norwegian had sued SAS for industrial espionage, accusing it of illegally accessing and using its booking data. The court also ruled that SAS should pay Norwegian Air's legal costs of about 6.8 million crowns in the industrial espionage case, Norwegian said in a separate statement….(Reuters, 20 May 08)

California man sentenced for stealing military technology

An El Dorado Hills man has been sentenced to two years in federal prison for selling trade secrets to foreign governments. Allen W. Cotten, 53, was sentenced in U.S. District Court after pleading guilty earlier this year.

Prosecutors say Cotten stole plans and parts for two types of video amplifiers from his employer, Genesis Microwave Inc. The thefts took place over a two-year period, starting in February 2004. The amplifiers are used in microwave technologies that have several military applications….(AP, 19 May 08)

Selling stolen trade secrets nets prison for Central Valley man

…Mr. Cotton admitted that when he worked at Genesis Microwave Inc. in El Dorado Hills, he stole plans, designs, specifications and mechanical parts and hardware for the manufacture and testing of components used in microwave technologies…Mr. Cotton sold or tried to sell the secret plans to foreign governments and foreign military contractors, prosecutors says. Names of the foreign entities have not been made public…..(Central Valley Business Times, 19 May 08)

El Dorado Hills Man Sentenced for Selling Stolen Trade Secrets
to Foreign Governments  (FBI)

Man Pleads Guilty to Stealing Trade Secrets from Local Company to Sell to Foreign Governments   (DOJ)

Chemist jailed for formula theft
A chemist employed by a Houston industrial coatings-maker who pleaded guilty to stealing the formula for a secret fire-proof finish was sentenced to a year in prison. Qinggui Zeng, 46, a US resident also known as Jensen Zeng, was arrested in Houston days before he planned to return to China and begin making the product. US Federal Bureau of Investigation agents searched Zeng's home and said they found printouts of the stolen formula hidden under attic insulation… He pleaded guilty last week at a Houston federal court. At the hearing, Zeng confessed to hacking into his employer's computer, stealing the formula, and soliciting investors to fund a Chinese venture through which he would make and sell the proprietary coating as his own creation, according to a statement issued by US Attorney Don DeGabrielle in Houston…..(Bloomberg, 19 May 08)

News Corp company cleared in hacking case

A subsidiary of News Corp has been cleared of charges in a corporate espionage lawsuit brought by satellite TV company DISH Network that claimed damages of almost $1 billion. A US federal court jury awarded just $US1500 ($1572) in damages from NDS for a single test incident with a satellite TV smartcard. DISH had alleged that NDS employed a hacker who systematically broke into its network, stole software code and posted information on the internet to let users unscramble DISH's signals and receive satellite television for free…..(News Technology, 19 May 08)

Analysis: Russia spies on German firms

The German government has accused foreign intelligence services -- blaming mainly Russian agents -- of having spied on German companies. "In the course of the global competition over market share and market dominance, industrial espionage is becoming increasingly important," a new government report on terrorism, political extremism and intelligence found. This industrial espionage hurts the German economy in the process and endangers jobs, the report said. …(UPI, 16 May 08)

Chinese, Russian industrial spies active in Germany - official

Chinese, Russian and Iranian spies have tried to steal industrial secrets from as many as one in two German firms, Financial Times Deutschland reported, citing Hartwig Moeller, head of North Rhine-Westphalia's intelligence agency. 'Every second German company has been affected, studies show,' with the loss of information valued at between 15 billion euros and 50 billion euros a year, said Moeller.'Together with the Chinese it is first and foremost Russian and Iranian intelligence agencies that are active in Germany,'….(Forbes, 16 May 08)

Germany cites threat of Russian espionage

German intelligence officials Thursday accused Russia of employing spies and Internet technology to obtain industrial secrets that could hurt the German economy, Europe's biggest, and destroy jobs. The domestic federal intelligence agency, the Office for the Protection of the Constitution, said Germany was highly attractive to foreign spies because of its cutting-edge technology and market leadership in several sectors… Overall, Russia and China were responsible for a good deal of intelligence-gathering activity in Germany, the report said. But the report singled out Russia in the field of industrial espionage…..(Reuters, 16 May 08)

Former Videographer Details Patriots’ Spying

Matt Walsh, a former New England Patriots videographer who helped the team spy on opposing teams, met with N.F.L. officials and Senator Arlen Specter on Tuesday for separate interviews about how the Patriots conducted an illicit videotaping program under Coach Bill Belichick. On Wednesday morning in Washington, in the offices of his lawyer, Michael Levy, Walsh sat down with Greg Bishop of The New York Times for his first interview with the news media. Here are excerpts from that interview…..(New York Times, 16 May 08)

Specter Calls Patriots’ Spying Wider Than Stated

After meeting with a former New England Patriots employee who helped the team spy on opponents, Senator Arlen Specter on Wednesday described the team’s illicit videotaping tactics as more systematic and deliberate than what the N.F.L. has acknowledged publicly. Mr. Specter, a Republican from Pennsylvania, said the former employee, Matt Walsh, described elaborate measures by the Patriots to conceal their filming of opponents’ signals. Mr. Walsh also explained how the Patriots’ coaching staff gleaned strategic information from members of the team’s video crew who had watched the St. Louis Rams’ walk-through practice before the 2002 Super Bowl.

He also identified more games and opponents that were filmed by the Patriots and detailed the advantages the team gained in later games……(New York Times, 15 May 08)

Sen. Specter wants independent investigation into Spygate

…Specter repeated his disapproval of Goodell's decision to destroy the notes and tapes confiscated during the initial investigation last fall, as well as the "piecemeal" way the league has revealed details about the tapings. He also cited the fact a Patriots attorney sat in on Walsh's meeting with Goodell as proof the investigation has not been impartial. "That sequence is incomprehensible," Specter said. "It's an insult to the intelligence of the people who follow it." Specter's interest in Spygate centers in part on the two NFL teams in his state. The Philadelphia Eagles lost to the Patriots in the Super Bowl in 2005, the same season in which the Steelers were defeated by New England in the AFC championship game…….(AP, 15 May 08)

U.S. jury reaches verdict on NDS, mistrial possible

Jurors have reached a verdict in the corporate espionage lawsuit against News Corp unit NDS Group Plc by DISH Network Corp, but the judge said on Wednesday he would first have to consider whether a legal issue warranted a mistrial in the case. The eight-member jury reached a verdict late on Tuesday afternoon, following a single day of deliberations in the month-long trial, but it was sealed by U.S. District Judge David Carter after he learned a member of the panel had spoken to a lawyer for DISH Network Corp. Carter said he would interview the woman, who according to DISH lawyers greeted them in a hallway and wished them "good luck," on Thursday morning…..(Reuters, 14 May 08)

How to protect against industrial espionage  Part II

…It sounds far-fetched, but intelligence agencies aren't shy about interfering in commercial processes if the outcome is deemed to be important enough to the national interest. Negotiations around commodity prices, for example, can have a significant impact on economies like Australia's. Intelligence gathering that can tilt the scales one way or the other is performed by nation states. It's no secret -- former intelligence agents in the United States and United Kingdom have admitted to conducting industrial espionage in support of their private sectors. The need to engage in espionage to provide a competitive edge for local companies is recognized by nations. It's extremely important in domestic markets when global companies enter the mix, and can be almost essential when large companies are competing overseas…..(Search Security, 8 May 08)

Electronic Surveillance for Information Security Professionals  Part I

(Search Security, 15 Apr 08)

Closing arguments as DISH Network, NDS trial ends

…Attorney Darin Snyder told the jury in his closing remarks that DISH employed an infamous hacker and attempted to crack the encryption codes of rivals in the satellite TV business. DISH has sued NDS in a corporate espionage case that has the potential for damages of $1.6 billion if a jury finds against the News Corp unit and awards punitive damages.  Jury deliberations were set to begin in the high-profile case as early as Thursday morning.  "The plaintiffs are doing the same with practically everything they're complaining about with NDS," Snyder said…..(Guardian, 8 May 08)

Corporate Spying in the Workplace

…Today companies like Wal-Mart and ExxonMobil have annual revenues larger than the entire budgets of some states, and they employ former agents from the F.B.I., the C.I.A. and the Secret Service to do security work. Unlike government agencies, whose surveillance activities are supposed to be conducted according to strict guidelines and court orders, these private firms operate with a remarkable degree of freedom. At the moment, federal laws against the practice of “pretexting” — using a false identity to obtain personal information — apply only to financial and telephone records. Congressional hearings on corporate espionage would be a good place to start figuring out how to regulate the practice……(New York Times, 7 May 08)

News Corp exec knew of hacker's activities

A News Corp executive has testified to keeping two hackers on the payroll, even after one of them was accused of infiltrating the security system of rival satellite television company Dish. Abraham Peled admitted that he continued to employ Christopher Tarnovsky despite being made aware that he had posted information on the internet to let users unscramble Dish's network and receive free service… The espionage case was brought by EchoStar Communications, which later split into two companies, Dish and EchoStar, with Dish being the primary plaintiff. ….(PC Pro, 7 May 08)

Murdoch 'must talk' on hacking

A judge hearing claims of industrial espionage against a News Corp company says Rupert Murdoch could lose the case unless he testifies, according to a US report. ABC News says it has a transcript of a hearing in chambers in the case… News Corp unit NDS is accused of hiring hackers to steal and post data that allowed free access to DISH Network's satellite television service. News Corp owns rival satellite provider DirecTV. News Corp has denied wrong-doing and says Murdoch knew about the alleged hacking in the 1990s…..(This Is Money, 6 May 08)

DOJ's Economic-Spy Strategy Emerges

When Fei Ye and Ming Zhong pleaded guilty to stealing trade secrets to benefit China, then-U.S. Attorney Kevin Ryan trumpeted the convictions as the first in the nation under a statute specifically tailored to industrial spying.

And though it wasn't mentioned in the December 2006 press release, the pleas now appear to be the feds' first throw in an attempted economic-espionage double play… Enter Lan Lee and Yuefei Ge, two former NetLogic Microsystems employees originally indicted in June 2006 for classic trade secret theft. After Ye and Zhong agreed to cooperate, last fall Assistant U.S. Attorney Matthew Parrella tacked on additional economic espionage counts. Ye and Zhong's plea deal doesn't specify who they gave up, but they admitted to applying for funding from the same Chinese venture group that Lee and Ge had allegedly solicited…..(Law, 5 May 08)

Israelis jailed for spyware espionage

…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. The Trojan horse was said to have been used by a number of different private investigation firms to spy on the Rani Rahav PR agency - whose clients include Israel's second biggest mobile phone operator, Partner Communications -, and the HOT cable television group. Another alleged victim was Champion Motors, who import Audi and Volkswagen motor vehicles. Asaf Zlotovsky, a manager at the Modi'in Ezrahi detective firm, was given a 19 month jail sentence. Two other employees, Haim Zissman and Ron Barhoum, were sent to prison for 18 and nine months respectively…(Dof Online, 2 May 08)

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